Satyam says staff will get January salaries

The government-appointed Board of Satyam Computer Services announced that employees will get January salaries on time. The salaries would be paid as scheduled and that would be achieved from the company’s internal accruals and receivables. The Board has appointed the Boston Consulting Group as the management advisor to support the Directors and Satyam leadership team and Goldman Sachs and Avendus as investment bankers. The advisor and bankers have been entrusted with the task of identifying strategic investors, obtaining expressions of interest and ensuring a fair, transparent approach to the entire process. The Satyam board also said that it has received several proposals from corporate entities and private equity firms, but ruled out selling the company by unbundling it into different parts.

Meanwhile, Larsen & Toubro Ltd. (L&T) said that it may increase its stake in Satyam to 15% because it expects the value to increase. "There may be a counter-bid," L&T Chairman A.M. Naik told analysts on a conference call. On January 23, the engineering giant raised its holding in Satyam to 12% from 4% to have greater say in the software maker’s rescue. The average price of L&T's stake in Satyam has dipped to Rs80 a share from the Rs174 it paid, Naik said. L&T is looking to expand its software unit by trebling its stake in fraud-hit Satyam, Naik added.

Fidelity Investments raised its holding in Satyam to 6.79%. Fidelity, which held 3.17%, bought 3.62% on Jan. 28, Satyam said in a filing to the stock exchanges. Stock exchanges said late on Wednesday that two Fidelity funds had bought a 2.5% stake in Satyam in block deals worth US$18.7mn. Separately, the Hinduja group and B.K. Modi group thrown in their hats for buying the scam-tainted IT major. The Spice group said it is ready to invest about Rs20bn (US$408mn) in Satyam. Other suitors in the race for Satyam include Tech Mahindra, iGate Global and private equity firms.

In a related development, the regional officers of the Provident Fund Organisation lodged a complaint against the Rajus for not depositing Rs75mn which was the employees' share of PF for December. They also confirmed that Satyam's total headcount is 43,622, and not in excess of 52,000 as claimed by the promoters and even the government nominated board.

Also, the Company Law Board (CLB) passed an order providing immunity to six government appointed board members and other new directors of Satyam from all legal action relating to Rs70bn fraud. The CLB's order will help the new board take a decision on the appointment of a new chief executive officer and chief financial officer. "We will act like court officials discharging public service," said C Achutan, a member of the new Satyam board. Satyam is facing two class action law suits in the US. These were filed by two US-based law firms, Izard Nobel LLP and Vianale & Vianale LLP.

Reports also said that former MD of Tata Chemicals, Homi Khusrokhan and ex-group finance director of the Murugappa group, Partho S Datta could be named Satyam's CEO and CFO, respectively. The new board was likely to announce on Saturday the names of its new CEO and CFO. Among the other Satyam related news, General Electric (GE) and Bombardier said they will continue their business association with Satyam, while National Australia Bank said it was reviewing its outsourcing plans with Satyam. At the same time, reports said that Citigroup, Merrill Lynch, Novartis and GlaxoSmithKline may discontinue their deals with Satyam. T