Satyam looks to reassure customers, investors

Interim CEO says outsourcer is working to improve liquidity after accounting fraud

The interim CEO of Satyam Computer Services Ltd. today attempted to reassure customers and investors that management could keep the India-based offshore outsourcer afloat after an accounting scandal, but he didn't disclose any specific measures that are being taken.

Satyam is working on various options to improve the liquidity of its balance sheet, which currently is not encouraging, interim CEO Ram Mynampati said without further elaboration at a press conference in Hyderabad, India.

Company executives have reached out to customers and spoken to some of them individually to assure them of the continuity of Satyam's outsourcing services, Mynampati said.

Satyam chairman B. Ramalinga Raju resigned on Wednesday after admitting that the company had inflated its profits and cash holdings for several years.

Despite Mynampati's efforts to sooth concerns about Satyam's viability, Forrester Research Inc. analyst Sudin Apte said that the outsourcer may not be able to survive the accounting scandal on its own.

"The future of Satyam as an independent entity is in doubt now," Apte said. "With fraud running high and no clear visibility into availability of working capital and cash on hand, its clients and employees will have serious challenges."

Clients likely will start analyzing their dependence on Satyam's resources, particularly for mission-critical jobs such as running SAP applications, and then decide whether to move them in-house or to another service provider, Apte said. Customers typically have more than one offshore supplier, reducing their need to rely on any single supplier in the short term, he added.

The outsourcer's customers may also offer jobs to key Satyam staffers working on their projects, according to Apte.

The moves at Satyam come even as Raju remains at large. "We have no knowledge of where Mr. Raju is," Mynampati said.

Mynampati was temporarily appointed CEO by a board that has been truncated by resignations over a controversial bid by Satyam to diversify into the construction business last month. That proposal, which involved buying two companies in which Raju and his family have large ownership interests, was foiled by investor protests.

The company's board is scheduled to meet on Saturday and will have to find new members before it can make Mynampati's appointment as CEO permanent, analysts said.

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