IDBI ready to lend more to Satyam

Banks are not averse to the idea of extending more finance to troubled Satyam Computer. After extending a loan of Rs 300 crore to Satyam,Yogesh Agarwal,chairman of IDBI Bank....

Written by ENS Economic Bureau | Mumbai | Published: February 10, 2009 1:32 am

Banks are not averse to the idea of extending more finance to troubled Satyam Computer. After extending a loan of Rs 300 crore to Satyam,Yogesh Agarwal,chairman of IDBI Bank,on Monday offered to lend more money to the company to meet its working capital needs.

“We (IDBI and Bank of Baroda) have jointly lent Rs 600 crore to Satyam,” said Agarwal at an Assocham summit. He,however,did not give details on the loans and said that if the IT company’s board approaches IDBI for further working capital requirement,the bank will take a call.

Satyam has been facing problems to meet its short-term payment obligations as it became severely cash strapped after a fraud by its chairman Ramalinga Raju. A newly appointed government management has arranged lines of credit for the IT company which might go on sale next week.

Engineering firm Larsen & Toubro which controls about 12 per cent of Satyam is in the race to raise its stake in the country’s fourth largest outsourcing firm while diversified Indian business houses Spice Group and Hinduja Group have also shown interest.

The bank funding,along with healthy collections,is expected to help the company tide over its financial challenges. Satyam had said January 2009 salaries (globally) and the fortnightly salary in Februay 2009 (for its US based associates) have been met from its internal accruals. (US payroll is run fortnightly for US based associates and has been so since the company’s inception).

“Completing the complex financial restatement exercise including announcement of Q3 results and ensuring prudent financial operations will be the primary focus in the next few weeks,” said Partho Datta,special advisor to Satyam board. He will be overseeing the financial operations of the company.

On a question of low credit offtake in the real estate sector,the IDBI Bank chairman said the bank is willing to extend loans at the rate of 8.5 per cent but not many deveopers are coming forward to access the loan facility of IDBI home cell. “Since there is subdued demand for dwelling units developers don’t seem look keen to borrow even at 8.5 per cent interest rate,” Agarwal said at an Assocham summit.

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