BackSatyam board meeting underway; funding, new management top on agenda
Satyam board meeting underway; funding, new management top on agenda
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Bangalore: The government-appointed board of fraud-hit Satyam Computer Services meets on Wednesday to discuss appointing new executives, arrange funding and look at options to sell the software services company in the wake of India’s biggest corporate scandal.
“The priority is to spell out clear measures to boost the confidence of clients who are still watching the situation very nervously," said KK Mital, head of portfolio management services at Globe Capital.
Following are possible outcomes from the meeting.
POTENTIAL BIDDERS
At least four groups have said they are keen to acquire a controlling stake, attracted by Satyam’s 600-plus client base, which includes General Electric and Cisco.
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With a 12% stake in Satyam, engineer and builder Larsen & Toubro looks best placed to pounce, but India’s Spice Group, US-based outsourcer iGate Corp and the diversified Hinduja Group are also potential bidders.
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The Satyam Fiasco (Full Coverage)
NAMING EXECUTIVES
Corporate affairs minister PC Gupta said last week that Satyam was close to finalising a new leader, who would not take the chief executive title.
CNBC TV18, citing sources, said Homi R. Khusrokhan, a former managing director at Tata Chemicals , was frontrunner to head Satyam.
Incoming executives were likely to demand and get immunity from US lawsuits filed against Satyam in the wake of the fraud, according to Edelweiss analysts Viju George and Kunal Sangoi.
Satyam’s founder and former chairman Ramalinga Raju, and the company’s former chief financial officer and managing director are in jail pending trial after Raju disclosed last month that profits had been overstated for years.
LIQUIDITY
Satyam faces a liquidity crunch. It has paid January salaries to its about 50,000 staff, but liquidity concerns remain and the board may outline short-term funding options.
Analysts say the board may approve a plan to raise funds from state-run banks to meet short-term needs. The board pledged assets and received approvals from banks for additional funds.
The company is also arranging funds from banks and financial institutions, including state-run Life Insurance Corp.
The board appointed KPMG and Deloitte to restate the accounts and said in mid-January this would take 8-12 weeks.
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