Satyam in crisis as India vows to end company fraud

By Sumeet Chatterjee

HYDERABAD, India (Reuters) - India's Satyam Computer faces a crisis of "unimaginable proportions," its interim chief executive said a day after the chairman revealed profits had been falsely inflated for years.

Chairman Ramalinga Raju resigned on Wednesday in India's biggest corporate scandal in memory, after saying that about $1 billion (656 million pounds), or 94 percent of the cash and bank balances on the company's books at end-September did not exist. The company's shares plunged nearly 80 percent.

The scandal, which some analysts dubbed "India's Enron" after the collapsed U.S. energy firm, has cast a cloud over foreign investment in Asia's third-largest economy and over its once-booming outsourcing sector.

It may also increase investors' nervousness about weak corporate governance and oversight in emerging markets, which are reeling from the global financial crisis.

Interim CEO Ram Mynampati said on Thursday that Satyam, India's fourth-largest software company, had contacted its top 100 customers, who account for almost 80 percent of revenue, and had received expressions of support.

Satyam specialises in business software and back-office services for clients such as General Electric and Nestle.

"Our only aim at this time is to ensure that the business continues," Mynampati said at a media conference on Thursday.

Mynampati said the liquidity situation was "not very encouraging now," but added Satyam had healthy receivables and would be able to deal with obligations this month.