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Satyam desperate for operating capital

SATYAM Computer Services Ltd, which is under investigation for fraud, is in talks with banks to overcome a cash crunch that may leave the software maker without enough money to pay salaries and utility bills.

The government-appointed board is seeking funds, looking for a new chief executive officer and improving revenue collection, Satyam said on Saturday in a statement. India's fourth-largest software exporter is being probed after founder Ramalinga Raju said on January 7 that he overstated profits.

"All efforts are being made to ensure that the employees are paid their salaries on time," the company said. The board members are "in touch with key customers and so far have not heard of deliveries being affected in any way."

State Farm Mutual Automobile Insurance Co, the largest home and auto insurer in the United States, canceled its Satyam contract on Friday, dealing a blow to the firm's efforts to persuade customers it can fulfill orders. Satyam needs clients including FIFA, soccer's governing body, to keep paying after the government ruled out a bailout and the company said it may take three months to sort out its accounts.

The Satyam episode "is a blot on our corporate image and indicates how fraud and malfeasance in one company can inflict suffering on many and can also tarnish India's image more broadly," Prime Minister Manmohan Singh said in Mumbai on Saturday.

Satyam won't know how much it needs until auditors confirm assets and assess how much clients owe, director Deepak Parekh said on Thursday. Satyam has 17 billion rupees (US$348 million) of pending payments from customers, he said.

The board will now meet once a week and members will take turns to chair meetings until the government appoints a chairman, the statement, reported by Bloomberg News, said.

"The new board is doing everything to try and stabilize the situation, find a new chief executive officer, reassure clients, but all this takes time," said Krupal Maniar, a Mumbai-based analyst at ICICI Securities Ltd. "Unfortunately, time is what's against them."

India's government has assured state-run banks it won't hinder their seizure of pledged properties if Satyam's subsidiaries fail to meet loan payments, the Economic Times reported on Saturday.

State-run banks have lent 20 billion rupees to subsidiaries of the computer-services provider and hold securities of 27 billion rupees, the report said.


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