Satyam faces claims of about US$267 million
- 18 November, 2009 02:49
Indian outsourcer, Satyam Computer Services, has received legal notices from 37 companies, demanding the return of 12.3 billion Indian rupees (US$267 million) they claim were paid to the company as temporary advances, Satyam said in a filing on Tuesday to the Bombay Stock Exchange.
The demand comes as Satyam, now managed by Indian outsourcer Tech Mahindra, has been trying to turn the corner after the company was plunged into a financial crisis in January.
Satyam first mentioned these claims in June, but said that the matter was still under investigation by various authorities.
In January company founder B. Ramalinga Raju said that Satyam had inflated revenue and profit figures for several years. His confession letter also referred to the advances arranged by Satyam from the 37 companies, Satyam said in the filing to the stock exchange.
Satyam informed the stock exchange that the companies want the money back to repay their creditors. Among the creditors are Maytas Properties and Maytas Infra, both construction companies promoted by Raju's family.
The Indian government, after taking over the board and management of Satyam in January, decided to invite bids to select a strategic investor in the company. Tech Mahindra was selected in the bid, and acquired a dominant stake of 43 percent in the company.
The move by Tech Mahindra and its investment subsidiary Venturbay Consultants was seen as risky, as the results of Satyam had been ordered to be restated by the government. The accounts have as yet to be restated.
Satyam said that it had replied to the legal notices from the 37 companies, describing their claims as "legally untenable."
The financial scandal at Satyam is still under investigation by the Central Bureau of Investigation, a federal agency, and the Serious Fraud Investigation Office of the country's corporate affairs ministry. Raju and others accused in the case are in custody, but have not been tried or sentenced.