Satyam's latest updates - May Axe 10,000 Employees: Headhunters

[VelMurugan]

Satyam chief Ramalinga Raju resigns?

Early on Tuesday, there were unconfirmed reports that Satyam Computers founder and chairman Ramalinga Raju had resigned from the board.

The reports also suggested that Raju had put in his papers and that he was awaiting the company board's decision on the issue. When contacted, a Satyam spokesperson said, "We are still awaiting news from the management. We will let you know once there is an announcement to make."

Incidentally, a Satyam board meeting is scheduled for December 29. According to analysts, Raju's resignation wouldn't make much of a difference to investors. "He is not to be blamed alone...the responsibility lies with the entire board. It was a unanimous decision and this board is in no place to decide on the issue," said Prabhudas Leeladhar analyst Apurva Shah.

The resignation of the chairman, who is also the promoter of the company, could raise issues of succession, which is far greater than him quitting, Shah added.

Shares of Satyam were down 8.5 per cent to Rs 148.60 on the BSE in intra day trading. The company's shares have seen severe beating ever since the company board pushed through a decision to buy out two subsidiaries belonging to the promoters' family.

The Satyam board had to later reverse this decision following strong opposition from investors and shareholders.

Source : indiatimes

[sajiv]

Will Raju continue to hold fort?

HYDERABAD: Will B. Ramalinga Raju continue to hold the fort in the country's fourth largest IT services company, Satyam Computer Service? This is a "billion dollar" question lurking in the minds of shareholders and also market watchers.

The company's share leapt on Monday on the Bombay Stock Exchange to close at Rs. 148.25, touching an intraday peak of Rs. 159.60 after opening at Rs. 133. The upside continued till 2.50 p.m. and the scrip dipped after the news of resignation of independent directors trickled in.

With the promoters' group pledging 8.27 per cent (the complete stake of the family-owned SRSR Holding), the remainder with them is just 0.34 per cent. It is not clear how many of the shares pledged with the institutional lenders, including IL&FS, GE Capital and DSP Merrill Lynch, were liquidated to cover the margin shortfall.

Sources say that IL&FS alone sold 60 lakh shares, which accounted for close to one per cent of the total number of shares in the company. Institutional investors are said to be insisting on change in management. Aberdeen Asset Management Company, one of the largest institutional investors, felt that the company needed to rebuild its credibility.

Unconfirmed reports suggest that multinational giants such as IBM and Accenture and domestic behemoths such as Reliance (ADAG) and Infosys are eying for a "controlling stake" in Satyam. However, it all depends on how much the Rajus still hold in the company and also how much the institutional investors may divest to pave the way for the IT biggies to take the controlling stake.

[dwarakesh]

Satyam Chairman Raju's letter to employees

Dear Associates,

I am writing to inform you of what has developed since my note of December 18th and to outline plans to restore our stakeholders' faith in Satyam.

The events of the past two weeks have raised many questions, but these can be distilled into two basic issues: the viability of our business strategy
to diversify; and the effectiveness of our corporate governance.

Re: Business strategy, you should understand that Satyam is completely committed to the IT services and BPO business, as we have been since our inception. While the idea that we could diversify into an unrelated business
was rejected by our investors, it was formed with the belief that doing so would not imperil our leadership in our core business or lessen our commitment to it, and that all stakeholders would benefit. Satyam did not - and does not now - intend to retreat from IT and BPO services in any way, and going forward, Satyam will focus exclusively on these markets.

Re: Corporate governance, the board arrived at its decision to bid for Maytas by following all required processes and procedures, and while there was a spirited discussion among members, their vote to approve the motion was unanimous. Further, Satyam has won numerous awards for excellence in corporate governance, including the Golden Peacock Global Award for Excellence in Corporate Governance on two separate occasions, most recently in 2008.

Over the past two weeks, we have been communicating these facts to our customers, and I'm very pleased to report that customers continue to show a high level of trust in Satyam.

We have also been in contact with many of our investors, and we have taken key steps to regain their confidence. These include strengthening the board by changing its size and composition, and engaging DSP Merrill Lynch to provide strategic advice and options. The board will meet on January 10, 2009 to consider these options and to chart a course of action that would boost stakeholders' confidence further.

Please be assured that the board and the leadership team are doing everything possible to get Satyam back on track. We cannot do this without your help, however. I ask for your continued faith in Satyam and for your steadfast focus on your customers, especially in the face of wild speculation and unchecked rumor. There is simply no more effective way to strengthen the company and to secure its future - and yours - than by delighting your customers.

Thank you very much for your commitment and support. Once again, I wish you the very best for 2009.

With warm regards,

Raju

Source: Economic Times

[dhilipkumar]

Satyam surges five days in a row amid takeover speculations


MUMBAI: Satyam Computers continued to surge for the fifth day in a row gaining over 7 per cent amid speculations that corporate majors, besides private equity firms, are eyeing the company for a possible takeover. At the end of the day's trade shares of Satyam settled with a gain of 7.17 per cent at Rs 182.35 on the Bombay Stock Exchange. During the trade the scrip had rallied to a high of Rs 184, up 8.14 per cent over the previous day's close on the bourses.

On the National Stock Exchange the scrip settled with a gain of 6.38 per cent at Rs 181.70. Over 3.69 lakh changed hands on the bourses. The scrip, which had dipped to its 52-week low level of Rs 114.65 last week, has pulled back amid speculations that the company is becoming a ripe target for takeover as the valuations are turning attractive. In the last five trading session the scrip has advanced over 35 per cent amid rumours that Anil Ambani Group (ADAG), Mahindra British Telecom, L&T Infotech, besides rival IT firms are eying the company.

The scrip of Satyam had taken massive battering in the past two weeks, plunging nearly 40 per cent. However, in the five consecutive trading sessions the scrip recovered over 19 per cent of the losses it suffered since it had announced the deal to buy two infrastructure properties - Maytas Properties and Maytas Infrastructure - for $1.6 billion.

[dhilipkumar]

Nasscom no authority to probe Satyam-WB episode, says Mittal

NEW DELHI: Reacting to a request by an IT-BPO union UNITES to conduct inquiry into the Satyam-World Bank fiasco, IT industry body Nasscom on Friday said that it has no authority to look into the matter. "It is a company-level issue and we do not have any authority to conduct an inquiry into the matter," Nasscom President Som Mittal said, adding that he was yet to received a formal request in this regard.

Fearing that the image of the Indian IT firms globally will take a beating following the Satyam fiasco, IT-BPO union UNITES has urged Nasscom to institute an inquiry in association with the World Bank on Satyam,which has been banned from doing business with the bank for eight years. "We want the inquiry to look into the possibility that some vested interests, who want to tarnish the good name and reputation of the Indian IT companies," Prithviraj Lekkad, President, UNITES Professionals India told PTI.

Nasscom and the government would have to decisively intervene and get to the bottom of the World Bank findings on Satyam and clear the fair name of Indian firms, including Satyam, and the integrity of the staff working for them abroad, he added. The Bank had said on December 23said, "Satyam was declared ineligible for contracts for providingimproper benefits to Bank staff and for failing to maintain documentation tosupport fees charges for its sub-contractors. Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."

[dhilipkumar]

Satyam explores possible merger

MUMBAI: Satyam Computer Services management and some funds have approached two smaller rivals about a merger to fend off any possible hostile bid for India's fourth-biggest software services exporter, according to a newspaper report on Monday, but one of the firms said it was not interested. Citing investment banking sources, the newspaper said Satyam held talks with HCL Technologies, which recently bought British consultancy Axon, and MindTree Ltd about a possible merger. Bangalore-based MindTree said it was not interested. "There's no interest from our side. Let me tell you, there is minus interest from us on this idea," Ashok Soota, executive chairman at MindTree said.

A spokesman for HCL, based in New Delhi, said the report was speculative. Officials at Satyam, which is also listed in New York, could not immediately be reached for comment. Speculation about a bid for, or management changes at, Satyam has been mounting since a botched attempt last month by the firm to buy two infrastructure firms in which its management had stakes.

Satyam reversed the decision after shareholders protested, but its shares have slumped by more than a fifth since then and four independent directors have resigned. The outsourcer said on Friday that the holding of its founders had fallen by a third to 5.13 per cent, and analysts said this made Satyam a more attractive target for private equity or global information technology firms. Satyam has hired the local unit of Merrill Lynch to review ways to enhance shareholder value, and its board is scheduled to meet on Jan 10 to consider options, including a share buyback.

By 0504 GMT, Satyam shares were quoted down 3.3 per cent, while the main Mumbai stock index was up 1.3 per cent.

[dwarakesh]

Tech Mahindra may bid for Satyam

Tech Mahindra may reportedly bid for acquiring Satyam in a cashless merger deal, say reports.

