Hyderabad: The accounting scam at Satyam Computer Services is to the tune of Rs.14,000 crore (Rs.140 billion/$2.8 billion) and not Rs.7,800 crore (Rs.78 billion) as the company's disgraced former chairman B. Ramalinga Raju stated earlier this year, the Central Bureau of Investigation (CBI) has said.
The federal agency Tuesday filed a 200-page charge sheet in the special court for CBI cases here that had details of properties acquired by Raju and other accused and their financial transactions abroad through fictitious firms.
'The quantum of scam and the loss suffered by investors has been quantified. The loss suffered by investors works out to over Rs.14,000 crore,' said CBI Deputy Inspector General Lakshminarayana.
The accounting fraud, which shocked India, came to light Jan 7 when Raju quit as Satyam chairman while confessing that he had cooked the company's accounts and inflated profits over several years.
The CBI official said with the filing of the additional charge sheet the agency had completed the probe into the accounting fraud.
The agency, however, is contemplating to file separate charge sheets pertaining to the diversion of funds and the fraud perpetrated by the accused with regard to filing of income tax returns of Satyam.
The additional charge sheet said Raju and the other accused had acquired assets worth Rs.350 crore.
'The huge assets acquired by the accused with the fraud amounts have been identified. A total of 1,065 properties whose documented value is Rs.350 crore have been identified which include around 6,000 acres, 40,000 square yards of housing plots and 90,000 square feet of built-up area,' said a CBI statement.
The accused had also raised loans of Rs.1,220 crore by forging the resolutions of the board of directors, apart from inflating profits by Rs.450 crore by showing fictitious customers, CBI said.
The
statement said the accused falsified the accounts in the matter pertaining to the acquisition of shares of a Hyderabad-based company.
The accused have also resorted to criminal breach of trust in the matter pertaining to declaration and disbursement of dividends. Further evidence collected revealed the role of two statutory auditors in the fraud.
'In the supplementary charge sheet, we have filed the charges under various sections of Indian Penal Code like 120 B (criminal conspiracy), 409 (criminal breach of trust), 419 (impersonation), 420 (cheating), 467, 468 and 471 (all pertaining to forgery),' the CBI official said.
The first charge sheet was filed April 7.
In addition to the nine accused, the investigating agency has also levelled charges against internal auditor V.S. Prabhakar Gupta.
Gupta, arrested two days ago, has been charged with breach of trust, forgery, cheating and fabrication of accounts.
'In the supplementary charge sheet, we have cited 301 additional witnesses and nine material objects. We have also filed 1,550 additional documents. With this the quantity of documents in this case has gone up to 55,000,' Lakshminarayana said.
The multi-disciplinary investigation team comprising officials of the CBI, the income tax department, enforcement directorate and the Reserve Bank of India, has also gathered details of Raju's bank transactions in Mauritius.
Raju and his brother and then managing director Rama Raju were arrested by the Andhra Pradesh police Jan 9. Former chief financial officer Vadlamani Srinivas was picked up the next day.
Two auditors were also arrested the same month.
The CBI, which began the investigations in February, arrested three executives of Satyam's finance wing in April.
All the accused are currently lodged in Chanchalguda central jail here.
Friday, November 27, 2009
Tuesday, September 8, 2009
Ramalinga Raju stable in intensive care unit
8 Sep 2009,
HYDERABAD: Disgraced founder of Satyam Computer Services Ltd B Ramalinga Raju remained in the intensive care unit of a government-run hospital Tuesday after he suffered a cardiac arrest in a jail here. His condition is said to be stable.
Raju, who was in Chanchalguda Jail along with seven other accused in connection with the Rs.78 billion ($1.43 billion) accounting fraud in Satyam, was given first aid by the jail authorities after he complained of chest pain Monday evening. He was then shifted to the Nizam's Institute of Medical Sciences (NIMS).
Doctors conducted various tests on him and some of the reports are expected later Tuesday, hospital officials said.
Resident Medical Officer of NIMS M Srinivas told reporters that the cause of the pain would be known after the reports of all the tests were fully evaluated.
Srinivas said the former Satyam boss was undergoing treatment in the intensive care unit and his condition was stable.
Raju's lawyer Bharat Kumar, however, claimed that Raju suffered a heart attack. According to him, Raju has a block in his arteries but the same could not be removed as he is also suffering from Hepatitis C.
Raju, who will turn 55 Sep 15, has been lodged in jail since Jan 9, two days after he shocked the corporate world by admitting to a Rs 78 billion accounting fraud in the IT major.
Raju's brother B Rama Raju, chief financial officer Vadlamani Srinivas, three other employees of Satyam and two auditors are also in jail.
They have been charged with cheating, forgery and criminal conspiracy and are being tried for the same.
Following Rajus's confession, the government appointed a board to run Satyam, one of India's leading IT companies. The company was bought by Tech Mahindra in April and renamed Mahindra Satyam.
HYDERABAD: Disgraced founder of Satyam Computer Services Ltd B Ramalinga Raju remained in the intensive care unit of a government-run hospital Tuesday after he suffered a cardiac arrest in a jail here. His condition is said to be stable.
Raju, who was in Chanchalguda Jail along with seven other accused in connection with the Rs.78 billion ($1.43 billion) accounting fraud in Satyam, was given first aid by the jail authorities after he complained of chest pain Monday evening. He was then shifted to the Nizam's Institute of Medical Sciences (NIMS).
Doctors conducted various tests on him and some of the reports are expected later Tuesday, hospital officials said.
Resident Medical Officer of NIMS M Srinivas told reporters that the cause of the pain would be known after the reports of all the tests were fully evaluated.
Srinivas said the former Satyam boss was undergoing treatment in the intensive care unit and his condition was stable.
Raju's lawyer Bharat Kumar, however, claimed that Raju suffered a heart attack. According to him, Raju has a block in his arteries but the same could not be removed as he is also suffering from Hepatitis C.
Raju, who will turn 55 Sep 15, has been lodged in jail since Jan 9, two days after he shocked the corporate world by admitting to a Rs 78 billion accounting fraud in the IT major.
Raju's brother B Rama Raju, chief financial officer Vadlamani Srinivas, three other employees of Satyam and two auditors are also in jail.
They have been charged with cheating, forgery and criminal conspiracy and are being tried for the same.
Following Rajus's confession, the government appointed a board to run Satyam, one of India's leading IT companies. The company was bought by Tech Mahindra in April and renamed Mahindra Satyam.
Former Satyam chief Ramalinga Raju suffers heart attack
8 Sep 2009, ET Bureau
HYDERABAD: B Ramalinga Raju, former chairman of scam-tainted Satyam Computer Services , was admitted to the Nizam’s Institute of Medical Sciences (NIMS), following a heart on Monday evening.
Raju was lodged in the Chanchalguda prison in January 9 this year, two days after he confessed to perpetrating a Rs 7,000-crore fraud at Satyam.
According to his lawyer Bharat Kumar, Raju suffered a heart attack at around 4.30 pm and his condition was serious when he was shifted to the hospital. “He was taken twice to NIMS over the past 10 days for treatment of type C Hepatitis. A medical board constituted by the state government examined him and recommended treatment for a couple of months. He had blocks in his arteries, but was unable to take medicines as he was suffering from liver disorder,” said Bharat Kumar.
Several applications for bail were rejected by the lower court and the Andhra Pradesh High Court. The CBI, which filed a charge sheet, also moved a petition to conduct lie-detector and polygraph tests. But Raju moved a counter-petition , challenging the validity of these tests. A lie-detector test cannot be conducted on a person who has a critical ailment.
Raju was shifted late Monday evening from the Chanchalguda jail to NIMS. His brother B Rama Raju and former chief financial officer Srinivas Vadlamani are also lodged in the same prison for conspiring in the same fraud.
HYDERABAD: B Ramalinga Raju, former chairman of scam-tainted Satyam Computer Services , was admitted to the Nizam’s Institute of Medical Sciences (NIMS), following a heart on Monday evening.
Raju was lodged in the Chanchalguda prison in January 9 this year, two days after he confessed to perpetrating a Rs 7,000-crore fraud at Satyam.
According to his lawyer Bharat Kumar, Raju suffered a heart attack at around 4.30 pm and his condition was serious when he was shifted to the hospital. “He was taken twice to NIMS over the past 10 days for treatment of type C Hepatitis. A medical board constituted by the state government examined him and recommended treatment for a couple of months. He had blocks in his arteries, but was unable to take medicines as he was suffering from liver disorder,” said Bharat Kumar.
Several applications for bail were rejected by the lower court and the Andhra Pradesh High Court. The CBI, which filed a charge sheet, also moved a petition to conduct lie-detector and polygraph tests. But Raju moved a counter-petition , challenging the validity of these tests. A lie-detector test cannot be conducted on a person who has a critical ailment.
Raju was shifted late Monday evening from the Chanchalguda jail to NIMS. His brother B Rama Raju and former chief financial officer Srinivas Vadlamani are also lodged in the same prison for conspiring in the same fraud.
YSR Death: Who's going to save Ramalinga Raju?
Thursday, September 3, 2009
Hyderabad, Sep 3: With the death of the 'son of soil', AP Chief Minister YS Rajashekhara Reddy there were scores of people who were heartbroken.
Buzz up!However, the people who will truly mourn the Chief Minister's death will not just be limited to farmers, party members and workers, as the ex-CEO of Satyam Computers, Mr Ramalinga Raju too may have to join the mourning.
When the Satyam Computers fraud came out in the open, it was a popularly debated fact if YSR was shielding the architect behind the epic Rs 7,800 crore scam.
During this period, YSR faced criticism for supporting and protecting Ramalinga Raju. While his request for the CBI probe into to scam was seen as an effort to protect Ramalinga Raju, his government constantly became the victim of scathing attacks of leaders and the public.
So, now the question is will the demise of YS Rajashekhara Reddy have an impact on Ramalinga Raju and his accomplices, and how?
Hyderabad, Sep 3: With the death of the 'son of soil', AP Chief Minister YS Rajashekhara Reddy there were scores of people who were heartbroken.
Buzz up!However, the people who will truly mourn the Chief Minister's death will not just be limited to farmers, party members and workers, as the ex-CEO of Satyam Computers, Mr Ramalinga Raju too may have to join the mourning.
When the Satyam Computers fraud came out in the open, it was a popularly debated fact if YSR was shielding the architect behind the epic Rs 7,800 crore scam.
During this period, YSR faced criticism for supporting and protecting Ramalinga Raju. While his request for the CBI probe into to scam was seen as an effort to protect Ramalinga Raju, his government constantly became the victim of scathing attacks of leaders and the public.
So, now the question is will the demise of YS Rajashekhara Reddy have an impact on Ramalinga Raju and his accomplices, and how?
Court extends Ramalinga Raju's remand by 14 days
PTI 5 August 2009
HYDERABAD: A local court on Wednesday extended the judicial remand of Satyam founder B Ramalinga Raju and eight other accused in the multi-crore rupee fraud case in the IT company by 14 days.
The XIV Additional Chief Metropolitan Magistrate extended the remand of Ramalinga Raju, his brother Rama Raju, former Satyam CFO Vadlamani Srinivas, former auditors of Price Waterhouse S Gopalakrishnan and Talluri Srinivas and three former employees of the IT firm till August 19.
The accused, who have been lodged in the Chanchalguda jail, were produced before the magistrate on Wednesday.
HYDERABAD: A local court on Wednesday extended the judicial remand of Satyam founder B Ramalinga Raju and eight other accused in the multi-crore rupee fraud case in the IT company by 14 days.
The XIV Additional Chief Metropolitan Magistrate extended the remand of Ramalinga Raju, his brother Rama Raju, former Satyam CFO Vadlamani Srinivas, former auditors of Price Waterhouse S Gopalakrishnan and Talluri Srinivas and three former employees of the IT firm till August 19.
The accused, who have been lodged in the Chanchalguda jail, were produced before the magistrate on Wednesday.
Sunday, July 26, 2009
Criminal cases against Maytas Properties promoters
The Hyderabad police has registered cheating and criminal breach of trust cases against the promoters of Maytas Properties, an unlisted company owned by the family of Satyam Computer Services Ltd founder B Ramalinga Raju, who is in jail after confessing to manipulating Satyam’s accounts.
Speaking to Business Standard, Deputy Commissioner of Police (Detective) R S Praveen Kumar said the police registered the cases yesterday following a complaint from a member who bought property at Hill County, Bachupally, a residential project promoted by Maytas Properties on the outskirts of the city.
The complainant told the police that he paid about Rs 77 lakh to buy the property and the company promised to deliver it in March 2008 but did not do so, citing the crash in the real estate market.
The police have registered cases under Section 406 (criminal breach of trust) and Section 420 (cheating). “We will investigate the case based on the complaint,” Kumar said, adding that that the cases were filed against B Rama Raju, Maytas Properties, vice-chairman and younger son of Ramalinga Raju.
People who bought flats at Hill County have been on the warpath for some weeks now since pressure from their monthly loan instalments was building up. They have held demonstrations at the construction site, at Rama Raju’s residence and also staged a hunger strike in protest against the delay.
Hill County is a Rs 1,100-crore project out of which the company has collected Rs 654 crore by selling residential property. It currently has Rs 100 crore as receivables and Rs 200 crore as vendor liabilities. The project envisaged construction of 840 apartments and 326 independent villas. The flats were priced between Rs 50 lakh and Rs 1.5 crore, while the price of villas ranged from Rs 1.5 crore to Rs 2.5 crore.
Last week, the company’s government-appointed director Ved Jain announced that it was looking at parting with a stake in the residential project.
Speaking to Business Standard, Deputy Commissioner of Police (Detective) R S Praveen Kumar said the police registered the cases yesterday following a complaint from a member who bought property at Hill County, Bachupally, a residential project promoted by Maytas Properties on the outskirts of the city.
The complainant told the police that he paid about Rs 77 lakh to buy the property and the company promised to deliver it in March 2008 but did not do so, citing the crash in the real estate market.
The police have registered cases under Section 406 (criminal breach of trust) and Section 420 (cheating). “We will investigate the case based on the complaint,” Kumar said, adding that that the cases were filed against B Rama Raju, Maytas Properties, vice-chairman and younger son of Ramalinga Raju.
People who bought flats at Hill County have been on the warpath for some weeks now since pressure from their monthly loan instalments was building up. They have held demonstrations at the construction site, at Rama Raju’s residence and also staged a hunger strike in protest against the delay.
Hill County is a Rs 1,100-crore project out of which the company has collected Rs 654 crore by selling residential property. It currently has Rs 100 crore as receivables and Rs 200 crore as vendor liabilities. The project envisaged construction of 840 apartments and 326 independent villas. The flats were priced between Rs 50 lakh and Rs 1.5 crore, while the price of villas ranged from Rs 1.5 crore to Rs 2.5 crore.
Last week, the company’s government-appointed director Ved Jain announced that it was looking at parting with a stake in the residential project.
Maytas Properties writes to angry clients
Hyderabad July 23, 2009
Maytas Properties, hit by both the recession in real estate and the Satyam accounting scam, has written to angry clients to give it more time.
Vice-Chairman B Rama Raju has written to the Hill County Home Owners Welfare Association, the body of clients in its prestigious project here which is now stuck for want of money. The customers, all of whom have paid a huge amount for a promised luxury home, are threatening prosecution.
“I am committed to do the project,’’ he promised in the letter, adding assurances of positive developments soon.
The police have registered cases against Rama Raju and Maytas Infra vice chairman Teja Raju, both sons of Satyam Computer Services’ founder B Ramalinga Raju, following a complaint from two members of the association for delaying the project.
“Several conditions, both internal and external, have contributed to the challenges that the company was facing in raising the funds to complete the Hill County project”, Rama Raju stated in the letter, a copy of which is available with Business Standard.
Maytas Properties is one of the two companies the Satyam founder had made an abortive bid to acquire in December last year to cover the huge scam that he finally couldn’t keep hidden. Maytas ran into problems after it failed to keep its promise of delivering the homes at the Rs 1,100-crore Hill County project in March 2008. Hill County, located at Bachupally on the city outskirts, was to have 840 apartments and 326 bungalows. These were priced between Rs 50 lakh and Rs 2.5 crore.
The company had collected Rs 654 crore from property buyers, who says they are paying monthly installments of Rs 50,000 upwards, though the flats and independent houses are yet to be ready.
Rama Raju says the current economic conditions, including the slowdown of demand in real estate, lack of investor interest and tightening of credit by financial institutions have made the company’s pursuit for funds a lot more difficult.
“In addition, what appears to be a never-ending pursuit by investigating agencies had to be dealt with immediately, thus diverting our attention” from the core issue of raising funds, he said. Adding that the company was now in discussion with some investors and financial institutions to complete the construction at Hill County.
He added the promoters have offered to provide additional collateral to realise the required funds. “Barring any unforeseen events, we are looking forward for a positive outcome soon.’’
Maytas Properties, hit by both the recession in real estate and the Satyam accounting scam, has written to angry clients to give it more time.
Vice-Chairman B Rama Raju has written to the Hill County Home Owners Welfare Association, the body of clients in its prestigious project here which is now stuck for want of money. The customers, all of whom have paid a huge amount for a promised luxury home, are threatening prosecution.
“I am committed to do the project,’’ he promised in the letter, adding assurances of positive developments soon.
The police have registered cases against Rama Raju and Maytas Infra vice chairman Teja Raju, both sons of Satyam Computer Services’ founder B Ramalinga Raju, following a complaint from two members of the association for delaying the project.
“Several conditions, both internal and external, have contributed to the challenges that the company was facing in raising the funds to complete the Hill County project”, Rama Raju stated in the letter, a copy of which is available with Business Standard.
Maytas Properties is one of the two companies the Satyam founder had made an abortive bid to acquire in December last year to cover the huge scam that he finally couldn’t keep hidden. Maytas ran into problems after it failed to keep its promise of delivering the homes at the Rs 1,100-crore Hill County project in March 2008. Hill County, located at Bachupally on the city outskirts, was to have 840 apartments and 326 bungalows. These were priced between Rs 50 lakh and Rs 2.5 crore.
The company had collected Rs 654 crore from property buyers, who says they are paying monthly installments of Rs 50,000 upwards, though the flats and independent houses are yet to be ready.
Rama Raju says the current economic conditions, including the slowdown of demand in real estate, lack of investor interest and tightening of credit by financial institutions have made the company’s pursuit for funds a lot more difficult.
“In addition, what appears to be a never-ending pursuit by investigating agencies had to be dealt with immediately, thus diverting our attention” from the core issue of raising funds, he said. Adding that the company was now in discussion with some investors and financial institutions to complete the construction at Hill County.
He added the promoters have offered to provide additional collateral to realise the required funds. “Barring any unforeseen events, we are looking forward for a positive outcome soon.’’
'No trace of Maytas funds in Satyam'
22 July 2009
HYDERABAD: In a fresh twist to the Satyam-Maytas saga, the top honchos of Mahindra Satyam denied having any knowledge of Rs 600 crore having found its way from Maytas Infra and Maytas Properties coffers into Satyam.
Vineet Nayyar, executive vice-chairman of Mahindra Satyam, told TOI that they have not received any communication from the two Maytas companies seeking a refund. "People can claim anything. But as far as we are concerned, till the Satyam accounts are restated we cannot say how much money has gone out of Satyam or into it," said Nayyar. "The forensics are being done by our finance team to untangle the financial manipulations at Satyam. We are in the process of restating the accounts," he added.
