MUMBAI - Satyam Computer Services Ltd. (500376.BY), embroiled in a fraud scandal, will decide on hiring an investment bank Thursday to help the company explore options, board member Deepak Parekh said Wednesday.
"All options are being looked at," Parekh told reporters on the sidelines of an industry event.
The comments came after Tarun Das, another Satyam director, said Tuesday potential buyers had approached the board although it had not yet discussed about any buyers or whether it would sell a stake or the company outright.
Meanwhile Kiran Karnik, also a member of the board, said Wednesday two "important" clients had notified Satyam on terminating their contracts with the Indian outsourcer. He declined to name the clients.
Earlier Wednesday, the Economic Times newspaper reported U.S. health insurer Cigna Corp. (CI) had given Satyam a three-month notice to end a technology outsourcing contract.
But a spokeswoman at Satyam said the report was untrue. Cigna officials couldn't be reached for comment.
Parekh said the company is still in the process of raising funds to meet its payment requirements for January and Satyam has pledged some receivables for funding needs. He didn't elaborate.
"We are trying to get receivables so we have funds to make payments for January. But, we are getting mixed responses from clients as they are very concerned and worried about the current circumstances," he said.
Parekh said the company is unable to raise funds from the banking sector unless Satyam's accounts are restated.
"Banks look at financial statements before giving loans, and last year's balance sheet is wrong," said Parekh, who is also the chairman of Housing Development Finance Corp. - India's top mortgage lender by assets.
He said there were certain documents at Satyam which pointed to possible fraud at the company, without providing more specific details.
"Some of the papers we've seen. It is obvious...you can make out that some of the documents were forged."
Parekh, Das and Karnik are part of the new six-member board appointed by the government earlier this month to bring Satyam back on track after its founder and former chairman B. Ramalinga Raju said he overstated its profits and created a fictitious cash balance of more than $1 billion.
Several government agencies are currently probing the company. Raju, his brother and Satyam's former managing director B. Rama Raju, and former chief financial officer Srinivas Vadlamani are in police custody in Hyderabad, where the company is based.
Capital market regulator Securities and Exchange Board of India, or SEBI, said it's difficult to ascertain the extent of the accounting issues at Satyam before the investigations are over.
While the regulator hasn't questioned Ramalinga Raju yet, it has questioned Satyam's auditors and internal finance department staffers, SEBI Chairman C. B. Bhave told reporters.
Price Waterhouse, a local affiliate of PricewaterhouseCoopers, audited Satyam's results for the past several years. Bhave didn't name Satyam employees SEBI questioned.
SEBI had also sought court permission to question Ramalinga Raju, and a judge in Hyderabad is expected to make a decision on the regulator's request Thursday.
Bhave said SEBI would have to go through a lot of papers "and go back in time to know the extent of fudging" of accounts. The regulator is trying to conclude the probe as fast as is "humanly possible," he added.
Bar On Selling Assets
India's Company Law Board has asked the Raju brothers, Vadlamani and two others - former director Ram Mynampati and Company Secretary G. J. Jayaraman - not to sell or mortgage their assets without its permission.
It has also asked them to submit the details of their bank accounts as well as moveable and immovable properties in India and abroad by Feb. 20, federal corporate affairs minister P.C. Gupta told reporters in New Delhi.
With Raju confessing to cooking Satyam's books, the government-appointed board had earlier said the accounts of the company had to be restated. It had appointed KPMG and Deloitte Touche Tohmatsu to look at the accounts.
KPMG's appointment, however, hasn't gone down too well with the nation's apex body for chartered accountants, the Institute of Chartered Accountants of India, which had objected to the firm's role as it isn't a registered member of the institute and, hence, can't audit in India.
But board member Parekh said KPMG isn't auditing Satyam's books and will play only a consulting role.
No Regulatory Probe Yet On Maytas Infra
SEBI hasn't yet formally ordered an investigation on Maytas Infra Ltd. (532907.BY), Bhave said, without elaborating.
The Raju brothers and their families have stakes in Maytas Infra and Maytas Properties Ltd., and Satyam had in December made a proposal to acquire the infrastructure companies for a combined $1.6 billion.
Satyam had to scrap the plan within hours of announcing it as investors, angry over the valuation of the companies, pulled down its stock price.
Meanwhile, as a direct a fallout of the Satyam development, the regulator Wednesday asked founders of companies to make disclosures when they pledge shares to raise funds.
The discloses will have to be made every three months as well as every time the shares are pledged, SEBI's Bhave said.
Ramalinga Raju had pledged his entire stake in Satyam to institutional lenders, who sold the shares when their value dropped after the aborted attempt to acquire the Maytas companies and Raju failed to provide top-up funds.
Such pledging of shares as collateral has picked up pace in the wake of the liquidity crunch, say observers.
-By John Satish Kumar and Ankur Relia; Dow Jones Newswires
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