Satyam gets another extension on filing its accounts

Indian outsourcer Satyam Computer Services has been granted an extension to file its financial results, leaving the financial health of the company unclear for a further three months.

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Indian outsourcer Satyam Computer Services has been granted an extension to file its financial results, leaving the financial health of the company unclear for a further three months.

India's Company Law Board (CLB) granted Satyam's request for an extension until Sept. 30 to file its results for 2008 and 2009. The filing of the results has been pending since the company came under a cloud in January last year for a financial scandal.

The delay could cost the company in terms of new business, according to Anthony Miller, managing partner at research firm TechMarketView.

“It is hard to see how customers, and particularly new customers, will be prepared to do business with a company for which they have no sense on the financials or key operating metrics,” Miller said.

The move could also anger Satyam investors, who have been complaining about the lack of financial information.

Satyam applied to the CLB last month asking for an extension of the deadline. In October last year, the CLB had extended the deadline for filing to 30 June 30.

Satyam was plunged into a financial crisis last year after its former chairman and founder, B. Ramalinga Raju, disclosed that the company's revenue and profits had been inflated for several years. A board, appointed by the Indian government, ordered the company's accounts to be restated, and also invited bids to select a strategic investor for the company.

Tech Mahindra, another Indian outsourcer, acquired a 43 percent stake in the company last year.

Satyam’s chief marketing officer, Hari Thalapalli, said last month that the restatement of the accounts was getting delayed because of a court decision which gave Satyam and its auditors only limited access to the company’s financial data, which is in the custody of the country’s Central Bureau of Investigation (CBI).

The CBI is investigating the role of Raju and some other former key executives of Satyam in the fraudulent accounting at the company.

If there is a problem that is causing a delay then the new management at Satyam should fix it, because the longer they leave the disclosure hanging, customers who have a deal to be done will go to competitors, Miller said.

Satyam as a company has not lost its reputation after the financial crisis, although the top management at the time did, according to Miller. A number of customers continue to do business with Satyam because they have confidence in its capabilities, he added.

But it will become more difficult for the company to pick up new customers, and renew existing business, if it does not disclose its financials quickly, Miller said.

Some analysts have suggested that Satyam should release at least some indications of operating performance for the period after the new management took charge. But the company is not able to disclose even summary data in the interim because it is in a "silent period," Thalapalli said.

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