Satyam's current execs to remain in charge after ownership change

IDG News Service - Tech Mahindra Ltd., the highest bidder for a majority stake in Satyam Computer Services Ltd., said Monday that it plans to leave the current management team at the scandal-wracked outsourcing vendor in place after taking control.

Satyam, which disclosed a fraudulent accounting scheme in January, will also continue as an independent entity for the foreseeable future, Vineet Nayyar, vice chairman and CEO of Tech Mahindra, said at a press briefing in Hyderabad, India.

Satyam's top priorities will be to retain customers uncertain about its future and win back lost business, Nayyar said.

In February, a new board that was appointed by the Indian government to run the company named A.S. Murty, who has been an executive at Satyam for 15 years, to be the outsourcer's CEO.

While Nayyar said that Murty and the other members of Satyam's management team will continue after Tech Mahindra buys a 51% stake, he added that the outsourcer is looking for a new chief financial officer. Its former CFO, Vadlamani Srinivas, resigned in January for his alleged involvement in the accounting scandal.

B. Ramalinga Raju, who was Satyam's chairman, and his brother B. Rama Raju, who was managing director, also resigned after the scandal came to light. They and Srinivas were among six former Satyam executives and three other people who were charged with criminal offenses this month in connection with the accounting fraud.

Satyam has yet to decide whether any workers will be laid off because of declining business following the disclosure of the scandal. Kiran Karnik, chairman of the company's board, was quoted in some media reports last week as saying that Satyam has excess staffers. But he said Monday that Satyam's management would decide whether to lay off workers.

Like Satyam, Tech Mahindra is an India-based outsourcer and IT services provider. But it gets most of its business from the telecommunications industry, whereas Satyam's business is more diversified. Also, Satyam is larger, with about 48,000 employees compared with 25,000 at Tech Mahindra.

Under the terms of its deal with Satyam, Tech Mahindra will pay about $350 million for a 31% ownership stake in the outsourcer and launch a public tender offer to acquire at least another 20% of its shares. Satyam's board said it has received the funds for the first part of the deal from a Tech Mahindra subsidiary and will issue the stock after some regulatory conditions are met.

The deal calls for Tech Mahindra to appoint four of representatives to the Satyam board. But the new members will be a minority group, as the six current directors will also remain on the board until further notice, per a government ruling.

The funds for the open offer to buy stock from other shareholders have been deposited in an escrow account, according to Satyam, which said that Tech Mahindra is scheduled to begin the tender offer on Tuesday.