It was only on Saturday that government-appointed director of Maytas Infra and Maytas Properties, Ved Jain had declared that the two companies, promoted by Ramalinga Raju's sons, had given Rs 380 crore and Rs 220 crore, respectively, by way of inter-corporate deposits (ICDs) to Satyam and that they had initiated proceedings to get the money back. Jain had claimed that there were records that the money had ended up at Satyam from Maytas Infra and Maytas Properties via certain Maytas controlled companies and that they had the documentary proof to support their claims.
Gearing up to battle class action lawsuits filed in US, new owners of Satyam do not seem to be in a mood to entertain the latest in a series of claims by the Rajus. Even as the Mahindras had, on an earlier occasion, said that they had found no evidence of Satyam having received any cash from Maytas, Ramalinga Raju's brother Suryanarayana Raju had staked claim to Rs 1230 crore.
He had claimed, in a letter that Satyam owed the money to a clutch of private companies owned by him. The Mahindras, who just upped their stake in Satyam to 42.7% through subsidiary Venturbay early last week, are already grappling with the legal issues facing the company.
HYDERABAD: In a fresh twist to the Satyam-Maytas saga, the top honchos of Mahindra Satyam denied having any knowledge of Rs 600 crore having found its way from Maytas Infra and Maytas Properties coffers into Satyam.
Vineet Nayyar, executive vice-chairman of Mahindra Satyam, told TOI that they have not received any communication from the two Maytas companies seeking a refund. "People can claim anything. But as far as we are concerned, till the Satyam accounts are restated we cannot say how much money has gone out of Satyam or into it," said Nayyar. "The forensics are being done by our finance team to untangle the financial manipulations at Satyam. We are in the process of restating the accounts," he added.
It was only on Saturday that government-appointed director of Maytas Infra and Maytas Properties, Ved Jain had declared that the two companies, promoted by Ramalinga Raju's sons, had given Rs 380 crore and Rs 220 crore, respectively, by way of inter-corporate deposits (ICDs) to Satyam and that they had initiated proceedings to get the money back. Jain had claimed that there were records that the money had ended up at Satyam from Maytas Infra and Maytas Properties via certain Maytas controlled companies and that they had the documentary proof to support their claims.
Gearing up to battle class action lawsuits filed in US, new owners of Satyam do not seem to be in a mood to entertain the latest in a series of claims by the Rajus. Even as the Mahindras had, on an earlier occasion, said that they had found no evidence of Satyam having received any cash from Maytas, Ramalinga Raju's brother Suryanarayana Raju had staked claim to Rs 1230 crore.
He had claimed, in a letter that Satyam owed the money to a clutch of private companies owned by him. The Mahindras, who just upped their stake in Satyam to 42.7% through subsidiary Venturbay early last week, are already grappling with the legal issues facing the company.
US SEC reviews progress on restatement of Satyam a/cs
24 Jul 2009, ET Bureau
HYDERABAD: A high-level US Securities and Exchange Commission team reviewed the progress on the restatement of accounts of Satyam Computer Services on Thursday with audit firm KPMG, Mahindra Satyam CEO CP Gurnani told ET.
The US SEC team, accompanied by Sebi officials also met Tech Mahindra officials, the new owners of Satyam, to discuss a host of issues including re-statement of the manipulated accounts.
Global audit firms KPMG and Deloitte have been commissioned to conduct a forensic audit of Satyam’s accounts, after founder B Ramalinga Raju confessed to fudging the books for seven years.
The US SEC is probing the violation of US Securities law by former Satyam executives after a clutch of class action suits were filed by law firms representing shareholders of Satyam in the US. Shareholders alleged that the executives issued false and misleading statements.
A senior Mahindra Satyam official said the restatement exercise is on track and is likely to the completed by December this year. Sebi is probing the insider trading of shares by Raju and his family as investigating agencies including the CBI suspect that the promoters made windfall gains by rigging share prices and invested the money in realty deals.
In an interim report on the Satyam investigation, SEBI has recommended prohibiting Satyam’s esrtwhile auditors and the audit firm Price Waterhouse from auditing accounts of listed companies for a certain period.
HYDERABAD: A high-level US Securities and Exchange Commission team reviewed the progress on the restatement of accounts of Satyam Computer Services on Thursday with audit firm KPMG, Mahindra Satyam CEO CP Gurnani told ET.
The US SEC team, accompanied by Sebi officials also met Tech Mahindra officials, the new owners of Satyam, to discuss a host of issues including re-statement of the manipulated accounts.
Global audit firms KPMG and Deloitte have been commissioned to conduct a forensic audit of Satyam’s accounts, after founder B Ramalinga Raju confessed to fudging the books for seven years.
The US SEC is probing the violation of US Securities law by former Satyam executives after a clutch of class action suits were filed by law firms representing shareholders of Satyam in the US. Shareholders alleged that the executives issued false and misleading statements.
A senior Mahindra Satyam official said the restatement exercise is on track and is likely to the completed by December this year. Sebi is probing the insider trading of shares by Raju and his family as investigating agencies including the CBI suspect that the promoters made windfall gains by rigging share prices and invested the money in realty deals.
In an interim report on the Satyam investigation, SEBI has recommended prohibiting Satyam’s esrtwhile auditors and the audit firm Price Waterhouse from auditing accounts of listed companies for a certain period.
CBI chief calls on senior officials at Satyam
Hyderabad July 25, 2009
Central Bureau of Investigation (CBI) sleuths, led by its director Ashwini Kumar, met senior officials of fraud-hit Satyam Computer Services, now rebranded as Mahindra Satyam, at its headquarters here on Friday.
“The CBI team was here to get first-hand information on the possible acquaintance of some staff with the company’s (jailed) founder, Ramalinga Raju. We don’t know further details of the closed-door meeting, as about 30 CBI security personnel cordoned off the entire office area. Several officials of the company, along with some senior management members, were present in the meeting,” a company source said.
He indicated the CBI team was likely to visit the IT outsourcing major’s headquarters again in a day or two. The CBI chief arrived here on Thursday to review the progress made by the bureau on its investigation into the multi-crore accounting fraud at Satyam.
Meanwhile, a petition filed by legal counsel for Ramalinga Raju yesterday, asking for quashing of the July 9 order of a lower court which allowed the CBI to conduct a lie detector test (polygraph test) and brain mapping (F300 testing) on Raju and his brother and former managing director B Rama Raju, and former chief financial officer Srinivas Vadlamani, all accused in the multi-crore scam, came up for hearing today.
Raju’s counsel contended the tests violated fundamental rights of the accused and would subject them to pressure. The confessions, anyway, would not be admissible in court. The CBI counsel sought time till July 27 from the court to file a reply. He told the court it would not conduct the tests till July 30. The CBI feels crores of rupees were also misappropriated from Satyam, for which they have yet to get proof. The accused, on whom the forensic tests were to be conducted, did not reveal the information with regard to the alleged defalcation and therefore, these were necessary to aid in the investigation.
The lower court felt it was a fit case to agree to allow the lie detector test and brain mapping.
Central Bureau of Investigation (CBI) sleuths, led by its director Ashwini Kumar, met senior officials of fraud-hit Satyam Computer Services, now rebranded as Mahindra Satyam, at its headquarters here on Friday.
“The CBI team was here to get first-hand information on the possible acquaintance of some staff with the company’s (jailed) founder, Ramalinga Raju. We don’t know further details of the closed-door meeting, as about 30 CBI security personnel cordoned off the entire office area. Several officials of the company, along with some senior management members, were present in the meeting,” a company source said.
He indicated the CBI team was likely to visit the IT outsourcing major’s headquarters again in a day or two. The CBI chief arrived here on Thursday to review the progress made by the bureau on its investigation into the multi-crore accounting fraud at Satyam.
Meanwhile, a petition filed by legal counsel for Ramalinga Raju yesterday, asking for quashing of the July 9 order of a lower court which allowed the CBI to conduct a lie detector test (polygraph test) and brain mapping (F300 testing) on Raju and his brother and former managing director B Rama Raju, and former chief financial officer Srinivas Vadlamani, all accused in the multi-crore scam, came up for hearing today.
Raju’s counsel contended the tests violated fundamental rights of the accused and would subject them to pressure. The confessions, anyway, would not be admissible in court. The CBI counsel sought time till July 27 from the court to file a reply. He told the court it would not conduct the tests till July 30. The CBI feels crores of rupees were also misappropriated from Satyam, for which they have yet to get proof. The accused, on whom the forensic tests were to be conducted, did not reveal the information with regard to the alleged defalcation and therefore, these were necessary to aid in the investigation.
The lower court felt it was a fit case to agree to allow the lie detector test and brain mapping.
Satyam scam: SEC team meets CBI, SEBI, KPMG officials
Hyderabad, July 25 The United States’ Securities Exchange Commission (SEC) team has held discussions with Mr Ashwani Kumar, CBI Director, and the Securities and Exchange Board of India (SEBI), on the Rs 7,136-crore Satyam scam at the IT major’s Infocity campus at Madhapur here on Friday.
The three-member SEC team also quizzed auditors of KPMG, which is taking part in the restatement of the balance sheets of the company. KPMG is doing a forensic study on how the scam was perpetrated over the years.
The SEC team, which conducted a preliminary probe in February 2009 soon after the scam broke out, had sought the permission from the Union Government and the CBI to carry out its own investigation into the issue.
Mr Ashwani Kumar, who reviewed the CBI’s probe into the scam, went to the Satyam campus along with his colleagues in the Multi-Discliplinary Investigating Team on Friday. The SEC team reportedly enquired into the role played by PriceWaterhouse, the statutory auditors for Satyam for years during the scam period.
Case adjourned
Meanwhile, the Andhra Pradesh High Court has adjourned hearing on the appeal by the counsel of Mr B. Ramalinga Raju (the former Satyam Chairman), questioning a lower court’s decision to permit CBI to conduct a lie-detector test and brain-mapping on Mr Raju. “Hearing has been deferred to July 28. The CBI gave an undertaking that it would not conduct the tests before that date,” said Mr S. Bharatkumar, counsel for Mr Raju.
The three-member SEC team also quizzed auditors of KPMG, which is taking part in the restatement of the balance sheets of the company. KPMG is doing a forensic study on how the scam was perpetrated over the years.
The SEC team, which conducted a preliminary probe in February 2009 soon after the scam broke out, had sought the permission from the Union Government and the CBI to carry out its own investigation into the issue.
Mr Ashwani Kumar, who reviewed the CBI’s probe into the scam, went to the Satyam campus along with his colleagues in the Multi-Discliplinary Investigating Team on Friday. The SEC team reportedly enquired into the role played by PriceWaterhouse, the statutory auditors for Satyam for years during the scam period.
Case adjourned
Meanwhile, the Andhra Pradesh High Court has adjourned hearing on the appeal by the counsel of Mr B. Ramalinga Raju (the former Satyam Chairman), questioning a lower court’s decision to permit CBI to conduct a lie-detector test and brain-mapping on Mr Raju. “Hearing has been deferred to July 28. The CBI gave an undertaking that it would not conduct the tests before that date,” said Mr S. Bharatkumar, counsel for Mr Raju.
The Satyam Saga - As it Unfolds
22 September 2008: Satyam Computer Services won the Golden Peacock Global Award for excellence in corporate governance for 2008 given by the World Council for Corporate Governance. On that day, the Satyam stock ended down 4.69% at Rs 352.75.
16 December 2008: Satyam announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and chairman B Ramalinga Raju and other insiders held 36% in Maytas Infra and 35% in Maytas Properties. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services. The announcement was made after market shut on that day.
Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to cope with slowing outsourcing business. Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development.
Following the surprising announcement, Satyam's American depository receipt (ADR) plunged on 16 December 2008 as investors reacted negatively to its plan to buy two related companies. The ADR of Satyam Computer Services, which closed down $6.85, or 55%, at $5.70 on the New York Stock Exchange, jumped 50% in after-hours trading to $8.89. Even after the evening rally they were still down 28% from 15 December 2008's close of $12.30. On that day, the Satyam stock ended up 0.49% at Rs 226.50.
17 December 2008: Folowing a negative investor reaction, Satyam called off the deal which it had announced after trading hours in India on 16 December 2008. Satyam announced the decision to call off the deal before trading hours in India on 17 December 2008. However, the Satyam stock slumped 30.22% to end at Rs 158.05 on 17 December 2008 as investors judged Satyam's move as a total disregard for corporate governance and shareholders. On that day, the Satyam stock slumped 30.22% to end at Rs 158.05.
18 December 2008: Shares of Satyam spurted 7.15% to end at Rs 169.35 after the company said during trading hours on that day that its board will meet on 29 December 2008 to consider buyback of shares.
Satyam's decision to consider buyback was aimed at soothing investors nerves after the stock slumped 30.22% to Rs 158.05 on 17 December 2008, hitting a five-year low in intraday trade, with investors exiting the counter due to poor corporate governance. Satyam claimed of having a large cash pile of $1.1 billion, which marketmen hoped the company could use for buyback. On that day, the Satyam stock jumped 7.15% to end at Rs 169.35.
19 December 2009: UK-based online and mobile payment services player Upaid Systems filed a motion against Satyam in a state court, requesting testimony of Satyam's chairman B Ramalinga Raju, chief financial officer Srinivas Vadlamani and global head of corporate governance G Jayaram in connection with Satyam's failed attempt to strip all surplus cash from Satyam to to buy two closely held companies.
Upaid had urged the top Satyam officials to clarify as to why the company went through with the Maytas deal, in case they were looking at moving cash out of the books largely because they feared Satyam could loose the Upaid's earlier filed case.
Upaid and Satyam are locked in a two-pronged legal battle, one, a forgery case filed by Upaid against the Satyam management seeking damages of over $1 billion, and the other, a disparagement case levelled by Satyam against the little known UKbased company.
The forgery case dates back to early 2000, when Satyam was working on a contract job for U-paid . Upaid says that it ran into problems with Qualcomm and Verizon and had to settle the case with them under grossly unfavourable terms due to forgery by Satyam officials. On that day, the Satyam stock ended down 3.87% at Rs 162.80.
23 December 2008: The World Bank confirmed that it has barred Satyam Computer from doing business with it for eight years, starting September 2008, due to data theft and paying bribes to its staff. The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices. On that day, the Satyam stock slipped 13.55% to end at Rs 140.40.
25 December 2008: Satyam Computer asked the World Bank to withdraw 'inappropriate' statements about the Indian outsourcer and to issue an apology for harm done to the company.
Earlier On 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September 2008. Media reports had suggested that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it. Equity markets were shut on that day on account of Christmas holiday.
26 December 2008: Satyam said Mangalam Srinivasan, non-executive and independent director of Satyam resigned from the company effective 25 December 2008. On that day, the satyam stock ended 0.41% up at Rs 135.50.
29 December 2008: Satyam said Professor Krishna G Palepu, non-executive director and Vinod K Dham, non-executive and independent director of the company resigned from the company effective 28 December 2008. The outsourcer did not give any reason for the resignations.
Satyam, before trading hours on the same day had postponed the board meeting set on 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details. On that day, the satyam stock ended 9.41% up at Rs 148.25.
30 December 2008: Media reports suggested some institutional investors in the company had approached IT firms and private equity players for a stake sale. The report cited market participants as its sources. On that day, the satyam stock ended 8.33% up at Rs 160.60.
31 December 2008: Media reports suggested US-based computer firm Hewlett-Packard may buy a stake in Satyam. Hewlett-Packard (HP) was reported to be attracted by the Satyam's lucrative business software practice. Reports suggested that buying stake in Satyam could give HP an opportunity to challenge its rival IBM with bigger, low-cost offshore capabilities. On that day, the satyam stock ended 5.95% up at Rs 170.15.
3 January 2009 (Saturday): Founder-promoters stake declined from 8.64% to 5.13%t as financial institutions with whom the entire stake was pledged dumped the shares. Of the remaining 5.13% stake (around 3.45 crore shares) with the promoters, around 2.19 crore shares (or roughly 63% of the holdings) were still reported to be pledged with various lenders.
6 January 2009: Satyam denied media reports that suggested that Tech Mahindra had approached Satyam for an all-share merger. On the same day, Satyam had announced that the share of promoters' group in the company had further dwindled with lending agency IL&FS Trust Company selling off 1.03 crore shares afresh. On that day, the satyam stock ended 7.31% up at Rs 179.10.
7 January 2009: Satyam's chairman Ramalinga Raju resigned the company and admitted fraud of reporting inflated figures in the accounts of the firm. As per the announcement, Satyam's balance sheet as on 30 September 2008 had inflated cash and bank balances of Rs 5040 crore, inflated debtors of Rs 490 crore and non-existent accrued interest of Rs 376 crore. Against this the liability was understated by Rs 1230 crore.
Raju said the Q2 September 2008 results had overstated operating revenues by Rs 588 crore, thereby overstating the operating profits and cash to that extent.
The gap in the balance sheet has arisen purely on account of inflated profits over the period of last several years, Raju confessed adding that every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap, Raju said.
Raju said in the last 2 years a net amount of Rs 1230 crore was arranged to keep operations going. He said this was done by pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers, Raju said.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones, Raju said. Maytas's investors were convinced that this is a good divestment opportunity and a strategic fit, he said.
Raju ended the statement with an apology to Satyam's staff and shareholders and said he was prepared to face the legal consequences.
On the same day, Satyam Computer announced of forming a new team to look into its day-to-day affairs, following the resignation of its chairman Ramalinga. The interim CEO of Satyam, Ram Mynampati, sent a letter to the management and staff, announcing the formation of a new team that consisted of persons who have spent 10 years in the company and twenty years in the industry. On that day, the satyam stock tumbled 77.69% up at Rs 39.95.
8 January 2009: Media reports suggested Satyam's banker Citibank froze more than 30 operational accounts of Satyam Computer. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm. Equity markets were shut on that day on account of Moharram.
11 January 2009 (Sunday): In a swift action to salvage the beleaguered Satyam Computer Services, the government, after market hours on Friday (9 January 2009), sacked the remaining three directors erstwhile board on Satyam, including the interim CEO Ram Mynampati. The government then set up a three-member board on 11 January 2009 in a bid to restore confidence in the outsourcing company rocked by India's biggest corporate scandal.
The new three-member board consists of Deepak Parekh, chairman of Housing Development Finance Corporation. Kiran Karnik, former president of the National Association of Software and Service Companies (Nasscom), a technology lobbying group, and C Achutan, a former official at the Securities and Exchange Board of India (Sebi). All the three members would act as independent directors. Corporate Affairs Minister Prem Chand Gupta expressed the hope that the new board would be able to provide the necessary vision, along with responsible and accountable leadership, to the company in this hour of crisis.
23 January 2009: Larsen & Toubro raised its holding in Satyam Computer Services to 12% from 4% earlier. L&T hiked stake in Satyam as the initial cost of investment in Satyam was at risk.
Following the additional share purchase, L&T's average acquisition price of around 12% stake in Satyam dipped to Rs 80 a share from the Rs 174, it paid earlier.
L&T had acquired 4% in Satyam at Rs 174 per share before Satyam's founder B Ramalinga Raju admitted on 7 January 2009 of a Rs 7,000-crore accounting fraud at the IT firm.
If the stake reaches 15%, L&T will then, as per the regulator's takeover guidelines, have to make an open offer for an additional 20% stake in Satyam.
27 January 2009: The government-appointed board of Satyam Computer Services appointed the Boston Consulting Group (BCG) as the management advisor to support the directors and the Satyam leadership team.
