Jan. 30 (Bloomberg) -- Spice Corp. Chairman B. K. Modi offered 20 billion rupees ($408 million) for a controlling stake in Satyam Computer Services Ltd., joining Larsen & Toubro Ltd. in the race for the fraud-hit software exporter.

Spice Innovation, Modi’s closely held New Delhi-based holding company, made a preliminary cash offer for preference shares in Hyderabad-based Satyam, Modi said in a telephone interview from New Delhi today.

Satyam hired Goldman Sachs Group Inc. to find a buyer this week after Larsen, the nation’s biggest engineering company, tripled its stake and said other bidders are interested. Satyam shares have declined 70 percent since founder Ramalinga Raju said Jan. 7 he’d inflated assets by $1 billion and quit as chairman.

“Anybody and everybody would have some or the other plan for Satyam because it is in big-time trouble and available at dirt-cheap valuations,” said Harshad Deshpande, a Mumbai-based analyst at Ambit Capital Pvt. “What is important is they need to provide right leadership, they need to have genuine interest.”

Modi may use part of the 21 billion rupees he earned by selling his stake in Spice Communications Ltd. to Idea Cellular Ltd. last year to finance an offer for India’s fourth-biggest software provider. Larsen Chairman A.M. Naik has said Larsen may lift its holding in Satyam to 15 percent, the threshold for an offer to investors under Indian takeover rules.

Satyam gained 7.8 percent to close at 53.85 rupees in Mumbai trading. The benchmark Sensitive Index added 2 percent.

Written to Government

Spice has sent its expression of interest to buy Satyam to the board and the government, Modi said. The purchase, if approved, will align with his group’s interests in the information and communication businesses, he said.

“The key thing is that the money must go into the company,” Modi said. The 20 billion rupees is the amount Satyam needs to run its operations and “we have the money,” he said.

Satyam’s board said on Jan. 27 it had organized money to pay salaries for January and was set to complete funding arrangements for meeting the cash-strapped company’s immediate needs.

The software company, which is being investigated by India’s fraud office, auditing body, markets regulator and police, also faces U.S. class-action lawsuits after Raju admitted to inflating earnings for “several years.”

Modi said he plans to change Satyam’s brand name if he succeeds in acquiring the company and said Spice was familiar with regulations in the markets where Satyam operated and was prepared to deal with any legal action the provider may face.

“If we invest our main focus will be on how to revive the company and how to grow it,” he said. “We have our lawyers and we know how to deal with the lawsuits.”

To contact the reporter on this story: Harichandan Arakali in Bangalore at harakali@bloomberg.net.

Last Updated: January 30, 2009 08:16 EST