Hyderabad / Mumbai: Satyam Computer Services Ltd plans to hire a financial adviser to rescue the company, as the investigation into the nation’s biggest accounting fraud spreads to the US.
Meanwhile, Maytas Infra Ltd, promoted by the Raju family that also promoted Satyam, disclosed that almost one-fourth of its equity had been acquired by IFCI Ltd and Sicom Ltd, which bought pledged shares.
Satyam’s new six-member board will meet on Thursday and decide the banker, said Deepak Parekh. Parekh is one of the directors appointed by the government, which dissolved the company’s board in the wake of a revelation by the company’s founder B. Ramalinga Raju that he had over the years fudged the company’s accounts to the tune of at least Rs7,136 crore.
Satyam has been approached by potential buyers as it struggles to raise funds and stop clients from joining State Farm Mutual Automobile Insurance Co. of the US in cancelling contracts. Another director, Kiran Karnik, said the company had received “termination notices” from two clients. He declined further details.
Embattled: A file photo of former Satyam chairman B. Ramalinga Raju. PTI
Parekh added that Satyam had pledged some of the money owed to it by customers, or receivables (he had earlier estimated these at Rs1,700 crore), to secure emergency funds.
The US Securities and Exchange Commission is said to be investigating whether Satyam misled investors, following inquiries by India’s fraud office, the apex audit body, markets regulator and the local police.
Reuters reported on Wednesday that JPMorgan Chase and Co. and Goldman Sachs Group Inc. have been shortlisted to advise the Satyam board.
Even as the new Satyam board is seeking help from investment bankers to raise funds or suitable suitors for the company, legal challenges for the firm piled up in the US, with a total of 18 class action suits being filed till date.
In Hyderabad, the Andhra Pradesh crime investigation department (CID) approached a Hyderabad court seeking a three-day extension of police custody for Raju, his brother and former Satyam managing director B. Rama Raju and the firm’s former chief financial officer Srinivas Vadlamani.
The petition seeking custody extension is scheduled for hearing at the court on Thursday, the same day when the bail petitions for all the three will come up for hearing.
A. Siva Narayana, additional director general of police (CID), said the team had not had enough time to question the three because of their “medical examinations and treatments”. He added that the police had “seized important documents” from Ramalinga Raju’s house and wanted to question him on the basis of these.
The Union government has restrained senior executives of Satyam, who are being investigated, from selling shares of the company, India’s corporate affairs minister Prem Chand Gupta said.
Shares of Satyam rose 3.35% to Rs27.75 each on the Bombay Stock Exchange (BSE) on Wednesday. Shares of Maytas Infra fell 4.97% to Rs100.40 each. The BSE Sensex closed 3.5% down at 8,779.17 points.
Reuters and PTI contributed to the story. Govardhana Rangan is with Bloomberg.