Satyam board knocks on banks' doors
The Govt-appointed directors of the fraud-hit Satyam Computer Services have started talks with banks to raise funds for salaries and other expenditure, while customers have assured continued support to the company, the new board said.business Updated: Jan 18, 2009 00:16 IST
The government-appointed directors of the fraud-hit Satyam Computer Services have started talks with banks to raise funds for salaries and other expenditure, while customers have assured continued support to the company, the new board said in Hyderabad on Saturday.
Meeting for the second time in six days to save the country's fourth largest software outsourcer, whose financial fraud of Rs.70 billion (Rs.7,000 crores/$1.43 billion) was described by Prime Minister Manmohan Singh on Saturday as a blot on India Inc., the six directors said "all efforts are being made to ensure that the associates (employees) are paid their salaries on time".
"The board expressed that they have been in conversation with customers, who in turn have expressed their continued support, which is a very encouraging sign," a press statement issued at the end of the meeting said.
On Satyam's financial position, the release said: "The board confirmed that it is engaged in discussions with Banks and financial institutions."
Besides the assurance of support from the customers, the board found "definite improvements on 'collections' (payments from clients) in the last week".
"This is expected to be a major priority for the business leaders and the board, in the ensuing weeks," the statement said.
The directors "are in touch with key customers and so far have not heard of deliveries being affected in any way", it added.
The new board had encouraging words for the embattled employees.
"The board reaffirmed its confidence in its associates (employees) and their ability to continue delivering high quality work," the statement said.
The first positive signals on the board's efforts to put Satyam back on track came as its disgraced founder and former chairman B. Ramalnga Raju, his brother B. Rama Raju, who was the company's managing director, and former chief financial officer Vadlamani Srinivas were engaged in a legal battle to get bail.
An appeal of the market regulator Securities and Exchange Borad of India (SEBI) to interrogate Ramalinga Raju will also be heard on Monday.
On Saturday a Hyderabad court ruled that the three will be in the custody of the Andhra Pradesh police Criminal Investigation Department (CID) from Jan 18 to Jan 22.
The six board members who attended the Saturday's meeting are HDFC chairman Deepak Parekh, former president of software sector's umbrella body Nasscom Kiran Karnik, former SEBI member C. Achuthan, Tarun Das, chief mentor of the Confederation of Indian Industry (CII), T.N Manoharan, a noted chartered accountant, and Suryakant Balakrishnan Mainak, a nominee of the LIC of India.
Parekh, Karnik and Achuthan were appointed Jan 11 and the other three on Thursday.
The directors left the appointment of the board chairman to the government and said the search for a chief executive officer (CEO) and chief financial officer (CFO) was continuing.
"Till such time a chairman is appointed by the central government, it was decided that one of the members of the board will chair the meeting, by rotation," the statement said.
Parekh chaired the Saturday meet.
The board will meet on a weekly basis till the appointment of CEO and CFO.
It constituted a three member audit committee headed by Manoharan. The other members will be Achuthan and Mainak.
The board has also appointed Brahmayya and Co., Chennai-based chartered accountants, as internal auditors of the company. Amarchand and Mangaldas and Suresh A. Shroff & Co., have been appointed as legal advisors to the board.
This was the first meeting of the board after the appointment of the three additional members.