October 19, 2012, 7:08 AM — Indian outsourcer Satyam Computer Services said Friday that about 8.22 billion Indian rupees (US$155 million) in its fixed deposit accounts will be frozen for 150 days by India's Directorate of Enforcement in connection with charges filed against the company's former promoters.
Satyam said in a statement on Friday that it has sufficient liquidity to meet its obligations and the development will not hinder or impair its ability to carry on its day-to-day operations.
The freeze follows the filing of charge sheets by the country's Central Bureau of Investigation against the erstwhile promoters of the company and others, and investigations by the enforcement directorate under India's Prevention of Money Laundering Act, Satyam said in a filing to the Bombay Stock Exchange.
The charges date back to January 2009 when Satyam was plunged into a crisis after its founder B. Ramalinga Raju disclosed that the company's profit had been overstated for several years under his management. The company lost a number of clients and had to settle litigation and fraud charges including from the U.S. Securities and Exchange Commission.
The Indian government moved quickly in 2009 to appoint its own board at the company to steer it through the crisis, restate the accounts, and identify a strategic investor. Another Indian outsourcer, Tech Mahindra, acquired a dominant stake of about 43 percent in the company.
The company has meanwhile regained new clients and business, despite uncertainties in the outsourcing market. In the quarter ended June 30, it reported revenue of 18.8 billion rupees, up by 31 percent from the same quarter last year. Net income at 3.5 billion rupees was up 56 percent.
The company is also contesting a tax claim from the country's Income Tax Department relating to the period before Tech Mahindra acquired a dominant stake in the company.
The new management got shareholder approval in June to merge Satyam with Tech Mahindra.