Satyam is going through a worst phase which has resulted in its share value erode rapidly for the past few days. The company came into troubled waters when it emerged that the board had approved a proposal to invest in a real estate firm owned by children of Raju, one of the main promoters of Satyam. Following strong negative response to the move, Satyam had to eventually call off the deal.

Reports say that Tech Mahindra may be interested in acquiring Satyam as part of its strategy to evolve from a telecom industry focused IT firm to a full fledged IT services company spanning across all sectors.

Earlier reports mentioned that HP, IBM, Mindtree would also be interested in acquiring Satyam. Mindtree however issued a statement denying any such move.

[dhilipkumar]

Satyam to log in highest Dec growth among peers: Analysts

MUMBAI: Here's more to Satyam Computer Services' appeal as a takeover target: it may be the best performer among India's Top 5 IT firms. According to consensus estimates of six brokerages, Satyam is expected to report the highest growth in rupee revenues for the December quarter among its peer group and its dollar revenues are expected to be only a tad below its guidance.

The embattles software major is likely to announce its quarterly results on January 16 or 20. A few brokerage firms like CLSA expect Satyam to meet its dollar guidance of $634-652 .2 million for the third quarter with revenues of $640 million. While Satyam is expected to maintain its full fiscal revenue guidance, Infosys Technologies is expected to scale down guidance for FY09, according to CLSA.

According to IIFL's Sandeep Muthangi , Satyam, Infosys and Wipro are expected to benefit because of their higher exposure to the dollar, as compared to Tata Consultancy Services (TCS) and HCL Technologies. The rupee's fall against the dollar will have a positive impact , while the pound's fall against the rupee will impact companies like TCS, which have a higher pound exposure. The quarterly numbers, however, will make little difference to Satyam's stock price beacuse of the loss of investors confidence in the management.

While the December quarter is typically weaker because of the more numbers of holidays, the slowdown this year has caused forced shutdowns by clients. According to Mr Muthangi, in many cases there have been demands for nonbilling for the last ten days of December. For instance, Wipro had asked all its offshore employees working for Cisco to apply for leave for five business days. "Our employees' leave/vacation is aligned around their respective customers' leave/vacation window," Wipro's executive vice president, HR, Pratik Kumar told ET in a written response.

"Clients are reluctant to commit on 2009 budgets and discretionary projects have been put on hold... With volume growth slowing down and pricing cut imminent in 2009, IT companies are focused on controlling cost to maintain margins," said Spark Capital analyst Santhanakrishnan.

[dhilipkumar]

Satyam staff may buy shares

HYDERABAD: Faced with a potentially uncertain future, some staffers of Satyam Computers are seriously considering whether they should start buying shares of the company in the market. A move to this effect began in the Hyderabad development centres of Satyam on Monday.

"The idea is that we must save the company from a hostile takeover the possibility of which now seems more likely. We should mop up some shares so that we can support the existing management," a senior Satyam staffer told TOI. "Raju and Ramu may have made a poor management decision to buy into Maytas but we should give them the benefit of doubt. After all they founded the company. They would any day be better than any new guy," suggested another Satyam staffer.

But there is a bit of a problem because the company is passing through the quiet period since December 17 that will end on January 19. This is because the third quarter results of Satyam will be announced on January 17 and there is no trading window a month before that to avoid any kind of possible insider trading. During this period senior vice presidents and above cannot deal in the Satyam scrip at all. Other employees are allowed to sell shares worth Rs 5 lakhs or 2500 shares whichever is lower. But this too with pre approval of the secreterial department of the company.

"It is unfortunate that this danger to our company has come during this period. But after the quarterly results we will swing into action," a Satyam employee said. He felt that in the context of India, no possible takeover bid can actually materialise in ten days time. So waiting for 10 days will not lead to any problem. Analysts aver that the move to mobilise the support of the staff is mooted by management itself. The move is in continuance of the offensive launched by the Rajus to woo employees through e-mails, which aimed at motivating the employees and reaffirming the promoters interest keep running the company. A site has also been put up in cyber space that is designed to din support in favour of Rajus.

It is expected that more than the lower rung associates, the very senior executives will be the ones who will buy into Satyam shares in a big way post the quarterly results. "Only they have the financial wherewithal to buy such a number of shares that are significant in number," said an analyst adding that such staffers are most likely to be affected if there is a management change. So there interest in trying to buy Satyam's scrip would also be higher.

[dhilipkumar]

Satyam founders' stake falls to 3.6 per cent

BANGALORE: The stake owned by founders of Satyam Computer Services has fallen to 3.6 percent from 5.1 percent after institutional lenders sold the stock, the Indian outsourcing firm said on Tuesday.

Satyam had said earlier the founders' stake might have been diluted as institutional lenders to whom they had pledged their shares exercised options to cover margin calls.

On Friday, Satyam had said the stake owned in India's No. 4 software services exporter by SRSR Holdings, in which the founders had accumulated their shares, had fallen to 5.13 percent from 8.27 percent at the end of the September quarter.

The company has said it will hold a board meeting on Jan. 10 to consider options to improve shareholder value and corporate governance, leading to speculation of a possible stake sale or takeover bid.

[Thilaga]

Ramalinga Raju has resigned from the Satyam board, reports CNBC-TV18.

Raju wrote a letter to the board giving balance sheet details.

Satyam said that the balance sheet has an inflated cash and bank balance of Rs 5040 crore. Satyam added that no board member had any knowledge of the real situation as against the books.

Accrued interest of Rs 376 crore in books is non-existent.

Satayam further said that Rs 1230 crore was arranged to Satyam but was not reflected in the books.

[Thilaga]

SEBI looking into Satyam's ISB links

Market regulator SEBI is examining another possible violation of corporate governance norms by IT giant Satyam, sources tell Network 18.

Satyam Chairman B Ramalinga Raju is on the executive board of the Indian School of Business and has been making donations and contributions over time to the premier business school.

Sources say SEBI is probing if it is a violation of corporate governance norms in 'spirit'.

ISB Dean M Rammohan Rao was an independent director on the Satyam Board and chaired the controversial board meeting on Maytas Buyout. Rao quit the board two weeks ago.

[nithyasubramanian]

BANGALORE: The chairman of India's embattled Satyam Computer Services announced his resignation from the leading outsourcer on Wednesday, sending its share down more than 50 percent.
Satyam Computer Services founder chairman B. Ramalinga Raju resigned from the IT major's board after admitting a fraud to the tune of Rs.40 billion ($823 million) in the balance sheet of the company.
"I sincerely apologise to all Satyamites and stakeholders, who have made Satyam a special organisation, for the current situation," B. Ramalinga Raju said in a notice sent to the stock exchanges.
"I am now prepared to subject myself to the laws of the land and face consequences thereof."
In a notification to the stock exchanges, the Hyderabad-based IT firm said Ramalinga Raju and Managing Director Rama Raju had resigned early Wednesday and that the Securities and Exchanges Board of India (SEBI) had been informed.
In the regulatory statement, Satyam's erstwhile chairman and co-founder Ramalinga Raju said that the software services firm had fraudulently incorporated a non-existent cash component and inflated the bank balance to reflect Rs.5,040 crores (Rs.50.4 billion or $1.04 billion) as against Rs.5,361 crores (Rs.53.61 billion or $1.1 billion).
"Rama Raju shall continue in the position till such time the board is expanded and the continuance is to ensure enhancement of the board," the company said in the notification.

[dwarakesh]

Ramalinga Raju resigns from Satyam board

In a letter to the board of directors, Raju also admitted that the company's balance sheet was inflated to Rs 5,361 crore at the end of September 2008 against the actual Rs 5,040 crore. There was also an accrued interest receipt of Rs 376 crore, which was non-existent. The balance sheet also had an understated liability of Rs 1,230 crore on account of funds arranged by Raju. The debtors position was also overstated by Rs 490 crore to Rs 2,651 crore.

Raju also admitted that the September 2008 results were overstated at Rs 2,700 crore with an operating margin of Rs 649 crore. Raju said the actual numbers were Rs 2,112 crore and the operating margin was much lower at Rs 61 crore. This resulted in an artificial cash balance of Rs 588 crore. Raju also admitted that Satyam's profits were inflated over several years. He said that what started as a marginal gap between actual operating profit and the reported figures has attained unmanageable proportions as the size of the company grew, and every attempt to eliminate the gap failed. He added, "It was like riding a tiger, not knowing how to get off without being eaten." The Maytas deal was the last attempt to fill the fictitious assets with real ones.

Raju also said Rs 1,230 crore was arranged to Satyam, which is not reflected in its books, to keep Satyam's operations running. For this the promoter had to pledge the promoter shares and raising funds from other sources.  Raju apologised to Satyam employees and stakeholders for the current situation. Raju will continue in his position till the board is expanded in the next few days.

