Larsen & Toubro, the Indian engineering major's acquisition of an additional stake in the scam hit Satyam Computer on Friday had triggered off speculation of the company being in the process of taking over Satyam. L&T had upped its stake from 4 per cent to 12 per cent fuelling rumours of an imminent takeover.

However, L&T chairman, A M Naik, on Tuesday scotched speculation while speaking to a private news channel. He declined to comment on a takeover of Satyam at the present stage and said that some corporate action would happen in the near future.

He clarified that the stake in the company was hiked to protect L&T's investment, as the initial cost of investment was at risk.

Commenting on the rationale for the deal, Naik said that with the acquisition of the initial 4 per cent there was great excitement as they saw great synergies that would help L&T grow and touch $500 million this fiscal. With a well trained workforce and large valuable clients there was a significant embedded value to be leveraged he added.

He said the role of strategic player like L&T in Satyam needs to be viewed differently from that of a financial investor.

Meanwhile the double whammy of the financial meltdown coupled with a major scam has sparked speculation about its likely fallout on the Indian IT sector.

According to a leading IT industry insider, the Satyam fraud has not tarnished the reputation of the Indian IT industry, rather the government's swift action has sent some positive signals about the maturity of the sector and the processes that come into play in dealing with such events.

He added, that the IT industry has also started acting on systemic measures to set up mechanisms to enable an organized response in such cases.

Among measures being discussed is a bankruptcy protection law on lines of Chapter 11 as in the US he said. Since corporate India was growing there could be more malpractices and even cases of poor management leading to sickness and there needs to be a defined way to deal with it he added.