In a major development, India’s fourth largest Information Technology firm, Satyam Computer Services, has further deepen into crisis as three more directors from the nine-member board resigned following the quit of independent director Mangalam Srinivasan.
Vinod K Dham, director; Krishna G Palepu, a non-executive director and M Rammohan Rao resigned from their respective chairs on Monday. Earlier on December 25, the company had announced resignation of Srinivasan
The resignation row began on company’s abandoned deal to acquire two companies Maytas Infra and Maytas Properties for $1.6-billion (Rs.7,753.6-crore); Satyam’s founder chairman B. Ramalinga Raju holds major stack in these two. However, the deal was aborted after mass opposition from institutional investors and analysts.
M Rammohan Rao, who is also the Dean of Hyderabad-based Indian School of Business, was the last person to quit from the board. He is the person who reportedly chaired the controversial meeting on December 16, when board members of Satyam decided to acquire the said companies.
Major disagreement came from those of foreign institutional investors and shareholders who asked the board to make clarity in this deal as the minority and other shareholders were not taken in confidence before this proposal, and this later resulted to call off this deal on December 17.
The World Bank has also slapped an eight-year ban on Satyam, its biggest outsourcing firm, for alleged charges of bribery and illegal activities inside the bank in September which report was confirmed on December 22.
Henceforth, a series of turmoil began with Mangalam Srinivasan’s resignation on December 25. She was among the board of directors since 1991. According to sources, she resigned on moral ground for not casting a vote of dissident against Maytas accusation. At present, she is a leading management consultant and a visiting professor at many US universities as well as the board of directors of Technology Information Frontiers, a Hyderabad-based computer systems design firm.
After that Vinod K Dham aka ‘Father of Pentium’, who was among the board members since January 2003, resigned from his post. He is currently the managing partner of Indo US Capital LLC, a venture capital firm in the US that invests in Indian start-ups.
Later, Krishna G Palepu, a professor of business administration at the Harvard Business School also resigned from the board.
Now there are only five members left in the board including two independent members: T R Prasad and V S Raju. Among other three: B Ramalinga Raju is the founder of the company and is currently holding the chairmanship. He is among the board of directors since its inception with his brother Rama Raju, Managing Director and co-founder of Satyam since 1987. And Ram Mynampati, the president of Satyam’s commercial and healthcare businesses as well as Director of Satyam Venture Engineering Services Pvt. Ltd., a joint venture between the company and Venture Global Engineering LLC, USA.
Meanwhile, the management has rescheduled the board meeting on January 10 from December 29 for discussion on the issue of reconstitution of the board and also to consider a proposal for buy back of shares by promoters.
Since mid April, the equity prices of Satyam have fallen down sharply by 67% from Rs. 450 per share to Rs. 148.25 per share at the close of trading on the Bombay Stock Exchange on Monday. Today it was at Rs.157.50 at 2 p.m. with 6.24% up.
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