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Satyam board extends meet, Sebi questions Raju

Satyam board extends meet, Sebi questions Raju
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First Published: Wed, Feb 04 2009. 05 41 PM IST

Updated: Wed, Feb 04 2009. 05 41 PM IST
Bangalore: The new board of Satyam Computer Services said a meeting to consider revival options for the fraud-scarred outsourcing firm would run over to Thursday, as the market regulator began questioning its jailed founder.
The government-appointed board began a meeting on Wednesday and is expected to name a new head for the outsourcer to boost the confidence of its clients and staff, as well as consider options for raising funds for paying staff wages.
Satyam will issue a statement on Thursday after the extended board meeting ends in Hyderabad, a spokeswoman said.
Also Read The Satyam Fiasco (Full Coverage)
In a note to staff on Monday, Satyam said an announcement relating to “critical leadership appointments” was expected to be made at the board meeting.
Separately, a team from the Securities and Exchange Board of India (Sebi) began questioning Satyam founder Ramalinga Raju and his brother in a jail in Hyderabad, and Raju’s lawyer, Bharat Kumar, said his clients were cooperating with the regulator.
The Supreme Court has given Sebi permission to question Raju and Rama Raju, Satyam’s former managing director, for three days from Wednesday.
Satyam, a provider of software and back-office outsourcing services, has been fighting for survival since Ramalinga Raju quit as chairman on 7 January , disclosing profits had been overstated for years and that about $1 billion of cash and bank balances on the company’s books did not exist.
India’s biggest corporate scandal has added to the grim outlook for the once-booming outsourcing sector, which has already been hit by the global economic downturn and the financial turmoil.
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Exports of software and services will grow by 16-17 percent to about $47 billion in the year ending March, sharply lower than an earlier forecast and compared to 29% growth a year earlier, an industry body said on Wednesday.
New Head
Analysts said Satyam’s new head would work closely with the board to try to revive the company and to restore the confidence of its more than 600 clients and about 50,000 employees.
“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.
Indian media have named Homi R. Khusrokhan, a former managing director of Tata Chemicals, as the frontrunner to be appointed as the chief executive officer of Satyam.
The board is also expected to discuss options for raising funds to meet short-term capital requirements and interest from potential bidders for Satyam.
“Satyam is making progress, but there is still a long way to go before it stands on its feet again,” Trindade said.
Shares in Satyam, which counts General Electric, Qantas Airways and Cisco Systems among its clients, ended down 6.8% at Rs50.10 in a Mumbai market that rose 0.6%.
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First Published: Wed, Feb 04 2009. 05 41 PM IST
More Topics: Satyam | Board meeting | Funding | L&T | Spice Group |