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Satyam gets extension for filing financial results
- — 08 July, 2010 21:15
Indian outsourcer Satyam Computer Services has received permission from the country's Company Law Board (CLB) to delay to Sept. 30 the filing of its 2008 and 2009 financial results.
The filing of the results has been pending since a financial scandal hit the company in January last year.
The delay could cost the company, particularly in terms of new business, said Anthony Miller, managing partner at U.K. financial research firm TechMarketView, said on Thursday.
"It is hard to see how customers, and particularly new customers, will be prepared to do business with a company for which they have no sense of the financials or key operating metrics," Miller said.
Satyam applied to the CLB last month asking for an extension of the deadline to file its results. In October last year, the CLB had extended the deadline for filing to June 30.
Satyam was plunged into a financial crisis last year after its founder and former chairman, B. Ramalinga Raju, disclosed that the company's revenue and profits had been inflated for several years. A board, appointed by the Indian government, ordered the company's accounts to be restated, and also invited bids to select a strategic investor for the company.
Tech Mahindra, another Indian outsourcer, acquired a 43 percent stake in the company last year.
Satyam's chief marketing officer Hari Thalapalli said last month that the restatement of the accounts was delayed because of a court decision that gave Satyam and its auditors only limited access to the company's financial data, which is in the custody of the country's Central Bureau of Investigation (CBI).
The CBI is investigating the role of Raju and some other former key executives of Satyam in the fraudulent accounting at the company.
If there is a problem that is causing a delay, the new management at Satyam should fix it, because the longer they leave the disclosure hanging, the more customers who have a deal to be done will go to competitors, Miller said.
Satyam as a company has not lost its reputation after the financial crisis, although the top management at the time did, according to Miller. A number of customers continue to do business with Satyam because they have confidence in the capabilities of the company, he said.
But it will become more difficult for the company to pick up new customers and to renew existing business if it does not disclose its results quickly, Miller said.
Some analysts have suggested that Satyam should release at least some indications of operating performance for the period after the new management took charge at the company. The company is not able to disclose even summary data in the interim because it is in a "silent period," Thalapalli said.
Besides the extension to Sept. 30 for the publication of the financial results for the years ended March 31, 2009 and March 31, 2010, the CLB has also given Satyam an extension to Sept. 30 to publish its financial results for the quarter ended June 30.