Goldman Sachs and Avendus were appointed investment bankers to advise the company on the way forward. A dedicated three-member BCG will work closely, free of charge, during this revival process, Deepak Parekh, board member, had said.
5 February 2009: The government-appointed board of fraud-scarred Satyam Computer Services on Thursday, 5 February 2009, appointed A S Murty, a Satyam executive for 15 years, as chief executive officer (CEO). Murty will be the chief executive with immediate effect, the company said in a statement. Murty was the Global Business Head of Satyam.
The board also said it has received bank lines of credit for Rs 600 crore toward working capital requirements. The money will help the company tide over its financial challenges, the board said.
The board said it had brought on two additional advisers: Homi Khusrokhan, who has served as managing director of Tata Chemicals, Tata Tea, Glaxo Laboratories India and Wellcome India; and Partho Datta, a chartered accountant who will focus on restating the company's scrambled third-quarter results.
6 February 2009: The government announced the appointment of Nasscom past-president Kiran Karnik as chairman of its six-member board.
13 February 2009: The Securities & Exchange Board of India (Sebi) relaxed takeover regulations for companies whose boards have been superseded and replaced by the Government or other regulatory authority. This smoothened the way for a possible sale of Satyam Computer Service, the only company that currently fits this description.
19 February 2009: The Company Law Board (CLB) allowed the government-appointed board of Satyam to bring in a strategic investor through an open bidding process. For this purpose, the CLB also permitted the board to increase the authorised share capital and issue preferential shares.
Currently, the authorised capital of Satyam is 80 crore shares of Rs 2 each, of which 67.3 crore shares have already been issued. The CLB has authorised the Satyam board to pass a resolution to amend the capital clause of the Memorandum of Association to raise its authorised capital. Accordingly, the authorised capital of Satyam will increase from Rs 160 crore comprising 80 crore shares, to Rs 280 crore comprising 140 crore shares.
The Satyam board has been directed to devise a mechanism for transparent, open and competitive process without furthering the interest of any particular acquire. Besides, the board will also have to obtain requisite approvals from the Securities & Exchange Board of India. The process of selection of a strategic investor will be overseen by a retired judge of the Supreme Court or former Chief Justice of India.
6 March 2009: The Sebi approved selling 51% stake in Satyam through global bidding process.
As part of the two-phased bidding process, a chosen investor will acquire newly issued equity shares representing 31% of Satyam's share capital and then make a mandatory minimum public offer to buy a further 20% stake. The bidders are expected to have total net assets in excess of $150 million.
9 March 2009: Satyam commenced a competitive bidding process for selection of an investor to acquire 51% equity stake. Interested bidders were asked to submit a detailed expression of interest and the proof of availability of at least Rs 1500 crore by 20 March 2009.
4 April 2009: The government appointed board of Satyam extended the deadline for submitting financial bids for acquiring a controlling stake in the firm to 13 April 2009 from 9 April 2009 as bidders sought more information.
13 April 2009: Tech Mahindra was declared as the winning bidder for a majority stake in Satyam Computer with a winning bid of Rs 58 a share. Tech Mahindra to pay Rs 1750 crore for a preferential allotment of 30.28 crore shares, amounting to 31% of Satyam's equity. This will be followed by an open offer to acquire an additional 20% within 55 days. The acquisition is expected to cost the company around Rs 2,900 crore.
After evaluating each bidder's technical bid the government appointed board of Satyam Computer and Justice Barucha confirmed Tech Mahindra as the highest bidder as there was no bid within atleast 90% of the Tech Mahindra's bid. Larsen & Toubro (L&T), and Wilbur Ross were others who put in technical bid for Satyam Computer Services. L&T had bid at Rs 45.90 a share and Wilbur Ross at Rs 20.
20 April 2009:Tech Mahindra deposited the funds needed for taking the majority stake in fraud-hit Satyam Computer. Tech Mahindra was to pay Rs 1750 million for a 31% preferential allotment of new shares and would then make an open offer for a further 20% of Satyam.
Funds for the 31% stake as well as the open offer have been deposited by Tech Mahindra, Satyam's government-appointed chairman Kiran Karnik had told media at Satyam's headquarters in Hyderabad.
22 April 2009:Tech Mahindra said its open offer for an additional 20% stake in Satyam Computer at Rs 58 per share will begin on 12 June 2009 and close on 1 July 2009. The open offer to Satyam’s shareholders was made by Venturbay Consultants, an unlisted arm of Tech Mahindra.
The maximum consideration payable under the open offer is Rs 1154 crore. Pursuant to successful completion of the offer, Tech Mahindra's holding in Satyam would go up to 51%. Kotak Mahindra Capital Company is the manager to the offer.
21 June 2009: Satyam Computer Services has been renamed Mahindra Satyam, two months after being taken over by Bangalore-based Tech Mahindra. The new robust brand is envisaged to represent the core values of the Mahindra group and the inherent strength of the Satyam brand.
16 December 2008: Satyam announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and chairman B Ramalinga Raju and other insiders held 36% in Maytas Infra and 35% in Maytas Properties. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services. The announcement was made after market shut on that day.
Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to cope with slowing outsourcing business. Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development.
Following the surprising announcement, Satyam's American depository receipt (ADR) plunged on 16 December 2008 as investors reacted negatively to its plan to buy two related companies. The ADR of Satyam Computer Services, which closed down $6.85, or 55%, at $5.70 on the New York Stock Exchange, jumped 50% in after-hours trading to $8.89. Even after the evening rally they were still down 28% from 15 December 2008's close of $12.30. On that day, the Satyam stock ended up 0.49% at Rs 226.50.
17 December 2008: Folowing a negative investor reaction, Satyam called off the deal which it had announced after trading hours in India on 16 December 2008. Satyam announced the decision to call off the deal before trading hours in India on 17 December 2008. However, the Satyam stock slumped 30.22% to end at Rs 158.05 on 17 December 2008 as investors judged Satyam's move as a total disregard for corporate governance and shareholders. On that day, the Satyam stock slumped 30.22% to end at Rs 158.05.
18 December 2008: Shares of Satyam spurted 7.15% to end at Rs 169.35 after the company said during trading hours on that day that its board will meet on 29 December 2008 to consider buyback of shares.
Satyam's decision to consider buyback was aimed at soothing investors nerves after the stock slumped 30.22% to Rs 158.05 on 17 December 2008, hitting a five-year low in intraday trade, with investors exiting the counter due to poor corporate governance. Satyam claimed of having a large cash pile of $1.1 billion, which marketmen hoped the company could use for buyback. On that day, the Satyam stock jumped 7.15% to end at Rs 169.35.
19 December 2009: UK-based online and mobile payment services player Upaid Systems filed a motion against Satyam in a state court, requesting testimony of Satyam's chairman B Ramalinga Raju, chief financial officer Srinivas Vadlamani and global head of corporate governance G Jayaram in connection with Satyam's failed attempt to strip all surplus cash from Satyam to to buy two closely held companies.
Upaid had urged the top Satyam officials to clarify as to why the company went through with the Maytas deal, in case they were looking at moving cash out of the books largely because they feared Satyam could loose the Upaid's earlier filed case.
Upaid and Satyam are locked in a two-pronged legal battle, one, a forgery case filed by Upaid against the Satyam management seeking damages of over $1 billion, and the other, a disparagement case levelled by Satyam against the little known UKbased company.
The forgery case dates back to early 2000, when Satyam was working on a contract job for U-paid . Upaid says that it ran into problems with Qualcomm and Verizon and had to settle the case with them under grossly unfavourable terms due to forgery by Satyam officials. On that day, the Satyam stock ended down 3.87% at Rs 162.80.
23 December 2008: The World Bank confirmed that it has barred Satyam Computer from doing business with it for eight years, starting September 2008, due to data theft and paying bribes to its staff. The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices. On that day, the Satyam stock slipped 13.55% to end at Rs 140.40.
25 December 2008: Satyam Computer asked the World Bank to withdraw 'inappropriate' statements about the Indian outsourcer and to issue an apology for harm done to the company.
Earlier On 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September 2008. Media reports had suggested that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it. Equity markets were shut on that day on account of Christmas holiday.
26 December 2008: Satyam said Mangalam Srinivasan, non-executive and independent director of Satyam resigned from the company effective 25 December 2008. On that day, the satyam stock ended 0.41% up at Rs 135.50.
29 December 2008: Satyam said Professor Krishna G Palepu, non-executive director and Vinod K Dham, non-executive and independent director of the company resigned from the company effective 28 December 2008. The outsourcer did not give any reason for the resignations.
Satyam, before trading hours on the same day had postponed the board meeting set on 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details. On that day, the satyam stock ended 9.41% up at Rs 148.25.
30 December 2008: Media reports suggested some institutional investors in the company had approached IT firms and private equity players for a stake sale. The report cited market participants as its sources. On that day, the satyam stock ended 8.33% up at Rs 160.60.
31 December 2008: Media reports suggested US-based computer firm Hewlett-Packard may buy a stake in Satyam. Hewlett-Packard (HP) was reported to be attracted by the Satyam's lucrative business software practice. Reports suggested that buying stake in Satyam could give HP an opportunity to challenge its rival IBM with bigger, low-cost offshore capabilities. On that day, the satyam stock ended 5.95% up at Rs 170.15.
3 January 2009 (Saturday): Founder-promoters stake declined from 8.64% to 5.13%t as financial institutions with whom the entire stake was pledged dumped the shares. Of the remaining 5.13% stake (around 3.45 crore shares) with the promoters, around 2.19 crore shares (or roughly 63% of the holdings) were still reported to be pledged with various lenders.
6 January 2009: Satyam denied media reports that suggested that Tech Mahindra had approached Satyam for an all-share merger. On the same day, Satyam had announced that the share of promoters' group in the company had further dwindled with lending agency IL&FS Trust Company selling off 1.03 crore shares afresh. On that day, the satyam stock ended 7.31% up at Rs 179.10.
7 January 2009: Satyam's chairman Ramalinga Raju resigned the company and admitted fraud of reporting inflated figures in the accounts of the firm. As per the announcement, Satyam's balance sheet as on 30 September 2008 had inflated cash and bank balances of Rs 5040 crore, inflated debtors of Rs 490 crore and non-existent accrued interest of Rs 376 crore. Against this the liability was understated by Rs 1230 crore.
Raju said the Q2 September 2008 results had overstated operating revenues by Rs 588 crore, thereby overstating the operating profits and cash to that extent.
The gap in the balance sheet has arisen purely on account of inflated profits over the period of last several years, Raju confessed adding that every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap, Raju said.
Raju said in the last 2 years a net amount of Rs 1230 crore was arranged to keep operations going. He said this was done by pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers, Raju said.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones, Raju said. Maytas's investors were convinced that this is a good divestment opportunity and a strategic fit, he said.
Raju ended the statement with an apology to Satyam's staff and shareholders and said he was prepared to face the legal consequences.
On the same day, Satyam Computer announced of forming a new team to look into its day-to-day affairs, following the resignation of its chairman Ramalinga. The interim CEO of Satyam, Ram Mynampati, sent a letter to the management and staff, announcing the formation of a new team that consisted of persons who have spent 10 years in the company and twenty years in the industry. On that day, the satyam stock tumbled 77.69% up at Rs 39.95.
8 January 2009: Media reports suggested Satyam's banker Citibank froze more than 30 operational accounts of Satyam Computer. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm. Equity markets were shut on that day on account of Moharram.
11 January 2009 (Sunday): In a swift action to salvage the beleaguered Satyam Computer Services, the government, after market hours on Friday (9 January 2009), sacked the remaining three directors erstwhile board on Satyam, including the interim CEO Ram Mynampati. The government then set up a three-member board on 11 January 2009 in a bid to restore confidence in the outsourcing company rocked by India's biggest corporate scandal.
The new three-member board consists of Deepak Parekh, chairman of Housing Development Finance Corporation. Kiran Karnik, former president of the National Association of Software and Service Companies (Nasscom), a technology lobbying group, and C Achutan, a former official at the Securities and Exchange Board of India (Sebi). All the three members would act as independent directors. Corporate Affairs Minister Prem Chand Gupta expressed the hope that the new board would be able to provide the necessary vision, along with responsible and accountable leadership, to the company in this hour of crisis.
23 January 2009: Larsen & Toubro raised its holding in Satyam Computer Services to 12% from 4% earlier. L&T hiked stake in Satyam as the initial cost of investment in Satyam was at risk.
Following the additional share purchase, L&T's average acquisition price of around 12% stake in Satyam dipped to Rs 80 a share from the Rs 174, it paid earlier.
L&T had acquired 4% in Satyam at Rs 174 per share before Satyam's founder B Ramalinga Raju admitted on 7 January 2009 of a Rs 7,000-crore accounting fraud at the IT firm.
If the stake reaches 15%, L&T will then, as per the regulator's takeover guidelines, have to make an open offer for an additional 20% stake in Satyam.
27 January 2009: The government-appointed board of Satyam Computer Services appointed the Boston Consulting Group (BCG) as the management advisor to support the directors and the Satyam leadership team.
Goldman Sachs and Avendus were appointed investment bankers to advise the company on the way forward. A dedicated three-member BCG will work closely, free of charge, during this revival process, Deepak Parekh, board member, had said.
5 February 2009: The government-appointed board of fraud-scarred Satyam Computer Services on Thursday, 5 February 2009, appointed A S Murty, a Satyam executive for 15 years, as chief executive officer (CEO). Murty will be the chief executive with immediate effect, the company said in a statement. Murty was the Global Business Head of Satyam.
The board also said it has received bank lines of credit for Rs 600 crore toward working capital requirements. The money will help the company tide over its financial challenges, the board said.
The board said it had brought on two additional advisers: Homi Khusrokhan, who has served as managing director of Tata Chemicals, Tata Tea, Glaxo Laboratories India and Wellcome India; and Partho Datta, a chartered accountant who will focus on restating the company's scrambled third-quarter results.
6 February 2009: The government announced the appointment of Nasscom past-president Kiran Karnik as chairman of its six-member board.
13 February 2009: The Securities & Exchange Board of India (Sebi) relaxed takeover regulations for companies whose boards have been superseded and replaced by the Government or other regulatory authority. This smoothened the way for a possible sale of Satyam Computer Service, the only company that currently fits this description.
19 February 2009: The Company Law Board (CLB) allowed the government-appointed board of Satyam to bring in a strategic investor through an open bidding process. For this purpose, the CLB also permitted the board to increase the authorised share capital and issue preferential shares.
Currently, the authorised capital of Satyam is 80 crore shares of Rs 2 each, of which 67.3 crore shares have already been issued. The CLB has authorised the Satyam board to pass a resolution to amend the capital clause of the Memorandum of Association to raise its authorised capital. Accordingly, the authorised capital of Satyam will increase from Rs 160 crore comprising 80 crore shares, to Rs 280 crore comprising 140 crore shares.
The Satyam board has been directed to devise a mechanism for transparent, open and competitive process without furthering the interest of any particular acquire. Besides, the board will also have to obtain requisite approvals from the Securities & Exchange Board of India. The process of selection of a strategic investor will be overseen by a retired judge of the Supreme Court or former Chief Justice of India.
6 March 2009: The Sebi approved selling 51% stake in Satyam through global bidding process.
As part of the two-phased bidding process, a chosen investor will acquire newly issued equity shares representing 31% of Satyam's share capital and then make a mandatory minimum public offer to buy a further 20% stake. The bidders are expected to have total net assets in excess of $150 million.
9 March 2009: Satyam commenced a competitive bidding process for selection of an investor to acquire 51% equity stake. Interested bidders were asked to submit a detailed expression of interest and the proof of availability of at least Rs 1500 crore by 20 March 2009.
4 April 2009: The government appointed board of Satyam extended the deadline for submitting financial bids for acquiring a controlling stake in the firm to 13 April 2009 from 9 April 2009 as bidders sought more information.
13 April 2009: Tech Mahindra was declared as the winning bidder for a majority stake in Satyam Computer with a winning bid of Rs 58 a share. Tech Mahindra to pay Rs 1750 crore for a preferential allotment of 30.28 crore shares, amounting to 31% of Satyam's equity. This will be followed by an open offer to acquire an additional 20% within 55 days. The acquisition is expected to cost the company around Rs 2,900 crore.
After evaluating each bidder's technical bid the government appointed board of Satyam Computer and Justice Barucha confirmed Tech Mahindra as the highest bidder as there was no bid within atleast 90% of the Tech Mahindra's bid. Larsen & Toubro (L&T), and Wilbur Ross were others who put in technical bid for Satyam Computer Services. L&T had bid at Rs 45.90 a share and Wilbur Ross at Rs 20.
20 April 2009:Tech Mahindra deposited the funds needed for taking the majority stake in fraud-hit Satyam Computer. Tech Mahindra was to pay Rs 1750 million for a 31% preferential allotment of new shares and would then make an open offer for a further 20% of Satyam.
Funds for the 31% stake as well as the open offer have been deposited by Tech Mahindra, Satyam's government-appointed chairman Kiran Karnik had told media at Satyam's headquarters in Hyderabad.
22 April 2009:Tech Mahindra said its open offer for an additional 20% stake in Satyam Computer at Rs 58 per share will begin on 12 June 2009 and close on 1 July 2009. The open offer to Satyam’s shareholders was made by Venturbay Consultants, an unlisted arm of Tech Mahindra.
The maximum consideration payable under the open offer is Rs 1154 crore. Pursuant to successful completion of the offer, Tech Mahindra's holding in Satyam would go up to 51%. Kotak Mahindra Capital Company is the manager to the offer.
21 June 2009: Satyam Computer Services has been renamed Mahindra Satyam, two months after being taken over by Bangalore-based Tech Mahindra. The new robust brand is envisaged to represent the core values of the Mahindra group and the inherent strength of the Satyam brand.
Friday, July 3, 2009
Satyam bullish under 'umbrella of governance'
ZDNet Asia, July 03, 2009
SINGAPORE--It has had the dubious honor of being dubbed the "Enron of India", but the revamped Satyam is now "extremely bullish" about its Asia-Pacific market prospects and confident of its governance, say company executives.
The newly-minted Mahindra Satyam--after the successful bid by Indian services giant Tech Mahindra--has tweaked its model of governance, which had been a "perceivable flaw", said Vineet Nayyar, executive vice chairman of Tech Mahindra and Mahindra Satyam.
Former Satyam Chairman B. Ramalinga Raju admitted to fraud and resigned in January amid a scandal over inflated profit reporting.
Speaking at a media briefing in Singapore Friday, Nayyar noted that the company's governance model has since been reorganized to allow greater responsibility and accountability. He added that incentives between sales and delivery teams have also been realigned, and there is greater transparency in the reporting of costs and profitability in the various business units.
"What you see in Mahindra Satyam is the congruence of the capabilities, skills and depth of knowledge of Satyam...now under the umbrella of governance which will adhere to the highest ethical standards [that Mahindra is known for]," he said.
Region's business picking up
Nayyar acknowledged that Satyam lost out on a large Telstra request-for-proposal issued earlier this year, but said the company's customers in the region still have "fairly positive" sentiments toward the company.
"It's not as if we've been banned or barred... We did lose a very large order, but there's still life beyond that [Telstra] order," he said. "On the other hand, all other clients [that] have stayed with us are staying with us, and are giving us further orders."
Philip Carter, IDC's associate research director for services in the Asia-Pacific region, told ZDNet Asia that apart from Mahindra Satyam losing a couple of key clients such as Telstra and the National Australia Bank, the company has made at least one recent deal in the region. Singapore's Land Transport Authority, he said, had awarded Mahindra Satyam a contract several weeks ago.
