Satyam Computer Services Ltd ,State Farm Insurance Co has terminated its contract

Fraud-hit Satyam Computer Services Ltd said on Monday a U.S.-based client had cancelled its contract, dealing a blow to the embattled Indian outsourcer caught in the country's biggest corporate scandal. State Farm Insurance Co has terminated its contract, a Satyam spokeswoman said, confirming a report in India's Mint newspaper on Monday, but she declined to give details of the contract."While we are disappointed in State Farm's decision to discontinue services, our executives are reaching out to clients around the world, and at this point, well over 90% of our clients have committed to continuing with Satyam," she said.A tech sector analyst with a Mumbai brokerage firm said State Farm was one of the top 10 clients for Satyam, who together accounted for a third of the outsourcing firm's revenue in the July-September quarter last year.The analyst, who asked not to be named as he was not allowed to speak to the media, said he was briefed about Satyam's top clients and their revenue contribution a few months back by the company's management.
Satyam, India's No. 4 software services exporter, was plunged into crisis after founder Ramalinga Raju resigned as chairman earlier this month, revealing profits had been falsified for years and $1 billion of cash on the books did not exist.
Some of other Satyam's clients might cancel orders, wary of business risks in the fraud-hit company, analysts said."Any customer dealing with Satyam at this point in time will be concerned with what is happening at the company now," said R.K. Gupta, managing director at Taurus Asset Management.A government-appointed board at Satyam said on Saturday it was talking to banks about funding, saying all efforts were being made to ensure staff salaries were paid on time.The board, which also discussed scheduling of vendor payments, said it had received expressions of support from clients. It said it was still looking for a new chief executive and chief financial officer for the outsourcing firm.Shares in Satyam (SAY), which have tumbled about 85% since the scandal broke, ended up 4.1% at 25.45 rupees in a Mumbai market that edged up 0.1%.The Economic Times newspaper said on Monday Satyam's new board was looking to appoint up to three investment banks to explore the possibility of finding a buyer.But analysts said finding a buyer for Satyam, which specializes in business software, would be difficult until the extent of the fraud was detected and measures to streamline operations were taken. "A buyer will have to take the responsibility for the company, and I don't think any one will take a shot in the dark before the accounts are restated and the legal issues are resolved," said Kevin Trindade, an analyst with KR Choksey Shares and Securities.

The former chairman, managing director and chief financial officer of Satyam were moved to police custody on Sunday after spending nearly a week in jail. Under custody, the accused are held in a police lock-up to help investigators with interrogation. The former executives are expected to stay in police custody until Wednesday.

An application against the former executives being held in jail has been deferred to Thursday, Raju's lawyer Bharat Kumar told Reuters. He did not give any reason for the postponement from Monday.Maytas Infra Ltd, in which Raju and his family hold a 36% stake, said on Monday its chief executive had resigned. Maytas is Satyam spelt backwards.In December, Satyam announced plans to buy Maytas Infra and Maytas Properties, a deal which was hastily abandoned in the face of a shareholder revolt. In his Jan. 7 resignation letter, Raju said the deal was his last attempt to resolve the problem of fictitious assets on the Satyam balance sheet.