spice group

The race to acquire Satyam Computer Services, the outsourcing firm snared in India's biggest corporate scandal, heated up as diversified Spice Group offered to buy a 51 percent stake, joining other potential bidders.

Satyam is struggling to survive after founder and chairman Ramalinga Raju quit this month, disclosing profits had been overstated for years. Since then, the government-appointed board has named bankers to identify strategic investors for the firm.

Spice Chairman B.K. Modi said on Friday his group was keen to buy control of Satyam via new shares and pump in more than $400 million to help the struggling firm overcome a cash crunch.

"That's our desire," Modi told Reuters. "We want the money to go inside the company. For that they will have to make a preferential issue. If I buy shares from the market, the money will not go into the company."

Modi, whose group runs mobile software and handset makers, IT services and entertainment firms, is the first to indicate a value to a deal for Satyam, which counts General Electric and Nestle its clients.

Shares in Satyam, whose market value has plunged to about $700 million from $7 billion in May 2008, ended 8.4 percent higher at 54 rupees on Friday.

Engineering conglomerate Larsen & Toubro, which also runs a

smaller software firm, last week trebled its stake in Satyam to 12 percent, making it the largest shareholder, a move it said was to protect its interests.