L&T looking to buy Satyam 20-01-09
Engineering giant Larsen and Toubro, which acquired little over four per cent stake in Satyam in less than a month, is believed to have approached the government on Tuesday, evincing interest to buy the troubled IT company.
L&T Chief A M Naik on Tuesday met Corporate Affairs Minister Prem Chand Gupta, Secretary Anurag Goel and other officials here, and is believed to have discussed options related to its "strategic" investment in Satyam Computer Services.
After his meeting, Naik told reporters that he was worried over his stake in Satyam, but did not disclose any further details about the meeting.
Asked if the company had informed the government about its intention to acquire Satyam, whose founder Ramalinga Raju recently disclosed a Rs 7,800 crore fraud, an L&T spokesperson from Mumbai said, "No comments."
On the company's four per cent stake in Satyam and if L&T was looking for a strategic fit in the IT firm, the spokesperson said: "We have a portfolio investment through L&T Capital" but declined to elaborate further.
Sources close to the development said the company was willing to explore all available options to safeguard its interest, but it was a bit too early to reach any final decision as Satyam's accounts are being scrutinised for authenticity.
Satyam director Tarun Das said on Tuesday that the company has been approached for buyout by both international and Indian IT firms. There have been unconfirmed reports that the company might soon appoint investment bankers to advise on a merger or sale.
Earlier, another board member Deepak Parekh had said that option of merger was always open for the company.
TN Manoharan named new Satyam Chairman (18-01-09)
TN Manoharan, former Chief of the Institute of Chartered Accountants of India, has been named the Chairman of Satyam Computer Services Ltd. Manoharan was appointed the Chairman post a meeting of the six-member Satyam board on today.
Now the newly appointed Satyam board is hunting for a CFO to steer the company out of the ongoing troubles. CNBC-TV18 brings a report on the potential candidates for the post.
First on the list is V Balakrishnan, also known as Balki, is the former CFO of the global IT business at Wipro. According to industry circles, choice of the CFO will depend largely on who becomes the CEO. Since former Wipro Vice-Chairman Vivek Paul is seen as a favourite, the odds are in favour of Balki. He is presently the President and Chief Executive, Strategic Business Development at Quatrro. Incidentally, CMD of Quattro, Raman Roy, is also seen a CEO candidate of Satyam.
Featuring next in the list is Alok Mishra. He is currently the CFO of WNS. Previously, he was the group CFO at Mphasis. He left the company last year after the EDS takeover.
Also in the running is Ravi Ramu, currently the Finance Director of the real estate company Purvankara. Earlier, he took over as Group CFO after Alok Mishra at Mphasis. Industry watchers say, both Mishra and Ramu are known for their proximity to former Mphasis boss Jerry Rao, who is also in the reckoning for the post of CEO of Satyam.
Satyam board appoints new chairman (17-01-09)
Hyderabad, Jan 17: The new board of fraud-hit Satyam Computer Services on Saturday cleared the name of TN Manoharan, as the group’s new chairman. According to reports, Manoharan is a former President of ICAI and also a part of the present Satyam board.
Besides Manoharan, the three-member audit panel of Satyam includes C Achuthan and S B Mainak.
Amarchand & Mangaldas, Suresh A Shroff and Co have been appointed legal advisers to Satyam board. Where as Chartered accountants Brahmayya and Co of Chennai have been named internal auditors with immediate effect.
The decision in this regard was taken by the board members, who met to look for ways to raise new funds after both the government and the company rejected talks of a state rescue bid.
The Satyam board has decided to meet on weekly basis with each member taking turns to chair meeting.
However, the search for CEO and CFO still continues. The board is currently engaged in discussions with banks and financial institutions to address liquidity issue.
Discussions about the financial situation of the company in the backdrop of Ram Mynampati's SoS to the Corporate Affairs Ministry is expected to dominate the agenda, as also complaints from accounting regulator ICAI about the board's choice of auditor to restate Satyam's financials.
Ahead of the crucial board meeting Kiran Karnik, one of the six members of the newly constituted board of the crisis-ridden IT firm, said they may discuss the issue of funding as well as the appointment of CEO and CFO.
"The most important issue is funding.... I do think that if we can tie up some funding then it will give great comfort to the employees and to the customers...," Karnik told a TV channel.
Another board member Tarun Das said, “Our priority is to safeguard Satyam employees and customer interests.”
Satyam, India's No 4 software services exporter, has been battling for survival since chairman Ramalinga Raju suddenly resigned last week, revealing profits had been falsified for years and that USD 1 billion of cash on the books did not exist.
Media speculation of government aid has mounted as analysts questioned whether India's biggest corporate fraud had left the outsourcing firm with enough money to pay its 50,000 staff.
