Satyam to review audited results

The company said its board will review its results for FY09 and FY10 on Sept 29.

Shares in Mahindra Satyam rose more than 7 per cent on Tuesday,as investors looked forward to their first peek into the audited financial results at the firm that was hit by India’s biggest corporate scandal nearly two years ago.

Satyam shocked investors in January 2009 when the firm’s former chairman and founder Ramalinga Raju said its profits had been overstated and assets falsified in a fraud allegedly worth over $1.5 billion.

The company on Tuesday said its board will review its audited financial results for fiscal years 2009 and 2010 on Sept. 29,which analysts say will take it closer to a merger with parent Tech Mahindra.

Tech Mahindra,which bought Satyam in April 2009 and is operating it as an independent company,has said it can only merge the firm into the parent after the restated results for fiscal years 2009 and 2010 are announced.

Shares in the company,earlier known as Satyam Computer Services,closed 4.1 per cent higher at 95.25 rupees after rising as much as 7.5 per cent in a volatile Mumbai market. It was the third most heavily traded stock in the broader market.

“I think expectations are building up for results. The performance of the company should be better than what it was under Mr. Raju’s (Ramalinga Raju) regime,” said K.K. Mital,head of portfolio management services at Globe Capital in New Delhi.

Mital holds the stock for his clients and is waiting for a further call after the company unveils the results.

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Satyam’s auditor PricewaterhouseCoopers had said all Satyam audit reports from 2000 through 2008 should no longer be relied upon,after the revelation of the fraud.

Analysts do not expect the company to restate numbers earlier than the 2008/09 fiscal year (April-March).

Satyam,which once ranked as India’s No. 4 outsourcing firm,has not reported results beyond the September quarter in 2008. INTEGRATION,LEGAL ISSUES

While the restatement of results would clear a key hurdle for Satyam’s merger with Tech Mahindra,various legal liabilities faced by Satyam remain a concern,analysts say.

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“Unless the legal issues are solved,they (Tech Mahindra) can’t really go ahead and merge it. Even now,they don’t fully understand the risks,so you don’t know how much the legal liabilities are,” said Sandeep Muthangi,analyst at IIFL Capital in Mumbai.

“By December,maybe,we will get some clarity on this whole merger thing.”

He expects the entire process to take about three years.

Satyam faces class action lawsuits from shareholders in the United States,which were filed after a sharp plunge in its New York-listed shares following the revelation of the fraud.

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The company has also received legal notices claiming a refund of 12.3 billion rupees ($265 million) by 37 companies,which Mahindra Satyam has said are “legally untenable”.

Last December,Satyam agreed to pay $70 million to Britain’s Upaid Systems Ltd to settle a patent suit and in August won a New York court ruling to withhold taxes on the payment. Last month,the Hyderabad court granted bail to Satyam’s founder Raju,mainly on medical grounds.