How Satyam was salvaged

Deepak Parekh, Kiran Karnik and C Achuthan are some of the names that helped the company

Two days after B Ramalinga Raju confessed to an accounting fraud at Satyam, the ministry of corporate affairs moved the Company Law Board (CLB) to remove the firm’s directors and appoint 10 new ones. The CLB passed an order stating the government had sufficient grounds to remove the existing board and appoint a new one. Two days later, on January 11, the government appointed Deepak Parekh, Kiran Karnik and C Achuthan to the Satyam board. On January 15, it appointed three more directors: Tarun Das, T N Manoharan and Suryakant Balakrishna Mainak.

The new board met on January 17 and appointed Amarchand & Mangaldas & Suresh A Shroff & Co as legal advisors and Chennai-based Brahmayya & Co as internal auditors. The directors met again on January 22-23. They touched base with 24 big clients to reassure them on business continuity. Some investment bankers were flown in to get their assessment. On January 26, the board appointed The Boston Consulting Group (BCG) management advisor to Satyam.

In the first week of February, the board appointed A S Murty, Satyam’s chief delivery officer, as the chief executive officer (CEO). It also brought in Homi Khusrokhan, who earlier headed Glaxo, Tata Tea and Tata Chemicals, and Partho Datta, director (finance) of the Murugappa group, as special advisors on issues related to management and finance.

On February 14, following a representation from the board, the Securities and Exchange Board of India relaxed the takeover norms for distressed companies whose boards had been superseded by the government. Subsequently, CLB permitted the board to increase the authorised share capital of the company from Rs 160 crore to Rs 280 crore, which enabled the board to offer 51 per cent in the company to the strategic bidder.

By early March, the board had agreed on the sale process. It would be a global bid and investors were expected to have total net assets in excess of $150 million. The deadline for final bids was rescheduled from end-April to April 13 to complete the process before the 2009 general elections. At 11.15 am on April 13, former Chief Justice of India, S P Bharucha, opened the bids. L&T had bid Rs 49.50 per share, Wilbor Ross & Co Rs 20 and Tech Mahindra Rs 58. At 11.30 am, the stock exchanges were informed that Satyam had been sold to Tech Mahindra.

THE MEN BEHIND THE RESCUE

Move your cursor over the yellow buttons to read about the men who helped salvage Satyam