The regulatory mechanism in India may be strengthened in view of the Satyam episode, commerce and industry minister Kamal Nath said, but added that the global economy should not view this single incident as a 'red flag'.
In an interview to BBC Hardtalk, Nath said the edifice of India is based on its performance over the last 10-12 years.
There are huge investments from all parts of Europe and the US, and the investors are not looking at this as a red flag.
Nath further said the reconstituted board of the company comprises experts and eminent persons and the regulatory mechanism could be strengthened based on the investigations in Satyam. He, however, disagreed that the fraud was being perpetrated for too long.
When pointed out that the previous board also had very eminent people, Nath said, "They depended on the auditors and I don't think the board can get into the micro (management) of a company . . . no board in the world is engaged in micro management of (a) company."
Asked whether the Satyam episode would dampen investor sentiment across the world, he said around 60 per cent of the Fortune 500 companies are invested in India. "I think it's (because of) the confidence that they have in India . . .," he added.
On the point that independent directors and shareholders are reluctant to raise issues before the company's founder, Nath said, "It's as true as false as it is in Europe and the US. In fact, the Indian Companies Act is tougher . . . Besides we have to prove more as an (up-and-coming) economy."
He further reiterated the fact that Satyam should not be considered the index by which to judge the Indian IT sector.
"Satyam is not the only Indian IT company, there are hundreds of them, Satyam represents a drop," Nath said.
Asked if the Satyam episode assumes more significance because it happened after the Mumbai terrorist attacks and in the midst of the global recession, among others, Nath said, "It's (the timing) not good ... Those who were not so closely associated with India probably look at it now with greater caution, but I think time is going to sort this out."
Nath further said that the newly constituted board of Satyam, which includes some very experienced and eminent people, is looking at how to keep the company viable.
"There is a new set of auditors, they are looking at it, they are going to see what the cash shortfalls are, the nature of the business, whether the business model is sound."
"Going forward, we must distinguish Satyam from its owner Raju or the so-called owner Raju. Raju's track is one track, he is going to be prosecuted, he is in jail," the minister said.
