By Devidutta Tripathy
HYDERABAD, India (Reuters) - Shares in Satyam Computer Services Ltd
The board is meeting at Satyam headquarters in the southern city of Hyderabad to lay out a roadmap for a firm battling for survival after its former chairman quit last week and confessed that profits had been falsified for years.
Indian shares and the rupee currency were hit as investors worried about the damage to foreign investment in Asia's third-largest economy and the once-booming outsourcing sector, a magnet for thousands of young job seekers.
"I think they (board) will look at providing stability to employees and clients first. What they have to see in the next three months is that Satyam is still not bleeding," said Avinash Vashistha, chief executive at consultancy Tholons.
"Also, we have to see if the government will extend some monetary support to Satyam to take care of salaries and all."
By 0840 GMT (3:40 a.m. EST), shares in Satyam, which counts Nestle
Satyam, which specializes in business software, has seen its market value dive to about $450 million from more than $7 billion just six months ago.
The fraud has dented hopes of thousands of graduates who said they had been promised jobs by Satyam, which was formed two decades ago and was viewed as being among the pioneers in India's software services industry.
"It's not only about the future of 53,000 employees, it's about me, my friends and 5,000-6,000 of us who have got offer letters but are yet to be inducted into the Satyam family," said Anji Reddy, an engineering graduate from Hyderabad's prestigious Jawaharlal Nehru Technology University.
"It's a tough market and I won't find a job anywhere else easily."
Shares in IT rival Wipro
Wipro said its World Bank revenues were insignificant and the decision would not affect its business and results.
RESTORE CONFIDENCE
Deepak Parekh, a senior banker and one of the government appointees to Satyam's board, said late on Sunday the priority was to restore confidence and then look at financial issues such as restating accounts.
Parekh was due to hold a news conference at 5:00 pm (6:30 a.m. EST).
Kiran Karnik, who used to head a technology lobbying group, and C. Achutan, a former official at India's market regulator, are the other board members. The government said it could appoint as many as seven more directors.
In an unprecedented move, the government dissolved Satyam's board, using special provisions in Indian company law, as it rushed to contain the fallout from what has been dubbed "India's Enron."
Satyam's 54-year-old founder and former chairman Ramalinga Raju and his brother, have been charged with criminal conspiracy and forgery. Both are being held in a Hyderabad jail, along with Chief Financial Officer Vadlamani Srinivas.
Raju came under close scrutiny last month after Satyam's botched attempt to buy two construction companies partly owned by its founders.
The fraud has hit Satyam's business prospects and triggered worries that some clients may cancel contracts after Raju admitted that 94 percent of the company's cash and bank balances at end-September did not exist.
Satyam, which in Sanksrit means "truth," faces a crisis of "unimaginable proportions," stand-in CEO Ram Mynampati said last week. Satyam, which is also listed in New York
"The board will look into whether Satyam can still operate as a separate entity or needs to be merged. But, for a merger, all legal and financial issues have to be settled first," Tholons' Vashistha said.
The company also faces securities fraud class-action lawsuits filed in the United States.
(Additional reporting by Sumeet Chatterjee and Prashant Mehra)
(Writing by Anshuman Daga; Editing by Jean Yoon)
