According to the company, the fund raising has been called off on the advise of Jardine Fleming after taking into account investors reaction. However, it was rumoured in the market that during its interaction with investors, the company could only manage to fetch a price of Rs 1750-1800, which was below its scrip price on the domestic market which was rulling over Rs 1800.

The market expected the placement to be made on the upper side of the Rs 2000 mark. The company denies this calling it `speculative'. Further, it was also rumoured that the company was able to place only 40 per cent of its total equities with foreign investors and thus called off the placement. On Tuesday, during the closing hours of trading on the bourses, as the rumours grew stronger, the Satyam scrip was hammered down to below the Rs 1750-mark from its Monday close of Rs 1871 on BSE.

Satyam computer had decied on July 26 to expand the company's equity base through two stages; a private placement and an ADR issue towards the beginning of the next year.

Satyam had also completed the formatilites for US listing of its fully-owned subsidiary Satyam Infoway. Sterling Commerce of US had decided to pick up 2.7 per cent stake in this company amounting to $5 million.

According to the private placement plan, the proceeds were to go to retire the company's debts.

Chairman Ramalinga Raju had said on that occasion that the move was to improve margins, provide resources to fund future growth and enable US dollar stock options to the company's overseas employees.

The debt retirement was to result in an interest saving amounting to over 6 per cent of its revenues, rasing the net profit margin by around 26 per cent on an annualised basis.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.