Hyderabad: Shares in Satyam Computer Services edged lower on Tuesday, after jumping 44% in the previous session, as a new government-appointed board got down to the business of trying to put the company back on track after a damaging fraud.
In the absence of a quick-fix in the wake of India’s biggest corporate scandal, there are hopes the government will help rescue Satyam, whose New York-listed shares plunged more than 84% on Monday in the first trading since the firm’s chairman resigned on Wednesday revealing a $1 billion fraud.
“The board members have come in, so the message is quite loud and clear that the government is serious about Satyam. But we have to give them time as they need to understand things first,” said Amabreesh Baliga, vice president at Karvy Stock Broking.
Satyam shares were down around 4% at Rs33 in early Mumbai trade.
Trade minster Kamal Nath has said the government was looking at all options to help Satyam.
A share index for the outsourcing sector gained nearly 4% on better-than-expected third-quarter earnings at second-ranked outsourcer Infosys Technologies
Infosys posted October-December net profit of Rs16.4 billion.
Satyam founder Ramalinga Raju resigned as chairman last week, saying profits had been falsified for years and about $1 billion, or 94 percent of the company’s cash and bank balances at end-September, did not exist.
Satyam, which counts Nestle and General Electric among its clients, has seen its market value plunge to below $500 million from more than $7 billion last summer.
The damaging fraud, dubbed “India’s Enron”, has cast doubt over whether Satyam can survive.
The new Satyam board met for the first time on Monday and said the company needed to restate its accounts and swiftly appoint senior people, but it would take time to get back on track. A first priority is to appoint an independent accountant.
The IT firm is struggling to pay its 53,000 workforce and needs immediate funding, though Deepak Parekh, a senior banker and one of the new board members, said that if reported receivables were correct the company should have adequate liquidity.
“We have to confirm these receivables are not overstated. And we have to confirm that the debt mentioned in the account is the actual debt and there is no more,” Parekh said.
He added that the option of merging Satyam, which faces US securities fraud class-action lawsuits, with another firm remained open.