Lawsuit settlement key issue for Satyam suitors: Jerry Rao

Here is a verbatim transcript of the exclusive interview with Jerry Rao on CNBC-TV18. Also watch the accompanying video.

Q: If indeed the speculation turns out to be right that we will have Mr. Homi Khusrokhan as Executive Director rather than CEO, how would you react to that development and the structure which is being laid down?

A: It's a very smart move; you do need somebody as executive, because the Board cannot keep signing cheques and doing day to day stuff. At the same time, appointment of a full time, medium-term, long-term CEO at this stage is not smart, because then you become hostage to the agenda of that individual he or she, CEO what they want to do becomes more important. Here, the board has retained some fluid options about what they can do. This is smart move, if this is going to be the final decision.

To have a director with executive responsibilities rather than have a formal CEO and that is the right thing for the next few weeks, until there is greater clarity of how it's going to go ahead.

Q: To your own mind how much of mess do we have here with Satyam- the number of employees have gone back and forth, we don't know what is happening with clients, we also don't know about the quality of suitors who are coming in and the kind of litigation they will have to face- is this resolvable?

A: It is very tough conundrum. The last point is the key thing. Can we put a number as to what the eventual settlement will be on the class action suits, obviously the pay out is not going to be what the litigants originally demand, there is going to be some settlement, but is there some way one can come across a reasonable number. If that is possible then our going concern is running it or selling it to an appropriate suitor, both of them is possible.

But for some reason if this class action suit in the US, all of us cannot agree on what that number is likely to be for the settlement with these litigants then it becomes very difficult to see how it will come. This must be bothering all the suitors right now as they are sitting in their boardroom and doing their calculations. They must be saying, 'What is a reasonable number for a settlement?' and then you can take a view of what the company is worth that is the key thing.

The rest of the mess - employees, customers etc., without knowing the insides, it's difficult to speculate but it seems to me and I have just been following what is happening in the press - the fact that salary commitments are being met, insurance commitments are being met etc., it means that at least the going concern is there and not all the customers seem to have deserted, the majority seem to have stayed.

So, at this point in time, the situation maybe fragile but it is by no means operationally irrecoverable. It operationally seems as sound as it can be possible, but the key issue is - is that litigation going to hang like a big Damocles sword over the company and can we put a number to it. If we cannot put a number to it then you have a different set of options.

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