Indian IT Industry

[Singha]

these are the kind of things that achieve nothing other than acting holier-than-thou and bad PR:

Description : Corporate
Headline : Satyam stripped off Golden Peacock Global Award
Date : Jan-08-2009

New Delhi: The Institute of Directors had earlier conferred the Golden Peacock Global Award for Excellence in Corporate Governance 2008 upon IT giant Satyam. Now it has stripped off the company of the laurel in view of the misrepresentation of the books of accounts by Satyam. An emergency meeting of Golden Peacock Awards Jury was held in view of the startling admission made by the Chairman of Satyam... the Jury has decided to withdraw the award with immediate effect, Chairman of the Award Jury Justice P N Bhagwati said in his letter to the beleaguered company.

[AdityaM]

The first victim of Satyam saga was Satya

[Shivani]

Crux of the scam in Satyam

Q: What is the crux of the scam in Satyam?

A : In essence, what disgraced chairman Ramalinga Raju has now admitted is that the company had been cooking its books to show higher revenues and lower liabilities , thereby grossly overstating the profits of the company as well as its reserves. This has been happening , according to Raju’s confession on Wednesday, for several years.

The net result of this massaging of accounts is that as of September last year the last quarter for which results are available — the company’s bank balance is overstated by Rs 5,040 crore and its receivables in the form of accrued interest by Rs 376 crore. On the other side of the balance sheet, Raju said, liabilities have been understated by Rs 1,720 crore. The combined effect of overstating the positives and understating the negatives is that the overall balance looks Rs 7,136 crore healthier than it would otherwise do.

Q: What was the purpose of the scam?

A: Rather like item numbers in Indian films, Satyam’s fancy numbers were aimed at sexing up the company and making it more attractive for investors. Raju pointed out that given the low promoter holding in the company (8.6% as of September 2008), poor performance could result in a take-over . It was important, therefore, to make it seem as if both the top and bottom lines were growing at a healthy rate, even if that was not actually true.

Q: How did it build up to such proportions?

A: The problem with overstating performance is that if you want to keep growth rate looking good, the absolute extent of the exaggeration has to keep getting bigger. To take this particular example, in 2003-04 Satyam reported net sales of Rs 2,542 crore. In the four years since then, that figure was reported to have grown by 36%, 34%, 40% and 31% respectively to reach Rs 8,473 crore in 2007-08.

Now, if a Rs 2,500-crore company wants to show 35% growth when it has actually grown by only say 25%, the extent of overstatement would be only Rs 250 crore (10% of Rs 2,500 crore). But if a Rs 8,500-crore company wants to do the same thing, it will have to fudge the figures by Rs 850 crore.

It is also important to realise that overstating revenues by 10% can overstate profit by a lot more. For instance, if actual revenues are Rs 2,000 crore and actual net profits Rs 200 crore, an addition of Rs 500 crore to revenues without changing anything else would also add Rs 500 crore to net profit. While this would mean exaggerating revenues by only 25%, the profit figure would get overstated by 250% (500 cr is two-and-a-half times 200 crore).

Q: How was Satyam’s proposed acquisition of Maytas linked to this scam?

A: Maytas, a real estate firm owned by Raju’s family, was proposed to be bought by Satyam for about Rs 6,400 cr and turned into a whollyowned subsidiary of Satyam. Raju has pointed out that this would have helped clean up the Satyam mess. Since Satyam would have to pay Maytas owners (the Raju family) for its shares, on paper Rs 6,400 crore would have moved out of Satyams books into the Raju family’s hands, while Satyam would have gained Maytas shares. This could have been an excellent way of regularizing the pumping up of numbers.

Here is how. One, the payment would have actually become just a formality with the Raju family technically receiving Rs 6,400 crore.

But, with Satyam’s reserves and surplus having already been depleted (or, conversely, inflated) the Raju family would have got much less. But, obviously, they would not have complained. Two, this would have then given the company a legitimate opportunity through an acquisition — to bring down the reserves to its actual level without admitting that the books had been cooked. And, nobody would have been any the wiser since only the Raju family and their close confidantes would know about this.

Thus, while Satyam’s reserves would apparently have been used up to pay for the acquisition, in reality the non-existent reserves would be passed on to the Raju family. And Maytas would have found a new home. The furore over what most people perceived as a blatant overvaluation of Maytas prevented the proposed merger going through, thus closing out an opportunity for Raju to paper over the bungling in Satyam.

Satyam's Raju untraceable, SEBI team in Hyderabad

NEW DELHI: Even as a Securities and Exchange Board of India (SEBI) team reaches Hyderabad to investigate Satyam Computers’ Rs 7000 crore fraud, its disgraced chief, B Ramalinga Raju remains untraceable.

After admitting to committing a Rs 7,000 crore fraud on Wednesday, Raju faces arrest and could serve as many as 7-10 years in jail.

Amid mounting speculation over his whereabouts, Satyam management has said that it has no idea where Raju is.

Sources in the Hyderabad police have said that Raju had left for Texas on Wednesday morning from Hyderabad airport. Raju has not been seen in public ever since his confession, but TV reports suggest that he could have left for Texas.

There is a petition pending over his Maytas deal for which British Telecom's Solutions firm - U-paid had demanded presence of Raju and senior directors of Satyam for questioning by its lawyers.

According to another TV report, Raju could also have left for Dubai, however, there is no confirmation.

Satyam’s former chairman is not reachable on his mobile phone.

Ramalinga Raju on Wednesday admitted to a Rs 7,000-crore fraud in the Hyderabad-based company and revealed that the balance sheet of Satyam had been inflated and that he would subject himself to the laws of the land.

