Don't see a drop in Satyam's customers, revenue: Tarun Das

Das is confident that Satyam is not in the danger of losing its customers, and subsequently, revenues as reported by The Hindu and The Economic Times. The two dailies have reported that Satyam is in danger of losing customers to the tune that, perhaps, 25% of its revenue may dissapear. He said, "I don't think that will happen. By the way, I have great respect and I have lots of friends in the media, but, I think, the media is also into a lot of new businesses this time like manufacturing news."

Here is a verbatim transcript of the exclusive interview with Tarun Das on CNBC-TV18. Also see the accompanying video.

Q: Let me start with a simple question that I think many people want you to answer. Does Satyam despite the terrible knock that it has faced have a future?

A: Absolutely, this company has great resources, outstanding people, technology know-how, fixed assets, and customers, you name it. So, this company has a great future.

Q: Will you talk first about people and Satyam is a people-led company. But given the knock it has suffered, given the tension and uncertainty they have been through, how can you be sure you can retain them? How can you be sure they even want to stay?

A: The response that we are getting from the employees of Satyam, they call them associates, is outstanding. They have been through a very traumatic few weeks ‑ very traumatic. It is understandable if they are uncertain, if they are feeling diffident. But we are reaching out to them. We are stabilizing the company, and are saying to them that they have a future. We have got cash in the company, and they are going to get their salaries on time etc.

Q: The first thing that they want to know when you reach out to them is what you hinted out or said quite clearly a moment ago that they will get their salaries on time. Are you saying to me today that the January salary due at the end of January will be paid promptly and in full?

A: No question about that. Globally, not only in India. Also, the early February salary is to be paid to all our employees in the US. We have the money, we have raised money. The employees of Satyam have increased collections, the money has flowed in. In the last two weeks, this has been done by the executives of Satyam.

Q: So, when newspapers and there was one in particular over the weekend Business Standard, which reported that there were offers being made to Satyam employees or associates as they preferred to be called by rivals and these were offers that were sometimes derisory because they were only offering up to 50% of the existing salary. Are you saying to me that no one is going to be tempted to take up that sort of offer?

A: First of all, offers are being made that we know and we know it from some of the employees. I think very few will go, maybe some will go. But as they see Satyam stabilizing, as they see money is in the company, as they see cash coming in from the banks and as they see customers staying they will stay with Satyam.

Q: The other side of the equation is what you mentioned customers staying. Are you confident that with the exception of four or five or a handful of companies that quit the others who have been with Satyam for 10 years, maybe even 15 years, will stay despite what has happened to Satyam's reputation in the market?

A: A few have gone and few more will go. But we are reaching out to our customers around the world not only to retain them, but we are actually now after all that has happened negotiating for increased business with some of the world's best names in the corporate sector.

Q: New people?

A: Old people and new people.

Q: So, when newspapers like The Hindu and The Economic Times says that you are in danger of losing customers to the tune that perhaps 25% of the companies revenues may disappear, you are saying to me that is just rubbish?

A: I don't think that will happen. By the way I have great respect and I have lots of friend in the media, but I think the media is also into a lot of new businesses this time like manufacturing news.

Q: So, what you are saying is that there is lot of misreporting, either malicious or more likely based on bad information?

A: Mostly based on wrong information.

Q: So, is there a need for the new Directors to communicate more openly so that this wrong information that is then being printed and accepted as facts and you don't worry your own employees or your own potential customers?

A: We are doing that every week. I am here with you to do that.

Q: Can Satyam - of which you now sound remarkably confident - survive as an independent company or is the future dependent upon finding a good credible buyer?

A: We don't know the answer to that yet, it can survive as an independent company. But we are getting proposals from some of the best names in the corporate world wanting to invest in Satyam. So, there is interest out there to bring money into Satyam. Why are they doing that? Because they see this as a strong organization.

Q: Let's split that answer into two parts. At this moment as a new Director of the company you have an open mind about whether the company will survive on its own or whether it needs to be sold, you haven't decided as yet. So, it could survive as an independent company, as it has been so far?

A: But because we are getting proposals and because it is our duty as a board to be responsible and fair we have appointed two investment bankers to look at all these proposals, to analyse them and present a report to us over the next four weeks.

Q: When you talk about proposals are these formal bids to buy or are they just casual, informal discussions?

A: Very formal, very serious.

Q: But what about the fact that Satyam faces at least 12 class interest lawsuits in the United States, you may end up facing more and the total damages that you could be liable for, could be astronomical why in those circumstance would people want to buy the company?

