Mumbai: Details and criteria for prospective bidders for a stake in India’s Satyam Computer Services could be finalised next week, a member of the fraud-hit firm’s government-appointed board said on Thursday.
Deepak Parekh had said on Wednesday that the board had sought approval from the Company Law Board to hold an open auction to find a buyer for the outsourcing firm and to increase its authorised share capital.
“Expressions of interest will be received from interested parties and there will be some criteria,” Parekh said on Thursday.
Also Read Satyam to cut costs, says Murty
“We will put some minimum financial amount, we will put some minimum equity holding... these are all open issues which are going to be finalised,” he said.
“Hopefully, we’ll have some news for you guys next week.”
Satyam has an authorised share capital of Rs1.6 billion ($32 million), comprising 800 million shares with a face value of Rs2 each, its 2007-08 annual report showed.
The company has sought to increase its equity to 1.2 billion shares, the Times of India newspaper said on Thursday.
The board had last month appointed Goldman Sachs and Indian firm Avendus to find strategic investors for the firm.
Potential suitors that have declared an interest include India’s top engineering and construction firm Larsen & Toubro , Spice Group and Hinduja Group.
Satyam has been struggling for survival since 7 January, when its founder Ramalinga Raju said profits had been falsified for years and $1 billion in cash and bank balances were missing.
With Satyam’s accounts still to be restated, prospective bidders would have to make “guesstimates” when bidding, Parekh said, but added that should not be too big a problem.
“They are in a business that other IT companies are in. Margins are more or less the same across industries,” he said.
While overheads and other costs could vary, industry players were aware of the ballpark margins to make a bid, he said.
Satyam’s assets were unpledged and the company also had huge receivables for work done in the last quarter, he said.
“We are realising each and every dollar that is being billed. And this is one of the important tasks that the board is looking at every week. Every week, twice a week, we look at receivables,” Parekh said
“I think normalcy has come back to Satyam.”
Separately, Satyam’s new CEO has told staff that all capital expenditure except for customer deliveries has been suspended and other costs cut as the company looks to conserve cash.
“The global economic condition and outlook remain dismal even as we begin our own financial recovery,” A.S. Murty wrote in emailed statement to staff.
“We must control costs and conserve cash.”
Business class travel and external training for employees have been suspended and most sales and support personnel will be located in low-cost countries, he said.
Murty, appointed as CEO earlier this month, said the company was also planning to terminate leases on several rented premises. He said the company was continuing to win fresh orders from new customers, but did not elaborate.