WORLD OF CRISIS

Jan 17, 2009

Rs 1700cr receivables offer hope to Satyam

After over a week of bad news, there appears to be some light at the end of the Satyam tunnel. The IT major has received assurances of financial lifelines from lending institutions, while its new board raised hopes that the firm's finances were not as dire as feared with its quantum of receivables being a healthy Rs 1,700 crore.

The government-appointed board also said it was open to take on "strategic investors". The good tidings on its finances might make potential "white angels" see an engagement with Satyam as viable in commercial terms rather than an act of charity that no business entity would undertake.

The news came on a day the government appointed three more directors on the board -- CII chief mentor Tarun Das, Institute of Chartered Accountants of India's former president T N Manoharan and LIC nominee Suryakant Balkrishna Mainak. The appointments are further expected to strengthen the new board's efforts at arranging funds.

"The first impression from the government-nominated directors is that Satyam's operations are sound and, by and large, major customers are willing to remain with the company," corporate affairs minister Prem Chand Gupta said after announcing the appointments on Thursday.

HDFC chairperson Deepak Parekh's announcement that rather than being completely in the red, Satyam's receivables stood at Rs 1,700 crore was greeted with cautious optimism by PMO. Though it needed to be seen how soon these funds would come into Satyam's coffers and what outstandings to banks were, it was felt that the IT giant may not need as much assistance at all. "The figure seems to tally with working capital needs," said sources.

The government's optimism stemmed from a meeting earlier in the day between Gupta and Parekh, the senior-most member in the board. Parekh also met Planning Commission deputy chairperson Montek Singh Ahluwalia to brief him about Satyam's revival roadmap.

After his meeting with Gupta, Parekh said the company had "healthy receivables" and pegged them at Rs 1,700 crore. This exceeds the Rs 1,100 crore quoted by B Ramalinga Raju, Satyam's fallen promoter who had plunged the company into a deep crisis when he owned up to having defrauded the company by cooking up books and siphoning money, perhaps for years.

Indeed, it now turns out that if anything, Raju was at least being truthful about the receivables.

Buoyed by the higher quantum of receivables, which will help bolster confidence of possible lenders, Parekh told TOI the Satyam board was open to inducting "strategic investors" as part of its strategy to revive the company. "There are many options in front of us. Yes, strategic investors is one of the options."

The board's confidence level too seemed to be going up along with the rise in the quantum of receivables. Parekh went as far as to say Satyam had the ability to even manage without an immediate bailout from the government. "It is a running company, is is an ongoing company," he said, stressing that they had the ability to pay salaries.

Coming a day after the news that Satyam paid $25-30 million as health insurance premium for its employees in the US, Parekh's words on higher receivables will lend weight to the new board's search for strategic investors and instil confidence among key financial institutions and banks to look at Satyam more positively.

"Give us some time. We are trying our best. Satyam has large receivables. If they come on time, we do not need any assistance. Its assets could also be hypothecated to borrow money in between," he said, adding that KPMG and Deloitte -- roped in to look at the accounts of Satyam -- could take at least 8-12 weeks for any report.

Parekh also quashed speculation that Satyam's former interim chief executive Ram Mynampati, a close confidante of Raju, had fled to the US and so had some other senior employees. "They have gone to meet the clients, they have gone all over," he said. Asked whether he was in touch with Mynampati and the other officials who have gone abroad, he said, "We are in touch with some of them, including Mynampati."

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