New-look board also wants independent auditor to verify company's books
By AMIT ROY CHOUDHURY
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(SINGAPORE) The Indian government-appointed board of Satyam Computer Services said yesterday that its top priority is to find a new CEO and to appoint an independent auditor to go through the company's books of accounts.
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| Mr Parekh: Said at yesterday's press conference that if Satyam's new board can restore confidence in just the structure of the company, it will be enough |
Speaking in Hyderabad yesterday, new director Deepak Parekh said that the board is looking for an experienced chief executive officer who can bring back order to the company. The board is also looking for a new chief financial officer to join the CEO in working to restore normal conditions in Satyam.
The comments of Mr Parekh, who is also chairman of the Housing Development Finance Corp, seem to indicate that the newly-appointed board is looking to hire outsiders for these two vital positions.
It may be recalled that, before resigning, the former chairman and founder of Satyam, B Ramalinga Raju, had appointed Ram Mynampati as interim CEO and head of a 10-member group of senior Satyam officials to craft a restructuring plan for the beleaguered company.
Mr Parekh noted that Mr Mynampati will no longer be a full-time director but will remain as a Satyam employee.
Apart from Mr Parekh, the Indian government has appointed former regulator C Achuthan and Kiran Karnik, ex-president of the nation's software industry lobby group, to the board, superseding the previous Satyam board.
Regarding the independent auditors, Mr Parekh said that the board has already spoken to two firms and their proposals would be submitted by today, after which the board would take a decision within the next 24 hours.
He noted that the primary task of the new auditors would be to work on the third-quarter results of the company. 'However, given the short time frame, we may seek an extension of the date by which we submit the third-quarter results,' he added.
Another important task of the new auditors would be to go through the accounts to see what the actual financial position of the company is.
Mr Parekh noted that if the receivables that are stated in the accounts are accurate and payments are received within 60-90 days, then the company does not face any significant liquidity crisis. 'The receivables hardly have any debt against them,' he noted.
Mr Parekh also noted that, unless the company got its financial numbers authenticated, no bank would be willing to extend credit to it.
'The auditors will have to go back for 3-4 years with the financial statements to get a clear picture of what has happened,' he added.
With regard to replacing PriceWaterhouseCoopers (PwC) as auditors, he noted that the decision to remove and appoint auditors can only be taken at the company's annual general meeting.
Speaking at the press conference, Mr Achuthan denied earlier reports that the board had sought legal immunity from lawsuits that are expected following the disclosures made by Mr Raju.
He, however, added that the board members enjoy immunity by virtue of being government-employed directors.
Mr Parekh noted that there is now some concern about the stability of the company among customers. 'We can allay customers' concerns. Let's not forget that the company has talent and customers are satisfied,' he said.
He added that if the new board can restore confidence in just the structure of the company, it will be enough. 'If we can give them (customers) a reasonable degree of confidence, they will hesitate to move mission-critical applications out.'
Mr Parekh noted that during the previous 24 hours, two international customers had said that Satyam's quality and accuracy of service was 'much better than others'.
'You cannot forget that Satyam has been among the top four IT companies in India,' he said.
He noted that the government is going to appoint a few more board members soon, immediately after which the full board will decide upon the appointment of the chairman.
'Given the enormity of the issue and the urgent attention required, the board will have to meet frequently for the next few months,' Mr Parekh said.
Indian Commerce Minister Kamal Nath said later that the Indian government is open to looking at all proposals made by the Satyam board including extending financial support 'if viable'.
'Satyam is an exceptional case. There could be a case of delinquency but not of systemic failure. There is no question of slur on Indian (companies') governance,' Mr Nath said.
Meanwhile, Satyam share jumped as much as 44 per cent yesterday, despite the Bombay Stock Exchange's Sensex index plunging more than 300 points, on expectations that the government- appointed board would rescue the company in the wake of India's biggest corporate scandal.
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