As i was cooking my afternoon lunch, i just read that the Rajus had for a considerable period off time been cooking their books bigtime (most corporates do cook their books) and B R Raju came out in an open letter to the companies shareholders about the said mess… somewhat like Bernie Madoff. Satyam books inflated of Rs 5040cr MC .
The Auditors PWC, the Company Secretary, the top management and its CAs and the independent directors have also to be held accountable for such a glaring falsification if Rajus statement is true. Heck even the SEBI and CLB should be in the docks for such poor oversight…
I suspect, there is more to it than meets the eye that says that they overstated profits that too showing it as cash lying in a current account for the last couple of years… also Satyam’s operating margin of 3% over stated as 24% also seems suspect.This seems too easy and there is a lot more news that one should expect. This could also be a case of theft and embezzlement or plain and simple diversion of funds.
As it was listed in the US , one must expect class action lawsuits from the relatively speedy US justice system, and it wont be easy for the Rajus to scuttle investigations with hush money to authorities as it is usually done. But this is an election year and however good their relations with the AP govt maybe the politicians might not want to take the risk. Plus the Punishment for such white collar crimes that play with 50000 employee and thousands of shareholder lives is lax and slow to come thanks to our creaking judicial system and these people can still live comfortable vip lives in prisons thanks to money power.
Not many international cos follow Infosys management standards and most indian corporates are greedy …
Raju and co were never that reputed in the first place and Maytas the mirror image of satyam or satyam spelt reverse, was their baby under threat thanks to recession and an expected prop mkt crash. In any case they had a very low leveraged stake as the promoters has pledged the entire holdings over a period of time since September 2006 and milked Satyam for their personal benefit at every chance they got.
Sadly the management – including independent directors Mendu Rammohan Rao, Dean, Indian School of Business, Hyderabad,‘Father of Pentium’ Vinod Dham, former Cabinet Secretary TR Prasad and Harvard Business School professor and governance expert Krishna Palepu, was unanimous during the talks of the Maytas takeover…
It shows how low the standards have fallen, and how indepedent directors operate.
Some say this is Indias Enron…. and why not ? People owning Satyam have lost nearly 78% and are expected to loose even more as the mkts fall along with Sayam stock today….
Satyam was a K10 stock a darling of the big Bull Ketan Parekh, but public memory about poor management is very shortlived especially in boom times. Could this have been forseen ? some did .. Like the Reliance MF and many others who sold after the recent Maytas episode.
I think management style and especially the attitude of Mutual funds and and FIs and FIIs on corporate governance should seriously change and takeovers should be welcomed, especially if the managements behavior is unbecoming and their stakes well below 10% that too leveraged to the hilt.