Accounting scandal at Satyam could be India's Enron

The company's difficulties multiplied when the World Bank, a major customer, barred Satyam from new business, citing "improper benefits" given to Bank officials.

Satyam rose to prominence in the late 1990s when Raju was among the first to spot outsourcing opportunities in the year 2000 rollover problem, which saw the coming of age of the software outsourcing industry.

Just three months ago, Satyam received a Golden Peacock award from a group of Indian directors for excellence in corporate governance.

By close of trade, Satyam's share value slumped to about $550 million from around $7 billion as recently as last June.

New York-listed Satyam specializes in business software and back-office services for clients such as General Electric and Nestle.

SWAT TEAM

Satyam said in a letter to employees that it had named Ram Mynampati as interim CEO, and named a "SWAT team" of senior managers to help him run the company.

Analysts said that was unlikely to satisfy investors.

"I think there is no future for this stock. This case for India is similar to what happened to Enron in the U.S.," said Jigar Shah, senior vice-president at Kim Eng Securities.

"It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected."

The scandal set off a wave of condemnation from Indian market regulators and government officials, and prompted banker Merrill Lynch to terminate its engagement with Satyam.

"It's going to impact the Indian outsourcing industry. Customers are going to be concerned about offshoring firms in India," said Sudin Apte, country head of Forrester in the western city of Pune.

Satyam said it would go ahead with a planned board meeting on Saturday to consider a share buyback following a rash of broker downgrades even after its acquisitions were called off last month. here

(Additional reporting by India bureaux, Tony Munroe in Hong Kong, Jim Finkle in Boston and Rachelle Younglai in Washington; Writing by Anshuman Daga; Editing by Jean Yoon, David Cowell and Tim Dobbyn)