Satyam's financial health

16 January 2009

The new board of Satyam is struggling to make sense of the mess left behind by Ramalingam Raju. The immediate problem faced by Satyam is a liquidity crunch since the Rs5,500 crore bank balance was a fictitious one.

Yesterday, Satyam's hopes for a Rs2,000-crore bailout were be dashed, with minister of state for industry Ashwani Kumar categorically saying that the government would not directly or indirectly subsidise th wrong doing and fraud by the IT firm's promoter.

However, the minister said that the government would do everything required to save jobs under the framework of its responsibilities.

Amid concerns over crisis-ridden Satyam's liquidity position, newly-appointed board member Deepak Parekh disclosed that the company's receivables stand at Rs1,700 crore. He also said that Satyam may borrow against assets if there is a need.

Earlier Parekh had said that Satyam might ask clients to accelerate payments to tide over its liquidity crisis. The normal cycle for debtors receivable in the IT sector is is betwen 30 days and 60 days.

Meanwhile another eminent board member, Kiran Karnik has said, Satyam Computer Services' immediate requirement could be close to Rs700-800 crore, including payment of salaries to employees and outstanding debt.