Page last updated at 12:11 GMT, Thursday, 15 January 2009

Satyam shares plunge by a third

Satyam's office in Bangalore
Satyam employs more than 50,000 people

Shares in fraud-hit Satyam Computers in India have slumped by a third after one of the firm's new board members ruled out accepting government money.

Kiran Karnik, who sits on the three-man government-appointed board, said this would send "a wrong signal".

On Wednesday, board chairman Deepak Parekh told the BBC the firm would try to borrow from banks.

Satyam's chairman, Ramalinga Raju, stepped down last week after admitting to years of accounting malpractices.

Mr Raju said the company's profits had been falsely inflated for years and that 94% of the money on Satyam's books was made up.

Mr Raju, his brother and the company's former chief financial officer are being held in custody.

'Viable organisation'

"Taking money from government will send a wrong signal," Mr Karnik told the Times of India newspaper.

"The company will make profits within a few months," he said, adding that Satyam was still a "very viable organisation".

Satyam chairman Ramalinga Raju
Mr Raju has admitted to massive fraud

Mr Karnik said the firm needed funding to continue trading and pay staff salaries next month.

"Our only concern is to keep the show going and hold on to the clients and the workers," he said.

Mr Karnik's statement saw Satyam shares take a beating, with the firm's stocks tumbling by 31.3% to a day's low of 20.55 rupees in early trade on Thursday.

Satyam shares have plunged more than 80% since Mr Raju's confession of fraud last week.

On Wednesday, board chairman Deepak Parekh said the firm would approach banks to raise funds for the company.

"We will try to raise money through some banks," he told the BBC.

"The fixed assets are absolutely clear", he said, adding Satyam had "no bank deposits but small debt".

On Tuesday, the Indian government said the Satyam scandal would be investigated by a federal office dealing with serious corporate fraud.

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