Satyam to restate its books by the end of March

February 16, 2009,

Satyam Computer Services Ltd is looking to restate its financial results for the third quarter-ended December 31, 2008 sometime in March this year. “We are looking at restating accounts for the quarter-ending December 31 by the end of March this year. Our auditors are working towards this end,” a Satyam spokesperson said at the weekend.

The only caveat to this possibility would be if the auditors decide to restate results of the company over the past several years, which could further delay a clearer picture of the Hyderabad-based IT company’s actual financial position.

Satyam chairman Kiran Karnik had earlier stated that a restatement of accounts of the scam-ridden company would take time, though the good receivables position of the company at Rs 1,700 crore were a positive indicator as far as its financial stability is concerned.

Karnik has also said that a restatement of accounts should ideally have no bearing on the sale of the company. KPMG and Deloitte were entrusted the task of restating Satyam’s account by the company’s board, following founder chairman Ramalinga Raju’s confession on January 7 that $1 billion on the company’s balancesheet was faked.

On the total shortfall of Rs 15 crore in staff provident fund remissions to the Employees Provident Fund Organisation (EPFO) for the month of December from Satyam’s end, the spokesperson said, “We have been co-operating with the EPF office on this and made the appropriate clarifications to their complaint. The 43,000-odd employee numbers with the EPFO are accurate, if you exclude trainees and non-Indian employees. Going ahead, the accounting restatement will also tally with the employee audit.”

To a query if remissions for December and January had been carried out, the spokesperson said, “As of January, we have fully complied with all the statutory requirements on the PF front.”

The process of finding a strategic investor in the company is currently on even as offers for management control in the company have poured in from companies like engineering and construction firm Larsen & Toubro Ltd (L&T), the Hinduja Group, the Spice Group and Tech Mahindra. L&T, which presently has 12 per cent stakeholding in Satyam, is said to be holding on to plans to further increase its stake via the open market till a clearer picture of Satyam’s financial status emerges post-restatement of accounts.

Satyam chairman Kiran Karnik had said after the board meeting on Thursday last that the company is financially stable and a final roadmap for the company would be decided in the next seven to 10 days. The company has secured Rs 600 crore in bank loans as a buffer to tide over cash shortfalls in the medium term.

The company has reiterated that its customers have stood by it and ruled out losing contracts to competitors. Visiting Cisco chairman and chief executive officer John Chambers on Thursday said his company would continue to repose faith in its “long-term relationship” with Satyam.