It might seem unfair to judge interim CEO Ram Mynampati from a solitary press appearance, but his first briefing this evening provided little assurance on how Satyam can survive this catastrophe.
Look at the scenario:
• Satyam’s stock is expected to dip to zero in the next trading session
• it has no equity to play with
• It can’t raise loans
• It is no longer a takeover target, given the legal liabilities that might vest on a buyer.
• It has insufficient cash to meet January payroll.
• Its employees are preparing to bolt, and presumably its blue-chip clients as well.
If Satyam is to survive, Mynampati will need a small miracle.
He didn’t start off well. He was caught trying to cover up a fairly simple question about the position of the CFO.
Mynampati first said the financial chief had been away from work this week for “personal reasons” and was expected next week. Later, in response to a more pointed question, he said the CFO had resigned. The clumsy cover-up kept alive questions about the trustworthiness of the company’s top management.
Mynampati appeared at the press briefing with five executives. Of them, he is the only board member. Most were evasive at most times, hiding behind words and long-winded explanations. They were helped along by some pointless questions on the auditors and other financial details which they were hardly in any position to comment on. The team merely used these questions to eat up time and keep away the tougher questions.
Finally, an apparently frustrated Bloomberg reporter asked Mynampati for a simple “yes/no” answer. Did the company have enough money to meet January payroll? Mynampati's response: “Don’t know.”
If reports are to be believed, Satyam has no more than Rs 300-odd crore in cash and its monthly payroll is upward of Rs 500 crore, not to mention other expenses. Mynampati said Satyam had a lot of receivables but collecting them might be quite another matter.
Similarly, the interim team wants us to believe many of its blue-hip clients have expressed solidarity with the company in these ‘challenging times.’ But that is not how business works and we all know it. Already, the corporate governance award Satyam was recently conferred has been withdrawn. If you tell me major clients are not going to bolt, I must be living in fairyland.
Mynampati and his team also put a spin on how the company’s 53,000-plus associates (employees) were solidly behind the management. Hours later, a
headhunter said nearly a third of Satyam’s employees had turned job hunters and had updated/submitted their resumes.
Many have called the Satyam scandal India’s own Enron. I don’t quite fancy that comparison, but as far as the two stories go, I can’t see Satyam going any other way.
Satyam, R.I.P.?