On its part, the Hyderabad police said they would take action against him only if a shareholder or the regulator lodges a complaint. Raju had written a letter to the board giving details of the company’s balance sheet which has serious financial irregularities including inflated cash balances running into several crores of rupees.

The 54-year-old US MBA Raju's letter of guilt and resignation to the Satyam board and Sebi on Wednesday morning sledge-hammered India Inc, dumbfounded regulators, pummelled the company's stock, knocked the bottom out of the market, and cast a long shadow over industry in general and the IT sector in particular.

Satyam stocks took a serious beating yesterday with this latest news that has shocked investors. The stocks plunged by almost 80 percent at Rs 39 per share, at day close.

Ram Myanpati is acting as interim CEO of the company, who after expressing ``shock'', swung into damage control mode.

Garagaparru stands by Raju

BHIMAVARAM: It was with shock and awe the people of the small Garagaparru village in Palakoderu mandal in West Godavari district reacted as the Satyam saga unfolded on a day when the villagers celebrated Vaikunta Ekadasi with religious fervour.

Even as they expressed deep shock and disbelief at their `muddu bidda' Byrraju Ramalinga Raju's confessions, the villagers refused to buy the argument that their son had indulged in financial frauds. The villagers of Garagaparru — Raju was born there — and the people of Bhimavaram from where Raju did his schooling insisted that the admission of massive financial irregularities should not be seen as a blot on Raju's character.

"We are not bothered about the crisis in Satyam Computers though we lost our shares in the company. But we are worried as to how Raju would come out from the deep hole," Sagi Veerraju of Bhimavaram town said. According to sources, some of the Raju clan members and local aqua farmers in West Godavari had invested nearly Rs 100 crore in Satyam group of companies.

Spewing venom on those casting aspersions on Ramalinga Raju, a villager of Gangaparru said: "Don't forget the fact that nearly 3,000 IT students from the district are working in Satyam Computers." It's a different matter that the villager is least bothered about the fate of over 50,000 employees who are on Satyam's payrolls.

Curiously, many villagers have expressed apprehensions over the continuation of the services rendered by Ramalinga's Byrraju Foundation. Sources said the Satyam group as part of its corporate social responsibility had taken up several service activities in East and West Godavari districts. "What would happen to `Grama-IT' programme and e-medicine, tele-school and water supply schemes of the foundation in some of the villages," Sagi Ramaraju wondered.

Sources said Ramalinga Raju used to deposit Rs 1 lakh in the name of those girls who have their surname as `Byrraju' in the district. "By the time they attain the marriage age, he would hand over the money. He launched the scheme for the girls in remembrance of his late father Satyanarayana Raju," a villager said.

Byrraju Foundation district convenor Gadiraju Nagababu said even if funding stops they would carry out welfare programmes for the benefit of the poor. But one advocate Alapati Srinivas of Bhimavaram at variance with the villagers and town people has only one poser. "Questions need to be asked and quickly as to how this all happened and who caused it to happen," he said.

AP politicos distance themselves from Raju

While the political class in Andhra Pradesh has distanced itself from B Ramalinga Raju, founder and chairman of Satyam Computer Services, there seems to be some covert efforts afoot to protect him.

According to unconfirmed reports, Raju may have fled the country. Hence, despite state chief minister Y S Rajasekhara Reddy’s assurance that legal action will be taken against Raju, the industry leader could evade arrest. But when contacted, police said they were yet to prepare the charge-sheet and only then would they start the search.

On his part, the chief minister Y S Rajasekhara Reddy the state would do everything to protect the career of Satyam employees and shareholders’ investments. “Now that Raju has confessed to wrong-doing running into thousands of crores, we will take all required legal action. We have asked the CID of the state police to conduct a preliminary inquiry and see if the state government can initiate criminal action against Satyam,” said Reddy.

The chief minister has also asked the prime minister to set up a management team with immediate effect with luminaries , including Azim Premji , Narayanamurthy and Ramadorai to manage the affairs of Satyam and the restore confidence of global customers in its business continuity.

“This is in the interest of the employees and other stakeholders till an alternative credible management is put in place for the company,” he said in a letter to Dr Manmohan Singh.

The ‘Raju factor’ has also united the opposition with the ruling Congress. The Telugu Desam Party is blaming him for the fiasco . “Ramalinga Raju’s greediness has led to Satyam fall. Satyam story is over now,” said TDP MP Mysoora Reddy.

It is apparent that the coming elections has triggered political parties to take a stand against the tainted company while market experts believe it will be difficult for them to completely delink themselves .

“Raju has helped almost all parties with magnanimous donations. Besides, Satyam used to be the pride of Andhra Pradesh. [Our version of H&D?] And, there is lot of money riding on the realty sector where Raju’s family has great interest,” said a source in the realty sector business. Raju’s sons promote two firms — Maytas Infra and Maytas Properties.

While Maytas Infra has bagged some prestigious government projects including Hyderabad Metro, Maytas Properties is engaged in four major projects including an SEZ.

Rotten rotten rotten.

[svinayak]

I talked to someone who knows RR. He says the chap took on all the guilt and tried to do his best to save the company. He is no crook at the bottom line.
I think there is or was some political pressure at the back of all this. I dont know if its external or internal.
I agree with hnair we should not trounce our own guys. Who knows if Donald Trump can come back RR can too.

US took a credibility hit in what everyone thought is their forte (financial industry). India is returning the favor in its area of expertise (IT industry) and has no reason to do this voluntarily.

I guess the same thing is happening to Pakistan...it is being asked to pack up terrorism (its forte)

Raju is responsible for overall company and compliance. Buck stops at his desk.

Satyam scandal in WB was that Satyam had access to the Database with RFP for WB funded projects. They used to sell it to others for money. This was being done for many years with the management knwoing it.

