The government-appointed board chose new management for Indian outsourcer Satyam Computer Services on Thursday, and said it had raised about US$130 million in working capital from banks to tide over the liquidity crunch in the company.
The board appointed A.S. Murty, a Satyam executive of 15 years, as the company's new CEO. The board had earlier said it wanted "fresh blood" in the company for the post of CEO. "In our interactions over the past few weeks, we are convinced that Satyam needs an internal leader to steer it at this critical juncture," the board said in a statement on Thursday.
The new management may however only be temporary, until the company is sold to an investor, according to people close to the situation.
The company would have chosen a powerful and well-known individual as CEO if the board intended to run the company as it is, said an analyst on condition of anonymity
To retain customers Satyam will have to address customers' concerns about the company's ability to continue to deliver services, analysts said after Satyam was caught up in a financial scandal.
The company paid staff salaries for January earlier this week from internal accruals, ending speculation that the company may lose staff working on clients' projects due to an inability to make payroll.
B. Ramalinga Raju, founder and former chairman of Satyam, and two other key executives resigned in January, after Raju stated that the profits of the company had been inflated for several years.
The board also brought in two outsiders to act as special advisors to the new CEO and the board. It appointed Homi Khusrokhan, a retired managing director at Tata Chemicals, and Partho Datta, a chartered accountant with over 33 years of corporate experience, to assist in management and finance areas respectively.
The board said last week that it appointed The Boston Consulting Group as management advisor, and Goldman Sachs and Avendus, an Indian investment bank, as investment bankers.
The new management appointments this week come even as the board said last week that it may consider a sale of Satyam to a strategic investor. In this context, the new management may only be a transitional one until the sale is finalized, according to analysts.
Satyam's long-term prospects are in question both because of the liquidity issue, and also because it will be tough to pitch to new customers after the brand has taken a beating from the financial scandal, said a source close to the situation on condition of anonymity.
Some companies like outsourcers HCL Technologies and iGate have shown interest in investing in Satyam, although analysts say the process could be delayed as the extent of the financial scandal at Satyam will not be known until the accounts are restated, and Satyam also faces two class action lawsuits in the U.S. The board said on Thursday that it had appointed business law firm, Wachtell, Lipton, Rosen & Katz, as Satyam's lawyers to address those suits.