Fraud-hit Satyam Computer Services Ltd is close to securing funding to pay salaries and other bills, its new board said on Friday, and Larsen & Toubro raised its stake in the outsourcing firm to 12 percent as a rival potential suitor emerged.

The government-appointed board said customer confidence was returning, and it had narrowed candidates for chief executive and chief financial officer to a shortlist of three.

It said it planned to announce before Jan. 28 details of funding to tide it over until the end of March.

"There is a pronounced shift in customer attitudes -- from being alarmed in the initial days, it has changed to a sense of cautious optimism," board member Kiran Karnik said in the statement.

The board, appointed by the government in the wake of India's biggest corporate scandal, is set to meet again on Monday and Tuesday.

As the board met, potential suitors circled Satyam, which has been struggling for survival since Jan. 7 when founder Ramalinga Raju resigned as chairman and said profits had been overstated for years and $1 billion in cash on the books did not exist.

Larsen & Toubro, India's leading engineering and construction firm, raised its stake in Satyam to 12 percent from 4 percent on Friday to protect its interest, CFO Y.M. Deosthalee told Reuters.

"There is a lot of corporate activity going on. We want to make sure our interests are covered," he said.

U.S.-listed outsourcing services provider iGate Corp also expressed interest in buying Satyam, whose clients include Nestle and General Electric, and was in touch with private equity firms to fund a possible deal.

"We would be interested in buying Satyam, assuming we can figure out what their liabilities are," iGate's chief executive Phaneesh Murthy told Reuters, adding he would be deterred if liabilities exceeded $1.25 billion.

Satyam shares rose nearly a third on Friday and was the top traded stock on the National Stock Exchange and Bombay Stock Exchange, with about 47 percent of its outstanding shares traded.

Satyam shares traded between 29.30 rupees and 39.30 rupees on the Bombay Stock Exchange before ending at 38.85 rupees, compared with a close of 179.10 rupees on Jan. 6, the day before Raju's revelations, and a 2008 high of 544 rupees.

Satyam's board said there has been no material impact from losing customers so far, and said receivables had been robust.

But Infotech Enterprises, a mid-sized Indian outsourcing firm, said some Satyam customers, who it did not name, had approached it. Last week, Tata Consultancy Services said some Satyam customers had approached it.

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