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Satyam board in talks for funding

Satyam board in talks for funding
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First Published: Sun, Jan 18 2009. 12 22 PM IST
Updated: Sun, Jan 18 2009. 12 22 PM IST
Hyderabad: The new board of embattled Satyam Computer Services said on Saturday it was in talks with banks and financial institutions over funding, and was doing all it could to ensure staff were paid on time.
The government-appointed board, which met on Saturday, said it was still looking for a new chief executive and chief financial officer for the outsourcing firm at the centre of India’s biggest corporate scandal. But it said it had received expressions of support from customers.
Satyam, India’s No. 4 software services exporter, has been battling for survival since Ramalinga Raju resigned as chairman earlier this month, revealing profits had been falsified for years and that $1 billion of cash on the books did not exist.
“Addressing the issue of liquidity, the board confirmed that it is engaged in discussions with banks and financial institutions,” Satyam said in a statement, adding all efforts were being made to ensure salaries were paid on time.
Payments coming into the company were better.
“The last week had seen definite improvements on ‘collections´ and this is expected to be a major priority for the business leaders and the board, in the ensuing weeks.”
Scheduling of vendor payments was also discussed at the board meeting.
Satyam founder Raju, his brother, who was the managing director of the company, and the former chief financial officer have been charged and are being held in a jail.
On Saturday, a Hyderabad court ordered the three to be moved into police custody for four days from Sunday for further questioning, V S K Kaumudi, inspector general of police in Hyderabad, told Reuters.
New Board
The government, which dissolved Satyam’s previous board, appointed three new directors last Sunday and another three on Thursday to help steer the company out of crisis.
Media speculation of government aid had mounted as analysts questioned if Satyam had enough money to pay its 50,000 staff.
But Economic Affairs Secretary Ashok Chawla said on Thursday the government was not looking at any direct support for the company or bailout “at this stage.”
Deepak Parekh, a senior banker and new Satyam board member, said it had $350 million in receivables and may not need new funding if the money came in on time, adding that the firm would consider bank loans if necessary.
The Business Standard newspaper on Saturday cited Company Affairs Minister Prem Chand Gupta as saying Satyam’s net receivables would be Rs11 billion, as it had foreign exchange losses of Rs2 billion and debt of 2 billion each from Citibank and BNP Paribas.
Key customers
Satyam, which has corporate giants such as Nestle and General Electric as clients, said board members had contacted key customers and had not heard of services being affected, reiterating earlier statements from the company.
“The board expressed that they have been in conversation with customers, who in turn have expressed their continued support, which is a very encouraging sign,” the statement said.
The board last week appointed KPMG and Deloitte to help it restate accounts, a process Parekh has said would take 8-12 weeks. Saturday’s statement did not mention the company’s December quarter results, which normally would be due by 31 January.
The board said it was still looking for a chief executive officer and chief financial officer for the firm, and said it would meet weekly until the appointments were made.
The board appointed an internal auditor, an audit committee of three board members, and legal advisers for the board.
Satyam’s shares climbed 27.1 percent to Rs25.80 on Friday, but the stock is still down more than 85% since the fraud was revealed.
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First Published: Sun, Jan 18 2009. 12 22 PM IST
More Topics: Satyam | Funding | Board | Directors | Deepak Parekh |