Moneycontrol » News » Business » Business News

Deepak Parekh, Kiran Karnik, Achuthan on new Satyam board

Published on Sun, Jan 11, 2009 at 13:00 | Source : CNBC-TV18

Updated at Mon, Jan 12, 2009 at 18:02

100644 Investors following Mahindra Satyam. Share this News with them.

Share on Tumblr

RELATED NEWS

ALSO READ

Mahindra Satyam

BSE | NSE 25/05/12

Are Mutual Funds betting on Mahindra Satyam?

Minister for Corporate Affairs PC Gupta said the government has elected three members to the board of Satyam : HDFC chief Deepak Parekh, former Nasscom president Kiran Karnik and former Sebi member C Achuthan. Further appointment, Gupta said, will be made subsequently as required.

Commmenting on the powers granted to the new board, the minister said the new board will be fully independent, and make its own assessment. The chairman would be decided by the board.

The new Satyam board will meet in 24 hours. "All options before the board are open, and it will decide what has to be done in the interests of the company."

Gupta also refused to confirm or deny if investors like Lazard - Satyam's single-largest shareholder - would be given seat.

Troubled tech giant Satyam's woes started when its former chairman, B Ramalinga Raju, on Wednesday startled the world by admitting to a Rs 7,000-crore. After the company's stock took a hammering at the bourses, the government intervened and scrapped the board and put this new one in.

So, what do experts read into this development?

Suresh Senapathy, CFO, Wipro, feels the kind of action that the government has taken is remarkable. "We haven't seen that in the past, whenever an incident of this nature has happened. The appointment of the board with such strong persons will restore confidence of all stakeholders, customers, and employees. I am sure the kind of members getting in, will fast restore the confidence of the entire community."

This view is also shared by Narayan Murthy, Chief Mentor, Infosys. "These are all excellent people. Deepak Parekh is known for handling such situations and he has done it with distinction. Kiran Karnik is an extraordinary person who did a wonderful job as the Executive Head of Nasscom. I don't know about C Achuthan. But coming from the Securities and Exchange Board of India he must be another wonderful person."

He feels the most important thing for the new board to do is to ensure that the future of the 53,000 employees is well taken care of. "The extremely important thing is that they are innocent people, they are not part of whatever has happened. So whatever is done, first they have to ensure that these youngsters and other employees' future are safe and they are happy. Then, we have to make sure that all customers are all well taken care of. Their confidence is restored and all the work in progress projects are continued well. So, first employee and then automatically you can take care of investors."

Deven Choksey of KR Choksey Securities said the new Satyam team would give lot of confidence to people to remain in the company. "Deepak Parekh, who is coming at the helm of the affairs, is going to be the person on whom the outside world as well as the internal people would have lot of confidence and will rely upon. Also, Kiran Karnik is carrying a lot of experience on the industry side, so I think he would be a big asset for the company. C Achuthan coming in from the Sebi side will ensure that proper regulatory environment is established once again back into the company. So from the outsider's perspective as well as the employee's perspective, this new team which is coming at the board level, would definitely give lot of confidence to people to remain in the company."

Commenting on how the markets will react to this news on Monday, Choksey said at least the negative sentiment will get arrested in the market place. "Investors will have more anxiety about the kind of outcome from this new board as far as the company's working and the find-outs are concerned. They would not have wrong image about the company, particularly the country as a whole. Wrong images which was getting created will get arrested. So, from that angle, the market could definitely get some amount of stability hereafter when we will see market opening on January 12.

Mohandas Pai, Head-HR and Administration, Infosys, also hails the government move as positive. "I am very happy that such good people have been appointed. Deepak Parekh is an icon. Globally, he is a very credible face and a banker. He will know how to get money for them. Kiran Karnik knows the industries inside out. C Achuthan from Sebi knows how the regulator works. So, it is a very well thought out board by the government. I must compliment the government on this and I think industry is happy to have such good people."

Commenting on what will be the first steps of action of the new board, he said the first thing that needs to be done is for the board to meet and get a presentation and update from the management. "It then needs to communicate and make a plan of action. The board should communicate will all the clients, give them assurance that services will continue, there will be no disruptions and their interest will be taken care of. They then need to talk to all employees and assure them that their careers will be protected to a maximum extent, and that the company is a going concern. It also needs to arrange for a line of credit because they need to pay salaries this month. One of the board members should focus on investigation. It is very important to get to the bottom of it and give all information to the regulators and to come out with a strategy to fight the court cases, because the company is under great stress from the legal front."

Hitesh Jain, Lawyer, Lazzard, said the firm has addressed a letter to the Ministry of Corporate Affairs saying it would like be a part of the discussion and consultation process. "So, we will like to hear from the government on our letter and based upon that further steps will be taken. Lazzard has already addressed a letter to Satyam Computers on the same lines that if the company is going to take any further steps, they should also consult with Lazzard. So, now there is going to be a board. If they are going to have a meeting, Lazzard has already placed a letter on record that the company should call them for discussion."

Sandeep Parekh, Professor, IIM-A, feels this is an important first step in terms of confidence building. "It is a great first step in terms of confidence, but the problem is enormous. There are three parts of it. One is of course the fire-fighting or the investigation which is going on - cooperation with the various regulatory bodies, cooperation with boards both in India and aboard. We have seen class action lawsuits. The second aspect is development of the business, making sure clients don't leave, making sure the important employees don't leave. That is the developmental side of it. Third, to ensure that everything just doesn't collapse and just general trouble shooting and management skills. This combination is a great combination in terms of trouble shooter and a great manager like Deepak Parekh. Kiran Karnik who brings in the software aspect, brings in enormous technical aspect, domain expertise into this. C Achuthan who is a man of great intellect and has kind of laid down the entire securities law in this country. Even after he is left he has contributed pretty substantially to how the financial law was worked for the last decade plus."

Thomas Mathew, MD, LIC, said the names chosen by the government are of really eminent and respected people and experts in their field like legal, IT, and finance. "We feel that it was the right choice and a correct decision. This will definitely help restore investor confidence. I am sure with these kinds of eminent people on the board, definitely the company should make turnaround and salvage value in a short while."

He said the new board appointees should take steps which would improve investor confidence in the company and also see that clients remain with the company. "Receivables should continue to be received by the company and in the long-term they should restore its reputation."