Following which, the stock has taken a hard knock and plunged over 50 per cent to a low of Rs 84. The stock had touched an intra-day high of Rs 189 today. As of 1155 hrs, the stock is now trading at Rs 87 - down 51.5 per cent - on hefty volumes of around 2.62 crore shares on the BSE.

[Kalyan]

really its shocking news that Satyam, Raju may face criminal proceedings and 10 year jail.....

and i heard that CTS is bidding for satyam at the rate of 150$ billion...

actually two companies are bidding satyam - IBM and CTS..in history, CTS is started with the strong funds and investments of

satyam.

later, they developed & become an MNC and in one of the top place....so, i hope CTS may have more chanced than IBM, but

satyam is 4th largest IT Company, so CTS having lacking in the release of funds...but they never allow the competitors to bid for

satyam. let's see

[dhilipkumar]

Satyam's chairman Ramalinga Raju resigns, admits fraud

HYDERABAD/MUMBAI: Satyam Computer on Wednesday plunged into a deep crisis, as B Ramalinga Raju resigned as its chairman after admitting to major financial wrong-doings and saying his last-ditch efforts to fill the "fictitious assets with real ones" through Maytas acquisition failed. ( Watch ) The beleaguered IT giant, already under scanner over the aborted acquisition of firms promoted by the chairman's family, received a rude shock days ahead of its January 10 board meeting, with Raju stepping down along with his brother and Managing Director B Rama Raju.

"It was like riding a tiger, not knowing how to get off without being eaten," Ramalinga Raju said in a letter to Satyam's Board of directors, wherein he listed major financial wrong-doings over the years to inflate the profits. ( Watch ) Listed at New York Stock Exchange, the company could face regulatory action in the US, analysts said. While Raju recommended DSP Merrill Lynch be entrusted the task of "quickly exploring some merger opportunities," the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam.

Noting that every attempt to eliminate gaps in balance sheet, purely on account of inflated profits over several years, failed, Raju said: "I am now prepared to subject myself to the laws of the land and face consequences thereof." Low percentage of promoter equity in the company, where four independent directors resigned in the last two weeks over the acquisition fiasco, could lead to a takeover and expose the gap, he said in the letter, also sent to regulator SEBI. The promoters' share in Satyam has now dipped to just over 3% that too is pledged with lenders. Shares of Satyam plunged by over 50% immediately after the announcement of resignations, necessitating an overhaul of the Board and management.

Raju will continue as chairman till the Board finds a replacement, even as speculation was rife that Satyam President Ram Mynampati would take over as chairman. Rama Raju would also continue as Managing Director, but only till the time the Board is expanded. Ramalinga Raju requested the Board to "hold together" to take some important steps, while hoping that one of the Board members T R Prasad was "well-placed to mobilise support from the government at this crucial time.

Satyam is the country's fourth largest IT firm and has over 51,000 employees.

Giving details of the financial irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books." The balance sheet also carries "an accrued interest of Rs 376 crore which is non-existent, an understated liability of Rs 1230 crore on account of funds arranged by me (Raju), an overstated debtors position of Rs 490 crore (as against Rs 2651 crore reflected in the books," Raju said.

He further said that Satyam reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24% of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3% of revenue). "This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said. "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," Raju further said. "It has attained unmanageable proportions as the size of the company operations grew significantly... 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," he said. "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," he said.

Raju, however, claimed that neither he, nor 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. Raju further said he or the company's MD did not take "even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results."

[Sudhakar]

This News is really informative.

" Confessing to fraud, Raju has written a letter to the board giving details of how the balance sheet has inflated cash balances of Rs 5040 crore and accrued interest of Rs 376 crore is non-existent. Rs 1230 crore was arranged to Satyam and is not reflected in the books. "

----  Typical Indian's. 

[dhilipkumar]

We will secure future of the company: Ram Mynampati

HYDERABAD: Satyam Computer Services will look all avenues to "secure the future" of the company. The scam tainted firm on Wednesday said its immediate priority would be to protect the careers and security of its 53,000 associates.

``We recognize that our associates have committed a significant part of their careers to build Satyam. We will pursue all avenues to secure their future in the company,'' said Ram Mynampati, Interim CEO (pending ratification by the Board) and Member of the Board, Satyam said.

Mynampati has been mandated by the Board to steer the company through this crisis. His statement came in the wake of the company's founder Ramalinga Raju's resignation. A disgraced Raju left Satyam after admitting massive financial fraud at India's fourth-largest software exporting company. Confirming that the company received a letter from Raju, Mynampati said we were obviously shocked by the contents of the letter. ``The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation,'' he said.

The company's immediate priorities also include protecting the interests of its shareholders and meet all its commitments to its customers and suppliers. `Satyam believes that its underlying business model, customer assets and growth prospects remain sound, even in the current challenging financial environment. Satyam leadership expressed confidence that the company will be able to overcome this latest development and continue to provide excellent service to clients, while delivering value to shareholders in the medium to long term,'' he said.

Satyam is committed to uphold the highest levels of corporate transparency and will cooperate with the relevant regulatory authorities to conduct detailed investigations into this matter. Satyam will keep stakeholders informed of the developments on a regular basis, said the release from the company.

[nithyasubramanian]

Satyam chief Raju resigns, admits Rs 7,000 cr fraud

Satyam Computer on Wednesday plunged into a deep crisis, as B Ramalinga Raju resigned as its Chairman after admitting to major financial wrong-doings and saying his last-ditch efforts to fill the "fictitious assets with real ones" through Maytas acquisition failed.

The beleaguered IT giant, already under scanner over the aborted acquisition of firms promoted by the Chairman's family, received a rude shock days ahead of its January 10 board meeting, with Raju stepping down along with his brother and Managing Director B Rama Raju.

"It was like riding a tiger, not knowing how to get off without being eaten," Ramalinga Raju said in a letter to Satyam's board of directors, wherein he listed major financial wrong-doings over the years to inflate the profits.

Listed at New York Stock Exchange, the company could face regulatory action in the US, analysts said.

While Raju recommended DSP Merrill Lynch be entrusted the task of "quickly exploring some merger opportunities," the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam.

Noting that every attempt to eliminate gaps in balance sheet, purely on account of inflated profits over several years, failed, Raju said: "I am now prepared to subject myself to the laws of the land and face consequences thereof."

Low percentage of promoter equity in the company, where four independent directors resigned in the last two weeks over the acquisition fiasco, could lead to a takeover and expose the gap, he said in the letter, also sent to regulator SEBI. The promoters' share in Satyam has now dipped to just over 3 per cent that too is pledged with lenders.     
Raju will continue as Chairman till the Board finds a replacement, even as speculation was rife that Satyam President Ram Mynampati would take over as Chairman.

Rama Raju would also continue as Managing Director, but only till the time the Board is expanded.
Ramalinga Raju requested the Board to "hold together" to take some important steps, while hoping that one of the Board members T R Prasad was "well-placed to mobilise support from the government at this crucial time."
Satyam is the country's fourth largest IT firm and has has over 51,000 employees.

Giving details of the financial irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books."

The balance sheet also carries "an accrued interest of Rs 376 crore which is non-existent, an understated liability of Rs 1230 crore on account of funds arranged by me (Raju), an overstated debtors position of Rs 490 crore (as against Rs 2651 crore reflected in the books," Raju said.

He further said that Satyam reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 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 Rs 588 crore in Q2 alone," Raju said.

"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," Raju further said.

"It has attained unmanageable proportions as the size of the company operations grew significantly... 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," he said.

"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," he said.

Raju, however, claimed that neither he, nor 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.

Raju further said he or the company's MD did not take "even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results".

[nithyasubramanian]

Sensex nosedives, Satyam tanks 80%

The benchmark index has tanked in the noon deals following revelations by Satyam of financial irregularities. IT and realty stocks have plunged after the shocking disclosures from Satyam's chief Ramalinga Raju, who has also quit.
The Sensex is down 768 points to 9,567while Nifty has shed 200 points to 2,912.
In a letter to the board members, Raju also said that the company reported inflated revenues over years.
Satyam's stock has tanked over 80 per cent. And the news has also hammered IT stocks. The IT index on the BSE is nearly 9 per cent while realty index is down nearly 16 per cent. Among the realty players, both Unitech and HDIL are down over 21 per cent.
Apart from Satyam other major Sensex losers include, RCom, JP Asso, DLF and Rel Infra, down between 14 per cent and 26 per cent.
Most of the Asian markets are however firm today on hopes that stimulus measures from a new US administration would help speed the world's economic recovery.
Also buoying the Asian markets are overnight gains on Wall Street, where the Dow Jones industrial average rose 62.21, or 0.7 per cent, to 9,015.

