Suitors seek risk cushion

The much awaited guidelines issued by the government-nominated board of Satyam Computer Services (SATYAM.BO : 90.55 -2.2) to facilitate the auction of a strategic stake in the fraud-mauled company has failed to bring cheer to its potential suitors who seem to want a cushion to ride out the lack of clarity on risks and liabilities involved in the deal.

Potential suitors include US-based giant IBM and local players including construction firm Larsen and amp; Toubro, which has an IT arm, iGate Global, Tech Mahindra (TECHM.NS : 916.55 +7.3), the Hinduja group and the Spice Group controlled by B.K. Modi.

Until the government provides the necessary "immunity" on the legal front to the prospective bidders, the sale would not go through, say experts involved in the deal that would help get the suitor 51 per cent stakes.

"No company would wish to carry the IT firm's past financial and legal baggage. This is a sketchy guideline and a detailed one needs to address these critical issues, in order to facilitate the sale of the IT firm," legal firm Hammurabi and Solomon's managing partner Manoj Kumar told Hindustan Times.

The Securities and Exchange Board of India-approved guidelines have no specifics on legal liabilities and risks arising from the IT firm's past accounts which deposed chairman B. Ramalinga Raju admitted to having doctored for years.

Several US-based securities firms and shareholder representatives have filed class action suits against Satyam.

Though the current board comprising six members have been provided the necessary immunity by the government, there has been no mention of a similar immunity for the strategic partner.

YM Deosthalee, chief financial officer, L and amp;T, said his company would take a call only after detailed guidelines are issued.

"We would take a decision based on the information provided on the financial and legal position of the IT firm," he said.

Audit firms KPMG and Deloitte, which have been entrusted with the job of restating the company's accounts, are yet to come up with the final numbers.