HYDERABAD: The new board of India’s scandal-hit IT giant Satyam Computers met for the first time yesterday, raising hopes for its future and sparking life in its moribund share price.
The group discussed critical issues linked to Satyam’s survival, such as how to retain clients, assess the fraud and restate its financial accounts, according to media reports.
The company’s battered shares rebounded nearly 45 percent to close at Rs.34.4 as investor confidence was boosted by the government-installed board. As announced last week, the Mumbai Stock Exchange yesterday removed the company from the benchmark 30-share Sensex index in reaction to the billion-dollar accounting scandal.“Investors are hoping for a leap of faith... a new vision for the firm, but there are several issues which the new board will have to tackle,” said R. Balakrishnan, executive director with Centrum Broking. The three-member board — appointed by authorities in an effort to salvage the country’s international business image — met at Satyam’s headquarters in the IT-hub Hyderabad. They replaced Satyam’s own interim board of directors who took charge after founder and Chairman B. Ramalinga Raju admitted the company’s accounts and assets had been falsified for several years. The new members are Deepak Parekh, the chairman of private sector housing firm HDFC; C. Achuthan, a former member of regulator Securities and Exchange Board of India; and Kiran Karnik, former president of an IT lobby group.
“We have to let investigations continue, and ensure that operations continue and employee confidence is restored,” Karnik, a former head of National Association of Software and Services companies, told media.
Analysts said the board would have to safeguard existing business and clients as well as look at potential new owners and auditors for the firm.
Satyam shares had been in a free fall last week, closing at Rs.23.85 on Friday, from around Rs.180 before the scandal broke. “The stock had been battered... there is hope that the new board would help improve fortunes for the company,” said Advait Date, a dealer with brokerage BHH Securities. In his resignation letter Raju said that heading the company as the deception grew “was like riding a tiger, not knowing how to get off without being eaten.”