Satyam to announce long-term plan next week

NEW DELHI, INDIA: The board of Satyam Computer will decide on a long-term action plan by next week, including a possible sale of the company, its chairman said, as the fraud-marred outsourcer struggles for survival.

Satyam was hit by a massive fraud as founder and former chairman Ramalinga Raju resigned last month disclosing that profits had been overstated for years in the country's biggest corporate scandal.

The fund-starved outsourcer, whose clients include General Electric  and Coca Cola, has borrowed 6 billion rupees ($123 million) from banks to meet short-term capital needs including employee salaries.

Kiran Karnik, who was last week appointed by the government as the chairman of a reconstituted board, told Reuters an action plan would be available by the middle of next week.

"We will chart out a long-term roadmap in the next 7 to 10 days and make a recommendation to the government that may include all possibilities," Karnik said.

Satyam's board has appointed Goldman Sachs and an Indian investment bank to find a strategic bidder.

Top engineering firm Larsen & Toubro controls about 12 percent of Satyam and has not ruled out raising its stake in India's No. 4 outsourcing firm while diversified Indian business houses Spice Group and Hinduja Group have also shown interest.

Shares in Satyam, which the market now values at about $640 million, less than a tenth of $7 billion in May 2008, were trading 2.9 percent down at 46.05 rupees in a firm Mumbai market.

Analysts say aggressive bidding interest in Satyam is unlikely unless there was clarity on its accounts and before takeover rules are simplified.

Contracts Ended

U.S.-based iGate Corp, which in January showed interest to acquire Satyam with help from buyout firms, said last week it had no interest in taking over the company due to lack of clarity on its liabilities.

Satyam, which named a new chief executive last week, has assigned Deloitte and KPMG to restate its accounts and board member Tarun Das, said on January 20 it might take six weeks to get a "fair account."

India's market regulator said it would change its rules on mandatory open offers to buy shares in firms after being approached by Satyam's board, but has not given any timeframe.

National Australia Bank, Australia's largest lender, said last week it would suspend new contracts awarded to Satyam, while State Farm Insurance Co ended its contract in January.

The Financial Express newspaper on Monday said insurance major Assurant  and Visa Inc had ended contracts with Satyam, but a Satyam spokeswoman told Reuters she could not confirm this.

Karnik declined comment when asked to comment on the report.