Hyderabad: Fraud-hit software maker Satyam Computer Services Ltd’s government-appointed board extended its meeting by a day as it considers options to rescue the company and name a new chief executive officer (CEO) and chief financial officer (CFO) to steer it through the crisis.
Investigating officers of the stock market regulator, the Securities and Exchange Board of India (Sebi), meanwhile, started questioning Satyam founder B. Ramalinga Raju and his brother and former managing director B. Rama Raju in a Hyderabad prison.
Critical meet: (L to R) C.K. Achuthan, Deepak Parikh and Kiran Karnik. The board is expected to announce a new CEO and CFO. Bharath Sai / Mint
It was the first time that Sebi officials were able to meet the pair since the founder on 7 January confessed to doctoring the company’s accounts for years to the tune of Rs7,136 crore, triggering India’s biggest corporate governance scandal. The brothers have been detained since 9 January.
Satyam’s six-member board, which will conclude the meeting on Thursday, is expected to announce a new CEO and finance head. Satyam will issue a statement on Thursday after the extended board meeting ends, a company spokeswoman said.
In a note to staff on Monday, Satyam said an announcement relating to “critical leadership appointments” was expected at the board meeting.
Former Tata Chemicals Ltd chairman Homi Khusrokhan and former finance director of the Murugappa Group, Partho S. Dutta, front runners for the posts of CEO and CFO, respectively, have met various business unit heads and the human resources department at Satyam’s corporate headquarters in Hyderabad, business news channel CNBC-TV18 reported. This could not be independently verified by Mint.
Analysts said Satyam’s new head would work closely with the board to try and revive the company and to restore the confidence of its more than 600 clients and about 50,000 employees, a number that prosecutors have said had been inflated. “The priority for the new Satyam head will be to maintain cash flow in terms of the clients that they have. One has to ensure that services continue to be provided to the clients,” said Kevin Trindade, analyst at KR Choksey Shares and Securities.
The board is also expected to discuss options to raise funds to meet short-term capital requirements and interest from potential bidders.
“Satyam is making progress, but there is still a long way to go before it stands on its feet again,” Trindade said.
In response to a petition from Sebi, the Supreme Court permitted the market regulator to question the Raju brothers for three days starting on Wednesday. Sebi approached the apex court after it failed to get permission to interrogate them from lower courts, including the Andhra Pradesh High Court.
Raju’s lawyer, Bharat Kumar, said on Wednesday that it was unfair to interrogate the brothers in the confinement in jail and in the absence of their lawyers. Lawyers will approach the Supreme Court with these objections, he said.
Satyam shares lost 6.8% on Wednesday to close at Rs50.10 on the Bombay Stock Exchange, whose benchmark Sensex index gained 0.6 %.
email@example.com Sumeet Chatterjee is with Reuters.