[sajiv]

Breaking News:Ramalinga Raju resigns as Satyam Chairman, admits "fraud" in Satyam-Videos-The Times of India

http://in.youtube.com/watch?v=VqJ-Q3nilXk

[Sudhakar]

Breaking News:Ramalinga Raju resigns as Satyam Chairman, admits "fraud" in Satyam-Videos-The Times of India

This updated video, i was watching with my family.

And concluded that, they are trying to figure out this breaking news so fastly.

So the News Person , was so energetic to say the the the the the for more than 5 times.

Do watch this funny breaking news video by reminding constantly on the the the the the.   

[Thilaga]

if she dint say 'the' for more than 5 times u wud nt hav posted it here Mr.Sudhakar...

tak it lite 

[sajiv]

Satyam fraud to be probed by CB-CID: Reddy

New Delhi: Terming the Satyam Computer financial fraud as "mind-boggling", Andhra Pradesh Chief Minister Y S Rajasekhara Reddy on Wednesday said his government would order a CB-CID inquiry into the "fudging" of accounts and do "whatever is needed to be done".

"The total figures are really mind-boggling," and as per the statement of Ramalinga Raju, the "fudging" of accounts was a "fraud", Reddy told a press conference when asked to comment on the collapse of the Hyderabad-based IT company.

"We will ask the CB-CID (Crime Branch-CID) to hold an immediate preliminary inquiry to look at the criminal angle into the entire episode,"

he said. When asked why not Raju be arrested as per his own statement, Reddy said, "That is what I am trying to tell. We will take every possible step. Whatever is needed will be done".

The Chief Minister said that he would also ask his officials to look into various problems and issues concerning this episode.

Observing that Satyam and Maytas were two different entities, Reddy said that while Raju owned very little stake in Satyam, the company employed over 53,000 people and the government would have to look into every aspect.

The Chief Minister said Hyderabad Metro Project and the Machilipatnam Port Project have been awarded to Maytas.

Raju, founder-chairman of India's fourth largest IT firm Satyam, today revealed that balance sheet of Satyam had been inflated and that he would subject himself to the laws of the land.

Centre to refer Satyam case to SFIO
The union government has said it will refer the case of financial bungling by Satyam Computer Services to Serious Fraud Investigation Office (SFIO) after verifying the facts and stern action under the law will be taken, if facts are correct.

"Case will be referred to SFIO once facts are verified. If they (facts) are genuine then it (the development) is shameful," Corporate Affairs Minister P C Gupta told reporters here.

He said if facts regarding financial wrong-doing by Satyam are found correct, stern action will be taken as per the law.

Gupta also said his ministry is in constant touch with the market regulator SEBI and a coordinated action with the watchdog will be taken.

Ex-MP threatens legal action
Former BJP Parliamentarian and president of the city-based Investors' Grievances Forum, Krit Somaya has threatened to file a criminal complaint against promoters and auditors of the Satyam Computers.

"Criminal complaint is being filed against Satyam promoters and auditors with the Economic Offences Wing (EOW) of Mumbai Police," Somaya said in a statement here today.

[Kalyan]

NYSE will halt trading in Satyam Computers at the opening trading session at the exchange on Wednesday.

"The NYSE will halt trading in SAY today at the opening in New York for news dissemination and trading will be halted on our European markets, too", an exchange official said in an emaild communication to queries sent by The Economic Times.

"NYSE Euronext is monitoring the situation closely, including the latest developments," NYSE spokesperson Christiaan Braakman said.

The move follows Satyam chairman Ramlingaraju on Wednesday in a communication to the company board members and stock exchanges admittied to misrepresenting facts in the balancesheet.

courtesy : economic times

[sajiv]

Merrill Lynch disengages from Satyam

Satyam Computer Services on Wednesday, Jan 7 said that DSP Merrill Lynch had terminated its engagement with the company.

In his letter to Satyam's board, Raju had said, "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."

OneIndia News

[sajiv]

Americans dreaded Raju more than Osama: Experts

New Delhi: Years after the foreign media wondered if Americans should be afraid of Ramalinga Raju more than Osama Bin Laden due to jobs they lost to India, experts on Wednesday said the fear seems to have come true, although for a different reason.

"Raju has certainly inflicted a huge blow to the India story on the global business arena and the companies across the world would be much more vigilant before engaging any Indian company for their business purposes," said an analyst.

Way back in 2004, American media had reported that it was not only dreaded terrorist Osama whom the Americans were afraid of, but Ramalinga Raju was a feared man too as millions of jobs were being outsourced to Indian companies like Satyam.

Talking to Canadian newspaper Financial Post at that time, Raju downplayed the fear generated by Satyam and others regarding the impact on the North American economy.

"In my opinion, the fear is misplaced," Raju had said during a visit to Canada in October 2004. Noting that Americans were only seeing one side of the picture, he had said, adding that the outsourcing trend had helped create lakhs of jobs in India and jobs were also being created in the US and Canada with firms like Satyam setting up shop there.

While the context has changed completely, the level of financial wrongdoing revealed today by Raju at Satyam makes him a feared man in the corporate world, another analyst said.

"Tables have turned upside-down now. The threat that Raju was to the US earlier is now a threat to the entire India Inc," brokerage firm SMC Global's Vice President Rajesh Jain told PTI.

"Having been a job-creator for corporate India for years, Raju has now turned into a money-grabber through financial bungling and corporate governance malpractices," Jain added.

"Situations are strikingly different from them to now. Satyam was a highly respected company at that time with an impressive client base and there were no questions about its corporate governance," consultancy and auditing major KPMG's Chief Operating Office Richard Rekhy told PTI.

India Inc's global image dented
Terming today's developments as "shocking," all the market observers, analysts and experts criticised Raju and said that it could have serious implications for India Inc's global image as well as the overall market here.

"This is a fraud that has been perpetuated over the years and top management has been involved in it so many years, keeping the auditors in dark," KPMG's Rekhy said.

"Today's events would put significant pressure on GDRs and ADRs of all the Indian companies, not just Satyam and the premium at which overseas securities of domestic companies are trading are at a risk," Sharekhan's Research Head Gaurav Dua said.

Another brokerage house Religare Hichens Harrison said that the developments would make even Satyam unattractive for any competitor or private equity player for a possible takeover.

[sajiv]

Satyam may be removed from Sensex, Nifty

Satyam Computers may be removed from the Sensex and Nifty following the revelation of manipulation in the company's accounts, analysts said.

Rajiv Mehta, senior analyst with India Infoline, a large brokerage house said his firm has immediately stopped covering Satyam and many other brokerage houses are also expected to do the same. There will not be any investor interest in the company anyway. The company may be removed from Sensex and Nifty, he said.

With the fall in its stock prices, Satyam has lost its weightage in the Sensex considerably over the recent past and currently has weightage of only 1.56 as of yesterday (Tuesday). While in nifty, the weightage is only 0.63 percent.

[nithyasubramanian]

Satyam's interim CEO vows to turn a new leaf

Taking over at a very crucial time, the new (interim) CEO of Satyam Computers, Ram Mynampati, on Wednesday said the company would meet the customers in the next two weeks to explain to them the entire "unfortunate events" and seek to retain their confidence.

Addressing employees, he said in a statement, "We will now be a better company and that we shall soon be a successful case study of how organisations have turned over a new leaf. We will be meeting many of our customers in person,  over the next two weeks."

Seeking apology, the new CEO said, "On behalf of our new leadership team, I apologise to you for the uncertainty and inconvenience that this incident has caused to you and your families. Increased focus on transparency at all levels, integrity and ethical functioning will be ensured."

He said the company would also meet the employees onsite and in these sessions, the company would explain to them  what happened, and articulate the actions that are being taken to retain your confidence in the company.

"A series of extremely unfortunate events led to this. A SWAT team, consisting of senior leaders, has been formed. Many of them are Satyam veterans with a minimum of ten years experience in our company and more than twenty years in the industry," he said.

This team will support him to steer Satyam through this challenging phase. The team represents all customer facing
units, key horizontal competency units and critical support units, he said.
Recalling the Full Life Cycle (FLC) model, which encouraged distributed and empowered leadership in the company, Mynampati said, "This is as good a time as many to remind ourselves that we have been acknowledged as being among the top three Best Employers in India, by Hewitt and Mercer surveys in 2007, and the American Society of Training and Development named us as the best globally."

Mynampati felt Satyam continues to have everything that is fundamentally required for its success – a strong customer base and a committed universe of 53,000 associates.

"What we are confronted with is the challenge of continuing our business operations seamlessly. We will need your involvement and ideas to make it happen. This quarter, will be tumultuous for us. It would be fair to assume that competition will try and leverage it to their advantage," he said.

