Race for Satyam gets hotter, BK Modi in fray

Race for Satyam gets hotter, BK Modi in fray
Comment E-mail Print Share
First Published: Fri, Jan 30 2009. 01 08 AM IST

No aid: Ashwani Kumar, Union minister of state for industry, says no financial bailout is needed as the board is capable of raising funds. Harikrishna Katragadda / Mint
No aid: Ashwani Kumar, Union minister of state for industry, says no financial bailout is needed as the board is capable of raising funds. Harikrishna Katragadda / Mint
Updated: Fri, Jan 30 2009. 01 08 AM IST
Hyderabad: The Spice Group promoted by B.K. Modi said on Thursday it wanted to buy a stake in Satyam Computer Services Ltd, making the first overt offer for the software company battling for survival after founder B. Ramalinga Raju confessed to a Rs7,136 crore accounting fraud.
No aid: Ashwani Kumar, Union minister of state for industry, says no financial bailout is needed as the board is capable of raising funds. Harikrishna Katragadda / Mint
In an interview with NDTV Profit, a business news channel, Modi didn’t specify the size of the stake the group wanted to acquire. But the channel cited people it didn’t identify as saying that Spice Group wanted to buy 51% of Satyam.
“Our board met today and we felt that this is the right time to go with it. It is in line with our strategy,” Modi told the channel.
Spice Group wants to acquire Satyam through a company called Spice Innovation, the broadcaster said, adding that a formal bid would be made soon.
Earlier on Thursday, a director on Satyam’s government-appointed board said as many as seven investors had shown interest in bidding for Satyam, as efforts to find a new chief executive officer (CEO) for the scam-tainted software maker gathered pace.
Goldman Sachs and Avendus Capital, which were named this week to identify strategic investors, are trying to find the best match for the Hyderabad-based firm, said Tarun Das, chief mentor of the business lobby, the Confederation of Indian Industry.
The search could take at least six weeks, said Das, one of the six directors on the Satyam board that the government named this month. On Wednesday, former Tata Chemicals Ltd managing director Homi Khusrokhan said he had been invited to join the board as its seventh director.
Satyam is at the heart of India’s biggest corporate governance scandal after founder-chairman Raju confessed on 7 January that he had misstated the company’s accounts over several years.
The government disbanded Satyam’s board and ordered a probe by the Serious Fraud Investigation Office into the accounting scam.
Raju, his brother and managing director B. Rama Raju and chief financial officer (CFO) Srinivas Vadlamani have been arrested.
The Company Law Board, the top legal and regulatory body governing companies in India, meanwhile, issued an order granting legal immunity to the board of Satyam and those appointed by the board from future legal implications arising from the fraud at the company, CNBC-TV18 business news channel reported.
The order is expected to clear the way for the appointment of a new CEO and CFO for Satyam; the appointments have been delayed partly because of concerns over the legal responsibility a new management team may have to assume for the scam.
At least 19 class action suits have been filed in the US in the wake of Raju’s confession.
Satyam spokesman T. Hari said the new CEO and CFO were expected to be named before the end of this week.
The government ruled out a financial bailout of Satyam. “The appointed board has all the ability to raise funds...there would be no financial bailout of the company,” minister of state for industry Ashwani Kumar told reporters. The government would ensure that “there would be no let-up in prosecuting those guilty of the fraud”, he said.
The CEO of PricewaterhouseCoopers, Samuel DiPiazza, met corporate affairs minister Prem Chand Gupta in New Delhi amid a probe into the role played by its Indian unit in the scam.
PTI contributed to this story.
Comment E-mail Print Share
First Published: Fri, Jan 30 2009. 01 08 AM IST