Indian SIs: Who owns the stock?

(By Anthony Miller) One of the more surprising aspects of the Satyam situation is the degree of influence disgraced chairman B. Ramalinga Raju seemed to be able to exert compared to his stake in the company. Indeed, Satyam had the lowest ‘promoter group’ (essentially, founders plus kith and kin) shareholding among any of the leading Mumbai-listed Indian SIs, as you can see in the table above. Contrast this with, say, Wipro, where founding chairman Azim Premji in effect controls nearly 80% of the stock, or HCL Technologies, where founding chairman Shiv Nadar controls about two-thirds. TCS is 75% controlled by its parent company, Tata Sons. Infosys, though, has 83% of its stock in public hands. Unlike its peers, Cognizant, now the 4th largest Indian player just ahead of Satyam, has its primary listing on Nasdaq. Ironically, Cognizant started life back in 1994 as DBSS, an offshore IT services joint venture between Dun & Bradstreet and, would you believe, Satyam, but those ties have long since been severed. For the record, Cognizant’s largest shareholder is FMR (Fidelity) with 14% of the stock.

Not surprisingly, Satyam’s industry peers are hastily distancing themselves from the company. Indian IT services/BPO industry body Nasscom issued a statement “express(ing) its shock” and feels sure that, “all the stakeholders would also treat this as an isolated issue. This is not in any manner a reflection on the industry or corporate India”. Well, I would like to think so too, but there is a long road to cover between here and there. The high levels of promoter ownership in some of the players will only serve to raise more questions on Indian corporate governance at times like these. Nonetheless, first let's see what recipe Mr Raju was using to cook the books before we condemn the entire curry kitchen!