Suitors for troubled Satyam Computer may keep away, as the government on Sunday clarified that selling the company was not the mandate of the newly appointed Board of the IT major.
“That is not the mandate of the (three-member) board,” Corporate Affairs Minister Prem Chand Gupta told reporters today when asked whether there was a possibility of a buyout of the beleaguered IT major whose board has been superseded by the government.
Satyam Computer earlier decided to appoint investment banker DSP Merrill Lynch to look for a strategic partner and explore possibilities of merger and acquisition. The investment company, however, backed out of the deal after the disclosure of fraud by Satyam’s founder Ramalinga Raju. Read more
The newly appointed board by the Government after dissolving of the previous Satyam Board is all set to meet on Monday, 12th January 2009 aand discuss the course of future action in regards to Satyam.
The government on Sunday nominated noted banker Deepak Parekh, IT expert Kiran Karnik and former SEBI member C Achuthan to Satyam
Computer’s Board, which will meet tomorrow at Hyderabad to chart out the future course of action.
“We will meet tomorrow at Hyderabad,” HDFC Chairman Deepak Parekh told reporters.
Parekh along with Karnik, former Nasscom president, and Achutan was nominated to the board by the government in order to stabilise the fraud-devastated Satyam Computer Services.
Asked whether he would head the board, Parekh said, “Decision to this effect will be taken tomorrow when the board meets for the first time.”
The newly appointed board members would be reaching Hyderabad tonight, he added.
The Government is leaving no stone unturned and is keen on finding out whether there remain any hidden ghosts in the Satyam files. In an update today, the CID has raided the Satyam premises.
The Andhra Pradesh CID on Sunday conducted raids on offices of Satyam Computer Services and residences of directors of the company’s disbanded Board here.
“As part of investigations, the raid have started today morning and are continuing,” a CB-CID official said.
Moving quickly to stabilise the fraud-devastated Satyam Computer, the government on Sunday nominated noted banker Deepak Parekh, IT expert Kiran Karnik and former SEBI member C Achutan to the IT company’s Board.
Deepak Parekh, chairman of HDFC Bank, said: “Govt and various industries from Bombay has requested me to be on Satyam Board because it’s a national meat. There are hundred steps that need to be taken but the first priority is to increase the number of the board from 3 members, restate the balance sheets and create a reassurance among clients, investors and employees of Satyam.”
The three-member board would meet within 24 hours to decide on the remaining up to seven members along with the Chairman, Corporate Affairs Minister Prem Chand Gupta told reporters in a hurriedly called press conference two days after disbanding the truncated Satyam Board.
Despite business analysts going all out to question Satyam’s financial credibility, with most of them saying that Satyam does not have money to pay of even January’s current salary to its employees. Satyam has ‘‘ good revenue” , so says its HR.
In response to a flood of queries by employees worried about their January salary, the Satyam’s HR is sending a positive response: ‘‘ Company has good revenue and impressive client and long standing engagement” .
It is possibly for such reasons that employees are now seeking a professional ‘‘ external and credible” management . While they have been flooded with mails over the last two days from team leads and senior management to keep their morale high, they say that the presence of the old set of management is not able to restore their confidence in the firm and its future. Read more
Satyam has welcomed the Government move to dissolve the Satyam Board and appoint its own Board members to get Satyam back on track and restore investor confidence. As a result of the government’s quick action plan, the high-profile meeting which was to be conducted by the older management comprising of interim CEO Ram
Mynampati and three independent directors stands cancelled.
“We welcome this decision which will ensure uninterrupted operations and restore the confidence of all employees, customers and shareholders across the globe,” Satyam, in a statement said.
The new board is expected to meet within seven days of its constitution.
The Satyam fraud may have come into the limelight after Ramalinga Raju’s disclosure of alarming facts regarding the cooking up of accounting books to an upward inflated amount of Rs. 7000 crores. The Satyam scam has become transparent in public domain now itself, but it would come to your surprise, that an analyst had figured it out way back in October 2008.
At the analyst conference call, Kawaljeet Saluja from Kotak Securities had enquired the rationale for the $550 million lying idle in a current account. A deposit in a current account doesn’t attract any interest.
The analyst interaction, organised after Satyam’s second quarter earnings of 2008-09, was addressed by chairman Ramalinga Raju, CFO Srinivas Vadlamani and Ram Mynampati, member of the board, who is now the acting CEO.
