Fraud-hit Satyam pins hopes on shaky white knights
Three months after its founder Ramalinga Raju shocked markets by disclosing India’s biggest corporate scandal, Satyam Computer Services is desperately pinning its survival hopes on its auction set for April 13.
But only a handful of bidders are in the race due to lack of clarity over Satyam’s accounts and potential legal liabilities from U.S. lawsuits. Even if the company manages to find a buyer for a 51 percent stake, it’ll take a long time to instill confidence among employees already jumping shipand nervous clients.
What about the role of the government, whose appointed-board is due to choose the buyer the same week the country heads for national elections? Will the government remove its handpicked board or continue to keep a watchful eye on any new strategy chalked out by the new buyer?
Some finance industry players point out the similarity between Satyam’s deal and the deal for top Chinese electronics retailer GOME. The Chinese company is in talks with potential investors, while its founder and ex-chairman is under potential police investigation. There is a lot of uncertainty about both deals and government support, temporary or long-term, is key to shoring up both high-profile firms.
Satyam’s former chairman, former managing director and former chief financial officer are all being held in jail in the southern Indian city of Hyderabad.
Satyam has not reported earnings since October as the new auditors are still in the process of restating accounts. Local media report the final tally of likely bidders for Satyam is shrinking.
Will the auction be the first step in a much-needed recovery for a company once ranked as India’s fourth-biggest IT services exporter or spell more pain ahead?