Over in the United Kingdom and Ireland, Satyam's existing clientele had signed US$2.5 million worth of contracts with the company during the first quarter of financial year 2009, Satyam's U.K. and Ireland head for noted earlier this month.
Carter said Tech Mahindra's coming into the Satyam picture has had a positive touch, but there were also challenges moving forward. A number of Mahindra Satyam executives hailed from Tech Mahindra, essentially a second-tier player focused on one vertical--telecoms. That presents management credibility issues, as well as a danger of talent attrition given management changes.
In addition, while the backing of Tech Mahindra may offer credibility in terms of financial stability and corporate governance, there is a "long process" in terms of sustaining and that credibility in the regional market, said Carter.
"There's been positive energy in terms of credibility building up, but I won't go as far to say they'll make the shortlist for every single major services contract," he pointed out.
Expansion in the pipeline
According to Mahindra Satyam's Asia-Pacific managing director Rohit Ghandi, the company is "extremely bullish" about the way forward.
The new Satyam, he added, would "be gunning very strongly for new business", through a combination of selling additional services to existing clients and pushing for new customer wins. For instance, the company is planning to roll out infrastructure services as well as BPO (business process outsourcing) services in Australia and New Zealand (ANZ).
Ghandi said Mahindra Satyam would concentrate on growing market share in countries Satyam formerly was active in--ANZ, China, Japan, Malaysia, Singapore and Thailand--before making expansion moves. However, Indonesia is a likely target as Tech Mahindra has an existing strong presence in the market.
The Asia-Pacific region, he added, is targeted to contribute 10 percent to 15 percent to Mahindra Satyam's overall revenues. Singapore, with headcount in excess of 400, will remain the regional headquarters for the company. Mahindra Satyam has over 2,000 employees across the region.
Nayyar added that Tech Mahindra and Mahindra Satyam will "for the time being" be run as separate entities but will tap on each other's relevant expertise as well as cross-selling opportunities. The two companies, he noted, have synergies that may result the merging of operations, but that would not take place at least in the next one to two years.
SINGAPORE--It has had the dubious honor of being dubbed the "Enron of India", but the revamped Satyam is now "extremely bullish" about its Asia-Pacific market prospects and confident of its governance, say company executives.
The newly-minted Mahindra Satyam--after the successful bid by Indian services giant Tech Mahindra--has tweaked its model of governance, which had been a "perceivable flaw", said Vineet Nayyar, executive vice chairman of Tech Mahindra and Mahindra Satyam.
Former Satyam Chairman B. Ramalinga Raju admitted to fraud and resigned in January amid a scandal over inflated profit reporting.
Speaking at a media briefing in Singapore Friday, Nayyar noted that the company's governance model has since been reorganized to allow greater responsibility and accountability. He added that incentives between sales and delivery teams have also been realigned, and there is greater transparency in the reporting of costs and profitability in the various business units.
"What you see in Mahindra Satyam is the congruence of the capabilities, skills and depth of knowledge of Satyam...now under the umbrella of governance which will adhere to the highest ethical standards [that Mahindra is known for]," he said.
Region's business picking up
Nayyar acknowledged that Satyam lost out on a large Telstra request-for-proposal issued earlier this year, but said the company's customers in the region still have "fairly positive" sentiments toward the company.
"It's not as if we've been banned or barred... We did lose a very large order, but there's still life beyond that [Telstra] order," he said. "On the other hand, all other clients [that] have stayed with us are staying with us, and are giving us further orders."
Philip Carter, IDC's associate research director for services in the Asia-Pacific region, told ZDNet Asia that apart from Mahindra Satyam losing a couple of key clients such as Telstra and the National Australia Bank, the company has made at least one recent deal in the region. Singapore's Land Transport Authority, he said, had awarded Mahindra Satyam a contract several weeks ago.
Over in the United Kingdom and Ireland, Satyam's existing clientele had signed US$2.5 million worth of contracts with the company during the first quarter of financial year 2009, Satyam's U.K. and Ireland head for noted earlier this month.
Carter said Tech Mahindra's coming into the Satyam picture has had a positive touch, but there were also challenges moving forward. A number of Mahindra Satyam executives hailed from Tech Mahindra, essentially a second-tier player focused on one vertical--telecoms. That presents management credibility issues, as well as a danger of talent attrition given management changes.
In addition, while the backing of Tech Mahindra may offer credibility in terms of financial stability and corporate governance, there is a "long process" in terms of sustaining and that credibility in the regional market, said Carter.
"There's been positive energy in terms of credibility building up, but I won't go as far to say they'll make the shortlist for every single major services contract," he pointed out.
Expansion in the pipeline
According to Mahindra Satyam's Asia-Pacific managing director Rohit Ghandi, the company is "extremely bullish" about the way forward.
The new Satyam, he added, would "be gunning very strongly for new business", through a combination of selling additional services to existing clients and pushing for new customer wins. For instance, the company is planning to roll out infrastructure services as well as BPO (business process outsourcing) services in Australia and New Zealand (ANZ).
Ghandi said Mahindra Satyam would concentrate on growing market share in countries Satyam formerly was active in--ANZ, China, Japan, Malaysia, Singapore and Thailand--before making expansion moves. However, Indonesia is a likely target as Tech Mahindra has an existing strong presence in the market.
The Asia-Pacific region, he added, is targeted to contribute 10 percent to 15 percent to Mahindra Satyam's overall revenues. Singapore, with headcount in excess of 400, will remain the regional headquarters for the company. Mahindra Satyam has over 2,000 employees across the region.
Nayyar added that Tech Mahindra and Mahindra Satyam will "for the time being" be run as separate entities but will tap on each other's relevant expertise as well as cross-selling opportunities. The two companies, he noted, have synergies that may result the merging of operations, but that would not take place at least in the next one to two years.
Who's who in Mahindra Satyam
Executive New post Former post
Vineet Nayyar Executive vice chairman, Tech Mahindra and Mahindra Satyam Vice chairman and managing director, Tech Mahindra
C.P. Gurnani CEO Head of global operations, sales and marketing, Tech Mahindra
S. Durga Shankar CFO Senior vice president, mergers & acquisitions, Mahindra & Mahindra
A.S. Murthy CTO CEO, Satyam
Rakesh Soni COO; head of delivery for manufacturing, banking and financial services, emerging verticals and strategic accounts COO, Tech Mahindra
Keshab Panda Head, business development and operations for manufacturing, banking and financial services, emerging verticals and strategic accounts Chief of Continental Europe, energy and utilities and manufacturing operations, Satyam
Atul Kanwar Head, business development and operations for regional business groups Chief business development officer, Tech Mahindra
Manish Mehta Head, delivery for regional business groups Head, system, analysis and program (SAP) development, Satyam
T.R. Anand Head, business development and operations for telecoms, tech infrastructure, media & entertainment, and semiconductor (TIMES); head, channel business Director and senior vice president for TIMES, Satyam
Ravi Bommakanti Head, delivery for TIMES Director and senior vice president and global head of insurance, Satyam
Hari T Chief people officer and chief marketing officer Global marketing head, Satyam
Source: Mahindra Satyam and HT Media
As Reported by-:ZDNet Asia
Vineet Nayyar Executive vice chairman, Tech Mahindra and Mahindra Satyam Vice chairman and managing director, Tech Mahindra
C.P. Gurnani CEO Head of global operations, sales and marketing, Tech Mahindra
S. Durga Shankar CFO Senior vice president, mergers & acquisitions, Mahindra & Mahindra
A.S. Murthy CTO CEO, Satyam
Rakesh Soni COO; head of delivery for manufacturing, banking and financial services, emerging verticals and strategic accounts COO, Tech Mahindra
Keshab Panda Head, business development and operations for manufacturing, banking and financial services, emerging verticals and strategic accounts Chief of Continental Europe, energy and utilities and manufacturing operations, Satyam
Atul Kanwar Head, business development and operations for regional business groups Chief business development officer, Tech Mahindra
Manish Mehta Head, delivery for regional business groups Head, system, analysis and program (SAP) development, Satyam
T.R. Anand Head, business development and operations for telecoms, tech infrastructure, media & entertainment, and semiconductor (TIMES); head, channel business Director and senior vice president for TIMES, Satyam
Ravi Bommakanti Head, delivery for TIMES Director and senior vice president and global head of insurance, Satyam
Hari T Chief people officer and chief marketing officer Global marketing head, Satyam
Source: Mahindra Satyam and HT Media
As Reported by-:ZDNet Asia
Tech M stake in Satyam to be 42.7% after preferential issue
Business Standard / New Delhi July 3, 2009
Tech Mahindra, the new owner of Satyam Computer Services (which is being rebranded as Mahindra Satyam), is in the process of approaching the Satyam board and the Company Law Board (CLB) to acquire additional shares via preferential allotment. The company had tendered an open offer to acquire an additional 20 per cent at Rs 58 a share but there were few takers, since the secondary market price hovered over Rs 70. Tech Mahindra, through its subsidiary Venturbay, had already acquired a 31 per cent stake in the company. Tech Mahindra's Chief Financial Officer Sonjoy Anand explains the company's stance on the issue.
What will be your next step, since the open offer did not get the desired result?
Our open offer was for acquiring the additional 20 per cent of Satyam, which is around 199 million shares. But since the share prices have gone up, the open offer has not been successful (the company’s stock is trading at 30 per cent higher than the open offer price of Rs 58). Some did tender to the open offer, but the number is very small.
So you will now acquire the additional equity through a preferential allotment...
Yes. This has been mentioned in the open offer, too. So now we will go back to Satyam with a request for a preferential offer. We did mention this earlier, that, in such a scenario we will subscribe to shares to make good the difference between the requirement of 199 million shares and the number of shares tendered in the open offer. This will bring our stake in the company to approximately 42.7 per cent. A spokesperson added: The open offer ended as of yesterday and we are in the process of collating the final numbers. The board will take a decision at the earliest, keeping these in consideration.
...and the outlay for this remains the same?
Yes, the outlay for acquiring through preferential offer route remains the same at Rs 1,155 crore. This will be fresh equity being issued by Satyam and the number of shares being acquired as well as the price remains the same.
How soon will this process be over?
It will take some time. We will be approaching the CLB soon. As of now, we have decided only about the preferential offer.
Tech Mahindra, the new owner of Satyam Computer Services (which is being rebranded as Mahindra Satyam), is in the process of approaching the Satyam board and the Company Law Board (CLB) to acquire additional shares via preferential allotment. The company had tendered an open offer to acquire an additional 20 per cent at Rs 58 a share but there were few takers, since the secondary market price hovered over Rs 70. Tech Mahindra, through its subsidiary Venturbay, had already acquired a 31 per cent stake in the company. Tech Mahindra's Chief Financial Officer Sonjoy Anand explains the company's stance on the issue.
What will be your next step, since the open offer did not get the desired result?
Our open offer was for acquiring the additional 20 per cent of Satyam, which is around 199 million shares. But since the share prices have gone up, the open offer has not been successful (the company’s stock is trading at 30 per cent higher than the open offer price of Rs 58). Some did tender to the open offer, but the number is very small.
So you will now acquire the additional equity through a preferential allotment...
Yes. This has been mentioned in the open offer, too. So now we will go back to Satyam with a request for a preferential offer. We did mention this earlier, that, in such a scenario we will subscribe to shares to make good the difference between the requirement of 199 million shares and the number of shares tendered in the open offer. This will bring our stake in the company to approximately 42.7 per cent. A spokesperson added: The open offer ended as of yesterday and we are in the process of collating the final numbers. The board will take a decision at the earliest, keeping these in consideration.
...and the outlay for this remains the same?
Yes, the outlay for acquiring through preferential offer route remains the same at Rs 1,155 crore. This will be fresh equity being issued by Satyam and the number of shares being acquired as well as the price remains the same.
How soon will this process be over?
It will take some time. We will be approaching the CLB soon. As of now, we have decided only about the preferential offer.
Satyam: PwC CEO raises more questions
2 Jul 2009
HYDERABAD: Chairman and CEO of PricewaterhouseCoopers, India, Ramesh Rajan’s statement given to the Central Bureau of Investigation (CBI) last week has raised more questions. Even as Rajan admitted to the CBI that Satyam’s audit was not done by Price Waterhouse (PW) and that S Gopalakrishnan and Srinivas Talluri were in no way attached to the firm PW, chartered accountants are surprised as to how the CEO never issued such statements on earlier occasions, when balance sheets of several listed companies were signed under the name of PW, by partners of Lovelock & Lewes.
Apart from Gopalakrishnan and Talluri, this list includes the names of P Ramakrishna, Sharmila A Karve, Anuradha Tuli and Kaushik Dutta. Among the various companies whose books have been audited by these six people are, GMR, Lanco, Saint Gobain, Moser Baer India Limited, Rain Commodities Limited, Infoedge and Satyam.
The balance sheets of these companies for 2007 and 2008, some of which are in the possession of this newspaper, clearly states that the firm’s share holders had formally appointed PW as its statutory auditor. The books have, however, been signed by either of these auditors who are not partners with PW but Lovelock & Lewes.
“How is it that PW never made an issue of this then? The only explanation perhaps is that the firm was also receiving certain benefits from these auditors and, hence, chose to keep quiet,” alleges a city-based chartered accountant. But this is not the only trap PW is caught in.
Considering that the firm did not refute this partnership by estoppels (or presumption), as called in auditing parlance, with the six auditors, PW can at any point be pulled up under the Companies Act of 1956.
Section 11 of this Act clearly states that “no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying out any other business (apart from banking)...”. However, if these six auditors are added to the list of existing partners of PW the number exceeds this figure. Elaborating on this, another CA says, “There are two firms by the name PW in India. The one with head office in Kolkata has 20 partners and the other with head office in New Delhi has 18 partners (as per ICAI records, also available to TOI). Now, if we add these six auditors to any of these firms the number will be more than 20.”
“This in turn declares the two PW firms as unregistered companies according to the Act and, hence, under Section 226 of the same Act, does not authorise any of its partners to audit the books of any company,” said sources further adding, “In that case the audits conducted by these partners so far stand invalid.”
Questioning why PW has remained quiet about all this until now, CAs and other auditors in the country say that the firm is also punishable for this under various sections of the Companies Act.
HYDERABAD: Chairman and CEO of PricewaterhouseCoopers, India, Ramesh Rajan’s statement given to the Central Bureau of Investigation (CBI) last week has raised more questions. Even as Rajan admitted to the CBI that Satyam’s audit was not done by Price Waterhouse (PW) and that S Gopalakrishnan and Srinivas Talluri were in no way attached to the firm PW, chartered accountants are surprised as to how the CEO never issued such statements on earlier occasions, when balance sheets of several listed companies were signed under the name of PW, by partners of Lovelock & Lewes.
Apart from Gopalakrishnan and Talluri, this list includes the names of P Ramakrishna, Sharmila A Karve, Anuradha Tuli and Kaushik Dutta. Among the various companies whose books have been audited by these six people are, GMR, Lanco, Saint Gobain, Moser Baer India Limited, Rain Commodities Limited, Infoedge and Satyam.
The balance sheets of these companies for 2007 and 2008, some of which are in the possession of this newspaper, clearly states that the firm’s share holders had formally appointed PW as its statutory auditor. The books have, however, been signed by either of these auditors who are not partners with PW but Lovelock & Lewes.
“How is it that PW never made an issue of this then? The only explanation perhaps is that the firm was also receiving certain benefits from these auditors and, hence, chose to keep quiet,” alleges a city-based chartered accountant. But this is not the only trap PW is caught in.
Considering that the firm did not refute this partnership by estoppels (or presumption), as called in auditing parlance, with the six auditors, PW can at any point be pulled up under the Companies Act of 1956.
Section 11 of this Act clearly states that “no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying out any other business (apart from banking)...”. However, if these six auditors are added to the list of existing partners of PW the number exceeds this figure. Elaborating on this, another CA says, “There are two firms by the name PW in India. The one with head office in Kolkata has 20 partners and the other with head office in New Delhi has 18 partners (as per ICAI records, also available to TOI). Now, if we add these six auditors to any of these firms the number will be more than 20.”
“This in turn declares the two PW firms as unregistered companies according to the Act and, hence, under Section 226 of the same Act, does not authorise any of its partners to audit the books of any company,” said sources further adding, “In that case the audits conducted by these partners so far stand invalid.”
Questioning why PW has remained quiet about all this until now, CAs and other auditors in the country say that the firm is also punishable for this under various sections of the Companies Act.
Andhra Pradesh includes inflated Satyam figures in IT export revenues
2 Jul 2009
HYDERABAD: The Andhra Pradesh government on Thursday said the state has posted a 24.5 per cent growth in information technology export revenues during 2008-09, higher than the projected national growth of 20.65 per cent, but this includes the inflated figures submitted by the scam-tainted Satyam Computer Services.
The exports during the year were Rs 32,509 crore against Rs 26,122 crore during 2007-08. The growth rate, however, has come down to 24.5 percent from 41 percent in the previous year.
The IT/ITES export figures for the last financial year include Rs 4,231.93 crore of Satyam, making it the top most exporter. The fraud-hit IT major had claimed exports of Rs 3,331.30 crore during 2007-08.
Officials of Software Technology Parks of India (STPI) here said they had to go by the figures submitted by the previous management of Satyam.
"We have included the figures after due certification process," STPI Hyderabad director P Venugopal told a news conference Thursday.
He, however, hastened to add that validation of the same would be done only in September.
Satyam founder and former chairman B. Ramalinga Raju shocked corporate India in January this by admitting to committing a Rs 7,800-crore accounting fraud by inflating the company's profits over several years.
Tech Mahindra bought Satyam in an open auction in April and last month re-named it as Mahindra Satyam.
STPI director general N. Krishnan said there could be 5 to 10 percent variation in the export figures submitted by the company and the actual exports. The audited figures will be available in August or September, he said.
Krishnan said the exports from STPI units were estimated at Rs 204,662 crore against Rs 180,155 crore 2007-08.
"The national growth rate has been lower than that of Andhra Pradesh," he said
HYDERABAD: The Andhra Pradesh government on Thursday said the state has posted a 24.5 per cent growth in information technology export revenues during 2008-09, higher than the projected national growth of 20.65 per cent, but this includes the inflated figures submitted by the scam-tainted Satyam Computer Services.
The exports during the year were Rs 32,509 crore against Rs 26,122 crore during 2007-08. The growth rate, however, has come down to 24.5 percent from 41 percent in the previous year.
The IT/ITES export figures for the last financial year include Rs 4,231.93 crore of Satyam, making it the top most exporter. The fraud-hit IT major had claimed exports of Rs 3,331.30 crore during 2007-08.
Officials of Software Technology Parks of India (STPI) here said they had to go by the figures submitted by the previous management of Satyam.
"We have included the figures after due certification process," STPI Hyderabad director P Venugopal told a news conference Thursday.
He, however, hastened to add that validation of the same would be done only in September.
Satyam founder and former chairman B. Ramalinga Raju shocked corporate India in January this by admitting to committing a Rs 7,800-crore accounting fraud by inflating the company's profits over several years.
Tech Mahindra bought Satyam in an open auction in April and last month re-named it as Mahindra Satyam.
STPI director general N. Krishnan said there could be 5 to 10 percent variation in the export figures submitted by the company and the actual exports. The audited figures will be available in August or September, he said.
Krishnan said the exports from STPI units were estimated at Rs 204,662 crore against Rs 180,155 crore 2007-08.