[sajiv]

Raju's holding in Satyam dips again

Hyderabad: Dealing a blow to the Satyam episode, Ramalinga Raju's family holding in Satyam Computer Services has fallen to 3.6% from 5.1% after institutional lenders sold the stock through SRSR Holdings. The promoters had pledged their equity with SRSR in view of the declining market.

In a notification to the Securities and Exchange Board of India (Sebi), Satyam said that IL&FS Trust Company in its capacity as trustee for following debenture holders and lenders, has till date sold 2,45,20,500 equity shares of Satyam.

Unless these shares are redeemed, Raju's stake may become nil with the current declining market conditions, say sources. Satyam chairman Ramalinga Raju's family had held 8.27% through SRSR at the end of September quarter.

The lenders had sold over 2.11 crore shares of Satyam, which were pledged by the promoters, in open market transactions. After the sale, SRSR held 3.45 crore shares representing 5.13% stake in Satyam, which includes over 2.19 crore pledged shares already transferred to lenders, the filing added.

The company had also said that the promoters had pledged their entire equity holding of 8.61% to the institutional investors who hold 60% stake in the company. Meanwhile, the company refuted the rumours about mergers with HCL or MindTree or Tech Mahindra. "We do not respond to any speculations," said the company spokesperson. The company's board is meeting on January 10 and hopes to discuss all the issues related to the current saga, the spokesperson added.1

[Kalyan]

Raju faces 10-year jail, Rs 25-crore fine or both

The disgraced former chairman of Satyam Computer Services B Ramalinga Raju could face a long spell in jail and be slapped with a hefty
fine, some of the country's top corporate lawyers said on Wednesday, as the government indicated plans to file civil and criminal action against all those who were party to duping investors in the company which is under investigation for inflating profits and falsifying financial statements.

Rohit Kochhar, chairman & managing partner at law firm Kochhar & Co said Mr Raju could be hauled away to jail under the SEBI Act. "Ramalinga Raju can face a maximum imprisonment extending up to 10 years or a fine up to Rs 25 crore or both," he said adding that the Indian Penal Code provides for Mr Raju to be booked for forgery, treason and furnishing false information.

Other corporate lawyers that ET spoke to echoed similar views, saying Mr Raju and key functionaries, notably directors with knowledge of the wrongdoings in the company, were liable to be prosecuted and imprisoned under the Companies' Act, SEBI Act and the Indian Penal Code. The Companies' Act provides for an imprisonment of six months for not maintaining proper books of accounts.

Despite Mr Raju's attempt to give a clean chit to other top officials, lawyers said that the managing director of the company and others responsible for ensuring the integrity of the company's books were equally culpable. "Mr Raju's statement that they were not aware of the falsification of documents is not sufficient to save them from penal action. The managing director and all officials and employees directly responsible for maintaining books may face imprisonment of up to six months or a fine of Rs 10,000," a lawyer said. Investors in Satyam, who have seen a huge erosion in the value of their investments, could even move court, according to Lalit Bhasin, a senior supreme court lawyer. The Companies Act allows shareholders representing 10% of a company to move the Company Law Board alleging mis-management in the company.

The company's and its executives' troubles may not just be restricted to India. The possibility of the company, which has its American Depository Receipts listed on the New York Stock Exchange, facing legal action from US authorities including de-listing and deportation of key directors could also not be ruled out, the lawyers said.

The minister for corporate affairs Prem Chand Gupta said on Wednesday his ministry had directed the Registrar of Companies in Hyderabad to file a report on Satyam by January 14. "This is a complex issue. We have to see what has been the role of the board of directors, of the chief financial officer and other responsible officials. Once that is clear we will take a call," Mr Gupta said.

The finance ministry too has sought information from capital market regulator SEBI and the Mr Gupta's ministry on the issue, which is expected by the weekend. "A detailed investigation will have to be conducted to ascertain if the management gave fraudulent documents to support the accounts to auditors. But, prima facie it looks to be a case of mis-statement of accounts which needs to be looked into," a finance ministry official said.

courtesy : economic times

[dhilipkumar]

Satyam heads towards disaster with Rs 8,000 cr fraud


HYDERABAD: In the country's biggest corporate fraud involving about Rs 8,000 crore, iconic IT company Satyam was on Wednesday hurtling towards disaster following the shocking disclosure of accounts fudging by its founder Ramalinga Raju, who then quit as chairman - leaving an uncertain future for the company and its 53,000 employees.

By the end of the day, the fourth largest IT company lost a staggering Rs 10,000 crore in market capitalisation as investors reacted sharply and dumped shares, pushing down the scrip by 78 per cent to Rs 39.95 at BSE. The NYSE-listed firm could also face regulator action in the US. The government, regulator SEBI and the industry reacted with shock and anguish over the turn of events that could tarnish India's corporate and raise vital issue like ethics, corporate governance and accounting and business practices.

Acting in tandem, Corporate Affairs Ministry and SEBI announced that the episode would be probed and action taken against the perpetrators of the fraud that entails inflating profits and creating fictitious assets. "I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to SEBI and the Board of Directors, while giving details of how the profits were inflated over the years and his failed attempts to "fill the fictitious assets with real ones."

The Maytas firms, although promoted by his family, proved to be his nemesis, with Raju saying: "The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones... But that was not to be. What followed in the last seven days is common knowledge." While the government said the entire issue would be referred to the Serious Fraud Investigation Office, SEBI described it as an event of "horrifying magnitude."

"It was like riding a tiger not knowing how to get off without being eaten," said Raju.

[sajiv]

Satyam is India's Enron

NEW DELHI: As Satyam's financial bungling came to light with its erstwhile Chairman Ramalinga Raju owning up to wrong doings worth thousands of crores in the balance sheet, analysts described the scam as "India's own Enron scandal".

In his letter to the Satyam board of directors with copies marked to the SEBI Chairman and stock exchange boards, Mr. Raju admitted that the company's financials were being inflated over the years and such irregularities by way of non-existing funds had added up to about Rs. 8,000 crore. Having cleared "his conscience" following the failed attempt to transfer the "funds" to his family-promoted company Maytas, he said he was ready for the laws of the land and face the consequences.

Commenting on the alarming scam in India's corporate history, Ashika Stock Brokers' Research Head Paras Bothra said: "We have witnessed everything bad, but not as bad a scam as this. It has become India's own Enron till date." Also dubbing the scandal as India's Enron, analysts of Angel Broking said: "Raju has relieved the burden on his conscience by bringing to light one of the biggest-ever frauds in Indian corporate history."

The similarity between the two scams is significant as, before its liquidation in late 2001, Enron was regarded as one of the world's leading energy companies with over 20,000 employees and a revenue claim of over $100 billion in 2000. Also, for six years in a row, Enron was "America's most innovative company". It was only by the end of 2001 that it came to light that the company's "financial condition" was sustained mainly through institutionalised, systematic and creatively planned accounting fraud.

Satyam has nearly 53,000 employees and is the country's fourth biggest IT firm. It has also won various innovation accolades and awards for its corporate governance. Analysts indicated that the size of the financial wrong doing could be much higher, considering that the figure of about Rs. 8,000 crore was disclosed by the company chairman himself.

"May be, it is just the beginning, something more could just crop up as investigations unfold. Investor confidence has been shattered and a fraud of such magnitude has shaken the confidence of institutional investors, who would have relied on the books of the company," Mr. Bothra said.

Grant Thornton's Harish H.V. said it was unlikely that the management was unaware of the whole situation and that the role of independent directors was questionable. Calling for swift and expeditious action against the loss of confidence, he noted that the regulators "need to act swiftly and ensure that there is no knee-jerk reaction" keeping in view the image of Indian companies abroad.

[Kalyan]

Raju goes offline in world wide web too

A day after Ramalinga Raju announced his departure from Satyam Computer after admitting to the country's biggest ever corporate
fraud, a website by his name, launched supposedly by his fans last week, today vanished into oblivion.

The website was launched with much fanfare last week by some people claiming to be Raju's well-wishers, who blamed media for giving him bad publicity.

Attempts to reach the site, which was available till Wednesday, was displayed "page not available" or "webpage cannot be found" error messages.

With a tag line of "Satyameva Jayate" (truth shall win), the website was soliciting public support for Raju. Various postings on the website had said Raju was a hero for them.

After the launch of the website, a Satyam spokesperson had said that it was not an official website and that "some well-wishers might have hosted it".

However, the disclosure of financial fraud at Satyam on Wednesday has led to flooding of internet message boards with postings ridiculing Raju.

courtesy : economictimes

[Kalyan]

Satyam employees being fed with positive inputs

A Satyam employee attached to its Pune unit on Thursday said after the initial shock and disbelief, it was "business as usual" on day two.

"Yesterday we kept staring at television sets screaming the news that shook Corporate India. But the subsequent series of mails sent to us by HR and CEO gradually eased the tension," the female IT professional, on the condition of anonymity said.

