L&T sees synergy with IT firm, but won't invest now

Larsen & Toubro (L&T), now one of Satyam’s largest single shareholders with 4 per cent, sees a lot of synergy between the core strengths of the beleaguered software giant with those of L&T Infotech, its unlisted information technology subsidiary.

The company, however, is not willing to raise its presence in Satyam till visibility on the software service company’s financials improves. It is open to joining a government management committee to oversee the company’s affairs till a new management takes over, sources familiar with the developments said.

“Satyam’s strength is in the SAP space, which is an area of interest for us and a reason L&T Capital, a group subsidiary, was buying shares from the open market till recently. The investments made good business sense at that point as the prices looked reasonable,” said Y M Deosthalee, L&T’s finance director.

SAP is a German software major and proprietor of enterprise resource planning solutions for which it has implementation partners. Satyam is the strongest player among Indian IT companies in the SAP space, which accounted for almost 45 per cent of its stated revenues. The company had set itself the target of emerging as the world’s second largest SAP implementer by the end of this year.

Deosthalee, however, said the company is stuck with the investments since the share prices have crashed. “We didn’t buy or sell any shares on Wednesday as reported by some sections of the media, nor do we intend to do anything till the visibility on Satyam becomes clearer,” Deosthalee said.

“Earlier, the idea was to get into some kind of a strategic alliance with Satyam,” Deosthalee said.

Deosthalee declined to comment further, but other sources in L&T said, “At this point, Satyam is a dangerous company to deal with. We feel scared as no one knows what’s going on. I can categorically say we have no plans to invest more in the company.”