NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Satyam faces claims worth Rs 10,000 cr

Satyam faces claims worth Rs 10,000 cr

June 10, 2009 14:00 IST
The euphoria over the Rs 181 crore (Rs 1.81 billion)  net profit in October-December 2008 notwithstanding, Satyam is still not out of the woods as it faces legal and other claims that could put a burden of up to Rs 10,000 crore (Rs 100 billion) on it.

These include claims worth about Rs 400 crore (Rs 4 billion) related to four overseas acquisitions made under the leadership of its disgraced founder B Ramalinga Raju and a demand of about Rs 1,230 crore (Rs 12.30 billion) from as many as 37 'unacknowledged' creditors.

Besides, there is a $1 billion long-running fraudlitigation with British firm Upaid and the class action lawsuits filed by its US shareholders over the multi-crorefinancial scam at the company, with an estimated demand of another $1 billion.

Except for Upaid case, all the other claims surfaced after the disclosure about massive financial irregularities at the company by Raju on January 7, 2009.

Satyam is trying to settle amicably some of these claims, while it intends to "vigorously defend" the class action lawsuits filed against the IT firm in the US and also the case filed by British mobile service firm Upaid in a Texas court.

At the same time, the claims made by 37 companies for a total of Rs 1,230 crore (Rs 12.30 billion) remains unacknowledged by Satyam.

"The company has received letters from 37 companies requesting for confirmation of sums allegedly owed by Satyam to them. The aggregate of sums claimed to be owed is Rs 1,230 crore," Satyam said while disclosing the financials for the quarter ended December 2008 and the first two months of 2009.

"The company has not acknowledged these claims till date. The matter is under investigation by various authorities," Satyam said.

The disclosure about these claims coincided with the company announcing a surprise profit of Rs 181 crore (Rs 181 billion) on stand-alone basis and Rs 160 crore (Rs 1.6 billion) on consolidated basis for the October-December 2008 quarter, and a further Rs 56 crore (Rs 560 million) for the January-February period this year.

While these figures are substantially below the year-ago level, the previous period results are being restated in thewake of a massive multi-year financial fraud admitted to by its then chairman Raju in January this year.

Subsequently, the government superseded company's board, which later decided to sell Satyam Computer to Tech Mahindra. By that time, about a dozen lawsuits had been filed against Satyam in US courts, with many charging the company with duping thousands of investors of billions of dollars.

"The company has not yet been required to reply to the complaints but anticipates that, in accordance with US procedures it will vigorously defend itself," Satyam said on these suits.

The company further said it was also defending the $1 billion lawsuit filed by Upaid in a forgery case dating back to early-2000.Post the scam disclosure, Satyam also got notices for claims related to four of its overseas acquisitions, which were excecuted much before the scam broke out.

These are related to the acquisitions of US-based Caterpillar's Market Research and Customer Analytics business unit, Chicago-based strategy and general management consulting firm Bridge Strategy Group LLC, Belgium-based supply chain management consultancy firm S&V Management Consultants as also purchase of 50 per cent stake in a JV with Venture Global Engineering LLC.

In some cases, certain parts of payment towards the acquisitions are yet to be made, which along with other claims made against the company total about $100 million.

© Copyright 2013 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.