Citing no specific reason for parking the funds in the current account, Vadlamani said that the money was restricted to the second quarter only and thereafter the amount goes to the deposit account. Unconvinced by the answer, Saluja probed further.
The Indian ministry has taken swift action and has received praise from all quarters for it’s decision to disband the Satyam Board. The board meeting scheduled for 10th January 2009, also stands cancelled.
The Ministry of Corporate Affairs dismissed the board, including the company’s interim head, late Friday night, hours after Satyam’s founder and former chairman, B. Ramalinga Raju, was arrested for doctoring the company’s accounts by $1 billion.
Raju confessed to filling the company’s balance sheets with “fictitious” assets and “nonexistent” cash in an extraordinary letter to the company’s board on Wednesday.
Raju was arrested along with his brother, former managing director B. Rama Raju, in the southern city of Hyderabad, according to S.S. Yadav, the top police official in Andhra Pradesh state, where the company is headquartered.
Raju, who has diabetes and hypertension, saw a doctor at 3 a.m. after complaining of discomfort and chest pain, said his lawyer, S. Bharat Kumar.
A local magistrate on Saturday ordered the brothers held in judicial custody until Jan. 23 while the investigation continues, said Kumar.
The brothers resigned from the company Wednesday.
The Satyam offices were largely empty because it was a weekend, “but otherwise, the business side continues,” she said.
“We are continuing our business as normal,” Hari Thalapalli, Satyam’s director of global marketing and communications, told PTI. “However, there is a movement of uncertainty due to suspension of the board.”
In the official statement, Gupta expressed concern that the scandal would bleed beyond Satyam’s offices and into the rest of the outsourcing industry, which has been a catalyst of India’s economic growth in recent years. Satyam Computer Services Ltd. employs 53,000 people - among the 2 million Indians working in the country’s booming high-tech industry, which last year brought in an estimated $40 billion. Satyam’s clients include a slew of Fortune 500 companies including Nestle, General Electric and Ford Motors.
In a statement announcing the disbanding of the board, Minister for Corporate Affairs Prem Chand Gupta condemned “the greed and misdeeds of a few persons who were at the helm of affairs of the company.”
“The current board of Satyam has failed to do what they were supposed to do,” he said.
The statement said the central government will appoint 10 people “to function as directors of the company,” but no decisions have yet been made.
Archana Uttapa, a company spokeswoman, said Satyam had not heard from authorities about who would be named to the new board or when the announcement would take place. A board meeting previously scheduled for Saturday was cancelled, she said.
“Satyam case is an aberration,” he said. “The credibility of Indian corporate sector in general, and IT sector in particular, should not be allowed to suffer because of this.”
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B Ramalinga Raju, the founder-chairman of Satyam Computer, and his brother Rama Raju, who were arrested by the Andhra Pradesh police on Friday night, were questioned by the police throughout the night.
Police questioned the two for more than three hours, Raju’s lawyer Bharat Kumar said on Saturday morning. The Crime branch of Andhra Pradesh booked the two after questioning under charges of fraud, forgery.
Bharat Kumar said that the two have been booked under Section 120 b (criminal conspiracy), 420 (cheating), 406, 467 and 427 (criminal breach of trust, forgery and using forged documents as genuine).
Raju surrendered to the police on Friday night and was arrested for criminal fraud.
The interim CEO of Satyam Ram Mynampati no longer stands as the CEO after the Government disbanding the Satyam Board. While it seems very unlikely that Ramalinga Raju was the only one to cook up the accounting books of Satyam and none of the Board members had any idea about the multicrore scam under the Satyam bed, Ram Mynampati surely has many questions to answer.
Market regulator SEBI’s probe team quizzed Satyam’s dislodged interim CEO Ram Mynampati for the third straight day in connection with
the Rs 7,800 crore fraud disclosed by company founder Ramalinga Raju on Saturday.
The three-member SEBI team, led by its southern region general manager A Sunil Kumar, has been interrogating Mynampati and other officials to find out facts related to the finances of the company, sources said.
“Ram has been responding to the SEBI questions and providing whatever information was available,” a spokesman for Ram said. Ram, however, remained incommunicado after Thursday’s press conference and the company officials said it was “impossible” to contact him by any means.
Sources said the SEBI team seized certain vital documents from the company’s corporate office here as part of its probe. It is learnt that the SEBI team would continue the probe for the next few days.
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