"The national growth rate has been lower than that of Andhra Pradesh," he said
Friday, June 26, 2009
Gurnani wants Mahindra Satyam known for transparency
25 Jun 2009, PTI
MUMBAI: New Mahindra Satyam CEO C P Gurnani has said that he would strive for making the company known for its transparency and governance standards.
In a communication to associates in the company, Gurnani, who was heading the global operations of Tech Mahindra before his new assignment said, "We have redesigned the organisation structure to make it more customer-centric and agile and decision making in the company is being accelerated."
He further said that the access to customers and geographic penetration is enhanced.
"My priority is to get the company re-energised and leverage these strengths (delivery excellence, domain experiences) effectively, to gain traction for accelerated growth," Gurnani said in a letter written to -----
Tech Mahindra named Gurnani to succeed A S Murthy on Tuesday.
"I am interested in future when we are recognised for our governance standards, transparency and values. I am interested in future when our associates are fearless and can match up to business challenge that comes their way," he said.
"... Unfortunate events following January have taken thier toll on the company and have seriously dented out image, business and morale. Ever since April, when Tech Mahindra emerged as an investor, I have had the opportunity to travel and meet some of our customers... one thing common was whatever be the past, they are interested in the future.
MUMBAI: New Mahindra Satyam CEO C P Gurnani has said that he would strive for making the company known for its transparency and governance standards.
In a communication to associates in the company, Gurnani, who was heading the global operations of Tech Mahindra before his new assignment said, "We have redesigned the organisation structure to make it more customer-centric and agile and decision making in the company is being accelerated."
He further said that the access to customers and geographic penetration is enhanced.
"My priority is to get the company re-energised and leverage these strengths (delivery excellence, domain experiences) effectively, to gain traction for accelerated growth," Gurnani said in a letter written to -----
Tech Mahindra named Gurnani to succeed A S Murthy on Tuesday.
"I am interested in future when we are recognised for our governance standards, transparency and values. I am interested in future when our associates are fearless and can match up to business challenge that comes their way," he said.
"... Unfortunate events following January have taken thier toll on the company and have seriously dented out image, business and morale. Ever since April, when Tech Mahindra emerged as an investor, I have had the opportunity to travel and meet some of our customers... one thing common was whatever be the past, they are interested in the future.
India's Satyam Computer announces new brand name
MUMBAI (AFP) — Indian outsourcing firm Satyam Computer announced Monday it was re-branding itself as it tries to recover from the country's worst-ever corporate scandal.
In a statement to the Mumbai stock exchange, the firm said it will now trade under the name "Mahindra Satyam", reflecting the purchase of the company two months ago by mid-sized outsourcer Tech Mahindra.
The company will also adopt a new logo from the Mahindra group.
In April, Tech Mahindra paid nearly 600 million dollars for a majority share of Satyam, which has been struggling since its founder confessed in January to falsifying accounts in India's biggest accounting fraud.
"The re-branding symbolises an amalgamation of the Mahindra group's values with Satyam's fabled expertise," said Anand Mahindra, vice chairman of the Mahindra group.
A statement said the firm would maintain Satyam in its name because it signifies "commitment, purpose and proficiency."
Satyam, ranked as India's fourth-largest outsourcer by revenues when the scandal broke, acts as a back office for some of the world's biggest companies including Nestle, General Electric and General Motors.
Earlier this month, the Hyderabad-based firm reported modest but better-than-expected quarterly profits, raising hopes it could recover.
In a statement to the Mumbai stock exchange, the firm said it will now trade under the name "Mahindra Satyam", reflecting the purchase of the company two months ago by mid-sized outsourcer Tech Mahindra.
The company will also adopt a new logo from the Mahindra group.
In April, Tech Mahindra paid nearly 600 million dollars for a majority share of Satyam, which has been struggling since its founder confessed in January to falsifying accounts in India's biggest accounting fraud.
"The re-branding symbolises an amalgamation of the Mahindra group's values with Satyam's fabled expertise," said Anand Mahindra, vice chairman of the Mahindra group.
A statement said the firm would maintain Satyam in its name because it signifies "commitment, purpose and proficiency."
Satyam, ranked as India's fourth-largest outsourcer by revenues when the scandal broke, acts as a back office for some of the world's biggest companies including Nestle, General Electric and General Motors.
Earlier this month, the Hyderabad-based firm reported modest but better-than-expected quarterly profits, raising hopes it could recover.
Satyam: Second round of top-level appointments on Thursday
24 Jun 2009, PTI
New Delhi: Mahindra Satyam will see another round of reshuffling of top executives tomorrow that will see outgoing CEO AS Murthy getting a new designation and US-based head of commercial division Ram Mynampati being replaced.
Mynampati, who was the President of the Commercial and Healthcare Divisions, has been replaced by Keshav Panda, sources close to the development said.
Panda, who was the head of the Europe business would be replaced by someone from within the Tech Mahindra Group.
Mynampati, also a former board member, had taken over as the interim Chief Executive in January after founder B Ramalinga Raju admitted to have cooked the books of the company for years.
Mynampati was subsequently removed after the government stepped in and disbanded the board and appointed new directors.
Besides this, Tech Mahindra is likely to be make further announcements on top level rejig tomorrow in Hyderabad, the source added.
Yesterday, Tech Mahindra appointed C P Gurnani CEO of Mahindra Satyam and S Durgashankar as the new Chief Financial Officer with immediate effect.
Gurnani succeeded A S Murthy, who was appointed as CEO by the government board after the multi-crore rupee scam broke out in the then Satyam Computer Services. Gurnani has been heading the global operations of Tech Mahindra.
New Delhi: Mahindra Satyam will see another round of reshuffling of top executives tomorrow that will see outgoing CEO AS Murthy getting a new designation and US-based head of commercial division Ram Mynampati being replaced.
Mynampati, who was the President of the Commercial and Healthcare Divisions, has been replaced by Keshav Panda, sources close to the development said.
Panda, who was the head of the Europe business would be replaced by someone from within the Tech Mahindra Group.
Mynampati, also a former board member, had taken over as the interim Chief Executive in January after founder B Ramalinga Raju admitted to have cooked the books of the company for years.
Mynampati was subsequently removed after the government stepped in and disbanded the board and appointed new directors.
Besides this, Tech Mahindra is likely to be make further announcements on top level rejig tomorrow in Hyderabad, the source added.
Yesterday, Tech Mahindra appointed C P Gurnani CEO of Mahindra Satyam and S Durgashankar as the new Chief Financial Officer with immediate effect.
Gurnani succeeded A S Murthy, who was appointed as CEO by the government board after the multi-crore rupee scam broke out in the then Satyam Computer Services. Gurnani has been heading the global operations of Tech Mahindra.
ICAI to ban guilty Satyam auditors?
June 24, 2009
Institute of Chartered Accountants of India (ICAI) came under immense public scrutiny after the auditor's role being questioned in the whole of Satyam fiasco.
Now, almost after six months after the Satyam story came to light, ICAI is ready with its investigations on the auditor’s role and is all set to give its verdict soon.
The needle of suspicion in the entire Satyam scam lay on the two auditors of Price Waterhouse, S Gopalakrishnan and S Talluri, who are now set to be banned for life from practicing.
ICAI, whose panel has found them guilty, will be taking the harsh decision.
The disciplinary committee, whose report will be submitted soon, is set to declare that both the individuals are guilty of gross lapses in the auditing of Satyam's day-to-day transactions and it wants them banned from practice for life.
Meanwhile, Price Waterhouse refused to comment on the decision. Initially, the firm had backed the auditors, but then later on suspended them. ICAI also declined to comment on the findings, but it is now clear that the lapses in auditing were serious.
What still remains unclear is—why is it only the individual and not the firm, which is held guilty?
Institute of Chartered Accountants of India (ICAI) came under immense public scrutiny after the auditor's role being questioned in the whole of Satyam fiasco.
Now, almost after six months after the Satyam story came to light, ICAI is ready with its investigations on the auditor’s role and is all set to give its verdict soon.
The needle of suspicion in the entire Satyam scam lay on the two auditors of Price Waterhouse, S Gopalakrishnan and S Talluri, who are now set to be banned for life from practicing.
ICAI, whose panel has found them guilty, will be taking the harsh decision.
The disciplinary committee, whose report will be submitted soon, is set to declare that both the individuals are guilty of gross lapses in the auditing of Satyam's day-to-day transactions and it wants them banned from practice for life.
Meanwhile, Price Waterhouse refused to comment on the decision. Initially, the firm had backed the auditors, but then later on suspended them. ICAI also declined to comment on the findings, but it is now clear that the lapses in auditing were serious.
What still remains unclear is—why is it only the individual and not the firm, which is held guilty?
Satyam case: US accounts under lens
25 Jun, 2009
HYDERABAD: The CBI now investigating diversion of Satyam funds abroad have identified three "suspicious" foreign bank accounts in the US which are held in the name of three different individuals.
About Rs 60 crore belonging to Satyam were channelised into the accounts that stand in the name of these three non Indian persons.
When CBI sleuths questioned Ramalinga Raju and Rama Raju on these accounts they claimed that three foreign nationals were officially connected to Satyam and the money was deposited for business reasons.
But the CBI did not find these transactions reflected in Satyam's books and with the help of Interpol is now seeking to crack the details about these individuals. CBI sources also told that the agency has discovered several transactions made through Indian banks but has not been able to track details of end users of these funds.
What is proving difficult is that the movements took place on foreign soil where CBI has no presence. "We have to depend on Interpol and other international agencies. Its a long drawn out process but we have set it into motion," CBI sources said.
CBI also suspects that what has been discovered is only the tip of an iceberg and there might be many more such foreign accounts yet to be traced. Meanwhile, the local CBI court posted the matter pertaining to conducting of lie detector tests on Raju brothers to June 30 following request of counsel for Rajus who sought some more time to present their arguments in this case.
HYDERABAD: The CBI now investigating diversion of Satyam funds abroad have identified three "suspicious" foreign bank accounts in the US which are held in the name of three different individuals.
About Rs 60 crore belonging to Satyam were channelised into the accounts that stand in the name of these three non Indian persons.
When CBI sleuths questioned Ramalinga Raju and Rama Raju on these accounts they claimed that three foreign nationals were officially connected to Satyam and the money was deposited for business reasons.
But the CBI did not find these transactions reflected in Satyam's books and with the help of Interpol is now seeking to crack the details about these individuals. CBI sources also told that the agency has discovered several transactions made through Indian banks but has not been able to track details of end users of these funds.
What is proving difficult is that the movements took place on foreign soil where CBI has no presence. "We have to depend on Interpol and other international agencies. Its a long drawn out process but we have set it into motion," CBI sources said.
CBI also suspects that what has been discovered is only the tip of an iceberg and there might be many more such foreign accounts yet to be traced. Meanwhile, the local CBI court posted the matter pertaining to conducting of lie detector tests on Raju brothers to June 30 following request of counsel for Rajus who sought some more time to present their arguments in this case.
Council to decide on draft report
22 Jun 2009
MANGALORE: The central council of The Institute of Chartered Accountants of India (ICAI) will meet within the next fortnight to take a final call on the draft report submitted by the high powered committee set up by it to go into la affaire Satyam. The council, which met in Mumbai two-days ago has had preliminary discussions on the draft report submitted by the committee and the ICAI will go public with its findings after the meeting.
ICAI president Uttam Prakash Agarwal told reporters here on Monday that the high powered committee headed by him had quizzed the Satyam higher ups indicted for their alleged role in the IT firm violating laid down procedures of corporate governance. The report has taken note of the various procedural lapses that have occurred in Satyam under Ramalinga Raju and will suggest steps to avoid its recurrence in Indian corporate set up.
Agarwal clarified that ICAI does not have powers to take disciplinary action against Price Waterhouse Coopers (PWC), auditors of Satyam, who allegedly fudged the balance sheet of the IT firm. But the disciplinary committee of ICAI will certainly take necessary action against the partners of PWC for any of their professional misconduct if proved as per findings of the committee and could lead to cancellation of their licenses, he said.
MANGALORE: The central council of The Institute of Chartered Accountants of India (ICAI) will meet within the next fortnight to take a final call on the draft report submitted by the high powered committee set up by it to go into la affaire Satyam. The council, which met in Mumbai two-days ago has had preliminary discussions on the draft report submitted by the committee and the ICAI will go public with its findings after the meeting.
ICAI president Uttam Prakash Agarwal told reporters here on Monday that the high powered committee headed by him had quizzed the Satyam higher ups indicted for their alleged role in the IT firm violating laid down procedures of corporate governance. The report has taken note of the various procedural lapses that have occurred in Satyam under Ramalinga Raju and will suggest steps to avoid its recurrence in Indian corporate set up.
Agarwal clarified that ICAI does not have powers to take disciplinary action against Price Waterhouse Coopers (PWC), auditors of Satyam, who allegedly fudged the balance sheet of the IT firm. But the disciplinary committee of ICAI will certainly take necessary action against the partners of PWC for any of their professional misconduct if proved as per findings of the committee and could lead to cancellation of their licenses, he said.
Saturday, June 13, 2009
HC declines stay in Satyam case
11 Jun 2009,
HYDERABAD: Justice G Bhavani Prasad of the A P High Court on Wednesday declined to stay the process of questioning Raju brothers and their CFO Vadlamani Srinivas by the enforcement directorate (ED).
The judge reserved his order to June 12. The three accused in Satyam scam approached the court questioning the lower court's order which permitted the ED to question them and record their statements.
Appearing for Raju brothers, senior counsel S R Ashok told the court that the ED had filed its application for questioning the accused under 167 of CrPC in the lower court despite the fact that a magistrate court has no role to play in matters related to a special enactment like money laundering Act. More over, the counsel said, in the absence of any prima facie evidence, the ED cannot proceed further under this Act.
Defending the ED, assistant solicitor general A Rajasekhara Reddy argued that what the central agency is seeking to do is only recording the statements of the accused. If a prima facie case is not made out of these statements, we will drop the matter there, he said. But questioning the accused is a must, he said. Just because the accused are in jail, we sought the permission of the court to question them, he said.
Had they been available outside, we would have straght away summoned them and questioned them, he said. Because, the central counsel said, the ED has got judicial powers to do so and the accused are bound to appear before us, he said. Hence the provisions of CrPC need not come in the way of ED which is proceeding the money laundering Act, he said.
HYDERABAD: Justice G Bhavani Prasad of the A P High Court on Wednesday declined to stay the process of questioning Raju brothers and their CFO Vadlamani Srinivas by the enforcement directorate (ED).
The judge reserved his order to June 12. The three accused in Satyam scam approached the court questioning the lower court's order which permitted the ED to question them and record their statements.
Appearing for Raju brothers, senior counsel S R Ashok told the court that the ED had filed its application for questioning the accused under 167 of CrPC in the lower court despite the fact that a magistrate court has no role to play in matters related to a special enactment like money laundering Act. More over, the counsel said, in the absence of any prima facie evidence, the ED cannot proceed further under this Act.
Defending the ED, assistant solicitor general A Rajasekhara Reddy argued that what the central agency is seeking to do is only recording the statements of the accused. If a prima facie case is not made out of these statements, we will drop the matter there, he said. But questioning the accused is a must, he said. Just because the accused are in jail, we sought the permission of the court to question them, he said.
Had they been available outside, we would have straght away summoned them and questioned them, he said. Because, the central counsel said, the ED has got judicial powers to do so and the accused are bound to appear before us, he said. Hence the provisions of CrPC need not come in the way of ED which is proceeding the money laundering Act, he said.
Rajus challenge ED order
10 Jun 2009
HYDERABAD: B Ramalinga Raju, his brother B Rama Raju and Satyam Computers former chief finance officer Vadlamani Srinivas on Tuesday approached the AP High Court challenging the orders of a lower court which permitted the Enforcement Directorate to question them in the Satyam scandal.
It can be recalled the fourteenth additional chief metropolitan magistrate court, Nampally, permitted the ED to question Rajus, V Srinivas and former auditors of Price Waterhouse.
The ED booked a case against them under the provisions of Money Laundering Act. The petitioners contended that the order of the lower court was illegal as the alleged offence against them does not fall under the purview of this Act. The High Court will hear the petition on Wednesday.
HYDERABAD: B Ramalinga Raju, his brother B Rama Raju and Satyam Computers former chief finance officer Vadlamani Srinivas on Tuesday approached the AP High Court challenging the orders of a lower court which permitted the Enforcement Directorate to question them in the Satyam scandal.
It can be recalled the fourteenth additional chief metropolitan magistrate court, Nampally, permitted the ED to question Rajus, V Srinivas and former auditors of Price Waterhouse.
The ED booked a case against them under the provisions of Money Laundering Act. The petitioners contended that the order of the lower court was illegal as the alleged offence against them does not fall under the purview of this Act. The High Court will hear the petition on Wednesday.
Thursday, June 11, 2009
Tech Mahindra says will not hike Satyam offer price
11 Jun 2009, 2028 PTI
HYDERABAD: In the face of surge in stock prices of Satyam to about Rs 81 a share on the eve of the open offer for beleaguered company, its new owner Tech Mahindra on Thursday said it will not hike the offer price.
"Our agreement with the market regulator SEBI is for Rs 58 a share (the price at which it acquired 31 per cent stake in the open bidding)," Vineet Nayyar, Chief Executive of Tech Mahindra, told media after the Satyam board meeting.
Asked about options in case the open offer was not fully subscribed, Nayyar said "in case we do not get adequate response, we will go for preferential issue to take our holdings in the company to 42 per cent."
Satyam shares prices have been rising for the past three straight sessions after the company reported better than expected financial results on Tuesday. It posted a stand-alone profit of Rs 181 crore for the October-December 2008 quarter. However, the government-appointed board has decided against endorsing the open offer saying it would be construed as a "negative statement" about fundamentals.
Chairman of Satyam Board Kiran Karnik in a regulatory filling with the US market regulator SEC said, "that supporting the public open offer would tantamount to recommending the share holders to sell their holdings in Satyam."
Karnik further said some of the government-appointed members of the board may be disengaged from the firm within the next week. "Some of the (nominee) board members may leave Satyam within next week," Karnik said.
Following disclosure of accounting fraud by the founder Ramanlinga Raju on January 7, the goevrnemnt supeseded the board of the IT firm and appointed its own nominees to run the firm.
The goevrnment nominees include Kiran Karnik, CII chief mentor Tarun Das, HDFC Chairman Deepak Parerk and former ICAI President T M Manoharan.
HYDERABAD: In the face of surge in stock prices of Satyam to about Rs 81 a share on the eve of the open offer for beleaguered company, its new owner Tech Mahindra on Thursday said it will not hike the offer price.
"Our agreement with the market regulator SEBI is for Rs 58 a share (the price at which it acquired 31 per cent stake in the open bidding)," Vineet Nayyar, Chief Executive of Tech Mahindra, told media after the Satyam board meeting.
Asked about options in case the open offer was not fully subscribed, Nayyar said "in case we do not get adequate response, we will go for preferential issue to take our holdings in the company to 42 per cent."
Satyam shares prices have been rising for the past three straight sessions after the company reported better than expected financial results on Tuesday. It posted a stand-alone profit of Rs 181 crore for the October-December 2008 quarter. However, the government-appointed board has decided against endorsing the open offer saying it would be construed as a "negative statement" about fundamentals.
Chairman of Satyam Board Kiran Karnik in a regulatory filling with the US market regulator SEC said, "that supporting the public open offer would tantamount to recommending the share holders to sell their holdings in Satyam."