Satyam is notorious for entertaining the hiring managers of Cisco and other companies which hire contractors. They spend money when these Indian managers visit India and put them is 5 star hotels and even send them B grade movies actress.

Some of the Cisco managers may be under the loop and scrutiny for hiring Satyam contractors.

[svinayak]

A case in point is the demise of hawala. We killed a homegrown money transfer mechanism, the hawala, because west used the bogey of terrorism to shove down our throats, the likes of Western Union. I am not going into their links to US intel or how we lost our own extensive intel inside hawala channels and became dependent on western intel for terror funding nowadays. The ground work for this final destruction was laid by the '90s Hawala scandal, in which we ourselves diligently trashed hawala routes and raked politicians of ALL parties across coals, instead of introducing legislation/regulations, modernize routing/promissory devices and laws for hawala sector. By now we would have had a solid grip like what US and UK have on at least a major chunk of the money flow inside Asia. Instead hawala was tarnished and buried by us, because it was considered "illegal by modern banking" standards. A standard set by west, which they themselves followed at their convenience, as we saw recently.

Idea is to create an legal India Hawala system with Indian control
Desi vyapari is needed for th

[John Snow]

Ok folks I am not going diss on the fallen,but I must caution
"India is a land 1 Million Mafias controlling one billion people"

Every time I go to India, I get a chance to wine & dine with some interesting people.

In 2003 when I was with ex IA chap who went into IT ( he was from Corps of Engineers) , he pitched a proposal, he said You see I bought a licence to start an (Donation) engineering college in Chitoor, the permit from GOI UGC Dept of education is in my hands, If we start the college we need about 30 crores for Land, buildings and bribes, I have already paid the Baksheesh for GOI guys in Delhi. If I have three partners each picthing 10 crores, we can by the end of third year returns to the extent of 19 to 20 percent and then its like a annuity for eternity, with donations sustaining the college.

( I paid last year 5 Lakhs for a nephew to do his engineering in Hyderabad, I have a promisory note for interest free loan to be paid as soon as he lands job Example of Sunk cost I guees).

So education is almost a scam ( for different clans). You get lot of land alloted which you can later slowly convert into plots. Akkineni Nagarjun has converted his fathers studio in AMeerpet into lots of plots ( ) all he did was touch Rajsekhar Reddy's feet and say Jai Anna...., the land was AP Govt land given free to Akkineni Nageswar rao when Tollywood was totally dependent on Studios like AVM, Gemini in Madras. Now its a Gold Mine.

During this visit, my classmate in Engineering and who went on to do his M.Tech in Madras IIT ( Industrial Engineering) 1978-81, is now picthing a very patriotic theme University with 350 acres in Bhongiri. Named Bhuvan Vijayam. He already GOI in Delhi all baksheesh and got his permits to start, Engg, Pharmacy, Education, etc colleges.

The prospectus and private placements are all thayar and hazar hai...

With a twinkle in his eye he says, it will be a residential complex environment with malls, housing for staff IIT lite like.

Its all up for grabs to make money.

Its rotten in AP I tell you, I think its same in TN and Karnataka also. Govt Lands , schemes and skimming...

Oh by the way the plot I purchased in 1986 near alwal has been occupied by Jhopidi wallahs, 350 sq yards gone kaput In 1986 I paid my hard earned PF money of 76 thousand Rs.

Hear a scam there a scam
Here a scam everywhere a scam...
Ol..

The scheme

[John Snow]

One simple question where did Raju get permission to hold such vast tracts of Land in HYderabad? Original intent was some thing different and CBN CM giri granted the AP govt land I am sure.

The trend is all over with every chief Minister land grab land grant GO is for something but the go signal is for scam.

[Singha]

ok so Raju is either hiding in the basement of his jubilee hills palace, hiding in his native village
or making a escape attempt to dubai where he will duly hang himself in a cheap hotel.

let us let the valiant upholders of the law deal with him and his cohort. open season has been
declared to score brownie points.

BUT - its is quite clear that Maytas infra is also probably bankrupt, many of its land deals are
shady and nobody (banks, PEs, FIIs) will agree to fund it with a 40 foot pole.

where does that leave the Hyd metro project ? I see cancelling all awards and retendering as the only option (all others had asked for viability gap funding and this will have to be paid now if
they want a metro)

they can also kiss their SEZ goodbye. so land speculators buying malibu layouts next to these
SEZs will lose out.

meantime, Namma Bengalooru metro is going smoothly and high tech bideshi pillars line the
MG Road area now......

[krishnan]

The possibility of a takeover from private equity investors is also in jeopardy. Industry players feel that Satyam will not get buyers as the acquirer will have to face the legal liabilities. Moreover, the company may find it difficult to get suitors as even its client list and deal flow is under scrutiny. The fact that Satyam could be forging the number of clients is not completely ruled out by experts.

"Clients are the biggest assets for an IT company. For any suitor that Satyam may have, its deal flows will be the biggest consideration. However, as admitted, Satyam showed bloated revenues in its second quarter results," said an analyst with a Mumbai-based brokerage. He added that there could only be two ways of doing it. Either the company was showing more revenues from its existing clients or it could be having dummy clients.

http://in.news.yahoo.com/48/20090108/12 ... t-del.html

[Singha]

my friend, who is a veteran survivor in nortel says Satyam is going to find no buyers or financiers
and will just be shut down at some point when its cash runs out. other indian cos might buy bits and pieces on a project specific basis if they see value but under strict no-liability conditions.

the market seems closed today due to muharram. next opening will be the final round of
ashura where I think the stock will fall into single digits.

good thing I forgot my demat password and couldnt buy yesterday as it was falling to "cheap"
levels.

