Bailout among Govt options; new Satyam board takes charge | business | Hindustan Times
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Bailout among Govt options; new Satyam board takes charge

business Updated: Jan 13, 2009 11:04 IST
Rajesh Mahapatra
Rajesh Mahapatra
Hindustan Times
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The newly appointed board of Satyam Computer Services said on Monday finding a new CEO for the scam-hit company and restating its finances were its top priority. A possible merger with a rival company is also on the table.

On their first day at work, the three members of the board touched down in Hyderabad, held a quick review with company officials at Satyam’s headquarters and then addressed the media, in an attempt to talk up sentiments and restore confidence among employees and customers.

They picked their words carefully. They expressed optimism, but didn’t seek to undermine the challenges that lie ahead. They didn’t set a timeframe for putting Satyam back on track, but promised to give it their best shot.

All told, the best possible scenario for Satyam, experts said, would be one wherein the company eventually finds a buyer.

Deepak Parekh, who anchors the new board for now, said the option of merging the company with a rival firm “is always open”, but gave no details.

To find a buyer, Satyam has to first come clean with its finances, which were rigged by its disgraced former chairman, B. Ramalinga Raju, allegedly to the tune of at least Rs 7,100 crore.

Parekh said an independent auditor would be appointed within 48 hours to restate Satyam’s finances. This is also crucial to raising money to pay salaries of its 53,000 employees and meeting running expenses.

“There is a doubt (about financial numbers) in everyone’s mind, including ours,” he said. “Unless we get some authenticated numbers, no bank will give money.”

The board will also persuade Satyam’s clients to pay earlier for the services they have already received.

Former NASSCOM president Kiran Karnik, who is also on the new board, said the speed and decisiveness with which the government intervened had helped restore some confidence among Satyam’s stakeholders.

“It’s not completely gone. There is perception of some stability now,” Karnik said.

On Monday, Satyam’s shares rose 44 per cent to Rs 34.40, on hopes of a revival.

But most analysts maintained that it would be difficult to entirely undo the company’s slide. As Parekh said himself, getting a good chief executive officer isn’t going to be easy, because “very few want to leave their job and come to a company with such uncertainty”.

Moreover, employees and customers need continuous assurance, and all of that has to be done in a transparent manner, in public glare. Already, clients are looking to switch and employees are passing on resumes to headhunters. The board needs to be expanded, but few competent candidates are available in the market.

Meanwhile, Prime Minister Manmohan Singh held a meeting of senior government officials in Delhi to review the Satyam issue.

“It’s a hell of a job,” said Omkar Goswami, economist and an independent director on the board of Infosys Technologies. “The best thing that can happen to the company is that it finds a buyer. In the worst case, it faces liquidation, but I hope that doesn’t happen.”