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Second coming floats in murky waters

A hastily put together leadership from Satyam Computer Services Ltd’s rung below the disgraced and since departed chairman Ramalinga Raju is groping for options to resurrect the company, but the task will not be easy.

india Updated: Jan 08, 2009 20:27 IST
Gaurav Choudhury

A hastily put together leadership from Satyam Computer Services Ltd’s rung below the disgraced and since departed chairman Ramalinga Raju is groping for options to resurrect the company, but the task will not be easy.

Options include a merger involving a strong, strategic partner, a buyback of shares by the new management from existing investors and a legal recourse where a court might step in to order a rehabilitation of the company, said a senior executive in a leading private sector investor that continues to hold stake in the company.

A lot would depend on the structure of the new board. A government official involved in the multi-agency probe launched by authorities said the reconstituted board could have a government nominee.

“The government is exploring all options including putting some government nominees on the board of Satyam. Nothing has been finalised though,” the official said.

Industry sources indicated that the large institutional investors had begun discussions among themselves to rope in a possible strategic investor.

Life Insurance Corp (LIC), which holds 4.34 per cent, is watching the situation. “We have 4.34 per cent stake in Satyam. We are concerned and will consider a decision according to how the situation develops,” LIC Managing Director Thomas Mathew said.

A buyback of shares appears a bleak due to the absence of sufficient cash reserves.

“The liquidity on the balance sheet at this point of time is not very encouraging,” interim Chief Executive Officer Ram Mynampati told a news conference.

ICICI Prudential, which holds 2.47 per cen stake in Satyam Computers, and LIC are among the major institutional investors in the company.

“We need to think if we can get a strategic investor who will take management control and try to revive the company,” a senior executive of an institutional investor in the company said.

Mynampati said the company was in the process of enhancing its liquidity through a mix of fixed assets and outstanding receivables.