The six-member government-appointed board to the scandal-hit Satyam Computer Services today appointed Goldman Sachs and Avendus as investment bankers to advise the company on the way forward and explore various strategic options that include identifying strategic investors, obtaining expressions of interest and ensuring a fair and transparent approach to the entire process.
In related developments, Price Waterhouse said it has suspended the two tainted auditors -- S Gopalakrishnan and T Srinivas -- following allegations of colluding in the Satyam fraud case. The bail petition of the duo, along with that of Ramalinga Raju and former CFO Srinivas Vadlamani, will come up for hearing on January 29.
Meanwhile, T N Manoharan who chaired the board meeting today -- its fourth since its constitution on January 10, said the board had received several proposals from corporate entities as well as from select private equity firms. “Some have shown interest in evaluating Satyam as an integrated entity, while others have expressed interest in portions of Satyam's business. A sale of ‘parts’ of Satyam at this stage would be contrary to the mandate of regulating the affairs of Satyam as a going concern, as stipulated by the central government. It is, therefore, not an option that is being evaluated currently,” he said in a press release today.
The board has also appointed US-based global management consulting group, Boston Consulting Group (BCG), as management advisor to support the directors and the Satyam leadership team. A dedicated three-member senior team from BCG is expected to work closely during this revival process.
"An important point to note is that they will not be charging any fees for their services and this reflects on their commitment to the task on hand," board member Deepak Parekh said.
The board today said it had concluded most of the discussions relating to the financing requirements of the company and these funds will help tide over the immediate, compelling operational expenses. It reaffirmed that the salaries for January 2009 will be paid, as scheduled and that this would be achieved from its internal accruals and receivables.
Responding to the move by a corporate entity (Larsen & Toubro) to acquire large portions of Satyam’s shares in the open market, Manoharan said the reasons for the same are best explained by the purchaser and that it should not be taken as an indication of support by the government-nominated board, for change of control of Satyam, at this stage.
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“Appropriate, fair and transparent measures for enabling open bids will be devised by the company's board in consultation with the Securities and Exchange Board of India (Sebi) and the Centre, since adequate number of bidding interests have been evinced to the new board. It is important to keep in view that this is now a government administrated company, reporting to the Company Law Board (CLB) and the ministry of corporate affairs,” he added.
The board stated that further validations have been done relating to the employee numbers of the company and there are sufficient data points to reinforce the understanding that the earlier reported numbers hold good.
Former Nasscom chief Kiran Karnik, who is part of the six-member board, said he had been talking to quite a few customers and partners everyday and it was heartening to note that they continued to engage with the company confidently.
“While a few are discussing risk mitigation plans, they are closely monitoring and wanting to see Satyam’s return to long-term sustainability. We have been assured by the actions of some of our key customers, who have sent strong messages to other vendors, to refrain from poaching Satyam's associates or business. There is already a steady improvement in the State-of-Work (SoW) extensions. We continue to reach out to our customers, where required, to reassure them at every stage,” Karnik said.
All these actions reflect the sense of urgency and determination and steps will help restore stakeholder confidence, ensure stability and growth and bring back the glory that the Satyamites truly deserve, Manoharan said.
The board has further discussed the proposed management structure and a formal statement reflecting the plan of action will be released this week, the release said.
Meanwhile, the bail petition filed on behalf of Price Waterhouse (PW) auditors, S Gopalakrishnan and T Srinivas, will come up for hearing on January 29. PW counsel Masthan Naidu filed the petition in the Nampally court here on Tuesday. He said he had not received any notice so far from the advocates of the Andhra Pradesh Crime Investigation Department seeking police custody of the two auditors.
Police arrested the two auditors in connection with Satyam fraud case on January 24 and produced before the magistrate on January 25. The duo was sent for judicial remand for 14 days.
On its part, has suspended both the auditors. "In light of recent allegations, S Gopalakrishnan and Srinivas Talluri, have been suspended of all of their duties and functions as partners of PW, pending completion of the investigations into the Satyam matter," a PW statement said.
While they are suspended, neither partner will play any part in client matters. They will undertake no activities on behalf of PW and have been advised to cooperate fully with the ongoing inquiries regarding Satyam. As the investigations proceed, PW will continue to evaluate the situation," according to the statement.
PW's assurance leader, Thomas Mathew, has announced that he would step down from this role with immediate effect "Mathew had no connection with the audit of Satyam. In light of the present situation, however, he believes it would be appropriate for him to relinquish his management position," said the PW statement. Mathew will remain a PW partner and PW would appoint a new assurance leader in the near future.