Govt may help Satyam raise financing

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Mumbai/Hyderabad/New Delhi: In order to restore the confidence of overseas investors and clients in the Indian IT sector, as well as reassure the company’s over 50,000 hapless employees, the government on Monday said it is open to providing all kinds of help-including indirect liquidity support-to Satyam Computer Services.

The Prime Minister's Office, which is overseeing developments at Satyam, on Monday directed cabinet secretary KM Chandrasekhar to coordinate the actions of various government agencies and regulators investigating into the company, a senior official told FE. Sebi chairman CB Bhave met Prime Minister Manmohan Singh on Monday and apprised him of developments at Satyam, the official said.

Commerce & industry minister Kamal Nath reiterated the government’s pledge to consider all options, including any proposal to arrange adequate finances, to help Satyam carry out its operations smoothly. Department of economic affairs secretary Ashok Chawla stressed that the government would ensure access to funds so that Satyam is able to carry out its normal, legitimate activities.

Meanwhile, the newly appointed three-member Satyam board, which met for the first time on Monday, discussed, among various issues, the company’s liquidity needs. Addressing the press in Hyderabad, Deepak Parekh said the new board's top priority would be to restore the confidence of customers, employees, investors and suppliers.

A new independent accounting firm will also be appointed to assess the company’s true financial position, Parekh said. “We will appoint a new accounting firm in the next 48 hours, which will restate financials and announce the third-quarter results—we have received proposals from two auditors,” Parekh said. Apart from Parekh, the board includes Kiran Karnik, former president of IT industry body Nasscom, and C Achuthan, a former member of markets regulator Sebi.

Satyam shares gained over 44% on Monday following the appointment of the new board members and the government’s clear intention to provide the firm support. Although Parekh did not disclose how much liquidity would be needed to carry out normal operations, according to its last quarterly financial update, Satyam pays Rs 522 crore in salaries and bonuses on average every month. It also pays around Rs 10 crore in staff welfare and employee stock compensation expenses a month, reports said.