Interview of Deepak Parekh, Board member, Satyam Computer Services
April, 21st 2009
Board member of Satyam Computer Services Deepak Parekh moved fast to appoint forensic auditors to re-state accounts of the scandal-hit company and convince banks to lend to the firm that was struggling to pay salaries to its employees after its defamed founder B Ramalinga Raju admitted to a Rs 7,000-crore fraud. The chairman of HDFC, the countrys largest mortgage bank, was candid that banks often take the backseat when scandals break out in the corporate world, as they do not want to be implicated. In an exclusive interview with ET in Hyderabad, he admitted that Satyam has set a precedent. He also thinks that the property market is stabilising after seeing a free fall.
Is Satyam making money today? When do you expect its business to turn around?
We cannot make forward-looking statements. All I can say is Satyams receivables are taking care of operating costs. We have raised Rs 600 crore as loan from two public sector banks and have drawn only Rs 300 crore. Of this, Rs 250 crore has gone towards repaying old loans.
What should be the optimal employee strength at Satyam, based on its current revenues?
We have not done a review of the optimal employee strength of Satyam. The company has lost many clients after the promoter admitted to the fraud. Since then, it lost around 2,000 employees. The new management will have to take a detailed review to see what should be the optimal strength of the company. The firm will require more people if they are able to bring in new work or continue existing contracts of clients who have put them on notice.
You have seen Satyam closely, its accounts, the people. As an independent professional, do you think Satyam needs re-branding?
We have all done pro-bono work. It is now left to Tech Mahindra to take a decision on whether or not to re-brand the company. The fact is, the Satyam brand, once upon a time gold-standard, has been sullied. The brand has taken a beating.
Do you think an institutional mechanism needs to be in place for banks to share information with auditors?
Banks need to be more cooperative and more proactive. We have taken a long time and even today we are not successful in getting old statements from numerous banks across the world with whom we have relationships. When such things happen in the corporate world, banks take a backseat. They do not want to be implicated. We had asked banks for old statements several times, especially from foreign banks. But they were not forthcoming.
Has Satyam set a precedent for the government to step in when promoters indulge in fraudulent practices?
Indias software sector has an image globally. Satyam was a large IT company, bringing in a lot of employment and revenue. So the government decided to step in and rightly decided to support the company and do whatever it could to ensure that Indias image is not tarnished. The board was given immunity and powers to do whatever they wanted to do. The government supported these decisions to ensure that the job is done in a transparent and efficient manner. Satyam has set a precedent. If a company has a large manufacturing or an employee base, I am sure the government will step in. But if a liquor company does forgery, I do not know if the government will step in.
After taking the mandate, did you at any point feel that you should not have stepped into the Satyam board?
For 100 days, we stopped all work to attend to Satyam. It was a daily exercise and every week we came in to Hyderabad and spent two or three days. We had to divorce ourselves from our existing work and work full time on Satyam. Fortunately, the outcome has been good and rewarding. We hope the company will go on the right track now and regain its past glory.
Do you think all investigations should wait till the re-statement of accounts is complete?
The re-statement of accounts will take a long time as we have to go back to six years. Many documents are not available in the company, many have been torn or misplaced and some confiscated by investigating authorities. A number of investigating agencies have looked at Satyam over the last 100 days. To get a re-statement with limited information is time-consuming. All agencies including the forensic audit team should work in coordination.
Do you see signs of the property market in India stabilising, given that many were surprised when Unitechs QIP did well?
Unitech has some great properties in prime localities. It has a large debt but after the Telenor deal money came into Unitech, the debt has gone down. With Rs 1,600-odd crore, the promoters stake comes to 51%. Unitech shares were battered down significantly. At Rs 38 per share, it is a win-win situation for shareholders and promoters. Unitech is here to stay as they have been successfully able to raise a large chunk of equity money in a short period of time. Clearly, it is a signal that the property market is stabilising.
Is there any truth that you may retire in January next year. Will you continue if the board wants you to?
No, I will be calling it a day when my term expires on December 31, this year.