New Delhi: A potential bidder for fraud-tainted Satyam Computer Services backed away from a deal on Friday, as one of the members of the new board was appointed as the chairman of the outsourcing company.
The Indian government said Kiran Karnik, a former technology lobby group head, would assume the role of Satyam chairman, a day after the outsourcing firm named a new chief executive and secured funding to help retain clients and employees.
Karnik is one of the six-man Satyam board, constituted by the government in the wake of the massive accounting fraud at the company.
Separately, US-based iGate Corp said it now has no interest in buying Satyam due to lack of clarity on liabilities of the company -- snared in India's biggest corporate scandal -- Chief Executive Phaneesh Murthy said on Friday.
"I have very little interest or no interest left in this company right now," said Murthy, who was previously the global sales chief at rival Infosys Technologies and spearheaded strong sales growth in the key US market.
Satyam has been battling for survival after founder and former chairman Ramalinga Raju disclosed last month profits had been overstated for years.
Raju is in jail pending trial. A team from the market regulator Securities and Exchange Board of India has finished questioning Raju and Rama Raju, the founder's brother and Satyam's former managing director, in connection with the fraud, a regulator official said.
The Supreme Court had granted the regulator permission to question the Raju brothers.
"My interest has progressively been coming down with every passing day. And my concern is that the restatement of financial statements will take anywhere from three to six months," iGate's Murthy said from Fremont, California.
iGate said last month it was keen to acquire Satyam, helped by private equity funds, joining other potential bidders including Larsen and Toubro, attracted by Satyam's global clients.
Analysts said it is unlikely that a bidding process will be set until there is clarity on changes to India's takeover rules and a restatement of Satyam's accounts.
"The key is how fast the company gets the things sorted out, because as time passes the interest of potential buyers will keep coming down," said Tejas Doshi, head of research at Sushil Finance.
Enormous task
On Thursday, Satyam's government-appointed board named AS Murty, a company veteran of 15 years, as its new chief executive.
Murty has the task of restoring confidence among Satyam's 600-plus clients and about 50,000 employees but it is not clear if he will play a key role in any sale process, most likely to be orchestrated by the government.
Shares in Satyam, whose market value has plunged to about $670 million from $7 billion in May 2008, ended up 2.5 per cent on Friday at Rs 47.40.
Satyam's board has named Goldman Sachs and India's Avendus to find a strategic bidder for the company.
India's Spice Group and the diversified Hinduja Group are among those who have shown interest to acquire Satyam, attracted by its clients such as General Electric, Cisco and Coca Cola. National Australia Bank, Australia's largest lender, said on Thursday it would suspend new contracts awarded to Satyam.
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