The management message was crisp and clear. It sought to assure the staff that there was no need to press the panic button as remedial measures were being initiated to restore the company's image and credibility.

"For all of us it should be business as usual," it added.

The Satyam customers too addressed mails to the employees saying their "partnership" will last through the tough times, being faced by the world's number 4 IT company.

Although shaken, "we are bolstering our spirit with these positive inputs and trying to meet the stringent deadlines of our assignment," she said.

Pune units of Satyam employ around 3500 IT professionals.

courtesy : economic times

[Kalyan]

'IOD relied on report submitted by Satyam to statutory bodies'

Distancing itself from troubled Satyam Computer Services, the Institute of Directors (IoD) on Thursday said it relied on the reports
submitted by the company to statutory authorities while selecting the IT major for the Golden Peacock Award for corporate governance.

"We have a very strong selection process and we relied on the reports and documents submitted by the company to statutory authorities," IOD Director (Indian Secretariat) Manoj Raut said.

In view of the controversy surrounding Saytam, the IoD has decided to take away the Golden Peacock Award - the very laurel the company used for trumpeting its corporate governance norms when the controversy broke out.

"In wake of unfolding events which are the most unfortunate, we have decided to take away the award from Satyam Computers," Raut said.

"Even the World Bank, income tax authorities and other statutory bodies could not notice the financial fraud committed by Satyam," he said, adding that people generally trust the disclosures made in the annual reports.

It may be recalled that on December 30 last year, Satyam Chairman Ramalinga Raju had cited the award to highlight the company's strong corporate governance structure to justify the board's decision to bid for Maytas.

Satyam Computers was awarded the Golden Peacock Global Award for Excellence in Corporate Governance 2008 by IoD. The firm had also won the Award for corporate excellence in 2002.

Satyam former chief Ramalinga Raju had insisted that all required processes and procedures were followed for making the 1.6-billion-dollar bid "while there was a spirited discussion among members, their vote to approve the motion was unanimous".

Another institution, Ernst & Young, which had awarded Raju with the Entrepreneur of the Year Award in 2007, however, was tightlipped.

courtesy : economic times

[sajiv]

CB-CID to probe Satyam fraud

NEW DELHI: Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy on Wednesday termed the massive financial fraud unveiled in Satyam Computers "mind-boggling" and said his government had ordered a CB-CID preliminary inquiry.

"The total figures are really mind-boggling and as per the statement of Satyam CEO Ramalinga Raju [who has since resigned] the accounts were fudged. We will ask the CB-CID to hold an immediate preliminary inquiry to look at the criminal angle into the entire episode," Dr. Reddy told a news conference here. Further action would be taken on the basis of this report.

Asked why Mr. Raju could not be arrested in the wake of his own statement, Dr. Reddy said: "That is what I am trying to tell [you]. We will take every possible step. Whatever is needed will be done."

"Different entities"
The Chief Minister said he would ask his officials to look into various problems and issues concerning this episode. Observing that Satyam and Maytas were two different entities, he said that while Mr. Raju owned very little stake in Satyam, the company employed over 53,000 people and the government would have to look into every aspect.

The Chief Minister said the Hyderabad Metro Project and the Machilipatnam Port Project had been awarded to Maytas. "I have asked the Chief Secretary to look into all aspects related to the metro project. We will decide on it later. Protecting the job security of thousands of young professionals working in the company is of prime importance. Everything that needs to be done to protect the careers and shareholders' investments would be done."
"No clean chit"

To a question, Dr. Reddy said he never gave a good certificate to Satyam. "I only said that the attempt of Satyam to take over Maytas was an issue between those two companies and the State government had no role. "

[Kalyan]

AP town still roots for Raju


what if everybody else thinks he is a fraud? The populace of Bhimavaram town have a different take on Ramalinga Raju: They still have unflinching faith in their 'muddu bidda'. A case in point: Before and after Ramalinga Raju's resignation on Wednesday, nearly Rs 50 lakh to Rs 80 lakh worth of shares were bought by the locals here.

    It is learnt that a shrimp trader bought nearly Rs 8 lakh worth of Satyam shares on Wednesday. Sources said Bhimavaram town alone has a huge army of 12,000 shareholders of Satyam — some of them reside in Hyderabad — worth Rs 120 crore. Most of the shareholders are gold and jewellery traders, rich aqua farmers and Kshatriya community people (Rajus).

    On Wednesday, before Ramalinga resigned, investors bought Satyam shares at Rs 170. When the news of his resignation broke out and the Satyam scrip crashed to below Rs 40, several others still purchased the shares. "We have full confidence in the company. No matter what others think, we bought some shares in the company," a landlord, KS R Jogiraju, said. Raju's villagers worried
Bhimavaram: The village where Raju grew up is fully behind their icon.

    With unwavering trust, KS R Jogiraju, a landlord, said that Ramalinga Raju has made it clear that there was no fraud on his part. "For all the mistakes done by the auditors, why should Raju take the blame?" Jogiraju asked.

    According to stockbrokers in West Godavari district, despite Ramalinga Raju's confessions of his complicity in the fraud, locals are not ready to buy his version. "Here are the investors of Bhimavaram, the native place of Ramalinga Raju, who have reposed their faith in Satyam in spite of the massive scam," a stockbroker said.

    For all the goodwill Ramalinga has earned in his native Garagaparru village and Bhimavaram town, there are however some grumbling investors who are livid with the Satyam man. "We don't know what would happen to our hardearned money. If a top IT firm like Satyam could deceive investors, imagine the fate of small traders," Bonda Srinivas, a shareholder, bemoaned.

    A resident of Bhimavaram for the last 40 years, V Venkateswara Rao said it was high time the government stepped in to save lakhs of investors' money. "Otherwise middle class people like me would be losing heavily," he rued. TNN

[dwarakesh]

Satyam: have the funds been siphoned off?

HYDERABAD: Several questions are being raised whether Satyam Chairman B. Ramalinga Raju has really spilled all the beans in his confessional statement on the Rs. 7,000-odd crore scam in the IT company

Mr. Raju has admitted the widening gap between the actual operating profits and those shown in the accounting books 'for several years now'. But, he has glossed over the fact that Satyam raised about Rs. 2,000 crore from American Depository Receipts in 2001 and its continued acquisitions in line with its claims that it was looking to take over firms with a valuation of over $50 million.

The handsome profits shown in the books notwithstanding, Mr. Raju, claimed that the contract margin of the company was as low as three per cent against a market average in excess of 20 per cent. "When Satyam is no less than that of Wipro, Infosys and TCS, why will the company accept contracts with such low margins? Mr. Raju is obviously not into charitable acts," a senior official in the Government remarked.

Industry analysts agree with the view and suggest that the investigating agencies must find out whether funds were siphoned off from Satyam Computers. Doubts are also being raised about the source of investments made in real estate by Maytas Properties, a privately owned firm of Mr. Raju's family, in purchase of land in all major cities in the south, creating a land bank of 6,800 acres.

An analyst wondered how an auditors like PwC with a global reputation failed to raise questions about the fudging of figures. "They should have raised questions when Maytas Properties was declared as the most precious asset of Mr. Raju's family with an estimated value of $1.3 billion compared to Maytas Infra ($0.3 billion) when Mr. Raju announced the decision to acquire them," he said.

[dwarakesh]

Centre orders inspection of Satyam subsidiaries' accounts

NEW DELHI: A day after Satyam's erstwhile Chairman B. Ramalinga Raju owned up to fudging of accounts to the extent of over Rs. 7,000 crore, the Government on Thursday ordered investigation into the books of accounts of eight subsidiaries of the Hyderabad-based IT major.

The accounts of the subsidiaries under the scanner are: Maytas Properties, Maytas Infrastructure, Satyam BPO, Nipuna Services, Knowledge Dynamics, Nitor Global Solutions, Ca Satyam ASP and Satyam Venture Engineering Services.

Corporate Affairs Minister Prem Chand Gupta told newspersons here that the probe into the books of accounts of these eight Satyam subsidiaries would be conducted as per the provisions of Sec. 209A of the Companies Act.

Mr. Gupta informed that the Financial Reporting Review Board of the Institute of Chartered Accountants of India (ICAI) had also been asked to get hold of the internal working documents of Satyam Computer Services and submit its report to the institute within three days. Alongside, the ICAI has been directed to take appropriate action against the erring auditors. Mr. Gupta said that his Ministry was simultaneously exploring the various options available for penal action against the erring company and its auditors. "The Government is keeping all options open. We are in close interaction with all other regulators to take coordinated action. The ROC and the Securities and Exchange Board of India (SEBI) are working in Hyderabad. There feedback has been sought," he said. Also, in a bid to prevent the occurrence of Satyam-like frauds in future, Mr. Gupta said that the Government would review and strengthen various provisions of the new Companies Bill that is now awaiting Parliament approval. "After the Satyam case, there is a case for re-looking at certain provisions of the Companies Bill, 2008, to enable the Government to take swift and more effective action in cases of large-scale fraud." Noting that the Satyam case appeared to be a "large scale fraud", Mr. Gupta stressed that the Government would "leave no stone unturned to punish the guilty" so as to protect the interests of stakeholders and shareholders.

