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New Delhi
15 January 2009
Indian officials are ruling out a government bailout for one of the country's largest information technology enterprises, Satyam Computer. This comes following speculation Satyam was under consideration to receive a lifeline from the government after its founder - who admitted to conducting $1 billion-plus fraud - was arrested.
Government officials say they will try to preserve the jobs of tens of thousands of Satyam employees, but are not looking to bail out the high-tech company.
Minister of State for Industry Ashwani Kumar says India's government is not going to directly or indirectly subsidize what he calls "wrongdoing and fraud in Satyam."
Earlier, some top government officials had said a massive cash bailout was under consideration.
Satyam - one of India's largest software and outsourcing entities - is in a deep crisis, after founder B. Ramalinga Raju revealed he had falsified company accounts to the tune of nearly $1.5 billion.
Despite the depth of the financial debacle, Indian minister of state for corporate affairs, Prem Chand Gupta, tells reporters it is premature to talk of a government rescue package for the troubled company and that Satyam has not requested such a bailout.
"The company may not need that. They have sufficient receivables. Their clients are all triple-A class clients. And, then, now it is for the new board [of directors] to take a view," said Gupta.
The government appointed a board of eminent outsiders, after ousting the corporation's directors.
Analysts say the situation at Satyam is so confusing it is difficult to know just how many employees and clients the company has, let alone ascertain its financial standing.
Satyam has appointed two new auditing firms to examine the extent of the fraud and restate financial results for the publicly-traded company. Once that happens, Satyam may be able to approach equity partners or banks for a loan.
Satyam had a valuation of $7 billion, six months ago but its shares have plunged about 90 percent since the scandal came to light, last week.
Authorities say Satyam founder Raju has admitted falsely inflating profits for years. Raju, his brother and Satyam's former chief financial officer have been jailed and face criminal charges.
Satyam's clients include many of the world's largest corporations.
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