Meanwhile, NASSCOM has asked its members not to grab Satyam’s clients. Reportedly, several Satyam clients have got in touch with it.
But Economic Affairs Secretary Ashok Chawla told reporters on Thursday that the government was not looking at any direct support for the company or bailout "at this stage”.
Deepak Parekh, a senior banker and Satyam board member, said it had Rs 17 billion (USD 348 million) in receivables and may not need new funding if the money came in on time.
But Parekh added the board would consider bank loans if necessary.
However, reports suggested said that Satyam has not asked government for any financial aid. After the formation of the new Satyam board some banks have come forward and offered help to the troubled company. Earlier company’s new board had sought bank loans.
The government, which dissolved Satyam's previous board last week, appointed three new directors on Sunday and another three late on Thursday to help steer the company out of crisis.
Company Affairs Minister Prem Chand Gupta said the first impression from the new directors about the company is that its operations are sound and that "by and large" major customers were willing to remain with the firm.
"All these are steps in the right direction ... but they need to get a CEO and CFO in place first to run the company's daily operations. That should be a priority," said Gajendra Nagpal, chief executive of Unicon Financial.
The expanded Satyam board is yet to decide on the appointment of new CEO and CFO to bring back the company's operation to normalcy.
Although the board had appointed KPMG and Deloitte, ICAI had objected to the appointment of KPMG, since it is not the member of ICAI, which may also figure in the meeting.
Satyam's shares jumped as much as 40 percent on Friday to 28.40 rupees after the government doubled the size of the board, but the stock has still lost over 80 percent of its value since the massive fraud was revealed.
Many questions about the accounting scandal remain to be answered: how large is it, who benefited, and how did the perpetrators manage to conceal it for so long?
Even if Satyam escapes a near-term cash crunch, it faces a long road to recovery.
The new board will have to keep clients from defecting to Satyam's rivals, fend off a growing number of lawsuits over the scandal and try to rebuild investor trust.
Lazard Asset Management said in a notice to the stock exchange on Friday it had sold all of its 5.3 percent holding in Satyam through open market transactions on Thursday.
Satyam's clients include corporate giants such as Nestle and General Electric.
Satyam's 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.
CID begins interrogation of Rajus, Srinivas
Hyderabad (PTI): Andhra Pradesh CID, which took former Chairman of Satyam Computer B. Ramalinga Raju, his brother and ex-MD Rama Raju and former CFO V. Srinivas into its custody from the Chanchalguda Jail here has begun a thorough interrogation of the trio.
The Sixth Additional Chief Metropolitan Magistrate on Saturday granted permission to the CID, investigating the Satyam fraud, to take the company executives into custody for four days for further probe. The court allowed the probing agency to question the accused during day hours in the presence of their counsels.
Following the magistrate's direction on providing medical treatment to the three, a doctor visited Ramalinga Raju and checked his health at the prison before being taken into the police custody.
A five-member CID team, led by investigation officer N. Balaji Rao, took the custody of accused at 1145 am amidst tight security. All the three accused were taken to CID's office at A C Guards here for further interrogation into the Rs 7,800-crore financial fraud. The road passing by the Chanchalguda prison was packed with media vehicles camped outside the jail premises since 7.30 am.
The CID team is being assisted by auditors and chartered accountants in its investigations to retrieve information from the documents of laptops, hard disks, papers and also CDs seized during raids from their residences, sources said.
The Raju brothers were in judicial custody since January 10 after their arrest on January 9 while Srinivas was in judicial remand after his arrest on January 10. They were arrested following Ramalinga Raju's admission that he cooked company balance sheet for the past 7 years to the tune of Rs 7,800 crore.
Latest IT News - Bleak future: What next for Satyam? (08-01-09)
It’s being described as Enron part two. Satyam’s Rs 5,000-crore fraud has shaken corporate India, deeply denting India’s image in the global market and eroding the credibility of the IT industry which sells on good corporate governance.
Satyam has won several awards for the same and chairman Ramalinga Raju’s resignation has left that reputation in shambles.
Raju in his letter has admitted to fudging Satyam accounts for years. He inflated the balance sheet to show Rs 5040 crore which never existed and falsified the company's financial position and performance.
While Raju has said that he is ready to face the law, angry shereholders will surely want to see him suffer. Andhra Pradesh government has already ordered an investigation.
Company Affairs Minister P C Gupta assured action will be taken “against the accused”.
The Securities and Exchange Board of India, too, is calibrating action.
“This is an event of a defined magnitude and first of its kind. We have to learn a few lessons and figure out appropriate action,” said SEBI Chairman, PC Bhave.
Raju will have to face the Americans too, since Satyam is listed in the US
The question is not just how and when he will be prosecuted, but how India inc will repair the damage to its credibility.