Karnik further said some of the government-appointed members of the board may be disengaged from the firm within the next week. "Some of the (nominee) board members may leave Satyam within next week," Karnik said.
Following disclosure of accounting fraud by the founder Ramanlinga Raju on January 7, the goevrnemnt supeseded the board of the IT firm and appointed its own nominees to run the firm.
The goevrnment nominees include Kiran Karnik, CII chief mentor Tarun Das, HDFC Chairman Deepak Parerk and former ICAI President T M Manoharan.
Satyam Buyer in a Fix, as Share Price Rises
Jun 11, 2009
Tech Mahindra, the Indian outsourcer that won the bid for majority ownership of embattled outsourcer Satyam Computer Services, may be in a fix following a sharp increase in Satyam's share price.Under the bid agreement in April, Tech Mahindra is offering to buy 20 percent of Satyam equity from shareholders at a price of 58 rupees (US$1.2). This is the price at which it purchased a 31 percent share in Satyam by a preferential issue of new equity.Satyam was plunged into a crisis after its co-founder B. Ramalinga Raju stated in January that the company had inflated revenue and profits for several years.The offer by Tech Mahindra to Satyam shareholders opens Friday and closes July 1. Satyam's shares have however soared on Indian stock markets after the company released on Tuesday unaudited results for the fourth quarter of last year, and for January and February this year. Satyam cautioned that the results were not reliable as they were based on data from their internal MIS (management information system).The figures showed that Satyam's revenue and profits were down in the fourth quarter from a year earlier. But the company posted a larger profit of 520 million rupees in February than in January when it had profits of 40 million rupees. Analysts interpreted the increase in profits as an indication that Satyam is now in a recovery phase.Investors on Indian stock exchanges pushed up the price of Satyam's shares for three consecutive days. The share traded on the Bombay Stock Exchange at 80.85 rupees on Thursday, far higher than the 58 rupees that Tech Mahindra is offering in its open offer to buy shares from Satyam's shareholders.A Tech Mahindra spokesman on Thursday declined to comment on whether the company was planning to hike the price for the public offer.If shareholders refuse to offer their shares for sale at prices lower than the current market price, the other option for Tech Mahindra would be to get to a 51 percent share in Satyam through another issue of preferential equity, say analysts. The bid agreement allows Tech Mahindra to take this route. Satyam on Thursday announced a program to cut staff costs by allowing some of them to take time off on reduced pay. Between 7,000 to 10,000 staff will be affected by the program, the company said. These are staff who have not been deployed on projects for more than three months. A number of Indian outsourcing companies have tried to cut costs during the economic downturn by reducing their "bench," which consists of staff who are not working on projects.
Tech Mahindra, the Indian outsourcer that won the bid for majority ownership of embattled outsourcer Satyam Computer Services, may be in a fix following a sharp increase in Satyam's share price.Under the bid agreement in April, Tech Mahindra is offering to buy 20 percent of Satyam equity from shareholders at a price of 58 rupees (US$1.2). This is the price at which it purchased a 31 percent share in Satyam by a preferential issue of new equity.Satyam was plunged into a crisis after its co-founder B. Ramalinga Raju stated in January that the company had inflated revenue and profits for several years.The offer by Tech Mahindra to Satyam shareholders opens Friday and closes July 1. Satyam's shares have however soared on Indian stock markets after the company released on Tuesday unaudited results for the fourth quarter of last year, and for January and February this year. Satyam cautioned that the results were not reliable as they were based on data from their internal MIS (management information system).The figures showed that Satyam's revenue and profits were down in the fourth quarter from a year earlier. But the company posted a larger profit of 520 million rupees in February than in January when it had profits of 40 million rupees. Analysts interpreted the increase in profits as an indication that Satyam is now in a recovery phase.Investors on Indian stock exchanges pushed up the price of Satyam's shares for three consecutive days. The share traded on the Bombay Stock Exchange at 80.85 rupees on Thursday, far higher than the 58 rupees that Tech Mahindra is offering in its open offer to buy shares from Satyam's shareholders.A Tech Mahindra spokesman on Thursday declined to comment on whether the company was planning to hike the price for the public offer.If shareholders refuse to offer their shares for sale at prices lower than the current market price, the other option for Tech Mahindra would be to get to a 51 percent share in Satyam through another issue of preferential equity, say analysts. The bid agreement allows Tech Mahindra to take this route. Satyam on Thursday announced a program to cut staff costs by allowing some of them to take time off on reduced pay. Between 7,000 to 10,000 staff will be affected by the program, the company said. These are staff who have not been deployed on projects for more than three months. A number of Indian outsourcing companies have tried to cut costs during the economic downturn by reducing their "bench," which consists of staff who are not working on projects.
Tuesday, June 9, 2009
Satyam Surges by Daily Limit After Reporting Profit
June 9- Satyam Computer Services Ltd. jumped by the daily limit in Mumbai trading after the software maker reported remaining profitable and retaining clients following the disclosure of India’s biggest corporate fraud.
Satyam rose 10 percent after posting a 520 million rupee ($10.9 million) unaudited profit and a 17.5 percent operating margin for February. The Hyderabad-based company said it won at least $380 million of orders from 215 clients since disclosing a $1 billion fraud by former chairman Ramalinga Raju in January.
“The numbers are better than what the market was fearing,” Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai, said by telephone. “The big positive is the margins,” which some investors had expected to drop to as low as 4 percent, he said.
Satyam climbed to 66.8 rupees, its biggest gain since June 2. The stock has declined 61 percent this year compared with the benchmark Sensitive Index’s 57 percent advance. Tech Mahindra Ltd., which in April won a bid to gain control of Satyam, surged 26 percent, the most since August 2006.
Winning the contracts in the face of “negative publicity” was a positive, Shah said.
The fraud has compounded Satyam’s woes as it fights to retain clients and sustain sales amid a global recession that has forced companies to lower technology spending.
Satyam may cut as many as 8,000 jobs because of a lack of available work, two company officials who did not wish to be identified said on June 5. The parent company had 41,622 employees on March 28, and its subsidiaries had a combined workforce of 4,088 as on Jan. 17, according to a statement.
Estimates, Assumptions
Satyam said the earnings had been prepared with data from the company’s internal management information systems, which may not be adequate, and books of accounts making certain estimates and assumptions. The figures, which had been shared with bidders for the controlling stake in the company, had not been reviewed or verified by an independent auditor, according to the statement.
Gains or losses pertaining to the inflated assets that Raju had disclosed have not been eliminated from the earnings, pending restatement of accounts, Satyam said.
“More information is always welcome,” Dipesh Mehta, a Mumbai-based analyst at Khandwala Securities Ltd., said by phone. Still, “this information is less reliable as it has been derived from the internally available management information system,” he said.
Satyam’s financial statements are being reviewed by KPMG and Deloitte Touche Tohmatsu after its former auditor, the Indian affiliate of PricewaterhouseCoopers LLP, said in January its audit reports on the software maker were no longer reliable
Satyam rose 10 percent after posting a 520 million rupee ($10.9 million) unaudited profit and a 17.5 percent operating margin for February. The Hyderabad-based company said it won at least $380 million of orders from 215 clients since disclosing a $1 billion fraud by former chairman Ramalinga Raju in January.
“The numbers are better than what the market was fearing,” Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai, said by telephone. “The big positive is the margins,” which some investors had expected to drop to as low as 4 percent, he said.
Satyam climbed to 66.8 rupees, its biggest gain since June 2. The stock has declined 61 percent this year compared with the benchmark Sensitive Index’s 57 percent advance. Tech Mahindra Ltd., which in April won a bid to gain control of Satyam, surged 26 percent, the most since August 2006.
Winning the contracts in the face of “negative publicity” was a positive, Shah said.
The fraud has compounded Satyam’s woes as it fights to retain clients and sustain sales amid a global recession that has forced companies to lower technology spending.
Satyam may cut as many as 8,000 jobs because of a lack of available work, two company officials who did not wish to be identified said on June 5. The parent company had 41,622 employees on March 28, and its subsidiaries had a combined workforce of 4,088 as on Jan. 17, according to a statement.
Estimates, Assumptions
Satyam said the earnings had been prepared with data from the company’s internal management information systems, which may not be adequate, and books of accounts making certain estimates and assumptions. The figures, which had been shared with bidders for the controlling stake in the company, had not been reviewed or verified by an independent auditor, according to the statement.
Gains or losses pertaining to the inflated assets that Raju had disclosed have not been eliminated from the earnings, pending restatement of accounts, Satyam said.
“More information is always welcome,” Dipesh Mehta, a Mumbai-based analyst at Khandwala Securities Ltd., said by phone. Still, “this information is less reliable as it has been derived from the internally available management information system,” he said.
Satyam’s financial statements are being reviewed by KPMG and Deloitte Touche Tohmatsu after its former auditor, the Indian affiliate of PricewaterhouseCoopers LLP, said in January its audit reports on the software maker were no longer reliable
Satyam buy: Tech Mahindra raises Rs 550 cr from Tata Capital, IDFC
9 Jun 2009, PTI
NEW YORK: To fund its takeover of scam-hit Satyam Computer, Tech Mahindra has raised Rs 550 crore from Tata Capital and IDFC by issuing debentures convertible into shares of its acquisition vehicle Venturbay Consultants.
Besides, Tech Mahindra has also borrowed Rs 1,450 crore from various banks, mutual funds, institutions and NBFCs at an interest rate of 10 per cent, part of which has been used for funding the acquisition of Satyam.
Disclosing Tech Mahindra's source of funds for the deal, a regulatory filing by the beleaguered IT firm here said the funding was from "internal resources, optionally convertible domestic debt, equity by Tech Mahindra in Venturbay and debt extended by Tech Mahindra to Venturbay."
In the first phase of acquisition, Tech Mahindra had paid about Rs 1,756 crore for 31 per cent equity through preferential allotment of shares in Satyam which is also listed at NYSE besides Indian bourses.
The filing with the US market regulator SEC said here that "Tech Mahindra has infused funds in Venturebay by using cash on hand" in connection with the initial 31 per cent stake purchase and the subsequent Rs 1,129 crore open offer for further 20 per cent equity.
NEW YORK: To fund its takeover of scam-hit Satyam Computer, Tech Mahindra has raised Rs 550 crore from Tata Capital and IDFC by issuing debentures convertible into shares of its acquisition vehicle Venturbay Consultants.
Besides, Tech Mahindra has also borrowed Rs 1,450 crore from various banks, mutual funds, institutions and NBFCs at an interest rate of 10 per cent, part of which has been used for funding the acquisition of Satyam.
Disclosing Tech Mahindra's source of funds for the deal, a regulatory filing by the beleaguered IT firm here said the funding was from "internal resources, optionally convertible domestic debt, equity by Tech Mahindra in Venturbay and debt extended by Tech Mahindra to Venturbay."
In the first phase of acquisition, Tech Mahindra had paid about Rs 1,756 crore for 31 per cent equity through preferential allotment of shares in Satyam which is also listed at NYSE besides Indian bourses.
The filing with the US market regulator SEC said here that "Tech Mahindra has infused funds in Venturebay by using cash on hand" in connection with the initial 31 per cent stake purchase and the subsequent Rs 1,129 crore open offer for further 20 per cent equity.
Satyam spends over Rs 1,000 cr on salaries in Jan-March 2009
9 Jun 2009, PTI
MUMBAI: Scam-hit Satyam Computer on Tuesday said that it has spent over Rs 1,000 crore on paying salaries to its employees in the first three months of this year.
According to the cash outlays information of the company for the first three months of this year, Satyam spent a total of Rs 1,026 crore on paying salaries and another Rs 342.72 crore in other employee-related segments.
The company made a cash outlay of Rs 91.17 crore on medical insurance for employees and Rs 251.55 crore on statutory compliance, the company said in the filing to the stock exchanges.
Overall, the company's total operating cash outlays stood at Rs 1,836 crore at the end of March this year.
The other expenditures of the company include - sub contractors, rent and utilities, travel and forex and other operating expenses.
At the end of March this year, the company's total headcount stood at 41,622, while its key subsidiaries, including Satyam BPO, had an employee strength of 3,828 associates.
Further, the non-operating cash outlays by the company in the three months period include - capital expenditures (Rs 52.54 crore), marked to market losses on account of foreign exchange contracts (Rs 147.81 crore) and repayment of loans (Rs 103.86 crore).
It also includes - deposits and margin money for bank guarantees and other non operative expenses, it added.
For the quarter ended December 2008, Satyam reported a consolidated net profit of Rs 160.50 crore and the total income stood at Rs 2,327.21 crore.
MUMBAI: Scam-hit Satyam Computer on Tuesday said that it has spent over Rs 1,000 crore on paying salaries to its employees in the first three months of this year.
According to the cash outlays information of the company for the first three months of this year, Satyam spent a total of Rs 1,026 crore on paying salaries and another Rs 342.72 crore in other employee-related segments.
The company made a cash outlay of Rs 91.17 crore on medical insurance for employees and Rs 251.55 crore on statutory compliance, the company said in the filing to the stock exchanges.
Overall, the company's total operating cash outlays stood at Rs 1,836 crore at the end of March this year.
The other expenditures of the company include - sub contractors, rent and utilities, travel and forex and other operating expenses.
At the end of March this year, the company's total headcount stood at 41,622, while its key subsidiaries, including Satyam BPO, had an employee strength of 3,828 associates.
Further, the non-operating cash outlays by the company in the three months period include - capital expenditures (Rs 52.54 crore), marked to market losses on account of foreign exchange contracts (Rs 147.81 crore) and repayment of loans (Rs 103.86 crore).
It also includes - deposits and margin money for bank guarantees and other non operative expenses, it added.
For the quarter ended December 2008, Satyam reported a consolidated net profit of Rs 160.50 crore and the total income stood at Rs 2,327.21 crore.
Maytas Infra says to start work on Karnataka airports
Tue Jun 9, 2009
Construction firm Maytas Infra Ltd said on Tuesday its board has approved starting work at Gulbarga and Shimoga airports in Karnataka immediately.
Maytas holds rights to build the two small airports, as part of a consortium that includes units of Nagarjuna Construction and Vienna International Airport.
Media reports had earlier reported the state government serving notice to Maytas asking why implementation was running behind schedule.
The Hyderabad-based company, linked to the founders of fraud-hit Satyam Computer Services, also said its government-appointed board is also working on a plan for the Hyderabad Metro and Machilipatnam Port projects.
Ahead of the announcement, the shares ended up 4.96 percent at 83.6 rupees each.
Construction firm Maytas Infra Ltd said on Tuesday its board has approved starting work at Gulbarga and Shimoga airports in Karnataka immediately.
Maytas holds rights to build the two small airports, as part of a consortium that includes units of Nagarjuna Construction and Vienna International Airport.
Media reports had earlier reported the state government serving notice to Maytas asking why implementation was running behind schedule.
The Hyderabad-based company, linked to the founders of fraud-hit Satyam Computer Services, also said its government-appointed board is also working on a plan for the Hyderabad Metro and Machilipatnam Port projects.
Ahead of the announcement, the shares ended up 4.96 percent at 83.6 rupees each.
Satyam has Rs.373 crore bank balance
9 June 2009
Mumbai, June 9: India's fraud-hit IT giant Satyam Computer Services Tuesday said it had a bank balance of Rs.373 crore (about $75 million) at the end of March 2009, but at the same time, it also had a Rs.460-crore loan outstanding.
At the beginning of the year, the IT giant's outstanding loan stood at Rs.200 crore. The company later repaid Rs.100 crore before raising Rs.369 crore in fresh loans in the first quarter, Satyam said in a regulatory statement.
"The company's total bank balances as on March 31, 2009, were Rs.373 crore. Out of the sanctioned loan limit, as on March 31, 2009, the company had availed loans worth Rs.469 crore ($93.8 million)," the filing said.
The company registered a profit after tax (PAT) of Rs.181 crore in the quarter ended Dec 31, 2008, the IT bellwether said.
Satyam had earlier furnished the details on a non-disclosure agreement to its bidders.
"Such information was provided to select bidders subject to the execution of a non-disclosure and non-solicitation agreement," the company said.
Satyam's export turnover during the quarter was Rs.2,194 crore, while domestic earnings were reported at Rs.100 crore.
During January, when the gross discrepancies in the balance sheet came into light, the IT exporter reported a minuscule PAT of Rs.5 crore.
In February, its profit soared to Rs.52 crore though revenues dropped to Rs.676 crore, the statement said.
This is the first publicly disclosed earnings estimates from Satyam since the disgraced former chairman Ramalinga Raju confessed inflating the company's balance sheet and assets by Rs.7,800 crore or more than $1.6 billion
Mumbai, June 9: India's fraud-hit IT giant Satyam Computer Services Tuesday said it had a bank balance of Rs.373 crore (about $75 million) at the end of March 2009, but at the same time, it also had a Rs.460-crore loan outstanding.
At the beginning of the year, the IT giant's outstanding loan stood at Rs.200 crore. The company later repaid Rs.100 crore before raising Rs.369 crore in fresh loans in the first quarter, Satyam said in a regulatory statement.
"The company's total bank balances as on March 31, 2009, were Rs.373 crore. Out of the sanctioned loan limit, as on March 31, 2009, the company had availed loans worth Rs.469 crore ($93.8 million)," the filing said.
The company registered a profit after tax (PAT) of Rs.181 crore in the quarter ended Dec 31, 2008, the IT bellwether said.
Satyam had earlier furnished the details on a non-disclosure agreement to its bidders.
"Such information was provided to select bidders subject to the execution of a non-disclosure and non-solicitation agreement," the company said.
Satyam's export turnover during the quarter was Rs.2,194 crore, while domestic earnings were reported at Rs.100 crore.
During January, when the gross discrepancies in the balance sheet came into light, the IT exporter reported a minuscule PAT of Rs.5 crore.
In February, its profit soared to Rs.52 crore though revenues dropped to Rs.676 crore, the statement said.
This is the first publicly disclosed earnings estimates from Satyam since the disgraced former chairman Ramalinga Raju confessed inflating the company's balance sheet and assets by Rs.7,800 crore or more than $1.6 billion
Saturday, June 6, 2009
GEQD report confirms forgery in Satyam scam
5 Jun 2009
HYDERABAD: The Union home ministry's Government Examiner of Questioned Documents (GEQD) has filed his report in the local CBI court which has reportedly confirmed the forgery committed by B Ramalinga Raju and other accused in the Satyam scam.
GEQD of Hyderabad, who is part of the directorate of forensic science working under the aegis of the Union home ministry, was earlier sent several documents signed by Raju and others. Certain cheques, fake fixed deposit papers, forged bank balance sheets - all signed by Raju and Co earlier along with their specimen signatures collected through CBI court - were sent to GEQD for verification.
In the verification, it was said, all the signatures tallied with one another. This means the charge of forgery for cheating can be established. In fact, the CBI, which is investigating into the scam, has charged the accused with IPC 468 also and the GEQD report would help them establishing the guilt of the accused in this regard.
After obtaining the report from GEQD, the CBI has filed this report in the court on Wednesday.
HYDERABAD: The Union home ministry's Government Examiner of Questioned Documents (GEQD) has filed his report in the local CBI court which has reportedly confirmed the forgery committed by B Ramalinga Raju and other accused in the Satyam scam.
GEQD of Hyderabad, who is part of the directorate of forensic science working under the aegis of the Union home ministry, was earlier sent several documents signed by Raju and others. Certain cheques, fake fixed deposit papers, forged bank balance sheets - all signed by Raju and Co earlier along with their specimen signatures collected through CBI court - were sent to GEQD for verification.
