Three independent directors resigned from the Satyam board yesterday, in addition to the IT company's oldest director, Mangalam Srinivasan, who had resigned on Christmas Day taking moral responsibility for the ill-fated Satyam-Maytas deal (See: Shareholder revolt forces Satyam to dump Maytas bid)

Satyam said three more independent directors, Krishna Palepu, Vinod Dham and Mendu Rammohan Rao, had quit. Palepu and Dham's resignations were effective Sunday, while Rao's came into effect from Monday.

Effectively, the nine-member board  has now been reduced to five - three whole-time directors that includes chairman B Ramalinga Raju,  managing director B Rama Raju and company president Ram Mynampati.

The remaining two independent directors are former IIT director V S Raju and former union cabinet secretary T R Prasad, who may also leave.

The company had announced that the meeting of its board of directors due to have been held yesterday has now been rescheduled to 10 January, 2009,  to allow the board to consider additional options (See: Satyam promoters ousted?)

The board had been expected to consider a share buyback at the Monday meeting, but news last week that the outsourcer had been barred from doing business with the World Bank added to its woes (See: Satyam barred from World Bank work for 8 years)

Out of control
However, it appears the promoters, who built Satyam in to the fourth-largest software company in India, are fast running out of options and may end up losing control altogether.

Chairman Ramalinga Raju's family held a little over 8 per cent through SRSR Holdings, while institutional investors such as ICICI Prudential, Aberdeen Asset Management and Fidelity held 60 per cent.

The company had warned the stock exchanges in a filing that stated, "Satyam has received a communication from the promoters that all their shares in the company held by SRSR Holding Pvt Ltd were pledged with institutional lenders over a period of time since September 2006. It is possible that some of the lenders may exercise or may have 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."

Yesterday over 10 crore Satyam shares changed hands -- almost twice the 5.80 shares or 8.61 per cent shares that Satyam promoters held in their names as of the quarter ended September.

If some of Satyam's lenders with whom the promoters had pledged their shares were among the sellers, then Satyam's stake would stand reduced further.

In the fortnight since the Maytas fiasco, Satyam shares had fallen to nearly half their value before recovering almost a fifth of those losses with a 10-per cent gain yesterday.

Over 3.07 crore shares were sold on the BSE and over 7.39 crore shares the NSE yesterday, with the selling continuing during today's pre-lunch trades. Till 12:30, over 87 lakh shares were traded on the BSE and over 21 lakh shares on the NSE.