Mahindra has already backed out as a potential buyer.

employees are said to be shell shocked and trying to escape but with job scene so bad,
escape will be hard too.

[Singha]

Shocked Satyam employees begin job hunting
January 8th, 2009 - 4:21 pm ICT by IANS

Hyderabad, Jan 8 (IANS) Jolted by the biggest fraud in India’s corporate history, thousands of employees of Satyam Computer Services have begun hunting for jobs in other companies.About 15,000 software professionals and other employees of Satyam have sent their CVs to placement companies and job portals during the last two days. Fearing trouble, more than 200 employees have also resigned during the last three to four days, sources in the company said.

A day after founder-chairman B. Ramalinga Raju resigned after admitting Rs.70-billion fraud, there was panic and confusion among 53,000 employees.

Though facing an uncertain future in Satyam, the employees attended to their duties at company headquarters and other offices, including business process outsourcing (BPO) centre, here Thursday.

“Like several of my colleagues, I have also sent my CV. Everybody is afraid of losing the job and it’s better to search a new job before it’s too late,” said a BPO employee on condition of anonymity.

Inside the premises, the employees discussed in groups the shocking developments, the uncertainty and future plans. But they avoided the media on the instructions of their higher-ups.

There was tight security around Satyam work centres in the city as security guards tried to keep a battery of reporters and cameramen at bay. Anxiety was writ large on the faces of employees as they walked into the campuses.

Some employees are trying for alternate jobs in the very companies for which they are doing project work at Satyam. While employees who have over two years or past experience are confident of securing new jobs, freshers were the worst hit.

The employees have said they were angry because only a few days ago Ramalinga Raju had assured them that the management was doing everything possible to get Satyam back on track.

Raju had written a letter to the employees amid “wild speculations and unchecked rumours” following the Satyam board’s bid to acquire Maytas Infra and Maytas Properties.

Satyam employees are spread over India and abroad. The company has centres in India, the US, Canada, Brazil, Britain, China, Hungary, Egypt, the United Arab Emirates (UAE), Malaysia, Singapore and Australia.

The Andhra Pradesh government has said that the interests of shareholders and employees were of prime concern. As Satyam was the brand image of Hyderabad, the government was keen to rescue it.

Chief Minister Y.S. Rajasekhara Reddy wrote to Prime Minister Manmohan Singh to set up a management team to run the affairs of Satyam “to restore the confidence of the global customers in its business continuity, so that the interests of the employees and other stakeholders are protected till an alternative credible management is put in place for the company”.

He suggested that the management team be comprised “personalities of globally known integrity and competence like Azim Premji, Narayana Murthy and S. Ramadorai”.

[John Snow]

The vultures are gathering over Hyderabad. Cyberabad is becoming crimerabad?.
MMS needs to bail out (of his job)

[Singha]

any tidbits how much CBN the ppt-enabled CM made during his jalebi days?

seems to be a land shark while current CM is evangelist + land shark

the blr 1st family looks pretty harmless in comparison...a kotha of land here, a petrol
bunk there, a couple farmhouses....nothing by AP standards.

[jkarthik]

...or TN standards, where the first family is rumored to practically own OMR and its former allies, Sriperambudur! What is frustrating is the potential impact of what could have been a model metro project - implementation in 1 shot, R+P deal making private participation viable etc- unfortunate.

[satya]

Raju is not guilty of wrongdoing frankly except things got a bit too much out of hand cuz of fall out with people you don't mess up ever in India . Hyderabad is India's Hawala capital and Raju was a middle level player .Satyam's rise had lot to do with CBN's rule , IT was the perfect cover and all those big infra projects with govt-contract-executors-keeper all belonging to same peoples . Right now , main priority is to cover up and keep it as mere accountancy fraud ( its a catchy phrase having being picked up already by our loyal media ) that means accounts and everything else and PWC will fully co-operate in it since it does a lot more than mere accountancy work and media is dutifully playing the role , for this hawala angle will never ever come out yet everyone knows .

[Vipul]

Politics-property combo may have trapped Raju.

An audacious real estate play is seen as the backdrop for the 54-year-old B Ramalinga Raju’s sudden exit from Satyam Computer Services, India’s fourth-largest IT company.

The Raju family, said real estate industry sources, might figure among India’s top 10 landlords as it had embarked on a massive land-buying strategy to cash in on the real estate boom in recent years. While the family holds over 6,500 acres through Maytas Properties, the individual members in their personal capacity have significant holdings of agricultural land across south and western India, industry officials said.

Industry and banking sources said the Rajus leveraged their ownership of Satyam, both in terms of shareholding and management control, to fuel other businesses. In fact, one banking source surmised that a key reason for cooking the books could have been to leverage the bull run in the Satyam stock before the market meltdown in the second half of 2008.

The promoters may have needed cash for land acquisitions, particularly around their infrastructure projects that were won on the back of ‘goodwill’, according to these sources.

So how did the Rajus land up with a severe liquidity crunch? One of the theories doing the rounds suggests they were trapped by a murky cocktail of political developments and a real estate crash. In the recent past, Maytas Properties and Maytas Infrastructure had won a number of prestigious projects.

These include the Hyderabad Metro Rail project, Machilipatnam port project and airport projects in Andhra Pradesh and Karnataka. In return, prime land near some of these projects had to be ‘offered’ to the supportive establishment. Several real estate sources claimed there were some instances of Maytas being awarded road projects even without proper bidding. However, ET could not confirm all this independently at the time of going to press.

With the real estate story turning sour, political circles were said to have demanded funds from the family instead of land. “Upcoming elections may have also forced members of the establishment to change their preference from land to money which put them in a fix,” said a Hyderabad-based developer.