[dhilipkumar]

Satyam may axe 10,000 employees next month: Headhunters

NEW DELHI: With a big questions mark on its cash position and a minimum outgo on salary estimated at Rs 500 crore a month, Satyam may lay off over 10,000 employees next month, says a recruitment firm.

"It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10 per cent due to the surplus of about 20,000 people in the jobs market," Headhunters India CEO Kris Lakshmikanth said. Satyam interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December.

Lakshmikanth said till Tuesday evening there were about 7,800 people from Satyam who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000. The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment. Further, possibility of a takeover too looks distant as the accounting fraud done by the company would make it difficult for any firm to evaluate its correct market value, which is compounding the worries of the employees. IT-BPO union Unites Professionals general secretary Karthik Shekhar said, "In case of any lay off at Satyam, we may take legal action."

"We have received over 7,000 hits since the news break. Yesterday, in one hour we have seen over 800 hits (no of people visiting the site) from Hyderabad. People have been enquiries on how the union can help them," Shekhar added.

[Kalyan]

Raju in Hyderabad, says his lawyer

    Satyam Computer's former chairman B Ramalinga Raju on Thursday said through his lawyer that he was ready to face any consequences for his action in defrauding the company to the tune of crores of rupees.

    Debunking reports that Raju had left the country, his lawyer S Bharat Kumar claimed that he was in Hyderabad and that the Satyam founder was "amenable to the process of law"

    "My client Ramalinga Raju denies reports appearing in a section of media that he is absconding or fled from the country. Raju is very much available in Hyderabad and amenable to the process of law," Kumar said in a statement.

    Raju, in an e-mail through his lawyer, said he is ready to face the consequences and that he will make himself available for probe.
    Satyam's interim CEO Ram Mynampati, however, said at the company headquarters that he had no knowledge of where Raju was but assumed that he must be in Hyderabad.

    "Should there a need arise, Raju will make himself available for probe or any legal process by the agencies of the Government," Kumar said.

[Kalyan]

Raju, directors face 10-yr jail term

Although Ramalinga Raju has gone out of his way to show that none of Satyam's other board members and senior executives were aware of the fraud, the law of the land is expected to take its course. Raju and any other director or executive found to be involved in the scam are liable to be prosecuted on charges punishable with imprisonment up to 10 years.

      Some of the more serious penalties that Raju and others are likely to face under various laws include:

    * Section 23 of the Securities Contract Regulation Act 1956, which imposes a penalty of imprisonment up to 10 years and fine up to Rs 25 crore. The adjudicating officer of Sebi is empowered to award such punishment to directors and management executives for violating the listing agreement by making false and inaccurate disclosures in the company's quarterly and annual results. The penalty is severe because of the enormous damage that the investors are liable to suffer on account of false disclosures.
    * Section 24 of the Sebi Act 1992, which imposes a penalty of imprisonment up to one year for infringement of any provisions of the law or rules and regulations, including fraudulent and unfair trade practices (FUTP).

    * Section 477-A of the Indian Penal Code, which imposes a penalty of imprisonment up to seven years. The police may on their own or on the recommendation of the Serious Fraud Investigation Office (SFIO) invoke this IPC provision meant to punish those found to have falsified accounts "willfully and with intent to defraud''.

    * Section 211 of the Companies Act, which imposes a penalty of imprisonment up to six months. The Company Law Board is empowered to punish those who are found to have "willfully'' failed to comply with the requirements of law relating to the annual financial statement. Significantly, the job of prosecuting agencies has been made easier by the damaging admissions made by Raju. Having taken responsibility for cooking the Satyam books to the tune of Rs 7,136 crore, it is just as well that Raju said, "I am now prepared to subject myself to the laws of the land and face the consequences thereof.''

    For all his exertions in his resignation letter to save the skin of other directors, they have reason to worry because the Companies Act does not only hold the board to account for any such failure of due diligence, it also makes no distinction in the liability of executive and non-executive or independent directors. The onus is on them to prove the action they had taken to discharge their fiduciary responsibility.

Investors have faint hope to get money

New Delhi:

In the wake of the bombshell dropped by Ramalinga Raju on Wednesday, SEBI is probing whether the sale of a sizable chunk of his shares by FIs in lieu of his debts just a few days ago amounted to insider trading. If the suspicion is confirmed, legal experts feel that the proceeds of that sale could well be distributed among the thousands of small investors hit by the sharp drop in the value of Satyam shares. This is despite the fact that, strictly speaking, the law provides little remedy to investors even when they suffer due to corporate misfeasance. Shares are accepted as an inherently risk-prone investment. Therefore, when a company goes into liquidation, for instance, creditors always have a prior claim over share holders on the available

[Kalyan]

Satyam may get better valuation if split into pieces

The buzz even before Ramalinga Raju's admission to fraud on Wednesday has been that Satyam might fetch a better valuation if it is Valuation split into pieces and sold rather than as a whole. An obvious reversal of the Gestalt philosophy of 'the whole being more than the sum of its parts.'

While the quality of Satyam's revenues has been suspect for a while with industry saying that it was acquired by quoting a hefty 10-12% discount over the biggies - borne out by Raju's admission that the profits had been cooked for years - industry says that parts of the business are good. The company's SAP practice, for example, is thought to be stellar.

A very big player in this vertical for years, this business might find buyers and also command an attractive valuation. Will Satyam's travails benefit TCS, Infosys, Wipro, the Indian Big 3? Looks like it will. It goes without saying that faced with the biggest securities fraud in corporate India, clients, particularly American and Europeans ones, might want to pull their business out of Satyam and give it those whose corporate governance is perceived as robust.

Also many of these companies have the same clients though the piece of work being done by them might be different . Big clients as a matter of their de-risking strategy normally go for at least two Indian vendors.

There was evidence on the stock markets on Wednesday of the Big 3 benefiting. Infosys and Wipro bucked the market meltdown to be in the green. The Infosys stock closed at Rs 1,187.10, up by Rs 20 as compared to its Tuesday's closing price of Rs 1,167.65. Wipro's stock price closed the day at Rs 243.30, marginally up by 55 paise from its Tuesday's closing of Rs 242.75.

Speaking of client reaction, Mohandas Pai, head of human resources at Infosys said, "Most definitely they will relook their Satyam exposure. They will re-look the risk and then decide. Some might shift, some might not."

Suresh Senapathy, CFO of Wipro, said whenever some other company is adversely affected, it opens up opportunities for others. "But this is not what we were looking for," he said. Said a senior executive of a big Indian IT company, "We could be opportunistic and go for some parts of the business that's attractive. But at the moment everybody will wait and watch to see how things unfold."

It is expected that clients with a million dollar or less business with Satyam might defect earlier than those with larger exposures. Satyam has 87 of Fortune 500 companies as clients.

"They will definitely not shift overnight. But clients will be nervous and some might just change providers. This will also depend on the stage of the engagement," says Diptarup Chakraborti, principal research analyst, Gartner.

[Kalyan]

Satyam out, HCL takes 4th spot

With Satyam's disclosure of falsifying revenue figures, HCL Technologies becomes the fourth-largest Indian IT services firm by
Satyam revenues. Analysts say HCL's recent acquisition of Axon Group had bridged Satyam's lead over it to some extent and the latest development clearly takes HCL up the rankings.

As per Satyam chairman B Ramalinga Raju's letter to the company's board on Wednesday, the company's actual standalone revenues for the July- September quarter in 2008 were Rs 2,112 crore, while it had reported revenue figures of Rs 2,700 crore. Adding revenues from subsidiaries of Rs 120 crore, its actual consolidated revenues would be about Rs 2,232 crore. HCL Technologies had reported revenues of Rs 2,369.3 crore for the same quarter.

"On an annualised basis, HCL Technologies will be fourth-largest among Indian IT firms. Axon is expected to add about $200-225 million and it should push HCL revenues about $2.2- 2.3 billion for the full financial year ending June 2009," said an analyst at a Mumbai-based brokerage, asking not to be identified. HCL Technologies recently acquired SAP consultancy Axon Group for $658 million, marking the largest acquisition by an Indian IT firm.

The Axon acquisition added significantly to HCL's enterprise applications services (EAS) business, an area where Satyam is strong too. About 45% of Satyam's revenues came from this business, while the Axon buyout increased EAS contribution to HCL's revenues to 30%, from 11% earlier.

