Satyam Computer's two more independent directors resign

Satyam Computer Services pared gains and was now up 9.96% at Rs 149 at 15:21 IST,on 29th Dec'08, after the company said two more independent directors have resigned.
A sharp slide in the stock was witnessed after the announcement which hit the market in mid-afternoon trade. Just before the announcement, the stock had jumped 17.78% to Rs 159.60 on hopes of a better corporate governance after the Indian outsourcer said it would consider more options to improve shareholder value and business practices, including strengthening corporate governance.
The stock had hit a 52-week high of Rs 544 on 30 May 2008 and a 52-week low of Rs 114.65 on 24 December 2008.
India's fourth largest software exporter by sales has an equity capital of Rs 134.77 crore. Face value per share is Rs 2.
The current price of Rs 149 discounts its Q2 September 2008 annualised EPS of Rs 35.48, by a PE multiple of 4.19.
Satyam said in a statement to the exchanges Krishna Palepu and Vinod Dham had resigned from the company's board effective Sunday, (28 December 2008). The outsourcer did not give any reason for the resignations. On Friday, 26 December 2008, Satyam had announced the resignation of independent director Mangalam Srinivasan.
Meanwhile, Satyam said before trading hours today, 29 December 2008, it has postponed a board meeting set for Monday, 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The board had been expected to consider a share buyback, after news last week that the outsourcer had been barred from doing business with the World Bank added to its woes.
Earlier in the day, a newspaper report quoted Dham as saying the 10 January 2009 board meeting would discuss a change in management, including a possible exit of Satyam's chairman and founder B Ramalinga Raju. It would also discuss appointing a chief executive or even a sale to another entity, the report said.
The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details.
The meeting would also address issues arising from a possible dilution of the founder's stake in the company. The company said it has received a communication from the promoters that all their shares in the company held by SRSR Holdings were pledged with institutional lenders since September 2006 and is is possible that some of the lenders may exercise or may have already exercised their option to liquidate such quantum of shares at their discretion to cover the margin shortfall. This would consequently dilute the promoters' holding in the company.
Raju and his family hold 8.61% stake in Satyam mainly through SRSR Holdings, a family owned investment company. SRSR has 8.27% stake in Satyam (as on 30 September 2008)
Satyam Computers during trading hours on 18 December 2008 had said its board will meet on 29 December 2008 to consider buyback of shares. The announcement was aimed at soothing investor nerves after the Satyam stock slumped 30.22% on 17 December 2008. Investors had chucked the stock following the company's announcement after market hours on 16 December 2008 of a $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju.
Satyam scrapped a $1.6 billion acquisition of companies connected to its chairman after the plan angered investors. The company's total disregard for corporate governance and shareholders was shocking - Satyam had no plan to take the proposal to minority shareholders.
The World Bank said last week Satyam had been declared ineligible for direct contracts with it for eight years "for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charged for its subcontractors". Satyam has asked the authority to withdraw what it called "inappropriate" statements and to issue an apology, but the World Bank in Washington has said it stood by its statement. Media reports had earlier said that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it for eight years.
The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices.
Satyam Computer Services' net profit rose 3.70% to Rs 597.43 crore on 6.87% increase in net sales to Rs 2700.52 crore in Q2 September 2008 over Q1 June 2008.
Satyam Computer Services is a global business and information technology services company. It delivers consulting, systems integration and outsourcing solutions to clients.