Satyam targets Rs 8,000-crore receivables

14 Feb 2009, ET Bureau

HYDERABAD: Tainted Satyam Computer Services is expected to garner around Rs 8,000 crore from customers over the next one year, even as the board is close to firming up the eligibility criteria for potential suitors, including many PE firms. The money is expected to be raised from both existing as well as new customers.

“Satyam expects receivables of over Rs 650 crore every month and the projections include revenues from over half-a-dozen new small- and mid-sized clients who have come on board recently,” said a source privy to the development. The software firm has already taken a bridge loan of Rs 300 crore each from Bank of Baroda and IDBI to meet immediate working capital needs. The source confirmed that investment bankers Goldman Sachs and Avendus were vetting a proposal on sale of controlling stake in Satyam through fresh issuance of equity, whose value would be decided through a transparent bidding process.

“A preferential allotment of equity by Satyam is one of the options being considered, but a decision is still awaited. Investment bankers are working out the eligibility criteria for prospective buyers who want to take over management control. Several PE investors have made proposals to the board, besides domestic and international firms which have expressed interest in acquiring Satyam,” the source said. Satyam’s suitors include engineering firm L&T, BK Modi-promoted Spice Corp, Tech Mahindra and iGate, among others. The Hindujas have also confirmed their interest in the software firm.

On January 7, company’s disgraced founder B Ramalinga Raju confessed to perpetrating a Rs 7,000-crore financial fraud. Global audit firms KPMG and Deloitte are restating company’s account. But the process is expected to take a while. A restatement of the accounts would be crucial for valuation of the company.

Last month, the board made it clear that the strategic road map for Satyam would not include the option of hiving off parts of the company and selling them as separate units. The company would only be sold as an integrated entity. “A sale of parts of Satyam at this stage would be contrary to the mandate of regulating affairs of Satyam as a going concern, as stipulated by the government,” the board had said.

The board has been in touch with Satyam’s customers to assure them of business continuity. Satyam’s major clients include GE, Applied Materials, DuPont, Qantas and Bombardier. Shares of Satyam were up by 0.4% to close at Rs 46.3 on the Bombay Stock Exchange
. Meanwhile, Satyam sought to boost employee morale saying “every effort would be made to ensure that the firm continues as an independent entity” in an internal news letter.