In the verification, it was said, all the signatures tallied with one another. This means the charge of forgery for cheating can be established. In fact, the CBI, which is investigating into the scam, has charged the accused with IPC 468 also and the GEQD report would help them establishing the guilt of the accused in this regard.
After obtaining the report from GEQD, the CBI has filed this report in the court on Wednesday.
Court reserves order on ED's plea in Satyam case
3 Jun 2009 PTI
HYDERABAD: A local court today reserved its orders for Friday on the Enforcement Directorate's petition, seeking permission to record the statements of the founder Satyam Computer B Ramalinga Raju and four other accused in the multi-crore rupee financial fraud case.
The XIV Chief Additional Metropolitan Magistrate Justice K Sudhakar after hearing the arguments posted his orders to June 5.
The Enforcement Directorate (ED) had filed a petition in the designated court of CBI on April 6 seeking its permission to record the statements of the accused in the jail to find out whether they have violated the Prevention of Money Laundering Act (PMLA).
The ED wanted to record the statements of Raju brothers, former CFO Vadlamani Srinivas and S Gopalakrishnan and Talluri Srinivas of Price Waterhouse.
Meanwhile, government examiner of questioned documents (GEQD), a central government forensic institute, today submitted its report in the court after verifying the signatures of the accused.
HYDERABAD: A local court today reserved its orders for Friday on the Enforcement Directorate's petition, seeking permission to record the statements of the founder Satyam Computer B Ramalinga Raju and four other accused in the multi-crore rupee financial fraud case.
The XIV Chief Additional Metropolitan Magistrate Justice K Sudhakar after hearing the arguments posted his orders to June 5.
The Enforcement Directorate (ED) had filed a petition in the designated court of CBI on April 6 seeking its permission to record the statements of the accused in the jail to find out whether they have violated the Prevention of Money Laundering Act (PMLA).
The ED wanted to record the statements of Raju brothers, former CFO Vadlamani Srinivas and S Gopalakrishnan and Talluri Srinivas of Price Waterhouse.
Meanwhile, government examiner of questioned documents (GEQD), a central government forensic institute, today submitted its report in the court after verifying the signatures of the accused.
Tech Mahindra to prepay Satyam loan
4 Jun 2009, ET Now
The new owners of Satyam Computer Services plan to prepay a Rs 300-crore loan the company had taken in February in an indication of its improved financial position just a month after being taken over by Tech Mahindra.
Part of the money that Satyam received from Tech Mahindra when it bought a 31% stake in the Hyderabad-based company will be used to retire the loan, a person familiar with the development said.
Satyam’s board of directors has approved the early repayment. “The cash flow situation has improved as the company has been able to recover some of its dues,” he said.
The loan was raised from IDBI Bank and Bank of Baroda after the government-appointed board tasked with rescuing Satyam found that the company was cash-strapped and did not have enough funds to meet its short-term obligations.
The company’s founder B Ramalinga Raju said on January 7 that its accounts were manipulated, leaving an over Rs 7,000-crore hole in its books.
The one-year loan, carrying a 13.5% interest rate, was raised by pledging Satyam’s land in Hyderabad. The company only drew half the Rs 600 crore it was sanctioned by the banks.
Tech Mahindra, which in April won the bid for Satyam, has infused Rs 1,756 crore into the company by subscribing to a preferential issue of 30.27 crore shares at Rs 58 per share. An open offer to buy a further 20% stake will open on June 12.
The new owners of Satyam Computer Services plan to prepay a Rs 300-crore loan the company had taken in February in an indication of its improved financial position just a month after being taken over by Tech Mahindra.
Part of the money that Satyam received from Tech Mahindra when it bought a 31% stake in the Hyderabad-based company will be used to retire the loan, a person familiar with the development said.
Satyam’s board of directors has approved the early repayment. “The cash flow situation has improved as the company has been able to recover some of its dues,” he said.
The loan was raised from IDBI Bank and Bank of Baroda after the government-appointed board tasked with rescuing Satyam found that the company was cash-strapped and did not have enough funds to meet its short-term obligations.
The company’s founder B Ramalinga Raju said on January 7 that its accounts were manipulated, leaving an over Rs 7,000-crore hole in its books.
The one-year loan, carrying a 13.5% interest rate, was raised by pledging Satyam’s land in Hyderabad. The company only drew half the Rs 600 crore it was sanctioned by the banks.
Tech Mahindra, which in April won the bid for Satyam, has infused Rs 1,756 crore into the company by subscribing to a preferential issue of 30.27 crore shares at Rs 58 per share. An open offer to buy a further 20% stake will open on June 12.
Satyam May Cut Wages of Some Staff
BANGALORE -- Fraud-hit Satyam Computer Services Ltd. plans to put about 8,000 employees who aren't working on any projects on standby for new contracts, and cut their salaries as part of its measures to reduce costs, two people familiar with the matter said Friday.
"Most of these people are already on a sabbatical and haven't been billed in recent times," one of the people told Dow Jones Newswires, asking not to be named.
The person said the company is considering paying only about 40%-50% of basic pay to employees on the bench.
Information-technology companies generally keep a part of their employees on standby, or the bench, to quickly deploy them if the company gets new projects. Satyam is considering putting employees on the bench and cutting their salaries as laying off such a large number of people could be difficult.
A decision on staff rationalization is yet to be taken, both the persons said, without giving any timeline for a decision.
India's federal Minister of Corporate Affairs Salman Khurshid recently said that Satyam's acquirer, Tech Mahindra Ltd., should deal with the issue of surplus employees with "sensitivity."
Tech Mahindra Chief Executive Vineet Nayyar, also now a member of the Satyam board, said last month that Satyam had an excess staff of around 10,000. The company has a total of about 40,000 employees.
The person said the employees put on the bench will remain entitled to medical reimbursements and provident fund. "They could be called back to full duty when projects are available," the person said.
While a company spokesperson could not be immediately contacted, T. Hari, Satyam's global marketing head, said, "We are exploring the most humane ways to tackle this issue."
Earlier Friday, the Business Standard newspaper reported that Satyam's board may meet June 11 to discuss the issue.
Satyam was plunged into turmoil when founder B. Ramalinga Raju said in January that he cooked the company's books, overstated profits and revenue, and created fictitious cash balances.
In April, a government-appointed board sold a 31% stake in Satyam to Tech Mahindra unit Venturbay Consultants Pvt. Ltd. Venturbay's open offer for an additional 20% stake in Satyam is slated to start June 12.
"Most of these people are already on a sabbatical and haven't been billed in recent times," one of the people told Dow Jones Newswires, asking not to be named.
The person said the company is considering paying only about 40%-50% of basic pay to employees on the bench.
Information-technology companies generally keep a part of their employees on standby, or the bench, to quickly deploy them if the company gets new projects. Satyam is considering putting employees on the bench and cutting their salaries as laying off such a large number of people could be difficult.
A decision on staff rationalization is yet to be taken, both the persons said, without giving any timeline for a decision.
India's federal Minister of Corporate Affairs Salman Khurshid recently said that Satyam's acquirer, Tech Mahindra Ltd., should deal with the issue of surplus employees with "sensitivity."
Tech Mahindra Chief Executive Vineet Nayyar, also now a member of the Satyam board, said last month that Satyam had an excess staff of around 10,000. The company has a total of about 40,000 employees.
The person said the employees put on the bench will remain entitled to medical reimbursements and provident fund. "They could be called back to full duty when projects are available," the person said.
While a company spokesperson could not be immediately contacted, T. Hari, Satyam's global marketing head, said, "We are exploring the most humane ways to tackle this issue."
Earlier Friday, the Business Standard newspaper reported that Satyam's board may meet June 11 to discuss the issue.
Satyam was plunged into turmoil when founder B. Ramalinga Raju said in January that he cooked the company's books, overstated profits and revenue, and created fictitious cash balances.
In April, a government-appointed board sold a 31% stake in Satyam to Tech Mahindra unit Venturbay Consultants Pvt. Ltd. Venturbay's open offer for an additional 20% stake in Satyam is slated to start June 12.
Tuesday, June 2, 2009
Satyam set to ink pact with M&M Group to tap aerospace customers
2 Jun 2009, ET Bureau
HYDERABAD: Satyam Computer Services is firming up a joint-go-to-market strategy with the Mahindra & Mahindra (M&M) group of companies for customers in the aerospace and other engineering segments to boost revenues from its engineering practice.
Tech Mahindra, the new owner of Satyam, is a subsidiary of the M&M group. Satyam will ink a non-disclosure pact with its partner before starting negotiations with customers. EADS, the owner of Airbus, features in the list of Satyam’s clients in the IES space.
The joint go-to market strategy will entail design, sourcing and making components for aerospace customers and other clients in the IES space. This division contributes to around 6-7% of Satyam’s revenues.
“The capability to do end-to-end aerospace components will make our clients leverage on the expertise from the combined entities”, said Karthik, Head, Integrated Engineering Solutions (IES), Satyam Computers.
He reckons that the global economic melt-down notwithstanding, the aerospace sector offers significant business opportunities as clients are looking for a good value proposition coupled with competitive pricing.
The Hyderabad based outsourcer reported revenues of around $ 2 billion before its defamed founder B Ramlainga Raju admitted to perpetrating a Rs 7,000 crore financial fraud. Many clients snapped ties after the fraud, impacting its revenues.
While Satyam’s accounts are now being re-stated, Tech M is reportedly looking at combined annual revenues of around $ 2.2 billion.
Besides aerospace, Satyam also offers IES to clients in the automotive, consumer products, telecom and healthcare sectors, besides aerospace. Engineering firm M&M has an established presence in the Indian market, especially in auto segment.
Satyam’s IES division offers a bouquet of product design and development services, both mechanical and electronic. The Systech group of M&M, in particular, has an eco-system for manufacturing and sourcing components from India.
It is reckoned that Satyam’s aerospace engineering practice will stand to gain from Mahindra Systech’s manufacturing capabilities. And the proposed tie-up will allow Satyam to select different parts of value chain – right from design and engineering of sub-systems upto sourcing and manufacturing.
“Satyam’s IES strengths in design, mechanical and embedded electronics, and China sourcing are complemented by M&M group companies’ strength in manufacturing and India sourcing. This synergy to take designs from art-to-part can help both clients accelerate their new product development (NPD) cycles and thereby increase their profitability across the global markets”, he said.
HYDERABAD: Satyam Computer Services is firming up a joint-go-to-market strategy with the Mahindra & Mahindra (M&M) group of companies for customers in the aerospace and other engineering segments to boost revenues from its engineering practice.
Tech Mahindra, the new owner of Satyam, is a subsidiary of the M&M group. Satyam will ink a non-disclosure pact with its partner before starting negotiations with customers. EADS, the owner of Airbus, features in the list of Satyam’s clients in the IES space.
The joint go-to market strategy will entail design, sourcing and making components for aerospace customers and other clients in the IES space. This division contributes to around 6-7% of Satyam’s revenues.
“The capability to do end-to-end aerospace components will make our clients leverage on the expertise from the combined entities”, said Karthik, Head, Integrated Engineering Solutions (IES), Satyam Computers.
He reckons that the global economic melt-down notwithstanding, the aerospace sector offers significant business opportunities as clients are looking for a good value proposition coupled with competitive pricing.
The Hyderabad based outsourcer reported revenues of around $ 2 billion before its defamed founder B Ramlainga Raju admitted to perpetrating a Rs 7,000 crore financial fraud. Many clients snapped ties after the fraud, impacting its revenues.
While Satyam’s accounts are now being re-stated, Tech M is reportedly looking at combined annual revenues of around $ 2.2 billion.
Besides aerospace, Satyam also offers IES to clients in the automotive, consumer products, telecom and healthcare sectors, besides aerospace. Engineering firm M&M has an established presence in the Indian market, especially in auto segment.
Satyam’s IES division offers a bouquet of product design and development services, both mechanical and electronic. The Systech group of M&M, in particular, has an eco-system for manufacturing and sourcing components from India.
It is reckoned that Satyam’s aerospace engineering practice will stand to gain from Mahindra Systech’s manufacturing capabilities. And the proposed tie-up will allow Satyam to select different parts of value chain – right from design and engineering of sub-systems upto sourcing and manufacturing.
“Satyam’s IES strengths in design, mechanical and embedded electronics, and China sourcing are complemented by M&M group companies’ strength in manufacturing and India sourcing. This synergy to take designs from art-to-part can help both clients accelerate their new product development (NPD) cycles and thereby increase their profitability across the global markets”, he said.
Satyam appoints Australia, NZ head
1 Jun, 2009,ANI
MELBOURNE: Satyam Computers has appointed Venki Prathivadi as country manager for Satyam Australia and New Zealand (ANZ) replacing Deepak Nangia.
The India based IT company has also appointed former chief information officer Vijay Prasad as principal advisor to the ANZ region to enable it to find its feet in the area after the set back in January following the revelation of a massive fraud.
It was learnt that the co company's founder and chairman, B Ramalinga Raju had over-inflated the value of its cash and bank balances by more than one billion US dollars.
Since the revelation of the fraud, number of Satyam's local customers including Telstra and National Australia Bank had cancelled its contracts or reduced their involvement with the company.
Australian software major Telstra had dumped the scandal-ridden outsourcing partner Satyam from an applications support contract believed to be worth $32 million a year.
Prathivadi has been with Satyam since 2003 and worked as the account director on the now-terminated Telstra contract.
MELBOURNE: Satyam Computers has appointed Venki Prathivadi as country manager for Satyam Australia and New Zealand (ANZ) replacing Deepak Nangia.
The India based IT company has also appointed former chief information officer Vijay Prasad as principal advisor to the ANZ region to enable it to find its feet in the area after the set back in January following the revelation of a massive fraud.
It was learnt that the co company's founder and chairman, B Ramalinga Raju had over-inflated the value of its cash and bank balances by more than one billion US dollars.
Since the revelation of the fraud, number of Satyam's local customers including Telstra and National Australia Bank had cancelled its contracts or reduced their involvement with the company.
Australian software major Telstra had dumped the scandal-ridden outsourcing partner Satyam from an applications support contract believed to be worth $32 million a year.
Prathivadi has been with Satyam since 2003 and worked as the account director on the now-terminated Telstra contract.
200 jobs go as Satyam finds its feet
June 02, 2009
SATYAM Computer Services has dropped its local headcount by 200 people as a result of the economic crisis.
Satyam yesterday announced the appointments of a new country head and a ``principal adviser'' for its Australian business as outsourcer tries to find its feet after being rocked by fraud allegations at its India headquarters.
Venki Prathivadi will replace Deepak Nangia and take the reins as country manager for Satyam Australia and New Zealand (ANZ), reporting to Asia-Pacific head TR Anand.
Mr Nangia left the business about a month ago to pursue other opportunities.
Last year, Mr Nangia said the outsourcer employed about 1000 staff locally and had another 700 staff in India servicing Australian customers.
This number has dropped, Mr Prathivadi said, with about 800 staff in Australia and about 500 in India servicing local customers.
``They've come down a little bit they're more in the 1200-1300 range,'' according to Mr Prathivadi who has been with Satyam Australia since 2003.
``There's generally been a global downturn and in response to that our numbers have come down a little bit.''
He could not say whether staff numbers would drop further or grow in the future.
``We will have to see how the economy holds up and we will respond accordingly. If the economy improves and there is a business uptake that could very well go up.''
He said there would not be a significant shake-up of the local operations.
``My priorities are to strengthen the relationships with customers in ANZ, build new business and take care of our associates,'' he said.
Satyam has also appointed a principal adviser to the ANZ region, which will be staffed by the company's former-CIO Vijay Prasad.
The local management restructure follows the revelation in January the Indian parent company's founder and chairman, B. Ramalinga Raju over-inflated the value of its cash and bank balances by more than $US1 billion ($1.28 billion).
Since the fraud scandal a number of customers including Telstra and National Australia Bank have either terminated contracts or reduced their involvement with Satyam.
SATYAM Computer Services has dropped its local headcount by 200 people as a result of the economic crisis.
Satyam yesterday announced the appointments of a new country head and a ``principal adviser'' for its Australian business as outsourcer tries to find its feet after being rocked by fraud allegations at its India headquarters.
Venki Prathivadi will replace Deepak Nangia and take the reins as country manager for Satyam Australia and New Zealand (ANZ), reporting to Asia-Pacific head TR Anand.
Mr Nangia left the business about a month ago to pursue other opportunities.
Last year, Mr Nangia said the outsourcer employed about 1000 staff locally and had another 700 staff in India servicing Australian customers.
This number has dropped, Mr Prathivadi said, with about 800 staff in Australia and about 500 in India servicing local customers.
``They've come down a little bit they're more in the 1200-1300 range,'' according to Mr Prathivadi who has been with Satyam Australia since 2003.
``There's generally been a global downturn and in response to that our numbers have come down a little bit.''
He could not say whether staff numbers would drop further or grow in the future.
``We will have to see how the economy holds up and we will respond accordingly. If the economy improves and there is a business uptake that could very well go up.''
He said there would not be a significant shake-up of the local operations.
``My priorities are to strengthen the relationships with customers in ANZ, build new business and take care of our associates,'' he said.
Satyam has also appointed a principal adviser to the ANZ region, which will be staffed by the company's former-CIO Vijay Prasad.
The local management restructure follows the revelation in January the Indian parent company's founder and chairman, B. Ramalinga Raju over-inflated the value of its cash and bank balances by more than $US1 billion ($1.28 billion).
Since the fraud scandal a number of customers including Telstra and National Australia Bank have either terminated contracts or reduced their involvement with Satyam.
Friday, May 29, 2009
Job cuts at Maytas Infra
New Delhi May 29, 2009,
Maytas Infra, the listed company promoted by the family of Satyam founder B Ramalinga Raju, is looking to rationalise its employee strength. Consequently, there would be some job cuts and inductions.
To this effect, Maytas board on Thursday reviewed the HR policies of the company to take stock of the situation. “There will be some job cuts and inductions in the company,” a company executive said, but declined to reveal the numbers.
Maytas board, chaired by government-appointed member K Ramalingam, reviewed the key issues of the company in the last two days. Among other things, the company discussed with some of its joint venture partners the infusion of funds and early completion of works.
B.S
Maytas Infra, the listed company promoted by the family of Satyam founder B Ramalinga Raju, is looking to rationalise its employee strength. Consequently, there would be some job cuts and inductions.
To this effect, Maytas board on Thursday reviewed the HR policies of the company to take stock of the situation. “There will be some job cuts and inductions in the company,” a company executive said, but declined to reveal the numbers.
Maytas board, chaired by government-appointed member K Ramalingam, reviewed the key issues of the company in the last two days. Among other things, the company discussed with some of its joint venture partners the infusion of funds and early completion of works.
B.S
Maytas Infra approaches govt for help
Press Trust of India May 27, 2009,
Faced with massive cash-crunch, Maytas Infra, the company promoted by kin of Satyam founder B Ramalinga Raju, has asked the government not to hastily withdraw projects awarded to it.
According to sources, Maytas Infra has written to the Corporate Affairs Ministry requesting for support from government agencies that have alloted various projects to it.
When contacted, Maytas Infra Chairman K Ramalingam confirmed the development and said, "After Satyam, many clients, including the government departments, who awarded projects to us have become panicky. We have asked the MCA to coordinate with government departments and support us."
He said the company is commercially viable and with a little support, it can manage through choppy water.
