India’s accounting standards regulator on Wednesday opposed the proposed sale of Satyam Computer Services to Tech Mahindra before restating the accounts of the scam-hit IT outsourcing company.
“I am not happy with the deal as the company’s correct financial position was not yet known,” Institute of Chartered Accountants of India (ICAI) president Uttam Prakash Agarwal said here on Wednesday.
He said ICAI would decide on taking up the matter with the authorities concerned after its apex council meeting debates the “speculative” deal this week. On Monday, the interim board of Satyam, appointed by the government to save the company with about 48,000 employees from collapsing, named Tech Mahindra as the highest bidder to buy a majority stake in Satyam.
Satyam’s financial accounts, which are being restated by audit firms KPMG and Deloitte after its founder and former chairman B Ramalinga Raju revealed a Rs 7,000-crore accounting fraud, is likely to take some more time.
The accounting regulator’s objection is based on the premise that the sale process has been initiated without knowing Satyam’s current financial position. “Such a large deal has taken place without finalising the company’s accounts and assessing its current valuation ,” Mr Agarwal said.
However, ICAI’s objection is unlikely to make an impact on the strategic sale, which is being executed under the supervision of former chief justice of India SP Barucha as per a process laid down by the capital market regulator Sebi. The entire process is being done with the permission of the Company Law Board, an independent quasi-judicial body that adjudicates on company law matters.
Also, the government wants to execute the deal swiftly as it is important to find a new owner with resources and management expertise to bring Satyam back to a healthy and stable state before its clients and employees leave the company.