Observers said Raju’s sudden admission of fraud had compelling reasons, and was probably done under external pressure to thwart bigger revelations.

In this context, it must be mentioned that Delhi Metro managing director E Sreedharan had called Hyderabad Metro Rail project a “future political scam”. He had objected to the way the government allowed the private consortium to develop land commercially.
Some other rumours floating in Hyderabad claim Satyam’s promoters raised huge funds from tobacco traders in Rayalseema district by pledging Satyam shares. The promoters may have assumed that they would be able to raise funds to recover the pledged shares through an IPO of Maytas Properties. But the downturn in the real estate market derailed Maytas’ IPO plans leading to the promoters being unable to meet margin calls on Satyam shares.

[Shivani]

I talked to someone who knows RR. He says the chap took on all the guilt and tried to do his best to save the company. He is no crook at the bottom line.

I think there is or was some political pressure at the back of all this. I dont know if its external or internal.

I agree with hnair we should not trounce our own guys. Who knows if Donald Trump can come back RR can too.

US took a credibility hit in what everyone thought is their forte (financial industry). India is returning the favor in its area of expertise (IT industry) and has no reason to do this voluntarily.

I guess the same thing is happening to Pakistan...it is being asked to pack up terrorism (its forte)

Raju is not guilty of wrongdoing frankly except things got a bit too much out of hand cuz of fall out with people you don't mess up ever in India.

Shiv, Even though its not BRF acronym, can you again explain cognitive dissonance and how it manifests itself?

♪Meanwhile...♫

Satyam addresses media: liquidity a concern

The decision of the team of seven Satyam executives to come together and address the press may not have been such a good idea given that it accentuated, if anything, the mess that the company is already in.

Satyam Computer Services is speaking to its top 100 clients individually, but if the team is as unstructured with their comments and disclosures as they were in their interaction with the media, it may not help to hold customers' sentiment.

The interaction started with the interim CEO Ram Myampati clearly saying that the CFO was not present as he was not attending office due to personal reasons. But a few minutes down the line, he confessed that not just the CFO but the company had received the resignation letters of the Managing Director as well as the Chairman.

Myampati was clearly ill prepared as he kept dilly-dallying between his stance that he had not spoken to the top management since Wednesday and his having attended a conference call with all the three on Thursday. He kept mentioning how the sequence of events was not clear in his mind.

The plea taken by the crack team that is spearheading the ill-fortuned company is that all these years the figures they saw was the date that had passed the filter of the auditors and therefore, the disclosures that Ramalinga Raju made took them by as much surprise as they had taken the rest of the stake holders of Satyam.

The Satyam board relied on audited data on revenue and had no inkling about the fraud, said Mynampati.

On the conduct of auditor PriceWaterhouseCoopers, he said: "We have not verified what process PwC took to certify financial statements. We are not yet in touch with them."

"I want to set the record straight, I along with other members of the board relied on audited data to make our recommendations. I am not related to the promoters. We will help investigating authorities," he said at the press meet.

"We first have to establish the veracity of Raju's statements. We have not completed the process," he added.

Another top priority for the company was to protect employees' careers, said Mynampati.

However, he also confessed that while the December salaries of the employees have been taken care of, the company is faced with immediate liquidity problem and is looking at raising liquidity from the market.

I would love to predict a bankruptcy timeline only this company does not have a board or management that can file for one! One swift mercy kill, please! Perhaps SEBI can file one on behalf of the shareholders (make rules as you go along, just like US).


PS: We will not touch tainted co like Satyam: Narayana Murthy

[Singha]

so whats going to save the 53K employees God alone knows. I hope the poor chaps make it to other cos before the ship sinks....they are not to blame for the faults of the lupine overlords.

for lack of anything better media is tossing around names like capgemini and
L&T even ADAG (who have just closed their zapak unit in blr and moved
back to mumbai)

TOI:

Satyam may axe 10,000 employees: Report
8 Jan 2009, 2045 hrs IST, PTI

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.

[SRoy]

^^

Really difficult to sympathize with them.

I have had my account manager poached upon by Satyam. The buggers went directly to our customers and even tried to negotiate the further work in project in their favour. Doesn't stops there, they even called me up to switch with my team, lock stock and barrel.

I'm just waiting a call from my ex-account manager, we prolly had some lowly posts in the pre-sales.

[Vipul]

Of all the Indian IT majors Satyam had the most rigorous and thorough procedure of checking the authenticity of education and experience listed on the application and resumes of its new employees.
IIRC, they used to band all the under investigation employee's (post joining) into Green (Looks good and genuine), Yellow(Resume info checking clear and waiting confirmation on some minor queries) and Red Bands(Resume info fake and employee to be fired).
I had a friend who was on the yellow band as the refernce he listed was abroad and was not reachable on his mobile.

[negi]

^^

Really difficult to sympathize with them.

I have had my account manager poached upon by Satyam. The buggers went directly to our customers and even tried to negotiate the further work in project in their favour. Doesn't stops there, they even called me up to switch with my team, lock stock and barrel.

I'm just waiting a call from my ex-account manager, we prolly had some lowly posts in the pre-sales.

^^ Big deal everyone does that for a fact, its just that Satyam thing went out of control and poor chaps got caught.The whole IT VITY operates in the same manner its just how big a chunk can one bite and swallow without choking yourself.

[CalvinH]

I have relatives in Satyam and as per them their HR practices has amazing nepotism. Eg Husband is a program manager in US, he manages a big account. He creates a position and hires his wife or his colleagues wife. No relevant experience check. (in US the process is more managed within the accounts). You just need to get through the gating criteria of MCA/BE etc.

E.g -2 : Wife comes to US on L-1 through Satyam. Her husband leaves the job (in some other company) in India and comes on L-2. Gets his EAD and joins Satyam in the same account/project.

