Indian government appoints new Satyam bosses, Stock surges 56%

by Sanjay Jha | January 12, 2009 at 03:09 am

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Even as the newly appointed board of the disgraced Indian company Satyam Computers is meeting to draw up a rescue plan for the firm that has been at the centre of a scandal over the falsifying of accounts, the stock surged nearly 60 per cent on Monday as investor sentiments improved after government took charge and appointed three members on its board.

The satyam stock has lost nearly 96 per cent last week after chairman Ramalinga Raju confessed to inflation Satyam’s books. On Friday, the stock touched a record low of Rs 6 intraday, as traders took huge short positions in the contract.

The Indian government has appointed three leading businessmen to the board of scandal-hit software firm Satyam.

This comes two days after Delhi sacked the entire board of Satyam, a private company, as its founder and former chairman was arrested.

Ramalinga Raju and his brother Rama, also a former Satyam director, were arrested on charges including criminal conspiracy and forgery.

Mr Raju admitted last week that the firm had been falsifying its accounts.

He said the company had exaggerated its cash reserves by some $1bn (£661m).

The affair is India's biggest-ever corporate fraud.

'Restore credibility'

The three new directors are Deepak Parekh, head of the Housing Development Finance Corporation; Kiran Karnik, the former boss of technology trade group Nasscom; and C Achuthan, a former member of the Securities and Exchange Board of India.