Business | General
India government not planning Satyam bailout
India's government is not considering bailing out Satyam Computer Services, and the fraud-hit outsourcing firm may have to turn to banks, many of them state-run, if it needs funding.
- Reuters
- Published: 23:51 January 15, 2009
Hyderabad, India: India's government is not considering bailing out Satyam Computer Services, and the fraud-hit outsourcing firm may have to turn to banks, many of them state-run, if it needs funding.
Satyam shares slumped by a third yesterday after Kiran Karnik, one of the three new Satyam board members appointed by the government, ruled out accepting government money as this would send the wrong signal.
The software services exporter has been battling for survival since founder Ramalinga Raju resigned as chairman last week, saying profits had been falsified for years and $1 billion (Dh3.67 billion) of cash and bank balances did not exist.
"The government at this stage is not looking at any direct support or bailout to the company," Economic Affairs Secretary Ashok Chawla told reporters.
Corporate Affairs Minister Prem Chand Gupta said Satyam had not sought state aid.
"The company has not asked for any package. Three days ago a new board has been appointed. These [are] eminent persons. They are on the job," he told reporters in New Delhi. "If they require funds, they will raise it from banks."
Karnik told the Times of India that Satyam was a financially viable company and would make profits in a few months.
He said taking government money would 'send a wrong signal', after media speculation the state would have to pump cash into a company that imploded in the country's biggest fraud scandal.
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