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Satyam sets house in order as suitors line up outside

Satyam sets house in order as suitors line up outside
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First Published: Wed, Jan 21 2009. 12 06 AM IST

Updated: Wed, Jan 21 2009. 12 06 AM IST
Hyderabad: Scam-hit Satyam Computer Services Ltd has received overtures from several Indian and overseas suitors interested in buying it, a director said on Tuesday, as the company struggles to survive a Rs7,136 crore accounting fraud by its founder B. Ramalinga Raju.
Engineering company Larsen and Toubro Ltd (L&T) is believed to have approached the government evincing interest in buying the company, while Essar Group firm Aegis BPO (business process outsourcing) submitted an expression of interest in acquiring Satyam’s BPO business.
“Satyam has got enormous fixed assets, human resource and technology assets. So, it is a very strong company,” Tarun Das, one of the six government-appointed directors, said. “The board has not yet discussed the issue of looking for a buyer... But I have to say, we have been approached by potential buyers.”
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Raju, who has since been arrested, triggered India’s biggest corporate governance scandal when he confessed on 7 January to having cooked Satyam’s books over several years. The confession threw the future of Satyam and its 52,000 employees into uncertainty.
Das said the board, which is due to meet on 22-23 January, hasn’t decided on the feelers from the suitors, whom he didn’t name. No decision has been made on whether it would be a stake divestiture or an outright sale. Prospective buyers are expected to wait until the company’s accounts are restated so clarity emerges on Satyam’s finances.
L&T chief A.M. Naik met corporate affairs minister Prem Chand Gupta and other senior officials in New Delhi and is believed to have discussed options, including the purchase of Satyam, in relation to its “strategic” investment in the software vendor. L&T has a stake of at least 4% in Satyam.
After his meeting, Naik told reporters that he was worried about his stake in Satyam, but did not disclose any other details. Asked if the company had informed the government about its intention to acquire Satyam, an L&T spokesperson from Mumbai responded with a “no comment”.
People close to the development, who spoke on condition of anonymity, said L&T was willing to explore all available options to safeguard its interest, but it was too early to reach any final decision because Satyam’s accounts are still being scrutinized.
Aegis BPO submitted an expression of interest for Satyam’s BPO business as the Essar Group is trying to expand its BPO unit, other people said. When contacted, the company spokesperson declined to comment. Aegis, which recently acquired Philippines’ back-office outsourcing group PeopleSupport Inc. in a deal worth $250 million (Rs1,225 crore) has completed the transaction and is looking at adding more companies, these people said. Aegis BPO has an annual revenue of about $500 million, and 15-odd Fortune 500 companies among its clients. Satyam BPO has 3,500-odd employees and international clients. Aegis BPO employs around 32,000 employees globally.
The government has disbanded Satyam’s board and asked the Serious Fraud Investigation Office to probe the fraud. The government-appointed board on 14 January said it would scout for candidates to head Satyam.
A senior Satyam official, who did not want to be named, said the new board has received at least 30 applications for the chief executive officer’s (CEO) post so far and the number was likely to increase. Names doing the rounds for the CEO slot include Vivek Paul, former head of Wipro Ltd’s global technology business who was until recently a partner with TPG Capital (formerly Texas Pacific Group) and Phaneesh Murthy, former head of global sales and marketing at Infosys Technologies Ltd, who is at present president and CEO of iGate Global Solutions Ltd.
Raman Roy, CEO of Quatrro BPO solutions (P) Ltd, Jaithirth ‘Jerry’ Rao, former chairman and CEO of MphasiS, and Venkatesh Roddam, former CEO of Satyam’s BPO division, are other prospective candidates.
Paul was considered a front runner and the buzz on his candidacy gained strength as he recently quit as partner at TPG Capital. He couldn’t be reached for comment. Murthy’s spokesperson said: “He has not been approached and we have no further comments to offer at this time.” Quattro’s Roy had the same comment to offer.
Roddam, who was associated with Satyam till three months back as CEO of its BPO subsidiary Nipuna, is also seen as a possible candidate because he knows the company and at the same time was not associated with the tainted management led by Raju.
Speculation about Roddam intensified after corporate affairs minister Gupta said that the government had suggested to the Satyam board to look within the company for CEO and CFO candidates. When reached for comment, Roddam said the speculation was just a “rumour.”
In other developments, Maytas Infra Ltd and Maytas Properties Ltd, controlled by Raju family members, denied any nexus between them and Satyam Computer. “There has been no receipt or utilization of any funds belonging to Satyam, by diversion or otherwise,” Maytas Infra said in a statement.
Harvard Business School professor G. Krishna Palepu, who had been an independent director of Satyam before quitting the board, resigned from the board of India’s second largest drug maker, Dr Reddy’s Laboratories Ltd.
Graphics by Sandeep Bhatnagar / Mint
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First Published: Wed, Jan 21 2009. 12 06 AM IST
More Topics: Satyam | Raju | Larsen and Toubro | Essar group | Aegis |