BANGALORE (Reuters) - Fraud-hit Satyam Computer Services Ltd said on Monday a U.S.-based client had canceled its contract, dealing a blow to the embattled Indian outsourcer caught in the country's biggest corporate scandal.
State Farm Insurance Co has terminated its contract, a Satyam spokeswoman said, confirming a report in India's Mint newspaper on Monday, but she declined to give details of the contract.
"While we are disappointed in State Farm's decision to discontinue services, our executives are reaching out to clients around the world, and at this point, well over 90 percent of our clients have committed to continuing with Satyam," she said.
The Mint newspaper said State Farm Insurance was among Satyam's biggest clients.
Satyam, India's No. 4 software services exporter, was plunged into crisis after Ramalinga Raju resigned as chairman earlier this month, revealing profits had been falsified for years and $1 billion of cash on the books did not exist.
A government bailout is seen as key to ensuring the company has enough cash in the short term and to restore flagging investor confidence, analysts said.
Some of Satyam's clients might cancel orders, wary of business risks in the fraud-hit company, analysts said.
"Any customer dealing with Satyam at this point in time will be concerned with what is happening at the company now," said R.K. Gupta, managing director at Taurus Asset Management in New Delhi.
A government-appointed board at Satyam said on Saturday it was looking for a new chief executive and chief financial officer for the outsourcing firm at the center of a scandal dubbed as "India's Enron".
The board, which also discussed scheduling of vendor payments, said it had received expressions of support from clients including Nestle
Shares in Satyam, which have tumbled about 85 percent since the scandal broke, were up 5.7 percent at 25.85 rupees by 0605 GMT in a weak broader market.
The Economic Times newspaper said on Monday Satyam's new board was looking to appoint up to three investment banks to explore the possibility of finding a buyer for the outsourcer.
On Sunday, a metropolitan court ordered the former chairman, managing director and chief financial officer of Satyam to be taken into police custody for four days from Sunday, after spending nearly a week in jail.
Under police custody, accused are held in a police lock-up to help the investigators in interrogation.
(Reporting by Sumeet Chatterjee; Editing by Ranjit Gangadharan and Anshuman Daga)
