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Bids for disgraced Satyam to be opened tomorrow

business Updated: Apr 12, 2009 09:31 IST
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Satyam Computer Services could have a new owner on Monday when bids are opened for the disgraced outsourcing giant, officials said.

Sale of the firm at the heart of India's biggest accounting fraud has taken on an urgency, with dozens of clients reported to have terminated their contracts or be aiming to shift their business because of uncertainty over Satyam's future.

"The bids will be seen Monday," Satyam board chairman Kiran Karnik told reporters on Saturday.

The Satyam board, advised by investment bankers Avendus and Goldman Sachs, then expects to announce the winning bid for the company, which acts as the back office for some of the world's biggest manufacturers, health care providers and banks.

"We very much expect it to be wrapped up Monday unless there's something we didn't anticipate, but that's unlikely," a person close to the bidding process, who did not wish to be named, told AFP.

A statement by Satyam, listed on the New York Stock Exchange in 2001, was expected late on Monday.

The government-appointed board took control of Satyam after its founder B Ramalinga Raju stunned corporate world in January by declaring he had inflated the balance sheet by over one billion dollars and overstated profits.

Just a handful of players are believed to be in the race as a result of lack of clarity about Satyam's accounts and worries over liabilities from US shareholder and other suits.

The accounts are still being restated and won't be ready for months. But Satyam has been battling to pay wages and other expenses since the fraud was revealed and is desperately in need of a cash infusion to help it survive.

Indian engineering giant Larsen & Toubro has already built up a 12 per cent stake in Satyam and is seen as a front runner for the firm, once India's fourth-largest by revenues.

Others expected to be in the race are Indian telecom software company Tech Mahindra Ltd and US billionaire investor WL Ross -- possibly in tandem with Nasdaq-listed Cognizant Technology Solutions, according to media reports. All have refused comment.

Information technology consultancy Forrester Research has warned there is a chance any deal might fall through due to lack of financial data and the risk of litigation, meaning Satyam would go "back to square one."

Satyam operates in close to 70 countries and has nearly 700 clients, including about 185 Fortune 500 firms -- in theory making it an attractive prospect.

But bidders have faced a tough job assigning a value to the Hyderabad-based firm.

"The liabilities represent a very grey area," Angel Broking analyst Hirit Shah said.

The bidder would buy 31 per cent of Satyam and then make an open offer on the share market to bring its stake to 51 per cent.

Raju, who described the fraud as like "riding a tiger" which got out of control, his brother and seven other people, including two Price Waterhouse employees who audited the accounts, have been charged with conspiracy, cheating, forgery and falsification of accounts.

If convicted on all counts they could face life imprisonment.