Fraud-hit Satyam approached by potential buyers
Satyam Computer Services Ltd has been approached by potential buyers, a member of its new board said on Tuesday, while concerns grew about the business prospects for the fraud-hit outsourcer.
Some clients of Satyam, at the center of India’s biggest corporate scandal, have told the company they want a contingency plan in case things do not stabilize in the next three months.
“All I can say, we have been approached by potential buyers,” Tarun Das, one of six members of Satyam’s new government-appointed board, told reporters, adding the board, which met on Saturday, had not discussed a buyer.
Satyam, India’s No. 4 software services exporter, was plunged into crisis after founder Ramalinga Raju resigned as chairman earlier this month, revealing profits had been falsified for years and $1 billion of cash on the books did not exist.
Engineering and construction company Larsen & Toubro, which had built up a 4 percent stake in Satyam ahead of Raju’s disclosures, was seen as a possible partner, with the Economic Times reporting it had appointed Japan’s Nomura to advise it.
However, Y.M. Deosthalee, chief financial officer of Larsen & Toubro, told Reuters the company had not appointed any merchant banker for a possible deal with Satyam, although he said it had been approached by several bankers.
“We have not appointed Nomura,” he said.
On Monday, Satyam, which specializes in business software, said U payday advance.S.-based State Farm Insurance Co had canceled its contract, and there were signs other customers had concerns.
“In a few isolated cases, customers have been engaged with us to understand the process of transition,” a spokesman said in an emailed response to questions from Reuters.
“They have said they would like to have a contingency plan, should it be required, if things don’t stabilize within the next 90 days,” he said.
Local media has reported that some big customers of Satyam, which has corporate giants such as Nestle and General Electric as clients, may terminate their projects.
“In this difficult process of saving the company, Satyam may lose two or three clients,” said K.K. Mital, head of portfolio management services at Globe Capital.
“Clients are definitely concerned and it depends on the kind of confidence-building measures the company takes.”
On Saturday, Satyam’s new board said it was still looking for a new chief executive and chief financial officer.
Analysts said outsourcing sector leader Tata Consultancy Services and No. 2 Infosys Technologies could benefit from Satyam’s woes, although both have said they are not trying to poach its clients.