Satyam says restating accounts won't delay sale

MUMBAI - Bidding for the sale of fraud-hit Indian outsourcer Satyam Computer could begin before its accounts are restated, with details of the process coming as early as next week, the new company chairman said on Thursday.

India's No.4 software exporter, has been struggling to survive since last month, when its founder Ramalinga Raju quit as chairman, disclosing a massive fraud that included years of overstated profits, leaving the company strapped for cash.

Chairman Kiran Karnik, appointed last week, said the board wanted the bidding process to start as soon as possible and it might not wait for the report on the firm's accounts.

"If the recasting takes a long time, which I expect it will, then we will not wait. That's not something which will hold up the process," Karnik said, speaking to reporters outside a meeting of the board to take stock of the issues facing customers and employees.

"It's a work in progress. I can't give any deadline. I can only tell you, this needs to be done quickly," Karnik said.

He said he expected the bidding process to be outlined in the next seven to 10 days and said the board would like to have many suitors contesting in an "open process".

Karnik said the company was financially stable and reiterated it was able to pay salaries, mainly from receivables. It has secured bank loans of 6 billion rupees ($123 million) and Karnik said that money would offer the firm an additional buffer.

"We have ensured financial stability," he said. "This is the first step and a very necessary step, though it's not a sufficient step. We have put out the fire and now we are looking at what we need to do to stabilise the company on an ongoing basis."

The company's reconstituted board has appointed Deloitte and KPMG to restate Satyam's accounts. A board member said on Jan. 20 they may take six weeks to get a "fair account".

The board has appointed Goldman Sachs and Avendus, an Indian investment bank, to look for strategic investors, and Karnik said on Wednesday the board had been approached by many potential suitors.

Shares in Satyam, whose market value has plunged to about $650 million from about $7 billion in May 2008, closed 2.2 percent down at 46.10 rupees in a Mumbai market that fell 1.6 percent.

SUITORS WAITING

Suitors have lined up to take over embattled Satyam, which has more than 600 clients, including General Electric and Coca Cola, though some groups have expressed concerns about the lack of clarity about liabilities.

Top engineering firm Larsen & Toubro has built up a 12 percent stake in Satyam and is seen as the leading contender. Some of the others showing interest include diversified Indian business houses Spice Group and Hinduja Group.

However, U.S.-based iGate Corp, which in January showed interest to acquire Satyam with help from buyout firms, said last week it had no interest in taking over the company due to lack of clarity on its liabilities.

Analysts have said selling Satyam may not be easy unless there is clarity on its accounts. It also will be easier after Indian takeover rules are simplified.

India's market regulator has said it would change its rules on mandatory open offers to buy shares in firms, at the request of Satyam's board. It has not given any time frame.