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19 May 2024

Potential buyers begin to circle Satyam Computer


Buyers have begun to circle India's beleagured outsourcing giant Satyam Computer Services, which has been fighting for its future since founder and former chairman B. Ramalinga Raju confessed to a $1 billion (Dh3.67bn) fraud on January 7, reports said.

Tarun Das, a member of Satyam's new government-appointed board of directors, said the company has been approached by suitors from India and abroad.

"We have been approached by potential buyers," the Press Trust of India quoted him as saying. "It is a very strong company. The board has not yet discussed the issue of looking for a buyer."

Aegis BPO Services, the back office unit of India's Essar Group, has expressed interest in carving out Satyam's back office arm, but has not made a formal offer, Aegis chief executive Aparup Sengupta said.

"We have expressed our interest in the form a letter to the board of Satyam," he said, adding that the letter was delivered last week.

"There is no offer we have put," he added. "We need to understand the firm more. There has to be due diligence."

Indian media reports have also fingered Larsen & Toubro, one of India's largest engineering conglomerates, as a potential suitor.

A Larsen & Toubro spokesman declined to confirm or deny those reports.

Larsen & Toubro owns four per cent of Satyam stock and has a software services and back office subsidiary called L&T Infotech, whose clients include Chevron, Hitachi, Sanyo, and Sunoco.

Raju said he had cooked Satyam's books for years, and the company's auditor, Price Waterhouse, the India unit of PricewaterhouseCoopers, has said that its audits are unreliable because they hinged on potentially false company data. Aegis has completed 11 acquisitions in the last three years.

Satyam's board will hold its next meeting today and tomorrow.

Satyam collapse hits NRi sentiment

The crash in the stock price following the fraud by Satyam Computers has shattered sentiment of Non Resident Indian (NRI) investors in the Gulf.

The stock, which had plunged to a low of Rs6.42 from a record high of Rs542, closed at Rs27.75 on the Bombay Stock Exchange yesterday.

The stock plunge has severely eroded the wealth of small and medium investors form the Gulf.

These investors are waiting for the new management to take some steps or a take-over by rival companies.

"On the advice of a financial expert, I had bought some shares of Satyam at Rs450 per share. Now the share value has come down to around Rs25," Raj Kumar, an Indian office clerk working in a Dubai office said.

"It is true that Satyam shareholders have been cheated," KV Shamsudeen, Director, Barjeel Geojith Securities, and a leading Indian investment advisory firm in the UAE said.

"NRI investors are upset about the fraud and its impact on the company's share price. I know investors who have purchased Satyam shares about 10 months back investing Rs2 million, but their share value has come down to just Rs 100,000," said Reji Jacob, Managing Director, JRG Securities, an Indian brokerage and investment advisory firm. (VM Sathish)