Satyam investors panic in Raju's native district

Satyam founder B Ramalinga Raju’s revelations on financial wrong doings has made a serious dent in the prospects of small investors in the East and West Godavari districts of Andhra Pradesh.

West Godavari being Ramalinga Raju’s native district, small-time investors had bought shares of Satyam by means of loans and using their years of savings. With the share prices growing steadily since the last couple of days on the takeover talks of Satyam, these investments only multiplied.

“Many companies have invested in Satyam as well as in Maytas Infra and Maytas Properties – the two companies owned by the Raju family, which Satyam proposed to acquire for $1.6 billion – especially from Eluru, Tadepalligudem, Bhimavaram, Tanuku, Palakollu, Narasapuram and Jangareddigudem towns in the two coastal districts through stock broking firms with a belief that they will bring them prospects,” a stock broker, on condition of anonymity, told Business Standard.

According to the information available with the stock broking firms, traditional investors in East Godavari district trade anywhere between Rs 100 crore and Rs 120 crore every day.

“Of this, Satyam’s share would be about five per cent (buying and selling of 50 million shares of Satyam) on a daily basis. With Satyam's share price plummeting to about 80 per cent on Wednesday, investors who bought the company's shares had lost about Rs 3.5 crore on a single day, while those who invested between Rs 10 crore and Rs 12 crore and held the stock lost Rs 7-9 crore. Together, they lost over Rs 10 crore on Satyam on Wednesday,” the stock broker said.

“We never expected that the Satyam stock would nosedive for all the wrong reasons,” said a worried P Veerabhadra Raju, who owns five acres of mango and cashew groves in East Godavari district.

“I had bought 1,500 shares of Satyam at Rs 480 per share in 2007 thinking that they will offer value for us with medium to long-term perspective. With Ramalinga Raju’s shocking disclosures, the share price dropped to Rs 40 and were now at the crossroads. Don’t know what is going to happen and whether to hold the shares or sell them,” he said.

ASN Raju, regional manager (Andhra Pradesh) of Networth Stock Broking, said that the traditional investors (approximately 6,000) in these two districts now have no other option left than to wait for the stock price to go up.

“And, it is unlikely to happen in the near term,” he said.