My relatives are in some of the best (read profit making) units in Satyam and he was appalled at the skills of resources working onsite with him till he came to know of this connection. And as per him these onsite recruits were paid a lot higher then people who came from offshore. One of them was so happy to get a 100K+ package that he kept showing it to everyone around for 6 months. It took him 6 months to believe he is given this package.

For a company which purely works on quality of HR this was sure to take them down in long run.

[CalvinH]

^^ Big deal everyone does that for a fact, its just that Satyam thing went out of control and poor chaps got caught.The whole IT VITY operates in the same manner its just how big a chunk can one bite and swallow without choking yourself.

Agree for the first part.

[SRoy]

^^

Really difficult to sympathize with them.

I have had my account manager poached upon by Satyam. The buggers went directly to our customers and even tried to negotiate the further work in project in their favour. Doesn't stops there, they even called me up to switch with my team, lock stock and barrel.

I'm just waiting a call from my ex-account manager, we prolly had some lowly posts in the pre-sales.

^^ Big deal everyone does that for a fact, its just that Satyam thing went out of control and poor chaps got caught.The whole IT VITY operates in the same manner its just how big a chunk can one bite and swallow without choking yourself.

^^ Yes its a big deal. It has to stop. It is the naked greed that drives these kind of unethical behaviour.

You forgot the part that many projects require NDAs to be signed between the principal and the vendor as the work involve handling of sensitive data. As a matter of fact if the principal happens to be a govt./semi-govt. undertaking then leakage of such data puts the vendor at risk.

An individual swithcing over to rival of a vendor on the basis information on such engagements suggests confidentiatly has been compromised. In many countries the vendor will be charged with criminal offence.

Big deal yes.

You statements reiterate "all desis are crook" meme.

[Vipul]

I have received a bunch of resumes of Satyam employees working offshore in IL with Caterpillar.Seems the contract is being terminated wef January 31st.

[Singha]

that was their first contract in US per reports...a very long running client is bailing out. the world bank blacklisting had already clouded their prospects.

the titantic is taking on water...

[negi]

^^ Yes its a big deal. It has to stop. It is the naked greed that drives these kind of unethical behaviour.

Aw.. now that you do not have points to substantiate you have come up with tangential ramble, read what you said first.

According to you Satyam poached one of your resources; well first thing to be asked is what moral perch does your company sit on ? specially when poaching is a widely known and even bragged about by MNC's ; heck most of the director,VP and other fat cats are poached.

Btw tell me for a fact has your company never indulged in poaching or whatever you may call it.

You forgot the part that many projects require NDAs to be signed between the principal and the vendor as the work involve handling of sensitive data. As a matter of fact if the principal happens to be a govt./semi-govt. undertaking then leakage of such data puts the vendor at risk.

An individual swithcing over to rival of a vendor on the basis information on such engagements suggests confidentiatly has been compromised. In many countries the vendor will be charged with criminal offence.

That is a hogwash specially in services and consulting I have seen likes of IBM and Delloitte poach resources from the other camp and then allocate them to the same assignment after displacing the other vendor , many times the client IT arm itself amkes an offer to the people working under contract employed by an IT company.

The only diff is if big dogs do it its called competition while when likes of Satyam do it it is unethical.

Big deal yes.

You statements reiterate "all desis are crook" meme.

Yeah me a crook desi onlee, what are you a PAKI

[Singha]

please stop this unseemly fighting.

[vijayk]

check this out in some blog and replies by some guy ... Sounds credible to me...

http://churumuri.wordpress.com/2009/01/ ... e-in-scam/

Narayana Says: 7 January 2009 at 6:44 pm

I strongly suspect Raju is actually committing fraud now rather than committed it earlier. I have studied the balance sheet yesterday night.

I doubt that the figures could be fudged seven years in a row. The money he says was not there was being held in banks.

last years balance sheet had following audited figures

3317.70 crores in on depoosit accounts and 956.29 crores in current accounts in scheduled banks!!.
The money held in non scheduled banks was Rs 179.78 crores.
Auditing agency I believe is PriceWaterhouseCoopers.

I feel unless the bank statements were verified auditors would not have signed. In all probability Satyam did have money on the books till the last audit. Recently someone was mentioning that satyam liquidated the bank accounts and started holding cash reserves. I was wondering why Satyam was doing it. First Raju tried to take out money through Maytas deal. His move back fired and he lost his equity stake!. To prevent further erosion, Raju said he would rollback the Maytas deal and now hie is trying to decamp with entire cash saying that the monies were on account of fudged balance sheet. Raju family is diverting the attention of law agencies by alleging fudging. Plain and simple. The fudging is happening now!!!
The best way to protect investors now is throw Raju and all his family into jail and restating Q3 unaudited balance sheet

[SRoy]

Yeah me a crook desi onlee, what are you a PAKI

Excuse me from your august company. You may be a crook, doesn't mean everyone have to or is.

I don't where do you work, but in my place we report to our compliance officers even if we pay for the drinks in business meetings. Its by regulation...forced honesty if you like. You guessed it right, we do not get too many govt. projects. Thats okay.

What's a PAKI by the way? Some new acronym?

That is a hogwash specially in services and consulting I have seen likes of IBM and Delloitte poach resources from the other camp and then allocate them to the same assignment after displacing the other vendor , many times the client IT arm itself amkes an offer to the people working under contract employed by an IT company.

How many years you have spent in the industry and in what capacities? What sectors?

>>

Yes companies do forgery. Satyam's case is different, its not possible to take this to such a scale and duration without involvment down to level of division heads, business unit heads, project managers and sales/account managers. Hence, my interest in knowing the extent of responsibilities you handle and financial information you are privy to.

