At present, Satyam has no cash reserves, despite the fact that the balance sheet prepared on March 31, 2008, shows a cash reserve of Rs 5,700 crore. To ensure smooth functioning of the company, a senior official said the company would require a new management, which could be trusted by clients and lenders, who have stopped giving Satyam money after the revealation of accounting fraud.
According to sources, interim CEO Ram Mynampati may be sacked. Government has criticized his role as a director, in its application to the Company Law Board (CLB), where it had sought permission to sack the earlier board.
While it’s unlikely that the new board will continue with Mynampati as CEO, at the same time, it will have to ensure that the new CEO must be aware of the functioning of the Satyam, having over 500 clients.
Parekh will also discuss availability of working capital for the company as it is facing acute financial crunch. It immediately needs credit from banks to continue operation. Because of fraud fiasco, banks are not ready to lend the company against receivables as collateral, saying it is very difficult to believe on the company’s statement as its balance sheet is under cloud.
Sources said that the board may decide to offer a seat to a bank, which will give it working capital. The board seat will give the bank inside information of its functioning and financial condition.
The board may also discuss appointment of remaining members. The government had sought permission from CLB to appoint 10 members, though it may not take the strength to 10. A senior official said the final number could be kept at five or seven.
The source added that as a first step, the government restricted itself to appointment of three members only, to avoid any clash of personality, which is crucial for smooth functioning of the board. So, government decided to select a core team first and later expand it. Some representation on the board could be given to institutional investors like Life Insurance Corporation.