Outsourcing analysts, however, say HCL Technologies may not gain as much as its bigger rivals TCS, Infosys and Wipro Technologies after Satyam's disclosure. "HCL Technologies will take about a year to integrate Axon. So, clients are going to look at the top three to move work from Satyam. Tier-II firms such as L&T Infotech, which is strong in enterprise applications, could also come on their radar," sourcing advisory firm Tholons CEO Avinash Vashistha said.

Meanwhile, HCL Technologies CEO Vineet Nayar has written to clients after revelations of Satyam's financial fraud, pointing out that the company has a strong business focus as demonstrated by its signing contracts worth over $1 billion in the last quarter. He also highlighted that six of the eight board members are independent and non-executive members.

[dwarakesh]

Satyam episode shocks colleges, students

HYDERABAD: The developments in Satyam have baffled colleges and students who saw Satyam as a path to realise their dreams.

They are totally shocked that such a reputed firm has resorted to fraudulent methods and feel that its impact will be huge on the mindset of students looking for career in the IT sector.

"It came as a huge shock since Ramalinga Raju was more respected among the student circles than any politician or a film star simply because he has paved the path of IT progress in the State," said Arun Reddy of Sri Indu Engineering College in Ibrahimpatnam. "We were all proud that such a big name in the IT industry across the world came from Hyderabad," said Priya, who just completed her B.Tech.

However, their affinity towards the company was more because it belonged to a Telugu man than its HR practices. Interestingly, Satyam had a relatively negative image for the recruitment practices of its HR wing and placement officers of several engineering colleges vouch for this. "My students would always put Satyam below Infosys, TCS, Cognizant and Wipro," says V. Uma Maheshwar, Placement Officer of Osmania University College of Engineering. He says their HR practices were not dynamic and senior students seldom passed a positive image to their juniors.

The placement officer of CBIT, N.L.N. Reddy, too agrees. "Their recruitment process is not professional like other companies," he says adding that they had not visited popular colleges like OUCE, JNTU Hyderabad, CBIT and Vasavi in the last two years. "Their HR manager was not even aware of a popular college like CBIT and it reflects how the HR wing functioned there." Dr. Reddy says Cognizant was one of the most respected and preferred companies as they didn't dishonour their offer letters even during the IT bubble burst.

No positive image

Some employees of Satyam too agreed that they rarely gave positive image of the company when their juniors in the college sought advice. "Bench periods in Satyam were longer than other companies," said an employee recruited three years ago. Despite the unfortunate developments students and colleges want Satyam to be back on track simply because it is identified with Telugus' pride across the globe.

[dwarakesh]

Job sites flooded with bio-data

BANGALORE: On Tuesday evening, hours before the name Satyam became hopelessly inapt, HR companies noticed a marked rise in the number of resumes being uploaded on their websites.

For instance, Headhunters India, which got 7,800 over December, found the number swelling to nearly 15,000 in just 24 hours.

"Over the next month Satyam, being left with no money in the bank, will either stop paying salaries or axe the 'non-billable' ones. Nobody believes the management's assurances right now," said Kris Lakshmikanth, CEO-Headhunters.

A similar picture emerges from recruitment agencies and job portals everywhere even as experts estimate that some 25,000 resumes are being floated at this point.

Sumeet Singh, Senior Manager at Siliconindia Jobs and Careers, said thousands of resumes came in on Wednesday. "There may not be mass layoffs in the coming weeks, but people are surely hitting the panic button."

A manager at Satyam, Bangalore, told The Hindu that over 30 per cent of the employees are "benched" (without project being assigned) and HR reassurances were being taken with a pinch of salt.

Edgy Satyamites were closely monitoring any development and were hooked to the directors' press conference Thursday evening.

"We are yet to make sense of the situation and are sceptical. If there is an exodus, everybody will want to beat the other to it. They have committed to January's salary, but what happens after that?" the manager asked.

The SWAT — military acronym for special weapons and tactics — team formed to tackle crisis, according to the interim CEO's email, failed to impress employees as did the company's concern for "staff and families".

Amidst rumours that other IT majors are trying to poach Satyam's clients, the faith ostensibly reposed by clients comes as a silver lining.

"Several big clients have said they will continue with us and that management-level issues are not affecting project meetings is reassuring. We went for these interactions with apprehension, but they seem confident," said a project manager working in Bangalore.
Recession

Amid all this, the spectre of recession looms large. All the top 10 IT majors have frozen recruitment.

In the event of a layoff, recruitment experts claim that at least 25 per cent stand a chance of being absorbed in other companies but at a "lower price".

"Salaries will surely dip. The Satyam tag makes them desirable, and IT majors will seize the opportunity to hire them at a cheaper rate," said a Bangalore-based HR analyst.

However, given the global financial crisis, a substantial portion of those working in the banking and finance sectors will find it impossible to get on to the bandwagon.

[dwarakesh]

10,000 job cuts likely at Satyam

With big question marks over its cash position and a minimum outgoing on salary estimated at Rs500 crore a month*, Satyam may lay off over 10,000 employees next month, says a recruitment firm.

"It is most likely that Satyam will cut 10,000 jobs next month as the company is left with no cash to pay the salaries. The current fiasco is likely to put pressure on salaries, which may reduce by 10% due to the surplus of about 20,000 people in the jobs market," Headhunters India CEO Kris Lakshmikanth said.

Satyam's interim CEO Ram Mynampati while admitting that the cash position is not encouraging, the company, however, has taken care of salary for December.

Lakshmikanth said till Tuesday evening there were about 7,800 people from the company who had posted their resumes on job sites and by Wednesday afternoon, it has gone up to 14,000.

The uncertainty about jobs is killingly painful for the 53,000 employees of Satyam, especially when the industry is going slow on recruitment.

Further, possibility of a takeover too looks distant as the accounting fraud done by the company would make it difficult for any firm to evaluate its correct market value, which is compounding the worries of the employees.

IT-BPO union Unites Professionals general secretary Karthik Shekhar said, "In case of any lay off at Satyam, we may take legal action."

"We have received over 7,000 hits since the news break. On Wednesday, in one hour we have seen over 800 hits (no of people visiting the site) from Hyderabad. People have been enquiring on how the union can help them," Shekhar added.

[dhilipkumar]

Can Satyam pay salaries to staff?

CHENNAI: A legendary entrepreneur overstated his company's assets and understated the liabilities. Many clients who had reposed their trust in Satyam may feel cheated and might walk away. In the hypothetical scenario of Satyam facing a zero-revenue and zero-account receivables situation starting today, how long would it be able to pay its 53,000 employees?

The 'fudged' cash and bank balances could have lasted them 10 months but Ramalinga Raju has already confessed on Wednesday that Rs 5,040 crore out of the Rs 5,361 crore is non-existent. Satyam pays Rs 522 crore in salaries and bonuses on an average per month, according to its last quarterly financial update. Along with this, it also pays a smaller amount of roughly Rs 10 crore in staff welfare and employee stock compensation expenses per month.

If you include items such as reimbursements for travel, communication and other personnel-related expenses - the monthly outgo for salaries would amount to Rs 580 crore. Now with Raju stating that it had an actual cash and bank balance of only Rs 320 crore at the end of September 30, 2008 itself, this means Satyam could have practically paid a month's salary or so at the most. But four months have passed since then and this is why there is more than a question mark on whether Satyam employees would be paid their monthly remuneration for January 2009.

"All the records were fudged. To find out whether something is at all left with Satyam, we need a full restatement of accounts. At this point, it is well nigh impossible to find out whether Satyam has any cash left with it, or not," IT analyst Harit Shah of Angel Broking said.

[sajiv]

Satyam launches damage control

The new management of the Satyam Computers set a damage control exercise in motion on Thursday.

Interim CEO Ram Mynampati, who addressed the media with five top leaders of the company, tried to create a new template for ensuring business continuity by reaching and assuring clients, ensuring liquidity and working for a smooth transition of the new leadership. Mynampati said the priority now was to regain the confidence of the customers and employees.

He said the top 100 clients who gave 80 per cent of the business had responded favourably. "We have received support from key customers...we are in touch with our customers personally," he said. The customers have been assured of business continuity and "complete transparency".
On the financial irregularities disclosed by former  chairman Ramalinga Raju, Mynampati said the team was yet to come to grips with those issues. On allegations that he had played a role in the fraud, Myanmpati said as a board member he had made judgements based on the audited balance sheet provided to him.

Mynampati said he was unaware of the whereabouts of Ramalinga Raju. Mynampati said a SEBI team had already begun preliminary investigations. He also assured full cooperationwith all regulatory bodies. The January 10 board meeting would induct new members, evaluate action against equity dilution and consider strategic alternatives to sustaining the company's operations. The company's financial results for Q3 of FY'09 are expected at end of this month and that Satyam will look at the option for a strategic buyer.