[vijayk]

http://www.greatandhra.com/ganews/viewn ... t=&scat=39


The multi-crore fraud committed by Satyam chief B Ramalinga Raju has left the ruling Congress party in an embarrassing situation.

The crisis compounded with the resignation of Maytas Infra (a subsidiary of Satyam) chief R C Sinha on Friday, as Maytas was part of Ramalinga Raju's conspiracy to siphon off funds. In fact, Sinha is a retired IAS officer, who has strong links with the top bureaucratic and political lobby in the State. He was the founding chairman of National Academy of Construction, set up by the State government.

Sources said Sinha was instrumental in securing thousands of crores of projects from the State government to Maytas and is believed to have personally bribed several bigwigs in the Congress government.

Naturally, these developments have caused worry to Rajasekhara Reddy government.

Though YSR and Finance Minister K Rosaiah tried to wash off their hands in the Satyam-Maytas scandal, they have admitted that the episode brought a lot of disgrace to the government. "I feel ashamed to learn that a Telugu man had resorted to such a massive fraud," said Rosaiah.

If the hollowness in Maytas is also exposed by the investigating authorities, then the Congress would be in trouble as it would also expose kickbacks paid to powers-that-be at various levels. Already, media started hounding the ruling party by unearthing the irregularities in entrusting massive projects like Metro Rail, Kakinada Port, Godavari water scheme and several irrigation projects to Maytas. In the coming days, it would be a flurry of reports in the media.

And that would be embarrassing to the Congress government before the elections. How much and what impact it would have on the Congress prospects in the elections remains to be assessed in the coming days.

[Singha]

with elections approaching and land no longer attractive valuation maybe the
political establishments had him over a barrel to part with 100s of crores of cash in campaign funds?

satyam management is throwing him a soft line. will not even file a police
complaint until their internal audit is done. until then he can roam around and
manipulate the situation to his capability. the entire team on the dias today
are probably friendly to him as they owe their rise into upper tier to being in
good books of ceo surely among other things.

atleast his and family members passports must be seized, immigration alerted,
all bank accounts frozen and put under house arrest.

btw the dean of ISB Prof Rao who was in satyam board also resigned his deans
position today.

[Shivani]

I have received a bunch of resumes of Satyam employees working offshore in IL with Caterpillar.Seems the contract is being terminated wef January 31st.

the titantic is taking on water...

Domino effect.

The Satyam customers have to review their business relationship with the company. Not doing so would raise doubts about their corporate governance.

So let us forget the liquidity crisis. Even if the cash flows were adequate to ensure immediate survival (and they aren't), with each lost customer Satyam's competetiveness will be compromised, not to suggest the quality of their work as the company is a in a continual state of readjustment and workers are shed in batches of thousands.

I see a stampede.

And once you have decided to go through the hassle of changing your services supplier, these customers might also decide to give their business to Phillipines, Brazil, or to any other country. Truly the best one can hope for is that most of these Satyam customers give their business to Indian companies.

[Vipul]

The Purchase of Satyam as a Going Entity looks increasingly remote with all the initial suitors(Tech Mahindra, HCL, L&T) ruling out buying the company.Cognizant is the one which has not shown any response so far.
I think the best case scenario would be for Infy,TCS and Wipro to bag the satyam business.In that case majority of the satyam employess would loose their jobs.
The worst affected would be those on H-1 status.With prospects in India not so good these consultants would be latching on to small mom and pop shops just to maintain their status(Paying dearly for the H-1 cost and bench or at best being on split pay)

[Satya_anveshi]

check this out in some blog and replies by some guy ... Sounds credible to me...
I strongly suspect Raju is actually committing fraud now rather than committed it earlier. I have studied the balance sheet yesterday night.

I doubt that the figures could be fudged seven years in a row. The money he says was not there was being held in banks.

last years balance sheet had following audited figures

3317.70 crores in on depoosit accounts and 956.29 crores in current accounts in scheduled banks!!.
The money held in non scheduled banks was Rs 179.78 crores.
Auditing agency I believe is PriceWaterhouseCoopers.

I feel unless the bank statements were verified auditors would not have signed. In all probability Satyam did have money on the books till the last audit. Recently someone was mentioning that satyam liquidated the bank accounts and started holding cash reserves. I was wondering why Satyam was doing it. First Raju tried to take out money through Maytas deal. His move back fired and he lost his equity stake!. To prevent further erosion, Raju said he would rollback the Maytas deal and now hie is trying to decamp with entire cash saying that the monies were on account of fudged balance sheet. Raju family is diverting the attention of law agencies by alleging fudging. Plain and simple. The fudging is happening now!!!
The best way to protect investors now is throw Raju and all his family into jail and restating Q3 unaudited balance sheet

[/quote]

That is what I was trying to get at when I was talking about its business model and decent cash flows. Is he under any coersion or is he playing this deliberately -this is Made-off's exact replica (he could have done the same). That said, producing bank statements is not a big deal - I don't want to say anything more than that.

[Vipul]

Satyam: Is Raju telling the truth even now?

The story Ramalinga Raju of Satyam Computers has narrated in his letter has too many loose ends and is too incredible to believe. Is his narrative a cover-up? By Vivek Sharma

Most of us are too shocked to react in any coherent manner. But, the story given by Ramalinga Raju in his letter to the board of directors of Satyam Computers is absolutely impossible for just he and his brother to carry out. There are far too many loose ends.

