Mahindra Satyam to challenge ED order attaching Rs 822 crore in fixed deposits

IT services provider Mahindra Satyam, erstwhile Satyam Computer, on Tuesday said it will challenge the order of the Enforcement Directorate (ED) attaching its fixed deposits worth Rs 822 crore in connection with money laundering case related to the company's previous management.

Scandal-hit Satyam was acquired by Tech Mahindra and renamed as Mahindra Satyam in 2009.

Earlier this month, the ED had issued attachment orders freezing fixed deposits of Mahindra Satyam in connection with its probe into the case of money laundering by its previous management headed by B Ramalinga Raju.

The ED’s probe found that Mr Raju and his associates "wrongfully" offloaded inflated shares of the said company by way of sale or pledging of shares, the ED order alleged.

"We will file an appeal. We are going to challenge it ...That money (which Raju claims to have brought in) had already been spent when we took over," Mahindra Satyam Chairman Vineet Nayyar said.

"In fact the situation was so bad, when the government directors were appointed, they had to borrow Rs 450 crore to pay salaries in USA. The money, which was never available to us, cannot be seen as debt on us," Nayyar said in a press conference after announcing company's second quarter results.

Trail of loans derived from front companies revealed that Rs 822 crore out of Rs 2,171.45 crore found their way to Satyam Computers and were used for day-to-day expenses like payment of salaries among others, ED had said in its order.

However, Mr Nayyar reassured that the final outcome of the ED attachment issue will not have an impact on the swap ratio for MSat merger into Tech Mahindra.

The merger process is going as per schedule and they are waiting the approval of Andhra Pradesh High Court, he said.