The government-appointed board of Satyam Computer Services today approved the process for inviting a strategic Investor and decided to seek regulatory approvals for it early next week. Upon receiving these clearances, the board will announce the process.
It has also recommended to the Ministry of Corporate Affairs the removal of Price Waterhouse as the statutory auditor of the company and also notified the audit firm about it. Price Waterhouse has tendered its resignation as the statutory auditor of the company. The board met for the seventh time today.
Chief Executive Officer AS Murty said Satyam has won new purchase orders and work extensions totalling to over $250 million since January 7, the day its founder, B Ramalinga Raju, admitted to cooking the company’s books. This includes a single order of $50 million.
The board has also authorised the CEO to finalise and implement a retention plan for its key associates in consultation with Boston Consulting Group and special advisors Homi Khusrokhan and Partho Datta. It has also endorsed the actions now under way to fine tune the expenditure and profit optimisation plan, said board member Achuthan.
Chairman Kiran Karnik said the board was satisfied with the progress of the company’s stabilisation programme. It was now riding on the efforts of the new board to restore stakeholder confidence and ensure business continuity.
“We are using the bank funding in a controlled and phased manner to meet immediate and near-term operating requirements, including payments to vendors. The good news is that we are receiving unsolicited offers from banks for funding,” board member Manoharan said.
Two days ago, the Company Law Board allowed Satyam to raise the company’s capital base and bring in a strategic investor. The board said the strategic investor should be selected through an open bidding process, which will be overseen by a retired judge.
The ailing company needs sufficient funds to refurbish its balance sheet. If the company decides to divest 51 per cent, it will issue around 697 million shares of Rs 2 each and 235 million shares if it decides to divest only 26 per cent. This will help it raise about Rs 3,500 crore and Rs 1,200 crore, respectively. There are also some suitors seeking a complete buyout.
Meanwhile, a team of the Central Bureau of Investigation, which registered a first information report against Ramalinga Raju as well as former Satyam directors, met officers of the Criminal Investigation Department from which it has taken over the investigation.
CBI has already constituted a multi-disciplinary investigation team headed by CBI DIG (Hyderabad) VV Lakshmi Narayana. The team will have officials from its bank securities and fraud cell, the State Bank of India, Institute of Chartered Accountants of India and Institute of Cost and Works Accountants of India. The Securities and Exchange Board of India, Registrar of Companies, Serious Fraud Investigation Office, Enforcement Directorate and Income Tax departments would coordinate in the investigation.
Also, the sixth additional chief metropolitan court here extended the judicial custody of Ramalinga Raju, his brother B Rama Raju, former chief financial officer Srinivas Vadlamani and Price Waterhouse auditors Gopalakrishnan and Talluri Srinivas through video conference till March 7. The judicial custody of all them ended today.
