Satyam won’t be carved up and sold, says board

Satyam won’t be carved up and sold, says board
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First Published: Wed, Jan 28 2009. 12 02 AM IST

 Bleak future: Price Waterhouse auditors Srinivas Talluri (left) and S. Gopalakrishnan, who had signed off on the Satyam accounts, were detained and taken to prison in Hyderabad on 24 January. Mahesh
Bleak future: Price Waterhouse auditors Srinivas Talluri (left) and S. Gopalakrishnan, who had signed off on the Satyam accounts, were detained and taken to prison in Hyderabad on 24 January. Mahesh
Updated: Wed, Jan 28 2009. 12 02 AM IST
Hyderabad: The six directors appointed by the government to steer the beleaguered Satyam Computer Services Ltd have appointed two investment bankers to identify strategic investors and potential buyers for the technology outsourcing firm, and also brought in a management adviser to help revive the firm. A board member also said that while there are several suitors, the board will not entertain investors who want only slices of Satyam—a signal that the company will be kept as one entity rather than broken into pieces.
Bleak future: Price Waterhouse auditors Srinivas Talluri (left) and S. Gopalakrishnan, who had signed off on the Satyam accounts, were detained and taken to prison in Hyderabad on 24 January. Mahesh Kumar A / AP
Meanwhile, global auditing firm PricewaterhouseCoopers suspended S. Gopalakrishnan and Srinivas Talluri, the two auditors of the firm who had cleared the accounts of Satyam Computer from 2000.
Goldman Sachs and Avendus have been appointed investment bankers and the Boston Consulting Group (BCG) management advisers. A Satyam release said a dedicated three-member senior team of BCG is expected to work closely during the revival process.
New board member T.N. Manoharan, who chaired the Tuesday meeting, said the board had received several proposals from companies and private equity firms.
“Some have shown interest in evaluating Satyam as an integrated entity, while others have expressed interest in portions of Satyam’s business.” Making it clear that “a sale of ‘parts’ of Satyam at this stage would be contrary to the mandate given by the government,” Manoharan said, “it is therefore not an option that is being evaluated currently.”
“An important point to note is that they will not be charging Satyam any fees for their services and this reflects on their commitment to the task on hand,” said Housing Development Finance Corp.Ltd (HDFC) chairman Deepak Parekh, a member of the board.
Responding to the move by engineering firm Larsen and Toubro Ltd (L&T) to acquire large dollops of Satyam shares in the open market, Manoharan said, “It should not be taken as an indication of support by the government-nominated board for change of control of Satyam at this stage.”
Kiran Karnik, another board member on Satyam and former president of National Association of Software and Services Companies, a premier lobbying body of the Indian software industry, said the board has been talking to the company’s customers, who continue to engage with the company.
The board also said that it had concluded most of the discussions relating to the financing requirements of the company. These funds will help tide over the immediate operating expenses, even as it reassured employees that salaries for January would be paid.
Meanwhile, television channel CNBC TV-18 said that the board has sought a waiver from India’s capital markets regulator Securities and Exchange Board of India (Sebi) from the stipulation under Indian takeover laws that an acquirer has to make an open offer to all shareholders at a rate not less than the 26-week average price.
The move comes after L&T indicated it could raise its holding in Satyam to some 15%, from the existing 12%.
CNBC added the regulator is expected to decide in the next few days. Mint could not independently confirm this. While the six-month average price of Satyam stock works out to Rs275, the average price since 17 December is Rs98 and Rs30 since 7 January.
When contacted by Mint, a Satyam spokeswoman said, “We do not have information on this.”
Meanwhile, S.B. Mainak, a nominee of Life Insurance Corp. of India Ltd (LIC), informed employees of the beleaguered software services firm that the company may be able to borrow from LIC to overcome a funds crunch. The insurance company owns less than 5% of Satyam.
The income-tax (I-T) department has joined other agencies— such as the crime investigation department of Andhra Pradesh, Sebi, Registrar of Companies and Serious Frauds Investigation Office (SFIO)—to unravel what happened at Satyam.
The I-T department will undertake an independent probe into the accounting fraud at Satyam with focus on tax deduced at source and benami deals. “We are conducting an independent probe into the Satyam case,” N.B. Singh, chairman of Central Board of Direct Taxes, or CBDT, told reporters on Tuesday.
While the petition filed by SFIO to question the accused is yet to come up for hearing at the metropolitan magistrate court in Hyderabad, the petition filed by Sebi was rejected. Sebi had sought a day to question the accused—including Satyam founder-chairman B. Ramalinga Raju—on charges that include insider trading in Satyam shares.
Responding to this, Union minister for corporate affairs Prem Chand Gupta told reporters in New Delhi that the government would appeal against the decision of the court. Stating that there were certain technical issues involved in Sebi’s petition, the minister said the capital markets regulator would appeal again.
On the appointment of chief executive officer (CEO) and chief financial officer (CFO) of the company, the minister said, “The board is absolutely competent and will take a view on that.”
A metropolitan magistrate court in Hyderabad, which heard arguments of counsels for accused (B. Ramalinga Raju, B. Rama Raju and Srinivas Vadlamani) seeking bail to their clients and the counter-arguments of public prosecutor against granting the same, has said that it would deliver its order on Wednesday.
K. Raghu and PTI contributed to this story.
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First Published: Wed, Jan 28 2009. 12 02 AM IST