“I am surprised, I am shocked. It’s a scandal, it’s a fraud. I don’t think anyone expected this,” said HDFC Chairman, Deepak Parekh.
Anand Mahindra of Mahindra and Mahindra said he was disturbed too. “I am one of the coaches in the upcoming Davos conference, the first thought on my mind was - you go in almost defensively because you aren’t projecting India shining".
The role of independent directors and auditors on Satyam is now under the scanner. The fear is this could be the first of many more skeletons inside corporate cupboards.
Satyam aims to continue business, protect staff (08-01-09)
HYDERABAD: Beleaguered Satyam on Thursday embarked on a major damage control exercise to pull itself from the brink, pushed to by founder Ramalinga Raju, saying arranging liquidity, assuaging fears of 53,000 employees and continuing the existing business would be its top priority.
Not ruling out initiating action against Raju or the auditors PwC for its complicity in fudging of accounts, the acting CEO Ram Mynampati said every possible action would be considered against Raju, who quit as chairman after making startling revelations on corporate India's biggest fraud entailing about Rs 7,800 crore.
Aimed at preventing panic exodus of highly talented workforce and top management, the interim CEO said that the December'08 salaries has been paid and the management would be focusing on arranging funds, which at the present juncture was a cause for concern.
"We do not rule out recommending action against Ramalinga. Many actions are possible for Satyam's future," he said, adding that the company was not aware of his whereabouts amid reports that the disgraced founder of the country's fourth largest IT company had left for the US yesterday before the news of his resignation and disclosure became public.
On the auditor PriceWaterhouseCoopers who have been authenticating year after year the company's accounts, which Raju admitted to fudging by inflating profits and creating fictitious assets, Mynampati said: "We have not verified what process PwC took to certify financial statement. We are not yet in touch with PwC."
In the middle of the press conference held by the interim management at Satyam's headquarters here, CFO Valdamani Srinivas, who is the financial custodian of the company, sent in his resignation but Mynampati said the Board would decide on it on January 10 and anyway he has to serve notice period.
Interim CEO Ram Mynampati declared that the liquidity and cash-in-hand were not encouraging, although the company managed to pay salaries for December month.
"Some outstanding payment to vendors is yet to be made... we are verifying the liquidity and balance sheet... we have to raise liquidity in near term and are confident of raising it," said Mynampati, while adding that his appointment was legal.
On the financial irregularities disclosed by former Satyam Chairman Ramalinga Raju, Mynampati said the team was not yet in a position to answer these issues, as it is still ascertaining disclosures made by Ramalinga Raju and trying to correct financial irregularities.
He said the regulatory bodies have already started their inspection and a team of market regulator SEBI was in Satyam talking to associates.
He said the company has started to actively reach out to customers globally and has been heartened to receive strong expressions of confidence and Readers react support from them.
"Our top 100 clients account for 80 per cent of Satyam's revenues," he said, adding that the top priority would be to clear pending contracts and continue with the business as usual.
The company founded by Ramalinga Raju in 1987 received its worst shock yesterday when he disclosed what has now become the country's biggest corporate fraud involving about Rs 7,800 crore.
Satyam is in the process of finding new investment banker as soon as possible to pursue strategic options left with the company and also expand the Board, which is now left with only three members including Mynampati.
Shareholders would be consulted on whatever options there are before the company, he said to a question on whether the company would explore merging or being taken over.
Satyam employees on the job, approach head hunters (08-01-09)
Employees of embattled outsourcing firm Satyam Computer Services Ltd are scrambling to send their resumes to job portals and other firms, but finding work may be difficult given tough market conditions.
As of September-end, Satyam, the country's fourth-biggest software exporter now bearing the dubious distinction of having perpetuated India's biggest corporate scandal in memory, said it had 52,865 employees in all.
On Wednesday, after chairman B Ramalinga Raju quit and said profits of the company had been inflated over the last several years, interim CEO Ram Mynampati, in a letter to employees, apologised for the "uncertainty and inconvenience" caused.
Warning employees of a "tumultuous quarter", Mynampati asked for their "involvement and ideas". But that did not appear to be a top priority for employees who seemed agitated as they entered the company's sprawling headquarters in the southern city of Hyderabad.
"How would you feel if you were in my position?" said one employee, reacting angrily to a reporter's question. Local newspapers said hundreds of employees had begun sending out their resumes to job portals and to other software firms.
But with a global slowdown putting the brakes on India's $50 billion IT industry, jobs will be difficult to come by.
Nasscom, the industry body, had earlier said it did not foresee job cuts, but lowered its 2008/09 job additions target to 200,000 from 270,000.
