Satyam looks up with bank funds, new chief executive

HYDERABAD - The cash-strapped Satyam Computer Services will get Rs.6 billion (Rs.600 crore/$130 million) from banks to meet its working capital requirements, and a new chief executive in company veteran A.S. Murty, the software firm’s reconstituted board said here Thursday.

The board, which met here for two days, also appointed former Tata Chemicals managing director Homi Khusrokhan and former Murugappa Group chief financial officer Partho Datta as special advisors to charter the future course of the beleaguered IT bellwether.

‘The infusion of bank funds, along with healthy collections, is expected to help the company tide over its financial challenges,’ the company said in a statement, but did not name the banks lending the money.

Satyam also reaffirmed that the January salaries for its global employees and the fortnightly salaries for its US-based staff in February have been paid from internal accruals.

‘Completing the complex financial restatement exercise, including announcement of third quarter results and ensuring prudent financial operations will be the primary focus in the next few weeks,’ newly appointed chief financial officer Partho Datta said.

Datta, a veteran chartered accountant, will oversee the company’s financial operations.

Prior to becoming the new chief executive with immediate effect, Murty was Satayam’s chief delivery officer responsible for delivery excellence and leadership development.

‘Murty is a Satyam veteran of 15 years, who has been in its forefront since January 1994. He brings into play a deep understanding of the organisation, proven expertise in leading a business unit, overseeing global delivery, nurturing customer relationships and spearheading the entire gamut of the human resources function,’ board member Deepak Parekh said.

‘In our interactions over the past few weeks, we are convinced that Satyam needs an internal leader to steer it at this critical juncture and Murty has the required bandwidth and support,’ Parekh added.

C. Achuthan, one of the six board members, who chaired the extended meeting, said the latest decisions were aimed at quickly stabilising the company’s operations.

‘The organisation has visibly increased its focus on business continuity for its customers and confidence building amongst its associates (employees) and vendors,’ Achuthan, a former residing officer of the Securities Appellate Tribunal, noted.

‘I am confident that we are on the right track and will be able to safeguard interests of our customers, associates, investors and other stakeholders,’ he added.

Murty said it was a unique opportunity to provide direction and guidance as the software major’s chief executive.

‘I have no misgivings about the enormity of the task in front of us, but together with my colleagues, I am confident we can accomplish the impossible. I look forward to working with the board, advisors and all Satyamites - to restore Satyam to its well-deserved glory,’ he said.

The board also confirmed that its priorities would be to reach out to key customers and associates to reinforce their trust and confidence, assert the financial position and restatement of third quarter results, evaluate long-term strategic options, assess legal liabilities, undertake cost rationalisation measures and resume investments in identified areas.

In a related development, the board has appointed Wachtell, Lipton, and Rosen and Katz as the company’s lawyers to address the Class Action suits in the US.

Latham and Watkins have been lawyers to Satyam for over eight years and will assist the company in its dialogue with US Securities Exchange Commission (SEC).