SanDisk faces business risk due to Satyam crisis

New Delhi: The world's largest supplier of flash memory cards, SanDisk, is facing problems like project delays and productivity loss owing to the current crisis at distressed IT firm Satyam.

In its annual report filed with the US Securities and Exchange Commission for 2008, Nasdaq-listed SanDisk has stated it is facing risks due to the situation at Satyam, which is the system integrator for installing a new ERP system for the memory disk maker.

SanDisk has warned investors that the design and implementation of the new Enterprise Resource Planning (ERP) system at the firm could take longer than anticipated and put further strain on its ability to run business on the older existing ERP system.

"Our current system integrator, Satyam Computer Services is experiencing financial difficulty which has resulted in some project delays and loss of productivity," SanDisk said in its 10-K filing to the Securities Exchange Commission (SEC).

The memory cards maker further said that if Satyam is to lose key personnel, declare bankruptcy or unable to perform at the expected level, SanDisk would have to engage a new integrator, which would likely result in significant delays in implementation and additional cost.

"Any design flaws or delays in the new ERP system or any distraction of workforce from competing business requirements could harm our business or results of operations," SanDisk stated.

Further, the firm has said that it would continue to enhance controls, procedures and workforce training.

"If we do not manage or adapt our systems, processes and procedures to our changing or growing organisation, our business and results of operations could be harmed," it added.

SanDisk has further cautioned its investors that the company has experienced and might again experience rapid growth or changes in business requirements, which could place a significant strain on its managerial, financial and operations resources and personnel.

Satyam Computer has been hit by the biggest-ever corporate fraud in the history of corporate India after its founder B Ramalinga Raju admitted to financial wrongdoings at the company.

At present, the government-appointed board of Satyam is in the process of finding a strategic investor for selling a majority stake in the company.