Author Topic: The boss of Satyam, India's fourth-biggest software firm  (Read 1012 times)

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The boss of Satyam, India's fourth-biggest software firm
« on: January 11, 2009, 01:42:07 PM »
The boss of Satyam, India's fourth-biggest software firm, has resigned after revealing financial irregularities in the firm's accounts.

Chairman Ramalinga Raju apologised and said "the gap in the balance sheet has arisen purely on account of inflated profits" during several years. He said he was subjecting himself to the laws of the land and would "face the consequences". India's benchmark index fell nearly 4% on the news, as Satyam stock shed 60%.

In a letter to the board of directors, Mr Raju said that neither he nor the managing director took any money from the company and did not benefit in financial terms following the "inflated results". The BBC's Sanjoy Majumder in Delhi says analysts see this as one of the worst crises to have hit corporate India, at a time when it was hoping to attract foreign investors looking for quick gains in emerging markets.

Our correspondent says many fear that the international community will now take a harder look at Indian companies and think twice about placing their money there. Jigar Shah, senior vice-president at Kim Eng Securities, said: "I think there is no fortune for this stock. The case for India is similar to what happened to Enron in the US." Satyam specialises in business software and benefited from the IT outsourcing boom.

immi22_80

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Re: The boss of Satyam, India's fourth-biggest software firm
« Reply #1 on: January 17, 2009, 10:10:04 PM »
Satyam computers is having a worst time in its working span. Its own founder and chairman Ramalinga Raju has resigned from the board and is waiting Board' '   '  '' '   ''  '' '   ''  ' ' ' ''    '''    ' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' ' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' s final decision.
Raju has also revelled many shocking facts and frauds related to satyam. Satyam has been in news from quite some time because of Maytas deal.


Raju has taken a bold step and has admitted all the frauds and has written a letter to the board giving all the details how the balance sheet has inflated cash balance of Rs 5040 crore and accured interest of Rs 376 crore is non existent. Rs 1230 crore was arranged to Satyam and is not reflected in the books.


Going one step ahead raju has also suggested Ram Maynampati as the interim CEO for the company.
Further investigation is required to find out who else are involved in the fraud says Security and Exchange Board of India(SEBI).

immi22_80

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Re: The boss of Satyam, India's fourth-biggest software firm
« Reply #2 on: January 17, 2009, 10:11:36 PM »
Satyam Computers Services Ltd.

From B. Ramalinga Raju
Chairman, Satyam Computer Services Ltd

Dear Board Members,

It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice:
1. The balance sheet carries as of September 30, 2008
a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore refglected in the books)
b) An accured interest of Rs 376 crore which is non-existent
c) An understated liability of Rs 1,230 crore on account of funds arranged by me
d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books)


2. For the September quarter (Q2) we reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24 per cent of revenues) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone.


The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several  years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew significantly (annualized revenue run rate of Rs 11,276 crore in the September quarter, 2008 and official reserves  of Rs 8.392 crore). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional  resources and assets to justify higher level of operations ' '   '  '' '   ''  '' '   ''  ' ' ' ''    '''    ' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' ' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''  '  ''' '   '' ' '   ''  '  ' '    ''' '   '  '' ' ''    ''' ' '   '' ' ' ''  '  ''' '   ''  '" thereby significantly increasing the costs.
Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten.

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas' '   '  '' '   ''  '' '   ''  ' ' ' ''    '''    ' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' ' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam' '   '  '' '   ''  '' '   ''  ' ' ' ''    '''    ' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' ' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' s problem was solved, it was hoped that Maytas payments can be delayed. But that was not to be. What followed in the last several days is common knowledge.


I would like the board to know:     
1. That neither myself, not the Managing Director(including our spouses) sold any shares in the last eight years-excepting for a small proportion declared and sold for philanthropic purposes.
2. That in the last two years a net amount of Rs 1,230 crore was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from know sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers.
3. That neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results.
4. None of the board members, past or present, had any knowledge of the situation in which the company is placed. Even business leaders and senior executives in the company, such as Ram Mynampati, Subu D T R Anand, Kesab Panda, Virender Agarwal, A S Murthy, Hari T, S V Krishnan, Vijay Prasad, Manish Mehta, Murali V, Sriram Papani, Kiran Kavale, Joe Lagioia. Ravindra Penu Metsa, Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or managing directors immediate or extended family members has any ideas about these issues.


Having put the facts before you, I leave it to the wisdom of the board to take the matters forward. However, I am also taking the liberty to recommend the following steps:
1) A task force has been formed in the last few days to address the situation arising out of the failed Maytas acquisition attempt. This consists of some of the most accomplished leaders of Satyam: Subu D, T R Anand, Keshab Panda and Virender Aggarwal, representing business functions, and A.S.Murthy, Hari T and Murali V representing support functions. I suggest that Ram Mynampati be made the Chairman of this task force to immediately address some of the operational matters on hand. Ram can also act as an interim CEO reporting to the board.
2) Merrill Lynch can be entrusted with the task of quickly exploring some merger opportunities.
3) You may have a ' '   '  '' '   ''  '' '   ''  ' ' ' ''    '''    ' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' ' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''' '   '  '' '   ''  '' '   '' ' ' ''  '  ''' '    '' ' '   '  '' ' ''    ''' ' '   '' ' ' ''  '  ''' '   ''  '"restatement of accounts' '   '  '' '   ''  '' '   ''  ' ' ' ''    '''    ' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    '' ' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''' '   '  '' '   ''  '' '   ''  '  ' '    '' ' '   '  '' '    '' ' '   '' ' ' ''    ''  ' ' '    ''' '   ''  ' ' '    '' ' '   '  '' ' ''    ''  ' ' '   ''  '  ' '    ''prepared by auditors in light of the facts that I have placed before you.


I have promoted and have been associated with Satyam for well over twenty years now. I have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries. Satyam has an excellent leadership and competency base at all levels. I sincerely apologize to all Satyamites and stakeholders who have made Satyam a special organization, for the current situation. I am confident they will stand by the company in this hour of crisis.


in light of the above, I fervently appeal to the board to hold together to take some important steps. Mt T R Prasad is well placed to mobilize support from the government at this crucial time. With the hope that members of the Task Force and the financial advisor, Merrill Lynch (now Bank of America) will stand by the company at this crucial hour, I am marking copies of this statement to them as well.

Under the circumstances, I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded. My contribution is just to ensure enhancement of the board over the next several days or as early as possible.

I am now prepared to subject myself to the laws of the land and fact the consequences thereof.

(B. Ramalinga Raju)

Copied marked to:
1) SEBI Chairman
2) Stock Exchanges

<--Jack-->

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Re: The boss of Satyam, India's fourth-biggest software firm
« Reply #3 on: January 18, 2009, 07:31:28 AM »
Now day by day market is covering that attact it got for Satyam.................

 

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