Government to prevent mass retrenchment in Satyam
Thursday, April 16, 2009
New Delhi: The agreement with the new owners of Satyam Computer Services will incorporate restrictions to prevent mass retrenchment of employees, according to a top functionary of the Ministry of Corporate Affairs (MCA).
"The employees of Satyam are well-trained, which is its main strength, and no management would like to disturb them. We have incorporated restrictions on the new buyers so that they cannot go in for mass retrenchment or strip the assets of the company and sell them for a certain period," the functionary told Business Standard.
The move allays fears in many circles that the new owners of Satyam might have to go in for large-scale retrenchment if they want to get it back on track. Satyam at last count had over 48,000 employees. That, according to many analysts, was a surplus of between 12,000 and 15,000.
The MCA functionary confirmed that US-based information technology giant IBM was very much in the running for Satyam. In total, over 140 entities had shown interest in buying the scam-hit company, of which 10 were selected. Later three of them were disqualified.
In the end only three submitted bids and Tech Mahindra [Get Quote] trumped Larsen & Toubro and Wilbur L Ross to emerge the winner, with a bid of Rs 58 a share that values the company at Rs 5,500 crore. The second-highest bid, L&T's, was Rs 45.90.
A spokesperson for Tech Mahindra declined to comment on the government's intent to prevent sacking of Satyam employees.
Asked whether Satyam will face problems due to many key clients walking out, the MCA functionary said: "While they lost accounts, they have also gained many new accounts, so the fear that it is losing business is exaggerated. Poaching of accounts is a common practice in any case."
He clarified that while the government had appointed some members to the board of Maytas Infrastructure, it had no intention of superseding the board, as it had done in Satyam's case.
On whether the government will rewrite the Companies Act to prevent an encore of the Satyam fraud, the functionary said: "The new draft Bill, which is before the standing committee, has been able to plug all the loopholes through which a Satyam was possible. It is for the next government to take it forward."
When asked about the future of the board appointed by the ministry to oversee Satyam's sale, the functionary said: "It is now up to the new owners to do what they like with the board, whether they want to keep them or change them."
Speaking on the investigation into the activities of former Satyam Chairman Ramalinga Raju and others, the MCA functionary said: "The Special Fraud Investigation Office has been presenting interim reports to the government and the matter is now with the CBI and the courts".