Hyderabad: Fraud-hit Satyam Computer Services Ltd may lose one of the three confirmed bidders for a majority stake in the firm.
Spice group chairman B.K. Modi said his company would withdraw from the bidding contest to protest an alleged lack of transparency in the sale process. “We think there is no transparency on various critical issues and we will walk out of the bidding process if the absence of transparency continues,” Modi said in a phone interview from Singapore.
Modi, who is flying back to India on Wednesday night, said Spice group’s board would meet later and decide whether to proceed.
Modi said on Monday he had been informed by Satyam’s government-appointed board that Spice group was shortlisted for the final phase of the competitive bidding process. The deadline for bidders to submit detailed expressions of interest (EoI) for a 51% stake in the firm passed on 20 March.
Larsen and Toubro Ltd, India’s largest engineering firm, and Tech Mahindra Ltd, an arm of the Mahindra group, which confirmed they had submitted detailed EoIs, declined to say whether they had been shortlisted, citing a commitment to the Satyam board not to discuss the bidding process with the media until its completion. Hinduja Group opted out of the race at the last minute. US-based information technology firm iGATE Corp. on Friday announced its decision to withdraw after expressing concern over desertions by Satyam clients and liabilities arising from legal challenges Satyam is facing in the US.
Satyam is at the centre of India’s biggest corporate fraud investigation after founder B. Ramalinga Raju confessed on 7 January to having doctored its accounts to the tune of Rs7,136 crore over a period of several years. Modi declined to say what parts of the bidding process he found to be non-transparent, citing non-disclosure conditions. Reuters quoted Modi as saying “We don’t know who the other bidders are. There is no understanding of (a) clear-cut auction process.”
Spice is belived to be unhappy that the Satyam board is not sharing with the bidders information on the company’s financial condition, the impact of the accounting fraud on it and the details of potential liabilities following class action suits brought in the US.
Asked about the transparency issue, Satyam board chairman Kiran Karnik said: “I have no comments to offer.”
Preethi Malhotra, director of Spice Innovation Technologies Ltd (SIT), a special purpose vehicle floated by Spice group for Satyam’s acquisition, said: “We are only requesting the Satyam board to adhere to the directives of the Company Law Board on maintaining transparency in the bid process.”
Spice group did receive an initial response from Satyam’s board. “It is not satisfactory and we sought assurance from Satyam board on transparency on several issues,” Malhotra said.