Enterprise headlines and summaries, 2009-04-20

  • Government approves Satyam sale to Tech Mahindra
    Venturbay Consultants Private Limited, a Tech Mahindra subsidiary, has until April 21 to deposit 17.56 billion rupees ($351 million) in an escrow account to buy shares representing 31 percent of Satyam, the Company Law Board said in a statement. Tech Mahindra will then buy another 20 percent of Satyam shares on the open market. Tech Mahindra, which was started as a joint venture between British Telecommunications Plc and Indian utility vehicle maker Mahindra & Mahindra, can appoint up to four directors to Satyam’s board, who will be exempt from fraud-related litigation in India, the law board said. The six government-appointed directors now on Satyam’s board will remain in place until further notice. Satyam has until December 31, 2009, to restate six years of fraudulent financials, the law board said.
  • Start-Ups in Washington Region Lure Less Venture Capital in Downturn
    Just last year, venture capitalists in the Washington region were willing to take a chance on an idea that might be promising, pouring hundreds of millions of dollars during the first quarter into projects such as an e-commerce site and a social network for music fans. But during the first three months of this year, investments have fallen to their lowest level since 1997, and start-ups without customers, revenue and an air-tight business model have little hope of receiving money. Investors have put just $59.1 million into 20 deals in the region since Jan. 1, down from $237.7 million into 49 deals during the comparable period a year ago. The drop reflects the uncertainty felt by both venture capitalists and entrepreneurs in this tight economic time. The clean-tech and biotech sectors experienced some of the largest declines. Both industries require a great deal of capital to get off the ground and take years, if not decades, to begin making money.
  • Deloitte Receives Bankruptcy Court Approval for Purchase of BearingPoint Public Services Assets
    Deloitte LLP announced today that it had received approval from the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) for its purchase of substantially all of the assets of BearingPoint’s North American Public Services practice for total consideration of $350 million in cash, subject to adjustment, and the assumption of certain BearingPoint liabilities. The transaction is expected to close in May, subject to customary closing conditions, including the receipt of Hart-Scott-Rodino antitrust clearance. At closing, Deloitte will acquire most of BearingPoint’s assets associated with projects in the Federal sector, as well as certain projects in areas such as healthcare, emerging markets, state and local government services, and education. Associated with the purchase of these assets, up to approximately 4,250 Bearing Point employees will become Deloitte principals and employees.
  • Wipro BPO loses Delta Air Lines contract
    Wipro BPO has lost its outsourcing contract with Delta Air Lines following negative customer feedback. Delta has been Wipro’s client since 2002. Spokespersons at Delta, the Atlanta based carrier, have gone on record saying that it has stopped routing customer service calls to India. The move makes Delta the second big carrier to shift customer service work from India after United Airlines did so in February. “Customer acceptance of call center representatives in other countries was low, and our customers are not shy about letting us have that feedback,” Delta CEO Richard Anderson said in his April 16 message to Delta employees, news agencies reported.
  • PW auditors knowingly falsified Satyam data
    Contrary to earlier perceptions that the Price Waterhouse auditors were taken in by the false fixed deposit receipts (FDRs) shown to them by Satyam’s accountants, the detailed chargesheet filed by the CBI says that both S Gopalakrishnan and Srinivas Talluri had obtained independent confirmations from banks about the balances in the books of the IT company. But when they were at great variance with the data provided by Satyam, both Gopalakrishnan and Talluri at different points of time chose to ignore the bank data and “knowingly certified the inflated and forged balance sheets prepared based on forged FDRs and other data..”
  • Satyam diverted foreign earnings: SFIO
    The Serious Fraud Investigation Office (SFIO) has found clear indications that Satyam Computer Services diverted part of its foreign earnings even before they reached the country, a government official said. According to SFIO, Satyam diverted part of its foreign earnings to tax havens like Mauritius before routing it back to Maytas Infra and other entities owned by founder and former chairman B Ramalinga Raju and his relatives, a senior official privy to the confidential report told ET on condition of anonymity.
  • Venture capital investment hits 12-year-low in 1Q
    For example, during the first three months of 2009, $614 million was invested in 138 deals in the software sector, down 42 percent in dollars and 34 per cent in transactions compared to the fourth quarter of 2008. •Life sciences — $989 million invested in 133 transactions, down 40 percent in terms of dollars and 31 percent in deals •Clean tech, which includes alternative energy and power supplies —$154 million in 33 deals, marking an 84 percent drop in dollars from the fourth quarter when $971 million went into 67 transactions •Internet-specific companies received $556 million in 123 deals, down from $804 million in 180 transaction. The only industry sector to buck the trend was financial services, which increased in both dollars and deals. Some $108 million was invested in 17 transactions, up 26 percent in terms of dollars and 21 percent in deals.
  • Tech Mahindra, Satyam risky bets
    Tech Mahindra is poised to join the top league of Indian IT exporters,offering a wide range of services across verticals, following its successfulbid for Satyam Computer Services. But the takeover of the company at thecenter of India’s biggest corporate fraud to date also means big risk,particularly with the full impact of the scam yet unknown. This week, ET Intelligence Group finds out what the deal means for investors of both the companies and what should be their investment strategy going forward.

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