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Satyam running out of cash, CFO quits, damage limitation on
Mohammed Siddique in Hyderabad | January 08, 2009 18:00 IST
Last Updated: January 08, 2009 20:20 IST
Beleaguered Satyam [Get Quote] on Thursday embarked on a major damage control exercise to pull itself from the brink, pushed to by founder Ramalinga Raju, saying arranging liquidity, assuaging fears of 53,000 employees and continuing the existing business would be its top priority.
Not ruling out initiating action against Raju or the auditors PwC for its complicity in fudging of accounts, the acting CEO Ram Mynampati said every possible action would be considered against Raju, who quit as chairman after making startling revelations on corporate India's biggest fraud entailing about Rs 7,800 crore (Rs 78 billion).
Mynampati, who is the only employee member of the company's board, addressed a crowded press conference at Satyam's headquarters in Hyderabad on Thursday evening to reassure customers, clients and employees of the company, stating that the leadership was committed to ensuring that the business continues with out any disruption.
Aimed at preventing panic exodus of highly talented workforce and top management, the interim CEO said that the December'08 salaries has been paid and the management would be focusing on arranging funds, which at the present juncture was a cause for concern.
"Some outstanding payment to vendors is yet to be made. We are verifying the liquidity and balance sheet. We have to raise liquidity in near term and are confident of raising it," said Mynampati, while adding that his appointment was legal.
On the conduct of auditor PriceWaterhouseCoopers, he said: "We have not verified what process PwC took to certify financial statements. We are not yet in touch with them."
"We do not rule out recommending action against Ramalinga. Many actions are possible for Satyam's future," he said, adding that the company was not aware of his whereabouts amid reports that the disgraced founder of the country's fourth largest IT company had left for the United States on Wednesday before the news of his resignation and disclosure became public.
On the auditor PriceWaterhouseCoopers who have been authenticating year after year the company's accounts, which Raju admitted to fudging by inflating profits and creating fictitious assets, Mynampati said: "We have not verified what process PwC took to certify financial statement. We are not yet in touch with PwC."
In the middle of the press conference held by the interim management at Satyam's headquarters here, CFO Valdamani Srinivas, who is the financial custodian of the company, sent in his resignation but Mynampati said the board would decide on it on January 10 and anyway he has to serve notice period.
Meanwhile, under siege PwC shot back at Satyam, saying a media statement that the auditing was based on the audit evidence provided by Satyam and in was accordance with applicable standards. The auditor also said that it will cooperate with the regulators in the probe into the fraud.
On the financial irregularities disclosed by former Satyam chairman Ramalinga Raju, Mynampati said the team was not yet in a position to answer these issues, as it is still ascertaining disclosures made by Ramalinga Raju and trying to correct financial irregularities.
He said the regulatory bodies have already started their inspection and a team of market regulator Sebi was in Satyam talking to associates.
CFO Srinivas, who Mynampati said was expected in office within a week, sent in his resignation during the course of the press conference -- dealing a blow to efforts to hold the top leadership team intact. The board will decide on accepting his resignation at a meeting on January 10.
Mynampati said that new management may recommend action against Satyam founder Ramalinga Raju; many actions are possible for company's future.
Mynampati also said that the company's board has launched the process to ascertain if the disclosures made by disgraced Satyam chairman B Ramalinga Raju on the financial irregularities are correct or not.
Mynampati was ill-prepared as he kept dodging questions and parroted in a staid, rehearsed manner. He said that the company's priority was to ensure complete transparency and to ensure a smooth transition of leadership. He also said that Satyam was in the process of identifying new candidates for the board.
Saying that his appointment as interim CEO was legal, Mynampati said that the company's financial results for Q3 of FY'09 are expected at end of this month and that Satyam will look at the option for a strategic buyer.
Expressing ignorance on the whereabouts of Raju since the disgraced Satyam chairman sending his five-page letter, Mynampati said that he and other members of the leadership had the conference call with Raju in which he reiterated what he had said in his letter earlier. "He assured us his full cooperation," Mynampati added.
Additional inputs: PTI
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