As of 30 September 2008, Satyam's stated cash and bank balances were Rs5,361 crore. Of this, Raju's letter says only Rs321 crore is real and Rs5,040 crore is fictitious. Almost the entire amount was reported to be held in deposits with banks. This amount was steadily built up over the last many years. One of the first items auditors check is asset confirmations, and for bank deposits they have to be original certificates from the banks. Given the large amounts involved, it is likely that the entire amount would have been split among many banks. That means the auditors were given forged balance confirmations from multiple banks all these years. There is no way the chairman or managing director of Satyam was directly giving these confirmations to the auditors. At least a few in the finance department of the company clearly knew about this all along.

Raju says in his letter that Rs376 crore of accrued interest is 'non-existent'. This amount was accrued over the last many quarters. For those not familiar with accounting jargon, a company 'accrues' an income when it is due but has not yet been realised in cash. If all the money was parked in bank deposits, which normally pay interest periodically, this means the bank defaulted in interest payments. And Satyam's auditors believed that story!

Satyam had reported Rs2,854 crore as unsecured debtors and Raju's letter says only Rs490 crore is real. Again, for such a large amount, the company would have shown many debtors and confirmations would have been submitted to the auditors for each one of them. Any auditor would go through the ledger account of at least some of the unsecured debtors to see if there are transactions happening. It is difficult to fudge a large number of accounts for a long time as each transaction must have a corresponding entry in the bank account. If the ledger accounts and bank statements were actually fudged, many more people must be involved, including some bankers.

There is only another way this can happen and that is the auditor didn't bother to check anything. That is hard to believe. The statutory audit team for a company the size of Satyam will have at least a dozen or more members, besides the audit firm partner who signs the audit report, and every year the team will change even if the partner remains the same. Assuming that this has been going on for many years, this implies that at least 50 trained employees of the audit firm were duped into believing this fiction. That is beyond incredible.

Satyam had a full-fledged internal audit team, presumably including many accounting professionals. This team must have been going through the books in much more detail than the statutory auditors and submitting regular reports to the audit committee of Satyam's board of directors. The audit committee had only external, so called independent directors and Raju or his brother Ramu were not members. How come not even one of these capable professionals, either in the internal audit team or in the audit committee, didn't detect anything amiss for many years?

These days every business manager analyses threadbare the profitability of each project or contract he or she manages. If Satyam's margins were so low or non-existent, unlike those of its competitors, it would have been apparent in the profitability analysis done by individual profit centres or managers. If it was so low, it would have come up at least in some of the project profitability sheets. If that is the case, why didn't any of the senior managers suspect the healthy margins reported by Satyam, quarter after quarter?

As mentioned earlier, almost the entire cash surplus of over Rs5,000 crore was parked in low-yielding bank deposits. No investments in the stock market or mutual funds or bonds. These days, even companies with Rs100 crore of surplus cash will set up treasury departments to manage the money and seek better returns. Why didn't any director, manager or auditor question this practice?

Raju says he brought in Rs1,230 crore as cash over the last 2 years to 'keep the operations going'. If true, this clearly means the company was facing a severe cash shortage over this period when it was reporting healthy profits. Surprising that none in Satyam's finance department took notice! There is also the small matter of how Raju brought in such a large amount of money, without even a single soul other than his brother knowing it.

This story is too incredible to believe. There are two possibilities:

This is a much bigger fraud, involving a large number of people.
The profits were not fictitious and the cash was real, at least until a few months back. Somehow the cash disappeared or was lost and this incredible story is a cover up.
Intriguing!

[SRoy]

The Purchase of Satyam as a Going Entity looks increasingly remote with all the initial suitors(Tech Mahindra, HCL, L&T) ruling out buying the company.Cognizant is the one which has not shown any response so far.
I think the best case scenario would be for Infy,TCS and Wipro to bag the satyam business.In that case majority of the satyam employess would loose their jobs.
The worst affected would be those on H-1 status.With prospects in India not so good these consultants would be latching on to small mom and pop shops just to maintain their status(Paying dearly for the H-1 cost and bench or at best being on split pay)

Many delivery units (on projects critical to their clients) cannot be demobilized all of a sudden, there is a cost involved for the clients as well as new providers. It make sense for prospective providers in such cases to absorb the unit intact.

[Satya_anveshi]

But what is with Indian commerce minister saying at Pravasi Bharatiya venue that GOI will "ensure" satyam's staff will be taken care of.

[Ananth]

That is politico speak. He is worried about prospects of Congress in AP.

[CalvinH]

The Purchase of Satyam as a Going Entity looks increasingly remote with all the initial suitors(Tech Mahindra, HCL, L&T) ruling out buying the company.Cognizant is the one which has not shown any response so far.
I think the best case scenario would be for Infy,TCS and Wipro to bag the satyam business.In that case majority of the satyam employess would loose their jobs.
The worst affected would be those on H-1 status.With prospects in India not so good these consultants would be latching on to small mom and pop shops just to maintain their status(Paying dearly for the H-1 cost and bench or at best being on split pay)

Many delivery units (on projects critical to their clients) cannot be demobilized all of a sudden, there is a cost involved for the clients as well as new providers. It make sense for prospective providers in such cases to absorb the unit intact.

Second that. You cant just move resources out a critical project and replace them. In this case client would ask the prospective provider to absorb the current team till the project is finished.. For long term development projects the transition to a new team mid way is next to impossible. For support projects too this can be achieved over a period of time but not immediately. Onsite positions are more secure then offshore in short and longer run. Here is the list of how this may work in case a buyers turns up (buyer like Infy, Wipro. TCS)

Layoff round 1 - Offshore folks on bench (buyer would be coming with its own bench folks)
Layoff round 2 - Offshore Developer on projects replaced by the buyers team
Layoff round 3 - Offshore Team Leads and PMs replaced (some would be retained based on unique and or much desired skill sets)
Layoff round 4 - Onsite consultants and team leads
Layoff round 5 - Onsite PMs, Architects