Old-Timer Murty Named New Satyam

After days of deliberation, Satyam's board chooses A.S. Murty, who has spent most of his career with the company, as the new CEO

By Deepshika Sikarwar

The Satyam Computer board chose an insider and old company hand as CEO on Thursday and charged him with the task of lifting morale and mending the firm's shattered reputation with clients.

AS Murty, 50, who has spent the better part of his professional career with Satyam, brings with him immense knowledge of the company, its operations and clients. He joined the company in 1994 and has worked across several businesses and functions. The Satyam board, which deliberated for two full days on the issue, hired him on the belief that his experience and knowledge will help with clients and employees.

Deepak Parekh, HDFC chairman and Satyam board member, said Satyam needed an insider with "bandwidth and support" to steer it during the revival phase. Mr Murty fitted the bill, he added.

The development ends uncertainty and speculation over the CEO but does little to resolve some of Satyam's most pressing issues. The new management continues to be besieged by angry clients demanding clarity, restive employees and a full-fledged government and police investigation seeking to unravel what appears to be a gigantic fraud.

Mr Murty's immediate task will be to mollify clients aghast at the goings on in India's fifth-largest software services exporter and retain employees. These are among Satyam's biggest assets and prospective suitors such as L&T are likely to walk away if the new management is unable to do both.

In a webcast to employees after being appointed, Mr Murty praised the dedication of Satyam's employees. "It is true that we have suffered a blow. The company is down but not out—and we have demonstrated our resolve to the market very clearly. In fact in the past two weeks, real positive changes have taken place," he added.

Mr Murty will be be supported by Homi Khusrokhan, former managing director of Tata Chemicals and Partho S Datta, former chief financial officer of the Murugappa Group. The two have been inducted as special advisors on the Satyam board.

"We have not appointed a chief financial officer as both are experts in finance," HDFC chairman and board member Deepak Parekh told ET.

Mr Datta's specific mandate is to oversee the financial operations of the firm and he would be assisted by a financial task force—a three-member Satyam team, said a source close to the development.

Mr Datta's team, along with the auditors, will be engaged in the crucial task of restating Satyam's accounts. This is expected to happen in the next few weeks.

"A high-profile outsider would not have taken up the CEO position with Satyam Computer Services as the company is up for sale. The most important factor to watch out for is who is going to buy Satyam. The company has, in fact, managed to overcome the first phase of uncertainty related to salaries and short-terms funds. It has entered into the second phase of uncertainty of finding a suitable buyer," said Sudin Apte, senior analyst & country head (India operations), Forrester.

On his part, Mr Murty made it clear that the company would chart out a "precise and practical 30-60-90 day plan" that would address the interests of all stakeholders, signalling the deadline for a possible change in the management control of the beleaguered software firm.

Several suitors apart from L&T have expressed interest in taking control of Satyam. The new board has already taken steps in that direction and the market regulator has also decided to change a few rules to accommodate prospective buyers.

The Securities and Exchange Board of India (Sebi) is likely to announce the anticipated crucial changes in takeover regulations in the next few days. These include a pricing mechanism to facilitate discovery of a fair open offer price in special situations such as change of control at the fraud-hit Satyam Computers.

As per the mechanism actively being considered, the company would make a preferential allotment of 15% equity to a new buyer, identified through an open or closed bidding. The highest price offered by the bidder would also become the benchmark price for the open offer to the other shareholders, a government official privy to the development said. "