Financials not as bad as made out: Mahindra Satyam

Mahindra Satyam on Wednesday said its financials are not necessarily bad as has been made out, even as investors were roiled by reports that the accounting fraud in the company could be double the initial estimate of Rs 7,800 crore (Rs 78 billion).

"The company wishes to point out to investors that reported allegations regarding the magnitude of investor harm or historical misstatements in the company's accounting records do not necessarily shed light on the present financial position and liabilities of the company," Mahindra Satyam said in a statement.

After the CBI filed a supplementary chargesheet last week, there were reports that the financial scam in erstwhile Satyam Computers, led by B Ramalinga Raju, could be to the tune of over Rs 14,000 crore (Rs 140 billion)

Although Satyam had reported profit for the December quarter, the new owner Mahindra has been given time until June 2010 to report financials, as per the orders of the Company Law Board of India.

This extension would also apply to publication of quarterly financial reports as required by the listing agreement, the company said.

Mahindra Satyam is currently defending certain lawsuits in the United States of America. The statement said that the company cannot currently quantify its potential liability in those lawsuits.

In a statement filed with the Securities and Exchange Comission in the US, the company had said last month that "Mahindra Satyam has received legal notices from 37 companies claiming a refund of Rs 1,230 crores (equivalent to $265 million), allegedly given as a temporary advance."

The companies claimed the money back to purportedly repay creditors, some of which include Maytas Properties Limited and Maytas Infra Limited.

Incidentally, the confession letter dated January 7, 2009, of the former chairman of the company (Raju) also referred to a net amount of Rs 1,230 crores (Rs 12.30 billion) arranged to the company by the 37 entities, the statement said.

Raju had, in the letter to the Board, also disclosed fudging the books for years.

On November 14, 2009, Mahindra Satyam replied to the legal notices stating that the claims are legally untenable.

Commenting on the recent reports that the board resolutions were forged for obtaining loans of Rs 1,220 crore (Rs 12.20 billion) from banks without proper authorization, the company said it was not aware of the full details of these alleged loans.

"However, to date no claims or demands in this regard have been asserted against the Company by any bank," Mahindra Satyam said.