Jan 7 (IANS)
a development that shook India's corporate and
financial worlds Wednesday, co-founder and chairman
of Satyam Computers B. Ramalinga Raju resigned
after confessing to a Rs.40 billion (Rs.4,000
crore or $823 million) fraud that had been going
on for years. As the scrip of the beleagured software
services firm crashed, the Ministry of Company
Affairs started an investigation into the way
it had cooked its balance sheets for years.
is with deep regret and tremendous burden that
I am carrying on my conscience, that I would like
to bring the following facts to your notice,"
Raju said in a regulatory statement, and listed
out the 'facts' that led to his decision to quit.
According to the statement, the company had cooked
its books resulting in an "inflated (non-existent)
cash and bank balances of Rs.5,040 crore"
over several years.
started as a marginal gap between actual operating
profits and the one reflected in the books of
accounts has attained unmanageable proportions,"
balance sheet as on Sep 30 last year had an inflated
cash and bank balance of Rs.5,361 crore (Rs.52.61
billion or $1.1 billion), as against the correct
amount Rs.5,040 crore (Rs.50.40 billion or $1.04
showed an accrued interest in the books to the
tune of Rs.3.76 billion (Rs.376 crore), a non-existent
amount. A liability of Rs.12.3 billion (Rs.1,230
crore) remained understated on account of funds
arranged by Raju while the debts of the company
were overstated as Rs.4.9 billion (Rs.490 crore).
difference in 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 cost,"
Maytas acquisition by Satyam 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 problems were solved, it was
hoped that Maytas' payments could be delayed but
that was not to be.
scrip plunged over 72.31 percent just after 1:30
p.m. Wednesday as a result of the announcement
and was trading at Rs.41.60 from a close of Rs.179.10
have received a communication with regards to
this. Authenticity of the communication has to
be established; once we have clear information,
action will be taken," Corporate Affairs
Minister Prem Chand Gupta said soon after the
news of Raju's resignation broke out.
The rise, rise and fall of
7, 2009 (IANS)
Satyam founder B. Ramalinga
Raju, who shocked India by admitting massive fraud
over several years, was the Ernst and Young Entrepreneur
of the Year in 2007 and the company won the Golden
Peacock Global Award for Excellence in Corporate
Governance given by the World Council for Corporate
Here is a brief history of
the company, which was once a flagbearer of Cyberabad,
as its headquarters and Andhra Pradesh capital
Hyderabad were hailed in the early years of the
IT boom in late 1990s.
- Established: June 24, 1987
- Global Headquarters: Hyderabad
- Development Centres: Bangalore,
Basingstoke, Beijing, Bhubaneswar, Budapest,
California, Chennai, Chicago, Dalian, Georgia,
Guangzhou, Gurgaon, Hartford, Hyderabad, Kuala
Lumpur, Melbourne, Mumbai, Munich, Mississauga,
New Jersey, Ontario, Pune, Sao Paulo, Shanghai,
Singapore, Sydney, Tokyo, Wiesbaden
- Employee strength: 52,865 (including employees
in subsidiaries and joint ventures) as on Sep
- 1991: Debuts on Bombay Stock Exchage with
an IPO oversubscribed 17 times
- 1999: Satyam Infoway (Sify)
becomes the first Indian Internet company listed
on Nasdaq; presence established in 30 countries
- 2001: Listed on the New
York Stock Exchange with trading name SAY
- 2006: Revenue exceeds
$1 billion; sets up the first "Global Innovation
Hub" in Singapore and operations in Guangzhou,
- 2007: Becomes the official
IT services provider for the FIFA World Cups,
2010 (South Africa) and 2014 (Brazil); Ramalinga
Raju named the "Ernst and Young Entrepreneur
of the Year"
- 2008: Revenue crosses
the $2-billion mark
- 2008 Dec 16: Announces
plan to buy two Maytas firms; calls off the
deal within hours in the face of shareholders'
opposition; share price tumbles
- 2008 Dec 18: Announces
board meeting on Dec. 29 to consider share buyback
as markets hammer the shares
- 2008 Dec 23: World Bank
confirms blacklisting Satyam for eight years
on grounds of data theft and bribing bank officials
- 2008 Dec 26: The crisis
takes its first toll - Mangalam Srinivasan,
an independent director, quits
- 2008 Dec 28: Puts off
board meet to Jan 10
- 2008 Dec 29: Three more
- 2009 Jan 2: Founder-promoters
stake falls from 8.64 percent to 5.13 percent
as financial institutions with whom the entire
stake was pledged dump the shares
- 2009 Jan 6: Promoters'
stake falls further as lenders offload more
- 2009 Jan 7: Ramalinga
Raju sends shockwaves by admitting fraud. Resigns