Wage increases were expected to be moderate for the next two years in the industry, Nasscom has said. "Today the market is not such that they will be absorbed easily," said Karthik Shekhar, general secretary of UNITES, an international outfit representing software professionals.
"We are in touch with the employees. They are waiting for more clarity from the management, but they are sending feelers." Satyam is due to hold a news conference at 1130 GMT. Satyam's rivals, who ware expected to pitch for its clients including General Electric, Nestle and Qantas, may be able to absorb some employees.
"If the employees go with the business, I reckon 55-60 percent of the employees will find work," said Mohandas Pai, director of human resources at larger rival Infosys Technologies. "Clients are likely to retain project managers and developers, so, in a worst-case scenario, about 40 percent of employees are at risk," he said, but declined to say if Infosys would consider pitching for Satyam clients or hiring its employees.
A project manager at an international IT services firm said he had received about four or five frantic calls from Satyam project managers, asking for jobs.
Others are choosing to pursue different options: a developer who has been with Satyam for seven years said he had been planning on taking a break to do a Ph.D for some time. This is a good time to do it, he said.
Satyam may axe 10,000 employees next month: Headhunters(08-01-09)
With a big questions mark on its cash position and a minimum outgo on salary estimated at Rs 500 crore a month, Satyam may lay off over 10000 employees .It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10 per cent due to the surplus of about 20,000 people in the jobs market,"Headhunters India CEO Kris Lakshmikanth said.
Satyam interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December.
Lakshmikanth said till Tuesday evening there were about 7,800 people from Satyam who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000.
The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment.
Further, possibility of a takeover too looks distant as the accounting fraud done by the company would make it difficult for any firm to evaluate its correct market value, which is compounding the worries of the employees. IT-BPO union Unites Professionals general secretary Karthik Shekhar said, "In case of any lay off at Satyam, we may take legal action."
"We have received over 7,000 hits since the news break. Yesterday, in one hour we have seen over 800 hits (no of people visiting the site) from Hyderabad. People have been enquiries on how the union can help them," Shekhar added.
Satyam Scrambles to Assess Finances As CFO Resigns (08-01-09)
MUMBAI -- Satyam Computer Services Ltd.'s already dire status appeared even more desperate Thursday as the company revealed it was strapped for cash and scrambled to assess its finances and ensure continuity of operations even as its chief financial officer resigned.
The salvage task was complicated by the revelation that the company's books were off-site and in the possession of CFO Srinivas Vadlamani who hadn't come to the office in recent days, interim chief executive Ram Mynampati told a news conference in the southern Indian city of Hyderabad.
Mr. Mynampati said Mr. Vadlamani offered to resign Thursday, a day after ....
Raju, directors could face 10-yr jail (08-01-09)
Although Ramalinga Raju has gone out of his way to make out that none of the other board members and senior executives of Satyam were aware of the fraud, the law of the land is expected to take its course and Raju and any other director/executive found to be involved in the scam are liable to be prosecuted on charges punishable with imprisonment up to 10 years.
Some of the more serious penalties that Raju and others are likely to face under various laws are:
* Section 23 of the securities contract regulation Act 1956, that imposes a penalty of imprisonment up to 10 years and fine up to Rs 25 crore. The adjudicating officer of Sebi is empowered to award such punishment to directors and management executives for violating the listing agreement by making false and inaccurate disclosures in the company's quarterly and annual results. The penalty is severe because of the enormous damage that the investors are liable to suffer on account of false disclosures.
* Section 24 of the Sebi Act 1992 that imposes a penalty of imprisonment up to one year for infringement of any provisions of the law or rules and regulations, including fraudulent and unfair trade practices (FUTP).
* Section 477-A of the Indian Penal Code, that imposes a penalty of imprisonment up to seven years. The police may on their own or on the recommendation of the serious fraud investigation office (SFIO) invoke this IPC provision meant to punish those found to have falsified accounts "willfully and with intent to defraud."
* Section 211 of the Companies Act that imposes a penalty of imprisonment up to six months. The company law board is empowered to punish those who are found to have "willfully" failed to comply with the requirements of law relating to the annual financial statement.
Significantly, the job of the prosecuting agencies has been made easier by the damaging admissions made by Raju in his resignation letter to the board. Having taken responsibility for cooking the Satyam books to the tune of Rs 7,136 crore, it is just as well that Raju said, "I am now prepared to subject myself to the laws of the land and face the consequences thereof."
For all his exertions in his resignation letter to save the skin of other directors, they have reason to worry because the Companies Act does not only hold the board to account for any such failure of due diligence., it also makes no distinction in the liability of executive and non-executive or independent directors. The onus is on them to prove the action they had taken to discharge their fiduciary responsibility.