A: Because of the history of US class action suits and the board has now done a research on that with the help of our legal advisors, is that class action suits get eventually consolidated. One law firm deals with it presented to the New York court and most class action suits, if not all, are actually settled through negotiations and we have seen the numbers where these are settled. So, yes that is a liability, that is a concern but we are not seeing that as something, which will drown anybody.

Q: In other words the fear or the apprehension that the prospect of class interest suites has created in the press again could be somewhat exaggerated?

A: Obviously, the companies who are wanting to invest have discounted that they have taken that into account they are still talking about coming into Satyam.

Q: So, the final words on Satyam - I don't want to put words in your mouth, so I put this as a question. Is that you believe is a viable going business concern with a healthy future?

A: Absolutely. This is a revelation to me over the last two weeks that I have been there as a Director. We have spent time, we have gone into every aspect. This is a company with a future. Mark my words this company is not going down.

Q: So, if it is a company with a future and if this was a revelation to you, then answer something for me do you get the feeling that the Ramalinga Raju confession is actually true and that he did cook the books or was the money siphoned out?

A: I have no clue. There are so many investigations that are going on that I have no clue what he did and I suppose all that will come out. All we know is his public letter, which has been publicised and we are trying to find out. We have appointed independent accounting firms, international firms to actually find all that out. So, we will know the situation maybe in 4-6 weeks from now. But irrespective of that this company has a future.

Q: Let's broaden our discussion what impact will Satyam have on India's IT industry, IT growth as you know is critically dependent on trust and credibility have those two factors been damaged?

A: Absolutely, I think no question as to not what Satyam did but what Mr. Raju has said he did that has been in the words of Nandan Nilekani like a black eye for us. And it will take time. It takes a long time to build trust, it takes a moment to lose trust. We have to rebuild trust.

Q: How difficult will it be to rebuild trust?

A: I don't think it will be difficult. I think it will depend on our playing it straight; putting all the facts on the table, being open with bad news as well as good news, not over inflating anything, avoiding exaggeration - it is going to be our internal code of conduct.

Q: In this process how important is it that the world should see that the Satyam process is handled legally, effectively and efficiently and that the Rajus are sent to jail quickly?

A: I think very important. The government has to be applauded for the speed with which it superseded this Satyam board, appointed a new board and I am not saying that because I am on it. But they moved fast and the government is giving us support in terms of space to get on with the job.

Q: The government moved fast there is no doubt about it. But are you worried that the coach may grind very slowly as you know the Indian legal system often gets entangled in its own due process of law and if that were to happen and the Satyam case were to drag on for years and years would that have a very damaging impact?

A: As far as Satyam is concerned, I don't see an issue with the company as such, because if you differentiate the company from the promoter and Chairman, they are two different things. There is one process, which will go on with the Chairman and promoter, there is another process of investigation by Sebi, the Ministry and all that with the company. I don't see that as an issue. We are opening everything out with the government, they are looking at everything. I don't see that as an issue.

Q: Now what about the fact that at the same time as the Satyam scandal the World Bank has put a suspension or ban on the work with Wipro, work with Megasoft, is that a blow?

A: It is a blow because it is an issue of perception. The perception is what are Indian companies doing? Are they doing something irregular?

Q: And this underlines that fear?

A: That underlines the fear. This is going to be a wake-up call, something good is going to come out of this. Everybody is going to be much more careful in the future and I think you will see that standards of behaviour from Indian companies will be par excellence.

Q: You say that something good will come out of this in the future. But then I remember reading endless comments often in the Western press that what Satyam seems to do at first hand is that India's corporate governance and its regulators have actually failed. It has failed at the management level, at the auditors level, at the bank level, possibly at the Sebi level, perhaps at the government level. Won't that collective problem put people off?

A: I don't think corporate governance has failed in India. I think in the last 10 years, since we started down this road of corporate governance we have come a long way. There is a huge amount of transparency, disclosures and corporate governance in industry. But if a person wants to commit fraud - what do you do? Have we got rid of all the thieves in the world, have we got rid of all the crooks in the world? You haven't, inspite of all the laws. So, don't take one example and say don't brush everybody with that.

Q: The Satyam scandal comes in the wake of the Mumbai terror strike, it happens in the wake of the international economic crisis, and the liquidity crunch that must effect India and it happens just weeks before and unpredictable election, where we don't know the outcome, everyone seems to be certain that we could end up with a less stable, less secure government. In that atmosphere has Satyam done damage to the prospects of investment in India?

A: No, not in the medium and long-term. I think the Indian economic story is a big story in the world today, even with 7% growth, even between 6-7% growth in GDP annually. We are major players in the world. The world is comfortable working in India and working with India. And we are going to put our hand out big time with higher levels of corporate governance, more disclosures and better practices to give confidence in the world. I don't see that as an issue.

