India Insight

Fraud-hit Satyam pins hopes on shaky white knights

April 10, 2009

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?

Comments
7 comments so far | RSS Comments RSS

Satyam will bounce back. even if some customers have moved it is still a formidable player. The new management has to cut down on unnecessary positions and simplify the internal struture.

Posted by munnu98 | Report as abusive
 

Satyam (truth) will come out. The real culprits Chandrababu Naidu and YS Rajasekhara Reddy will bite the dust in the ensuing general elections. The Satyam money is being used in the elections by Congress and TDP.
What a pity…God help the people of India

 

You know reuters, you have been a copy+paste e-beggar website these days. Just copying whatever crap your indian media sources have given you. You have published 20+ false news in your site and not so good days are ahead as your quality is declining every single day!

During last 3 months you have singled out an aspiring company with outstanding skilled resources with all your pessimistic & negative media coverages.

You will witness, on 13th, the fate of 40000 Satyamites will change & better days will bless their crisis ridden lives.

Well, Reuters’s editors & krappy journalists, beware of bankruptcy which is approaching you…as it is quite evident, that readers are hating your sensationalism, speculative, false and biased news coverage!!!

I hate you!!!

Posted by The Satyamite | Report as abusive
 

the “truth” is that satyam is not a one-off problem; it is an archetype of the traditional/new age multinational businesses of india — still run as family concerns, while booking fictitious financials to meet the regulatory requirements of whatever country requires them. even raju’s “confession” is a scam. he stole the money, replaced it with fiction using software developed in-house (and not by a couple of finance mgrs), and had the audacity to have relatives jump in to claim even those fictitious assets as “loans” made by them to satyam.

as for the indian government, it hopes to use its appointed board to keep the “truth” under wraps, smooth over any ambiguities or contradictions, quickly sell to an INDIAN company (well-versed in satyam-style book-keeping), and move on, hoping that satyam will be left as a footnote in india’s corporate history.

a couple of facts: parekh of HDFC recuses himself; but he was president of the HDFC when satyam became a major shareholder of HDFC. the others? distinguished directors of indian corporate boards, persumably as well-informed as satyam’s previous board, considered the most illustrious in india.

Posted by jay | Report as abusive
 

Hanmi
Agree with you, YSRajasekhar Reddys congress and before that TDP have allowed Raju brothers to doctor books and to venture into real estate business by flouting the law and in the bargain collected multiple crores for themselves.
If congress is oozing crores of rupees today and ready to spend the illegal money for election victory then the very democratic credentials of the country should be questioned. Last week, Rajasekhar reddys son in law, brother anil, was arrested for using andhra churches for election propaganda and also for distributing money in churches. Where is the sanity whats judiciary doing, is the law enforcement sleeping or is it in denial.

As for satyam,it will limp back to life and takes sometime to bounce back to previous glory. Cutting costs is of paramount immediate strategy.

 

Jai Hooooooooooooooooo in Satyam

Posted by sandeep | Report as abusive
 

Now that Satyam bid is finalized, the attention will switch to satyam’s bankruptcy resulting from a dozen law
suits. On the contrary ,I think, now satyam’s existing customers will start abandoning it; thus its takeover
will not solve any problems.

Posted by jjmk4546 | Report as abusive
 

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