Ramalingam added that the company has written to various government departments, who had awarded projects to the firm, and asked them not to panic due to the multi-crore scam at Satyam Computer.
Many government projects related to irrigation, oil, power, building, etc in states like Andhra Pradesh, Maharashtra, Jammu and Kashmir have been awarded to the Hyderabad-based company.
After Satyam Computer founder B Ramalinga Raju confessed of committing accounting fraud at the IT firm in January this year, many companies including PSUs cancelled contracts awarded to Maytas Infra.
PGCIL had in December last year accorded the company with rural electrification project worth Rs 222.25 crore under which the company was to execute the order in Khurda and Sundergarh districts of Orissa, and West Midnapore district of West Bengal.
However, after the Satyam debacle, Power Grid Corporation of India Ltd (PGCIL) decided to revoke the seven rural electrification contracts.
Similarly, the Karnataka government had also said it will cancel two airport projects being executed by Maytas Infra with Nagarjuna Construction Co Ltd.
London-listed Vedanta Resources Plc had also cancelled a contract with Maytas Infra for building a township for its staff in Jharsuguda, Orissa.
Ramalingam said the company has already finalised its revival plan and has approved corporate debt restructuring package too.
Faced with massive cash-crunch, Maytas Infra, the company promoted by kin of Satyam founder B Ramalinga Raju, has asked the government not to hastily withdraw projects awarded to it.
According to sources, Maytas Infra has written to the Corporate Affairs Ministry requesting for support from government agencies that have alloted various projects to it.
When contacted, Maytas Infra Chairman K Ramalingam confirmed the development and said, "After Satyam, many clients, including the government departments, who awarded projects to us have become panicky. We have asked the MCA to coordinate with government departments and support us."
He said the company is commercially viable and with a little support, it can manage through choppy water.
Ramalingam added that the company has written to various government departments, who had awarded projects to the firm, and asked them not to panic due to the multi-crore scam at Satyam Computer.
Many government projects related to irrigation, oil, power, building, etc in states like Andhra Pradesh, Maharashtra, Jammu and Kashmir have been awarded to the Hyderabad-based company.
After Satyam Computer founder B Ramalinga Raju confessed of committing accounting fraud at the IT firm in January this year, many companies including PSUs cancelled contracts awarded to Maytas Infra.
PGCIL had in December last year accorded the company with rural electrification project worth Rs 222.25 crore under which the company was to execute the order in Khurda and Sundergarh districts of Orissa, and West Midnapore district of West Bengal.
However, after the Satyam debacle, Power Grid Corporation of India Ltd (PGCIL) decided to revoke the seven rural electrification contracts.
Similarly, the Karnataka government had also said it will cancel two airport projects being executed by Maytas Infra with Nagarjuna Construction Co Ltd.
London-listed Vedanta Resources Plc had also cancelled a contract with Maytas Infra for building a township for its staff in Jharsuguda, Orissa.
Ramalingam said the company has already finalised its revival plan and has approved corporate debt restructuring package too.
Bombay HC denies relief to Maytas Infra
MUMBAI: The Bombay High Court has denied any interim relief to Maytas Infra, the company promoted by Ramlingam Raju's son, in a dispute related to expansion of a stretch of Salem Highway (NH 68).
Maytas had moved the court challenging termination of its contract by Utility Energytech and Engineers last month.
Maytas had also sought a temporary stay to the termination, but Justice Anup Mohta of Bombay High Court last week refused to pass any interim order.
National Highway Authority of India awarded contract for highway expansion for a 62-km stretch in Tamil Nadu to Utility Energytech and Engineers in 2007. Maytas entered into a separate agreement with Utility as a subcontractor. Last month, Utility sent a termination notice to Maytas. Both parties have alleged breach of agreement. Maytas also moved the court. But justice Mohta, in the order last week, said that “once party has taken decision based on commercial wisdom (to terminate contract) court can not compel it to allow other party to continue.'' Since Maytas has also appointed arbiter, it can get relief by way of compensation, judge said. Unless all the facets of the case are decided, no interim injunction can be granted, he added. - PTI
Maytas had moved the court challenging termination of its contract by Utility Energytech and Engineers last month.
Maytas had also sought a temporary stay to the termination, but Justice Anup Mohta of Bombay High Court last week refused to pass any interim order.
National Highway Authority of India awarded contract for highway expansion for a 62-km stretch in Tamil Nadu to Utility Energytech and Engineers in 2007. Maytas entered into a separate agreement with Utility as a subcontractor. Last month, Utility sent a termination notice to Maytas. Both parties have alleged breach of agreement. Maytas also moved the court. But justice Mohta, in the order last week, said that “once party has taken decision based on commercial wisdom (to terminate contract) court can not compel it to allow other party to continue.'' Since Maytas has also appointed arbiter, it can get relief by way of compensation, judge said. Unless all the facets of the case are decided, no interim injunction can be granted, he added. - PTI
Govt-appointed Satyam board to stay till open offer concludes
New Delhi/ May 30, 2009
The government-appointed board of Hyderabad-based Satyam Computer Services has decided to continue till the open offer is made. The offer starts on June 12 and closes on July 1.
“There is a thinking among the board members that it will be prudent to stay on till the open offer is made. The open offer is due in a few weeks. To make changes during this time will not help a smooth transition,” said a board member.
After Ramalinga Raju, founder and chairman of Satyam, admitted to the fraud on January 7 this year, the government announced the re-constitution of the board and appointed HDFC Chairman, Deepak Parekh; ex-Nasscom President, Kiran Karnik; former member of Sebi, C Achuthan; Chief Mentor at CII, Tarun Das; former Executive Director of LIC, S B Mainak and member of ICAI, T N Manoharan, as part of a six-member board.
Meanwhile, as the Satyam board has expanded to include four additional nominee directors of Tech Mahindra subsidiary Venturbay Consultants, bringing the board’s strength to 10, cross-sharing of employees has already begun between Tech Mahindra and Satyam. Nearly 400 employees are being placed with Tech Mahindra, according to a source close the development.
“Gradually, employees that suit the bill may even find their way into the Mahindra group companies,” the source added, qualifying that such employees were yet to be identified.
Tech Mahindra, the new owner of Satyam, has also given the final touches to what it has christened ‘Operation Phoenix’ (named after the mythical bird which rises from its own ashes every time it dies), “to give a human face to redistribution and redeployment of the excess staff that Satyam has on its rolls”.
Vineet Nayyar, MD & CEO of Tech Mahindra, was on record recently that the company had excess staff of around 10,000. Most of these employees are non-billable (not working on current projects).
“The reason is that Ramalinga Raju showed high revenue figures and, hence, had to recruit employees to work on non-existent projects. Satyam is, thus, left with a huge pool of non-billable employees,” reasoned the source.
Hence, as part of ‘Operation Phoenix’ (Phase-I), at least 6,000 Satyam employees — those who have been on the bench for at least six months — will be given up to 40 per cent of their salary and asked to stay home while continuing to stay on the rolls. These employees have around 2-3 years of experience on an average, and are across verticals that Satyam caters to.
“They need not come to office. If they are needed, they will be drafted back into the workforce. Else, the company will take a call after six months,” said the source.
These employees can also go for re-training or re-skilling, for which “Satyam will even offer interest-free loans”.
The employees will have to register with their respective unit HR heads, added the source. Moreover, Satyam is also looking at “reverse placements” wherein the placement agencies, which provide it with employees, will look at job opportunities for the 6,000-odd employees.
The government-appointed board of Hyderabad-based Satyam Computer Services has decided to continue till the open offer is made. The offer starts on June 12 and closes on July 1.
“There is a thinking among the board members that it will be prudent to stay on till the open offer is made. The open offer is due in a few weeks. To make changes during this time will not help a smooth transition,” said a board member.
After Ramalinga Raju, founder and chairman of Satyam, admitted to the fraud on January 7 this year, the government announced the re-constitution of the board and appointed HDFC Chairman, Deepak Parekh; ex-Nasscom President, Kiran Karnik; former member of Sebi, C Achuthan; Chief Mentor at CII, Tarun Das; former Executive Director of LIC, S B Mainak and member of ICAI, T N Manoharan, as part of a six-member board.
Meanwhile, as the Satyam board has expanded to include four additional nominee directors of Tech Mahindra subsidiary Venturbay Consultants, bringing the board’s strength to 10, cross-sharing of employees has already begun between Tech Mahindra and Satyam. Nearly 400 employees are being placed with Tech Mahindra, according to a source close the development.
“Gradually, employees that suit the bill may even find their way into the Mahindra group companies,” the source added, qualifying that such employees were yet to be identified.
Tech Mahindra, the new owner of Satyam, has also given the final touches to what it has christened ‘Operation Phoenix’ (named after the mythical bird which rises from its own ashes every time it dies), “to give a human face to redistribution and redeployment of the excess staff that Satyam has on its rolls”.
Vineet Nayyar, MD & CEO of Tech Mahindra, was on record recently that the company had excess staff of around 10,000. Most of these employees are non-billable (not working on current projects).
“The reason is that Ramalinga Raju showed high revenue figures and, hence, had to recruit employees to work on non-existent projects. Satyam is, thus, left with a huge pool of non-billable employees,” reasoned the source.
Hence, as part of ‘Operation Phoenix’ (Phase-I), at least 6,000 Satyam employees — those who have been on the bench for at least six months — will be given up to 40 per cent of their salary and asked to stay home while continuing to stay on the rolls. These employees have around 2-3 years of experience on an average, and are across verticals that Satyam caters to.
“They need not come to office. If they are needed, they will be drafted back into the workforce. Else, the company will take a call after six months,” said the source.
These employees can also go for re-training or re-skilling, for which “Satyam will even offer interest-free loans”.
The employees will have to register with their respective unit HR heads, added the source. Moreover, Satyam is also looking at “reverse placements” wherein the placement agencies, which provide it with employees, will look at job opportunities for the 6,000-odd employees.
L&T Q4 net up despite Satyam provision
28 May 2009, REUTERS
MUMBAI: Larsen & Toubro Ltd, on Thursday reported its March quarter net profit rose a better-than-expected 3.3 per cent on a strong order flow of infrastructure contracts.
Net profit rose to Rs 999 crore ($209 million) in its fiscal fourth quarter ended March from Rs 967 crore a year ago, but was weighed down by a provision of Rs 185 crore for its investment in Satyam Computer Services.
Net sales rose to Rs 10,470 crore from Rs 8,470 crore.
A poll of 13 brokerages had forecast net profit of Rs 910 crore, on net sales of Rs 11,059 crore.
MUMBAI: Larsen & Toubro Ltd, on Thursday reported its March quarter net profit rose a better-than-expected 3.3 per cent on a strong order flow of infrastructure contracts.
Net profit rose to Rs 999 crore ($209 million) in its fiscal fourth quarter ended March from Rs 967 crore a year ago, but was weighed down by a provision of Rs 185 crore for its investment in Satyam Computer Services.
Net sales rose to Rs 10,470 crore from Rs 8,470 crore.
A poll of 13 brokerages had forecast net profit of Rs 910 crore, on net sales of Rs 11,059 crore.
Tech Mahindra to appoint new Satyam CFO in two weeks
26 May 2009, ET Bureau
MUMBAI / HYDERABAD: Tech Mahindra, the new owner of the scam-hit Satyam Computer Services, is close to appointing a chief financial officer for the company.
The candidate is from outside the Mahindra group and the announcement is likely to be made within the next two weeks, a top official of the firm told ET. Earlier, Tech Mahindra was reported to be considering many candidates for this post, including one from the Mahindra group itself although not from Tech Mahindra.
The CFO’s appointment is crucial as Satyam’s accounts are being re-stated by two auditors, KPMG and Deloitte. The two firms, which are re-stating accounts for the last six years, made a presentation to the board on Friday. But the process has been time-consuming and expensive. Chairman of the board Kiran Karnik has admitted that the IT firm’s bottom line is under stress.
Satyam plunged into a crisis after its defamed founder B Ramalinga Raju admitted to fudging the books. His erstwhile CFO Srinivas Vadlamani was also charged of conniving with Raju and was also taken to judicial custody.
The government-appointed board to salvage Satyam was given the mandate to appoint both a chief executive officer and CFO for Satyam. AS Murthy, who was from Satyam itself, was named the CEO.
The board had considered some candidates for the post of CFO. Partho S Dutta, former group finance director of the Murugappa group, was offered the job but declined, said a source privy to the development. Dutta is now special advisor on the Satyam board.
The government-appointed board eventually decided that it was better for the new owner to take a decision on CFO. “The position of CFO of Satyam offers unique challenges. In addition to the qualifications of a CFO, the person should have strong contract management skills with customers. The CFO should be able to support the business in evolving the right customer contracts,” said R Suresh, managing director of executive search firm, Stanton Chase.
Given the liquidity challenges Satyam faces, CFO also needs to strong cash management skills and should be in a position to manage recievables and salaries. The CFO also needs to understand the old system that was in place and come up with a new MIS (management information system) that allows transparency in reporting the daily, quarterly and annual financial data, Mr Suresh added.
MUMBAI / HYDERABAD: Tech Mahindra, the new owner of the scam-hit Satyam Computer Services, is close to appointing a chief financial officer for the company.
The candidate is from outside the Mahindra group and the announcement is likely to be made within the next two weeks, a top official of the firm told ET. Earlier, Tech Mahindra was reported to be considering many candidates for this post, including one from the Mahindra group itself although not from Tech Mahindra.
The CFO’s appointment is crucial as Satyam’s accounts are being re-stated by two auditors, KPMG and Deloitte. The two firms, which are re-stating accounts for the last six years, made a presentation to the board on Friday. But the process has been time-consuming and expensive. Chairman of the board Kiran Karnik has admitted that the IT firm’s bottom line is under stress.
Satyam plunged into a crisis after its defamed founder B Ramalinga Raju admitted to fudging the books. His erstwhile CFO Srinivas Vadlamani was also charged of conniving with Raju and was also taken to judicial custody.
The government-appointed board to salvage Satyam was given the mandate to appoint both a chief executive officer and CFO for Satyam. AS Murthy, who was from Satyam itself, was named the CEO.
The board had considered some candidates for the post of CFO. Partho S Dutta, former group finance director of the Murugappa group, was offered the job but declined, said a source privy to the development. Dutta is now special advisor on the Satyam board.
The government-appointed board eventually decided that it was better for the new owner to take a decision on CFO. “The position of CFO of Satyam offers unique challenges. In addition to the qualifications of a CFO, the person should have strong contract management skills with customers. The CFO should be able to support the business in evolving the right customer contracts,” said R Suresh, managing director of executive search firm, Stanton Chase.
Given the liquidity challenges Satyam faces, CFO also needs to strong cash management skills and should be in a position to manage recievables and salaries. The CFO also needs to understand the old system that was in place and come up with a new MIS (management information system) that allows transparency in reporting the daily, quarterly and annual financial data, Mr Suresh added.
Learning from Satyam: How to Detect Fraud
Other Indian companies could watch for unusually large bank deposits. The board should know where they are located and who has access
The scandal at Satyam Computer Services (SAY) continues to rock India's outsourcing industry. The company, once the fourth-largest IT services provider in India, has been on the rocks since then-Chairman Ramalinga Raju announced in January a $1 billion accounting fraud. Prosecutors are pursuing cases against Satyam executives and auditor PricewaterhouseCoopers accountants. Rivals are busy trying to poach Satyam employees and clients. And smaller competitor Tech Mahindra (TEML.BO) in April took control of the company by buying 51% of Satyam stock for $1.5 billion.
As Indian investigators try to learn how to look for fraud in the future, they need to look at a relatively obscure line item in Satyam's books. A comparison of Satyam's performance with its two major competitors—Infosys (INFY) and Wipro (WIT)—would not have revealed any problems. The company consistently lagged in key performance metrics, including return on equity, receivables turnover, and cash conversion cycle, but (unlike in other frauds) the metrics would not have shown any reason to suspect financial statement manipulation.
Breakdown of Internal Controls
The vital clue, though, was Satyam's investments in bank deposits. As of Mar. 31, 2008, Satyam reported in its consolidated balance sheet approximately $825 million of its $1.1 billion cash and bank balances as investments in bank deposits. The first time this line item appeared in Satyam's consolidated financial statements was in fiscal year 2003. It is indeed telling, in retrospect, that the disclosures made by the company about these deposits did not include the names of the banks where the deposits were invested—customary in India under generally accepted accounting principles (GAAP)—nor did they explain the reasons as to why a significant portion of the company's assets were invested there.
Even though the disclosures were minimal at best, it is highly unusual that scant—if any—attention was paid internally to such large bank accounts without examining the supporting details on where they were located and who had access to them. It appears that management overrode the underlying internal controls, which would imply that there was a breakdown of such controls over financial reporting. Corporate governance at Satyam appears to have been virtually nonexistent, but this fraud should have been caught much earlier, particularly through the external or internal audit processes.
Since the criminal proceedings and the restatement of Satyam's consolidated financial statements are still under way, the underlying facts and circumstances of Satyam's fraud are not completely transparent yet. Perhaps the strength of the company's reported numbers concealed the imploding financial situation. Two plausible scenarios arise: One, the cash reflected in the cash and bank balances was fake from the beginning; or two, that the cash was genuine but was subsequently misappropriated.
The scandal at Satyam Computer Services (SAY) continues to rock India's outsourcing industry. The company, once the fourth-largest IT services provider in India, has been on the rocks since then-Chairman Ramalinga Raju announced in January a $1 billion accounting fraud. Prosecutors are pursuing cases against Satyam executives and auditor PricewaterhouseCoopers accountants. Rivals are busy trying to poach Satyam employees and clients. And smaller competitor Tech Mahindra (TEML.BO) in April took control of the company by buying 51% of Satyam stock for $1.5 billion.
As Indian investigators try to learn how to look for fraud in the future, they need to look at a relatively obscure line item in Satyam's books. A comparison of Satyam's performance with its two major competitors—Infosys (INFY) and Wipro (WIT)—would not have revealed any problems. The company consistently lagged in key performance metrics, including return on equity, receivables turnover, and cash conversion cycle, but (unlike in other frauds) the metrics would not have shown any reason to suspect financial statement manipulation.
Breakdown of Internal Controls
The vital clue, though, was Satyam's investments in bank deposits. As of Mar. 31, 2008, Satyam reported in its consolidated balance sheet approximately $825 million of its $1.1 billion cash and bank balances as investments in bank deposits. The first time this line item appeared in Satyam's consolidated financial statements was in fiscal year 2003. It is indeed telling, in retrospect, that the disclosures made by the company about these deposits did not include the names of the banks where the deposits were invested—customary in India under generally accepted accounting principles (GAAP)—nor did they explain the reasons as to why a significant portion of the company's assets were invested there.
Even though the disclosures were minimal at best, it is highly unusual that scant—if any—attention was paid internally to such large bank accounts without examining the supporting details on where they were located and who had access to them. It appears that management overrode the underlying internal controls, which would imply that there was a breakdown of such controls over financial reporting. Corporate governance at Satyam appears to have been virtually nonexistent, but this fraud should have been caught much earlier, particularly through the external or internal audit processes.
Since the criminal proceedings and the restatement of Satyam's consolidated financial statements are still under way, the underlying facts and circumstances of Satyam's fraud are not completely transparent yet. Perhaps the strength of the company's reported numbers concealed the imploding financial situation. Two plausible scenarios arise: One, the cash reflected in the cash and bank balances was fake from the beginning; or two, that the cash was genuine but was subsequently misappropriated.
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