India's scandal-tainted Information Technology company, Satyam Computer Services, has been bought by a telecommunication firm, Tech Mahindra. The sale is expected to restore confidence in India's I-T services sector.
<!-- IMAGE -->
Three months after Satyam Computer Services was hit by a massive accounting fraud, Tech Mahindra won an auction for a controlling stake in the high tech giant.
On Monday, Tech Mahindra agreed to buy a 31 percent stake in Satyam for $351 million, edging out other bidders. The bid has to be approved by the government.
In January, Satyam's founder, B. Ramalinga Raju, shocked investors by admitting the company's profits had been overstated by more than $1 billion. The fraud had been going on for years, and it raised doubts about the survival of the I.T. giant, at that time India's fourth largest outsourcing company.
The country was rocked by its biggest corporate scandal, and the government moved quickly to protect the image of its booming Information Technology sector. It sacked the board of directors and appointed a new one, which set out to find a customer for the company.
Satyam Chairman, Kiran Karnik says the sale signals a new stage, and will restore customer confidence in the outsourcing company.
"We are very pleased," he said. "We think it is a very valuable company, we view this as a very successful event today."
The Satyam scandal has also raised questions whether accounting standards and corporate governance are adequate in India.
After Satyam's sale was announced, Indian Prime Minister Manmohan Singh gave assurances that a similar scandal will not be repeated.
"I am confident that our regulatory system has the resilience and the strength to ensure that no such "Satyam" will ever take place," he said.
Satyam has about 53,000 employees and operates in nearly 70 countries. Its clients include some of the world's largest corporations like U.S.-based General Electric. Satyam is listed on the New York Stock Exchange, and faces several lawsuits in the United States.
In recent months, India's I.T. sector has been reassuring customers that Satyam represents a "stand-alone" case. The $50 billion I.T. industry has grown massively in the last two decades.