Independent director Prasad to continue on Satyam board

BANGALORE - T.R. Prasad, an independent director on the board of Satyam Computer Services, Tuesday declared he would continue in the non-executive post despite four other directors quitting in succession.

‘I will continue on the Satyam board, as resigning now would mean deserting a troubled ship,’ Prasad, a former cabinet secretary with the central government, said in a statement.

In view of doubts being raised about the continuance of the remaining three independent directors - V.S. Raju, V.P. Rama Rao and himself - Prasad said the $2-billion Satyam was a major player in the global IT space, employing over 50,000 of the best and the brightest of professionals, with vendor commitments to several global corporates and entities.

‘The 21-year-old company is almost entirely owned by the public, either directly or through financial institutions. Restoring their confidence is the task of utmost importance awaiting the consideration of the board for which we are availing the services of DSP Merrill Lynch,’ Prasad pointed.

The Hyderabad-based global software exporter has engaged financial adviser DSP Merrill Lynch to assist the board in reviewing the various options before its next board meeting, rescheduled to Jan 10 from Dec 29.

Two independent directors - M. Rammohan Rao and Vinod K. Dham - and non-executive director Krishna G. Palepu resigned from the board Monday, while independent director Mangalam Srinivasan quit Dec 25.

The spate of resignations follows the top management’s aborted bid to acquire the two realty firms - Maytas Properties and Maytas Infra - run by the two sons of Satyam founder-chairman B. Ramalinga Raju, for $1.6 billion (Rs.79.2 billion) to bail them out of a cash crunch.

The various options to be considered by the board at the Jan 10 meeting include strengthening Satyam’s governance by increasing its size and altering its composition.

‘Completing this ongoing task, in my view, is a public duty and responsibility. Hence I intend continuing on the board, at least till this commitment is fulfilled,’ Prasad asserted.

Following the resignation of the four directors, the strength of the 10-member Satyam board has been effectively reduced to six, including three independent directors, one whole-time director (Ram Mynampati) and two promoter directors (Ramalinga Raju and B. Rama Raju).

The promoters, including Raju’s family members, hold a minority stake of 8.61 percent in the beleaguered company.

Foreign institutional investors (FIIs) collectively hold a majority stake in Satyam, with 48.22 percent of the total equity, while Indian financial institutions (FIs) hold 12.91 percent. Others, including retail investors, hold the remaining 30.38 percent of the equity.

Raju has also asked the board to include the possible dilution of the promoters’ holding in the company in the agenda for consideration at the Jan 10 meeting.

He fears dilution of the promoters’ stake as he had pledged all shares of the promoters with institutional lenders, some of whom might have offloaded.

Satyam informed the Bombay Stock Exchange (BSE) that the minority holding of the promoters would have been diluted by institutional lenders with whom their shares were pledged through a holding firm.

‘The promoters had pledged all their shares with institutional lenders through SRSR Holding Ltd in September 2006. Their holding would have been diluted if the lenders had exercised the option to liquidate the pledged shares,’ the company said in a notification to the BSE Monday.