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Satyam: Management involves staff in firm's revival bid
K Rajani Kanth & B Krishna Mohan in Hyderabad | February 07, 2009 12:38 IST
The scam-tainted Satyam Computer Services [Get Quote] appears to be gearing for action after almost a month of uncertainty. Under the guidance of newly-appointed chief executive officer A S Murty and special advisors Homi Khusrokhan and Partho Datta, the company has called for a series of meetings at various levels to involve employees (called associates) in rebuilding the company.
Calls to several employees today elicited a common reply, "Call me later. I am in a meeting." Most of those who fleetingly responded said the appointment of A S Murty may get the company back on track. The stock was up 2.5 per cent today (after falling for 3 consecutive days) to close at Rs 47.40 on BSE.
In an email to Satyam employees, Murty stated, "I learned a long time ago that many companies can thrive when things are going well - when the economy is strong and customers line up to buy products and services. It takes a very strong organisation, bonded by true culture and value-based management, to survive a crisis."
He assured them that things have stabilised in the organisation with regard to payroll. "We now have secured the funding for timely deliveries and other working capital requirements. Our board is solidly with us and several of our customers have reinforced their commitment. A few may have left, but we will endeavour to bring them back," he said.
The appointment of Murty as CEO will make the revival efforts more focussed, say some employees. "We are taking the various reports appearing in the media with a pinch of salt. There are contrasting news in different media about clients not renewing their contracts, which is in contrast with the internal communication channels," said another associate.
Meanwhile, another piece of news that lifted their spirits was the company's internal newsletter Newstoday, which informed that Satyam had received bank sanctions for Rs 600 crore (Rs 6 billion) as a planned fund infusion towards working capital requirements.
But there was some bad news too. iGate Corp which earlier had evinced interest to acquire a part of Satyam, has backed out, citing delay in taking the decision by the company's management. "Our interest in Satyam is waning. I believe that delay in decisions will erode value of the company because of the migration of customers and employees," said Phaneesh Murthy, CEO, iGate.
Analysts say that the appointment of a CEO yesterday gave an indication that the company is not prepared for an easy takeover, when there is no clear picture about its valuation.
A Larsen & Toubro spokesperson said the company did not want to comment on the new appointment. B K Modi, chairman, Spice Group (another suitor), dismissed the appointment saying "...there should be clarity on the Satyam issue. The government has to decide whether it intends to nationalise Satyam or run it as a private sector company, as it always had been...the government should sell a controlling stake to the highest bidder through an auction process (to which L&T is opposed)".
Vineet Nayyar, vice-chairman and managing director, Tech Mahindra [Get Quote], too, had said, "it (CEO's appointment) still does not solve the basic problem of Satyam and that is getting the books cleared, liabilities issue, and customer retention."
Sudin Apte, senior analyst, Forrestor, believes, "This appointment is a good step for tactical purpose," but adds that "customers are more concerned about who will buy Satyam -- a large conglomerate or a tier II IT firm or someone who has nothing to do with IT. This appointment certainly does not solve these questions and concerns."
With inputs from Bibhu Mishra, Bangalore
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