Satyam In Damage Control

The restoration of confidence in any enterprise is a long drawn process. For the people in charge of the Satyam situation the restoration of confidence is priority number one.Satyam Computers is a story that goes beyond just a Multi Crore Rupee fraud. Satyam is the company many consider to be the earliest forerunners of India’s outsourcing phenomenon. As the man who founded it and may have caused its immediate downfall Ramalinga Raju languishes in jail, the government and India’s regulators are in damage control mode.

The central government has decided to take care of the financial aspect of this case. While it’s the local law enforcement of Andhra Pradesh where Satyam’s headquarters are located that takes care of the criminal aspect of the case.

It’s been a delayed reaction at best from both the governments. Placing Ramalinga Raju under arrest occurred a good 48 hours after his confession. The markets are closed on the weekend leaving Satyam’s stock immune from selling pressures for two days. The precise extent of the damage to Satyam will be known only when Monday’s trading session comes to an end.

It may not be as bad as expected because even though the government has acted a tad bit late, everything from then has been remedial.

For starters dismissing the board of Satyam which was hurriedly reconstituted after Raju was arrested and many on the previous board quit is a good move. The reconstituted board comprised members from Satyam who despite pleading innocence in the entire matter do raise many questions and doubts.

The next step has been to appoint a new board with members who are responsible solely to restore investor and consumer confidence.Deepak Parekh,the chairman of HDFC has been appointed on Satyam’s board.The other two members on the yet to be expanded board are Kiran Karnik, the former chief of NASSCOM and C.Achutan the former presiding officer of the Securities Appellate Tribunal.

These men have been appointed as they have strong and credible reputations. More importantly, they’re very competent and if given time and the resources, they have a real chance of pulling Satyam out of its deep hole.                                            

These men have the difficult task of ensuring that Satyam as a computer company and IT outsourcing firm continues to first stay in business and then starts to grow.Satyam is a company that’s seen by the government as one that’s “too big to fail”. 

At the end of the day Satyam does employ 50,000 people.Raju and co. have lied about the companies they serve but the ones they do serve are many fortune 500 companies.The new board has the task of making sure that these companies don’t withdraw their business relationship with Satyam because that will cause a further loss in revenue from which matters like paying employee salaries also become difficult.

A fact that can help the new board in reviving Satyam could very well be Satyam itself. It’s been the people in charge that’s let the company down, not the one’s who have been working under them.