Latest Satyam board meeting ends inconclusively

But board says it will name new CEO, announce funding infusion next week

The new board of directors at scandal-ridden Satyam Computer Services Ltd. met again today, but it didn't finalize a solution to the offshore outsourcing vendor's liquidity crisis or name a new management team for the company.

It was the third meeting since the Indian government took control of Satyam's board, dismissed the previous members and appointed its own nominees. That came in the wake of a Jan. 7 admission by Satyam's now-former chairman that the company had inflated its financial results for several years.

As a result of the accounting scandal, Satyam customers want reassurances that the company will be able to continue operating and retain the employees who are doing work for them, said Siddharth Pai, an India-based consultant at Technology Partners International Inc.

Satyam disclosed earlier this week that State Farm Insurance Cos. had terminated its IT outsourcing contract following the accounting fraud disclosure. Meanwhile, a spokeswoman for General Electric Co.'s subsidiary in India said GE would continue to work with Satyam "at this point."

At the conclusion of today's meeting, Satyam's board said it is in the final stages of securing arrangements for new funding to help tide the company over on paying its operational expenses, including worker salaries and payments to external vendors.

The board said that a funding announcement is expected by next Wednesday and that the new infusion will address the company's operational needs through the end of March. However, the board added that because of "the demanding financial situation" faced by Satyam, it and the company's remaining executives had also discussed ways to speed up bill collections from customers and implement "prudent measures for cost optimization."

A new CEO and chief financial officer are scheduled to be named next week as well, the board said, noting that it has narrowed its possible choices to three candidates for each position. Satyam named an interim CEO after Chairman B. Ramalinga Raju and his brother, CEO B. Rama Raju, both resigned. The company's chief financial officer also left after the accounting scandal came to light.

Copyright © 2009 IDG Communications, Inc.

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