India's embattled Satyam Computer Services could receive liquidity from the government, but will seek funds from banks and ask for early payments from clients in a bid to salvage the firm, a member of its new board said. (12 January).
The outsourcer will appoint a new accounting firm within the next 48 hours to work on restating the accounts, Deepak Parekh, senior banker and government appointed board member, said.
The issue of working capital requires immediate attention, said Parekh, who is also chairman of Housing Development Finance Corporation (HDFC), a home loan company in India.
The Indian government has promised immediate funds to help Satyam overcome the crisis and safeguard 53,000 jobs. It will also appoint new board members "soon".
But the amount of cash required to salvage the company is not yet clear, as the board has the task of sorting out accounts which have been falsified for years.
The working capital crisis may not be acute, according to Parekh. The company has large receivables due and minimal debt. But the board cannot plan salvaging strategies until it is sure the figures for the receivables and debt are correct, he added.
"The board will try to its best to help the company tide over the crisis," said Parekh, sitting beside fellow board members Kiran Karnik, former President of NASSCOM and C Achutan, Director at the National Stock Exchange. All three members were appointed to the board of the troubled outsourcing firm by the Indian government, in the wake of a billion dollar accounting fraud by chairman and founder Ramalinga Raju.
Parekh told press that the priority is to restore confidence and then restate accounts that the former chairman Raju admits have been falsified for years.
“No one has faith in the numbers being produced so far,” Parekh said. “Unless the accounts are restated, the outlook for Satyam can’t be the same.”
"We want authenticated numbers and unless we get that, no bank is willing to give credit lines," said Parekh, adding that the board would meet frequently to figure out how to raise funds.