Satyam board seen headed for major overhaul

27 Dec 2008, 0023 hrs IST, ET Bureau

HYDERABAD: A shakeout looms in the top echelons of Satyam Computer Services
, as the board prepares for a meeting on Monday to consider a share buy back, amid growing calls for drastic measures to repair its damaged image.

One independent director, academician Mangalam Srinivasan, stepped down on Christmas day citing moral responsibility for allowing a controversial takeover bid of two firms run by Satyam’s founder B Ramalinga Raju. However, the plan was aborted within hours after a shareholder rebellion.

Speculation is rife that more heads could roll. A change in management
or a complete overhaul of the board may happen on Monday. But a Satyam spokeswoman declined to say if anything other than a share buyback is on the agenda. Ramalinaga Raju is the executive chairman and his brother Rama Raju is the managing director on the Satyam board.

According to a corporate lawyer, if Raju resigns, one of the options before the board could be to appoint one of the independent directors as a chairman or managing director. The other option could be to appoint other investor nominees as chairman or managing director. “But this possibility appears remote as financial investors may not be willing to take the onus of running the company,” said a corporate lawyer, who wished not to be identified.

Institutional investors led by Aberdeen Asset Management, Fidelity and ICICI Prudential hold a 61% stake in Satyam, several times the 8.5% stake held by the family of the company’s founder and chairman Ramalinga Raju. The resignation of Ms Srinivasan, who was on the Satyam board for over 17 years, has also added pressure on other directors to follow her example.

But VS Raju, former dean of IIT Madras and an independent board member ruled out resignation. “I am clear that I did not do anything wrong. We approved the acquisition of Maytas Infrastructure
and Maytas Properties after examining the full information available to us. The resolution to allow Satyam to acquire the two firms was not put to vote and was adopted unanimously by the board,” he said. Other independent members including M Ram Mohan, the dean of the Indian school of Business and T R Prasad, former Cabinet secretary were unavailable for comment.

The other directors on Satyam are Ram Mynampati, president and whole time director, Krishna G Palepu, a professor at the Harvard Business School, and Vinod Dham, described as the father of the Pentium chip.

Via:E.T