Q: Let me quote to you from the 'The Financial Times' and this is what they wrote on January 8 "It will also raise disturbing questions about the risk of doing business in India and even the sustainability of the countries much wanted growth miracle."

A: I cannot but disagree with The Financial Times, the paper which I respect very much. But they often write things which are not correct. I think our growth miracle will continue with infrastructure projects being implemented and you will see that more is happening on that. Our growth will rise this year, when the world is in a tough year of 2009. But India will still come out looking good.

Q: Are you scared that Satyam may not be an aberration as so many people keep hoping that it will be and that there maybe some truth to what Rajeev Chandrashekhar the President of Federation of Indian Chambers of Commerce and Industry (FICCI) - I accept that it is a rival organization for you- but Rajeev Chandrashekhar has said that "the most disconcerting aspect of the Satyam fraud is the growing worry amongst investors and regulators that this maybe the tip of the iceberg". What if there are more Satyams?

A: I don't think it is a rival organization. It is a small organization compared to the CII. But I respect the organization and what Mr. Chandrashekhar said - I don't think he is right. I think we must see this and it is an aberration, it is a one-off case.

Q: But does the world accept that?

A: The world will accept it as we go forward. The world will see it in the proof of the pudding is in the eating, is in the action.

Q: Let's talk about more wider and more generic lessons to begin with do we need to think carefully about the sort of people who are appointed  Directors and the numbers of Directors they can take on, which effects how much time they have for each of them and the way they function?

A: Absolutely. I would like to see much more election in the independent Directors; I would like to see the independent Directors of not more than 8 board each one.

Q: Why eight?

A: I think 10 is the limit or something and I want to make it tighter. I want independent Directors give more time to each company where they are on the board. So, I am seeking quality participation by independent Directors.

Q: So, you are talking about the scrutiny of the sort of people who get appointed to the Indian Directorships the numbers they take on which you say has to be limited to eight, and then thereafter should there be some periodic review by some independent and the sort of work they do?

A: Absolutely. And in fact the choice of independent Directors there must be a nominations committee. The second thing is that independent Directors must meet regularly among themselves and discuss the company without the management sitting there. There are all kinds of things that are happening internationally and some of our companies here, which needs to be made widespread.

Q: Are here also lessons here for families that run businesses because one of the comments for instance in the Economist was that Indian business run by families may not have fully understood the corporate rules that should apply- true?

A: Not true. I think many companies in the world not only in India are owned by families in US, in Europe. Europe is full of family owned businesses- so is India. Families have changed. There are family owned businesses in India who have higher standards of corporate governance.

Q: But do they translate effectively those families when they move from being small family around businesses to large corporates?

A: They are doing it because they are going through it listing and they are doing it faster and they are listing and they are taking public money so they have to do it so there is a pressure of the public and they are doing it. There is a transformation in the family owned businesses we should not knock families.

Q: What is on the side of the auditors do we need to have compulsory rotation of auditors so that familiarity doesn't breed complacency?

A: I think we should look at rotation, we should look at maybe joint auditors. We should strengthen the audit process, I would say that.

Q: Do we need to have harder, sharper, deterrent punishments to put off errant auditors?

A: I think there should be harder, deterrent punishments for everybody. All the way down the line promoters, management, auditors-you name it every player in the game. There must be tough punishment.

Q: If the CFO of Enron is in jail for 24 years now and that is a good model to go down that road. So, you are saying that the punishment is known to be tougher there would be less likelihood of the other people repeating what the Rajus alleged to have done?

A: The punishment is a deterrent. We must have deterrents.

Q: So, you appeal to the government to come out with stiffer penalty and tougher punishments, including longer jail sentences, going all the way to 24 years?

A: Why not? I want a clean corporate sector. I think the corporate sector has come a long way. We can take it even further. They have to be very good, responsible players in India and they will be.

Q: Does the final lesson of Satyam mean that India needs more rules and does it suggest that we haven't those and what we need is better compliance?

A: We have too many rules and regulations, not just enough. We need better compliance and we need better enforcement and we need stronger punishment.

Q: When you say we need better compliance and enforcement, do we need better ethics both at that corporate level and individual level?

A: The ethical standards have improved enormously in business. But there is always room for improvement. And as I say Satyam let's look at it as a wake-up call, let's look at it as an opportunity and see it as a future strategy to improve ourselves.

Q: As the chief mentor of CII, when we talk about the need for better ethics what is your message to the Indian management and the Indian promoters?