Taking rapid action to stem the Satyam rot and send a message to investors and observers across the globe, the central government announced the appointment of three eminent personalities on the board of Satyam Computer Services Limited. They are, Deepak Parekh, chairman, HDFC Bank, Kiran Karnik, former president of Nasscom, and C Achutan, former Sebi member?all three have the right credentials to address the issue on hand. Industry and market participants have applauded the decision to put a top banker, an IT expert and a market investigator on the company?s board.
The newly appointed board will meet within 24 hours (before Monday noon) to take stock of the situation. According to Premchand Gupta, minister of company affairs, the board?s immediate task is not to look for a strategic buyer but restore the company?s credibility, customer confidence and employee morale, besides safeguarding the interest of Satyam?s employees, investors and other stakeholders.
Achuthan said the team?s top priority would be to put the scam-tainted IT company back on the rail and ensure that the guilty are not spared. ?The first step in the board meeting would be to evolve a strategy on how to go ahead and restore the damaged image of the company,? When contacted, Deepak Parekh said it was too early to comment on the situation.
Meanwhile, Ganesh Natarajan, chairman, Nasscom, was emphatic in his response, he said, ?I think the combination of these three people is the best in terms of delivering corporate governance and organising government finance and equity. The next set of members should be those with experience of managing large multinational companies especially in operations and those that can attract finance.?
?The board members bring a lot of confidence to the market and this will be seen as a positive. Though the valuation for Satyam is still under a cloud,? said Dharmesh Mehta, head of equities with Enam Securities. The equities market has seen the Satyam stock take a huge plunge and also pull down the markets by 8% since the scam broke out. Sudip Bandopadhyay, CEO & director with Reliance Money, reckons that it will give investors a lot of hope. ?The speed with which the government has reacted is a strong positive.?
Prithvi Haldea of Prime Database thinks that the appointment of people who can make a difference to the situation is a welcome move. ?There could have been political appointments as well, but this is political and pragmatic,? he added.
Even the peers in the technology business were positive. Wipro executive director & chief financial officer Suresh Senapaty told FE, ?We believe this will help restore confidence of all stakeholders and the international community.? Similar statements were issued by Infosys team members.
However, analysts point out that now with the Centre calling the shots in the Satyam affair, state institutions that have investment and exposures in Satyam would not take any independent decisions on the issue, without consulting the government To that extent, the institutions are relieved. Thomas Mathew, managing director, Life Insurance Corporation said, ?The situation has changed positively after the government intervention and the formation of a new board with prominent professionals. With this kind of people at the helm, we are now confident that company would be put in the right course very soon.?? He refused to comment on the rumours that institutions were gathering together to get a better position on the board.
Mathew also denied that the corporation, with over 4% stake, will demand a board-level representation or is talking to other institutional players who have stakes in LIC. According to him, the corporation is not in a hurry to exit the Satyam portfolio as it is a long-term investment.
All eyes are now trained on the board to know the course of action. Lazard Brothers has been known to have expressed an intention to be on the board and is rallying support.
