The board of Indian outsourcer Satyam Computer Services received government approval on Thursday to sell a stake in the company to a strategic investor.
The investor will be chosen through an open bidding process, the government's Company Law Board said. Satyam's board told the CLB that it would need to sell a minimum 26 per cent stake to attract an investor.
The government-appointed board said earlier this month that it was considering an investment in the company as an option. A number of companies have stated their interest in investing in Satyam, though some analysts say the decision may be risky as the accounts of Satyam have yet to be restated.
Satyam's financial crisis occurred after founder B. Ramalinga Raju said the company's profits had been overstated for several years. A working capital crisis ensued that the board said it is able to tide over with bank loans.
The company has started a cost-cutting drive, both to help Satyam's financial recovery and to tide over the impact of the recession on the company.
Company CEO A.S. Murty in an email to staff announced on Thursday a number of cost-cutting measures including a freeze on capital expenditures. Earlier in the month, two senior staff resigned as part of a continuing "cost-rationalisation" exercise.
The cost-cutting measures are designed to make the company look attractive to an investor, according to a source close to the situation.Related articles: