Satyam Computer Services, one of India's largest software services companies, is under investigation by the Indian Government's department of company affairs (DCA) for alleged financial irregularities.
Satyam recently spent $7 million on establishing Australian operations, including a new software development centre in Sydney. Satyam employs over 80 staff in Australia and services clients such as the Commonwealth Bank and Ford.
The DCA launched the investigation into Satyam r following complaints by shareholders and other interested persons, according to Mohammed Yunus Siddiqui, deputy principal information officer attached to India's ministry of law, justice, and company affairs.
"The matter is under investigation, and once the investigation is complete, if there is a prima facie case of malpractice, we will start prosecution, and take action against the company's directors and other relevant people in the company," said Siddiqui, who declined to detail the allegations against the company.
A statement issued today by Satyam said that the company has already responded in detail to the DCA's letters seeking clarifications and refuting each of the items raised by them. "The company has not violated any provisions of the law and is confident of defending its position," the statement added.
India's corporate governance leaks like a sieve, with most companies sidestepping the rules and controls, according to analysts. Of the 5,000 companies registered under the Companies Act as of March 31, 2002, about 50 per cent do not file their annual returns on time, for instance, according to Siddiqui. There are currently 37,000 prosecution cases initiated by the Government pending against companies in India.
Satyam Computer posted revenues of $US96.3 million in the quarter to June 30, up in rupee value by 11.98 per cent over the same quarter last year. Profit, however, dipped by 10.72 per cent. The company also saw a sequential decline of 2.3 per cent from revenues in the quarter to March 31, 2002, largely on account of economic uncertainty in its key markets like the US.