Government Acts - Satyam -New Board Constituted

The new Satyam board will meet in 24 hours and its chairman will be selected by its three members, who include Deepak Parekh, chairman of the Housing Development Finance Corp, said Corporate Affairs Minister Prem Chand Gupta.

The other members are Kiran Karnik, former president of technology lobby group, the National Association of Software and Service Companies, and C. Achutan, a former official of the regulator Securities and Exchange Board of India (SEBI).

"These three members will chart the future course of action for the time being," Gupta told a news conference in New Delhi.

New York-listed Satyam welcomed the reconstitution of the board, saying it would ensure the outsourcer's continued operations, help maintain customer confidence and staff morale, and restore investor trust.The agenda of the new board's meeting was not disclosed but analysts said it would likely focus on ways to retain existing clients such as General Electric and Nestle and how to guarantee working capital.

Stand-in Chief Executive Ram Mynampati said on Thursday the scandal had pushed Satyam, which specialises in business software and back-office services, into a crisis of unimaginable proportions and that liquidity was not very encouraging.

"The aim of the board will be to ensure continuity of business and confidence of clients as clients always gets concerned with such incidents," Karnik told television channel NDTV Profit. "Satyam will be back on the rails."

Analysts said the quick move to name new board members was a step in the right direction.

"I think it's a first good move towards restoring client confidence," said Sudin Apte, country head of Forrester. "But we still have a long way to go."

In a five-page letter sent to stock exchange authorities last week, Raju admitted about $1 billion, or 94 percent of the cash and bank balances on Satyam's books at end-September, did not exist.

Gupta said the government would soon make a decision on appointing additional board members.

Several securities fraud class action lawsuits have been filed in the United States on behalf of investors who bought Satyam American Depository Receipts (ADRs) in the last five years.