According to Ernst & Young, its aluation of Maytas Properties was used inappropriately by Satyam Computer (Q, N,C,F)* Services for its merger with Maytas, reports Business Standard.
At the meeting on Dec. 16, 2009 of the Satyam board, ex-CFO Srinivas Vadlamani, now in jail, had said that Ernst & Young had valued the closely-held Maytas Properties at Rs 65.23 billion, though Satyam had agreed to acquire it for Rs 64.10 billion.
However, Ernst & Young said its valuation of Maytas Properties was for a proposed share transaction involving the existing shareholders of the company, the family of Satyam founder S Ramalinga Raju.
Ernst & Young said that they were not given to understand by any party, explicitly or implicitly, during the valuation exercise about Satyam`s plans to acquire Maytas Properties.
Ernst & Young added that it was engaged by a law firm and not by Satyam for this valuation, which is mandatory for such a transaction, according to the guidelines laid down by the Reserve Bank of India. It said that this valuation was done only to comply with RBI`s regulatory requirements and their engagement letter and valuation report clearly and unequivocally state this.
Ernst & Young also clarified that though it is the auditor of Maytas Properties, it is not the auditor of the various subsidiaries it has floated to acquire real estate assets. It also said that since Maytas Properties is not listed, there was no requirement to prepare a consolidated statement and audit it.
