India's Satyam Computer Services (SATY.BO) said on Monday it was commencing a competitive bidding process to select an investor to acquire 51 percent stake in the fraud-tainted outsourcer. Interested bidders will be asked to submit a detailed expression of interest and proof of at least 15 billion rupees (205.9 million pounds) by March 20, New York-listed Satyam (SAY.N) said in a statement.

Satyam shares jumped as much as 15.3 percent to 48.55 rupees, boosting the company's market value to about $633 million, still just a fraction of the $7 billion it was worth last May.

Satyam's government-appointed board wants to bring in an investor to restore confidence among its roughly 50,000-strong staff and more than 600 customers, which include General Electric (GE.N) and Qantas Airways (QAN.AX).

The company has been struggling for survival since founder and Chairman Ramalinga Raju shocked investors in January, saying Satyam's profits had been overstated for years and assets falsified in what has become India's biggest corporate scandal.

Raju, the managing director and the chief financial officer quit and were later arrested.

India's top engineering firm Larsen & Toubro (LART.BO), which controls about 12 percent of Satyam, and diversified firms Spice Group and Hinduja Group have expressed an interest in Satyam.

A Larsen spokesman said on Monday the company would go ahead with a bid for Satyam.

We expect to go ahead with the bid, spokesman D. Morada told Reuters. The bid price has no relation to the market price, he said, when asked about the basis for valuation of the bid.

Another suitor the Hinduja group said it could not comment on whether it would bid.

I would not really like to comment on that, Hinduja Group's chief financial officer, Prabal Banerjee, told Reuters.

Satyam said eligible bidders will be short-listed and given access to certain business, financial and legal materials and after completion of the due diligence process bidders would be asked to submit their financial bids.

As part of a two-phase sale process of Satyam, the chosen investor would acquire newly issued equity shares representing 31 percent of Satyam's share capital and then make a public offer to buy a minimum of 20 percent more, as required by Indian law.

If the investor fails to acquire 51 percent even after the close of the open offer, it would be able to subscribe to additional equity shares.

Satyam said as result of the relaxation given by the market regulator there was no requirement to have a minimum floor price that was otherwise required under Indian law for the initial subscription.

(Additional reporting by Prashant Mehra in MUMBAI)

(Reporting by Sumeet Chatterjee; Editing by Ranjit Gangadharan)