Calcutta, Jan. 16: Satyam chairman B. Ramalinga Raju was cautioned by at least one director on December 16 — the fateful day when the board met to discuss the $1.6-billion acquisition of the Maytas twins — not to use the directors as a “rubber stamp to affirm… decisions already reached”.

After the shareholders nixed the plan and the stock was clobbered by the markets, several directors wanted the company to release a copy of the minutes of that meeting — a demand that Raju stonewalled until he finally caved in and confessed to the biggest financial fraud in the country.

A copy of the minutes of the board meeting is now with The Telegraph and it shows there were sharp reactions from several directors to the Maytas buyout. The minutes of the month-old meeting also reveal, at a time corporate governance in India is under the microscope, how companies hoodwink directors with impressive track records and ability to ask searching questions.

The board — reduced to four after a string of resignations — was superseded on January 9, two days after Ramalinga Raju confessed to the Rs 7,136-crore fraud.

According to the minutes of the meeting, independent director Mangalam Srinivasan said the board members should have been involved right from the beginning of the process to avoid giving the impression that the directors were a mere rubber stamp.

Srinivasan — the longest serving board member and the first to resign after the controversy erupted — wanted to know if there was “any particular reason either external or internal for this initiative and timing of the proposal”.

Ramalinga Raju and his brother Rama kept quiet as they had decided to abstain from any discussion or voting at this meeting as they were “interested and concerned” with the proposals placed before the board.

Raju said later in his confession that he had been looking to fill the gaping hole in the Satyam balance sheet by using the assets of the Maytas twins. Until then, everyone had been led to believe that Satyam was cash-rich with a surplus of $1.2 billion in its books.

The meeting had begun with some presentations: the first was by Ram Mynampati who said that growth would be difficult over the next two years because of pricing and margin pressures.

Chief financial officer (CFO) Vadlamani Srinivas then said the valuation of Maytas Infra — a listed stock — was done under the Sebi rules for takeovers while Ernst & Young had valued the unlisted Maytas Properties. Ernst & Young has since denied it carried out the valuation.

The board was told that the company needed to de-risk its growth strategy by entering the unrelated areas.

M. Rammohan Rao, the former dean of the Indian School of Business, wanted to know if the foray into these areas would dilute Satyam’s core competency in IT. Rao, who chaired this meeting as Raju had stepped aside while the board deliberated the Maytas buyout, wanted to know if the diversification was fraught with risk. He was told “there may be some risk but it can only be known from the marketplace”.

When Rao wanted to know if there was the possibility of a competitive bid for Maytas Infra, he was told that it was unlikely since the bidder would have to bid for both the promoters’ as well as the public’s holding.

Vinod Dham, another independent director and known as the father of the Pentium chip, said it was important to demonstrate how the acquisition would benefit the shareholders.

CFO Srinivas then said Ernst & Young had valued Maytas Properties at Rs 6,523 crore. “But we have considered only Rs 6,410 crore.” He also said Luthra and Luthra, a Delhi-based law firm, had carried out the due diligence for this valuation. The firm has since denied that it was involved.

“In view of the non-disclosure agreement with the valuer, we are not able to disclose the name of the valuer to the public,” Srinivas told the board.

The CFO said Maytas Properties had a land bank of 6,800 acres and could build 245 million square feet of space. “This is almost one-third of DLF’s properties but the valuation considered is one-tenth of DLF’s valuation,” he said.

Harvard professor Krishna Palepu said it was important to ensure that each organisation was able to excel in its own domain and yet create synergies between them. Srinivas, who was fielding most of the questions posed by the board, said the revenues from the two Maytas entities would account for 25 per cent of Satyam’s revenues by the financial year 2010.

Former cabinet secretary T.R. Prasad and V.S. Raju, a former professor at IIT Delhi, do not seem to have asked probing questions. Both felt that the price being offered to the public was “generous”.

Ramalinga’s son Teja and and the management of Maytas Infra were then invited into the boardroom to make a presentation. Maytas Infra’s CFO V.V.R. Raju told the Satyam board that the debt-equity ratio of the company was 1:1.6 – which meant that it wasn’t laden with debt.

The Maytas Properties also made a presentation. Mangalam Srinivasan, who had been asking the most pertinent questions, wanted to know what sort of guarantees had been given to the banks. She was told “land and development are given as collateral securities”.

T.R. Prasad wanted to know how much land had been mortgaged with the banks or financial institutions. He was told that only 110 acres out of the 6800 acres had been mortgaged.

Rammohan Rao then drove the consensus on the proposal. Mangalam Srinivasan appeared to be satisfied with the explanations but suggested that “the management ... take board guidance at appropriate stages for all acquisitions.”

Krishna Palepu said it “was very important to make the same compelling presentation to the investors”.

After the initial hiccups and searching questions, the approval to the Maytas buyout was unanimous.