The Indian government announced Friday that it cancelled a board meeting scheduled for Saturday of troubled outsourcer Satyam Computer Services.
Indicating that it was taking charge of the company for now, the government said it would restrain current directors of Satyam from acting, and appoint 10 of its nominees to Satyam's board.
Satyam's board was to meet Saturday to, among other things, decide on additions to the board, which had its numbers reduced by resignations in December.
On Wednesday, B. Ramalinga Raju, the company's chairman, resigned after admitting to inflating the company's profits over several years.
Raju surrendered to the police late Friday in Hyderabad where Satyam has its headquarters, according to Indian TV news channel NDTV 24X7.
The company's interim CEO, Ram Mynampati, cautioned on Thursday that the liquidity on the company's balance sheet was not encouraging. He did not provide any details as to how he planned to raise cash.
The future of Satyam as an independent entity is in doubt, and the company will more likely be sold as a whole or in parts, Forrester Research said.
The National Association of Software and Services Companies (Nasscom) has said that the move by the government will strengthen the confidence of employees and other stakeholders in the company.
The government has not discussed what it plans to do after appointing its nominees to the board. It is likely that they will ask for a re-audit of the company's accounts, while at the same time look out for potential investors, analysts said.
The Satyam debacle will likely be a setback to India's outsourcing industry, which has tried building a good image over the last several years, Forrester said.