While the Centre on Thursday dismissed the prospect of any financial bailout package for embattled IT major Satyam Computer Services, newly-appointed board member Deepak Parekh, who has been asked to clean up the mess, said the company could raise the funds needed to maintain business continuity by mortgaging its assets. Parekh, who is also HDFC chairman, said that salaries for Satyam?s 7,000 employees based in the US have been paid.
Parekh?s disclosures came on Thursday evening after extensive meetings in New Delhi with senior government officials, including Planning Commission deputy chairman Montek Singh Ahluwalia and ministry of corporate affairs secretary Anurag Goel, to bring them up to speed on ground realities at Satyam. Since the fraud confessed to by Satyam founder & former chairman B Ramalinga Raju has put a question mark on every transaction on its books, it?s not clear which assets of the firm can be mortgaged without encumbrances.
Meanwhile, the corporate affairs ministry appointed three new directors to join the board overseeing Satyam?s operations. CII chief mentor Tarun Das, Institute of Chartered Accountants of India (ICAI) former president TN Manoharan, and LIC?s S Balakrishnan Mainak join C Achuthan and Kiran Karnik, besides Parekh, who were appointed earlier.
Corporate Affairs minister Premchand Gupta said that more directors would be appointed, if needed. Under the Company Law Board decision on Satyam taken last Friday, the board can have at most ten directors. ?The new Satyam board has already engaged the services of two audit firms, Deloitte and KPMG, to look into its fudged accounts. They have begun their work, but it would take a few weeks before they can come out with any findings,? Gupta said.
In Hyderabad, senior officials in the Andhra Pradesh government said a review had been ordered of all immovable property belonging to the company, its subsidiaries and the Raju brothers. Satyam, group firms Maytas Infrastructure and Maytas Properties, and the Raju family have more than 17,400 acre of land in various parts of Andhra Pradesh, Nagpur, Chennai and Bangalore. The state chief secretary is reviewing these holdings to ascertain if they have clear titles so that, if need be, the plots of land can be mortgaged or disposed of to meet Satyam?s immediate financial requirements.
Senior Satyam executive Ram Mynampati, who officiated as interim CEO until last week and is currently in the US ostensibly to personally allay the concerns of major clients, has informed the Centre that Rs 150 crore is needed immediately to cover US employees? health insurance policies. ?We have received a mail or two from Mynampati. They indicated that they would need something of the order of Rs 150 crore to take care of the health insurance liabilities of the employees in the US,? department of economic affairs secretary Ashok Chawla said. Chawla dismissed any possibility of a government bailout ?at this stage?.
The new firms replacing Satyam?s original auditor, Price Waterhouse, have been asked to restate Satyam?s accounts for the last seven years?the period over which Raju claimed to have cooked the books. Asked if the Centre would consider indirect support to the firm, Chawla said that the true picture on the company?s receivables had to be revealed first. ?It depends on the board coming to a kind of conclusion,? he said.
Meanwhile, a day after Price Waterhouse conceded that its Satyam audits had been compromised by falsified information provided by the company’s management, ICAI has said that the accounting firm could not absolve itself from the fiasco. “This does not absolve them of the defaults already committed, if any,” ICAI president Ved Jain said.
Price Waterhouse, who have been Satyam?s auditors for over eight years, had on Wednesday admitted that its audit of the company’s financials could be “inaccurate and unreliable” in view of the financial irregularities disclosed by Ramalinga Raju. Price Waterhouse said that it relied “on management controls over financial reporting, and the information and explanations provided by the management, as also the verbal and written representations made to us during the course of our audits”.
New moves
• Parekh says Satyam could raise the required funds by mortgaging its assets
• CII?s Tarun Das, ICAI?s TN Manoharan & LIC?s SB Mainak join board
• AP orders review of all immovable property of Raju brothers and their firms
