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
Friday, May 29, 2009
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.
Sunday, May 24, 2009
ICICI gets more time to deposit Maytas money
22 May 2009, ET Bureau
MUMBAI: ICICI Bank, which has given the performance guarantee for one of Maytas Infrastructure’s projects, can deposit the amount it underwrote for a highway project in Tamil Nadu after it is heard by the Bombay High Court in June.
A division bench of justices Abhay Oka and AR Joshi on May 15 had asked ICICI Bank to deposit Rs 20 crore with the court in one week towards the performance guarantee amount, following an appeal by Maytas. The bank sought the order to be reviewed and asked for time for depositing the money, which the court allowed. The case will come up for further hearing when the court reopens after the summer vacation.
The court on Thursday was told that the bank had not been served the appeal filed by Maytas in connection with invoking of its guarantee. The division bench of justices Anand Nirgude and Rajesh Ketkar has allowed the bank four weeks to deposit about Rs 20 crore (the performance guarantee) in the court.
Meanwhile, the bench, which passed the order for the bank to deposit the money, can hear the bank’s contention and review the order if needed.
Maytas was sub-contracted the project for expansion of NH68 by Utility Energytech, an ADAG company. According to Utility Energytech counsel Shrihari Aney, Maytas defaulted on performance. After the Satyam fiasco, Utility Energytech terminated the contact with Maytas and invoked the mobilisation guarantee of Rs 40 crore.
Maytas then initiated arbitration proceedings alleging that land for the project was not acquired in time. It sought a stay on execution of the performance guarantee, which was underwritten by ICICI. Its contention was that Utility Energytech must not receive the money pending the arbitration proceeding.
Solicitor Ashu Thakur, on behalf of Maytas, said that the court had stayed the invocation of the performance guarantee till May 15. Within this time, Maytas filed an appeal against the order. However, the bank was not served the appeal in which the said order was passed, said the bank’s counsel Venkatesh Dhond.
MUMBAI: ICICI Bank, which has given the performance guarantee for one of Maytas Infrastructure’s projects, can deposit the amount it underwrote for a highway project in Tamil Nadu after it is heard by the Bombay High Court in June.
A division bench of justices Abhay Oka and AR Joshi on May 15 had asked ICICI Bank to deposit Rs 20 crore with the court in one week towards the performance guarantee amount, following an appeal by Maytas. The bank sought the order to be reviewed and asked for time for depositing the money, which the court allowed. The case will come up for further hearing when the court reopens after the summer vacation.
The court on Thursday was told that the bank had not been served the appeal filed by Maytas in connection with invoking of its guarantee. The division bench of justices Anand Nirgude and Rajesh Ketkar has allowed the bank four weeks to deposit about Rs 20 crore (the performance guarantee) in the court.
Meanwhile, the bench, which passed the order for the bank to deposit the money, can hear the bank’s contention and review the order if needed.
Maytas was sub-contracted the project for expansion of NH68 by Utility Energytech, an ADAG company. According to Utility Energytech counsel Shrihari Aney, Maytas defaulted on performance. After the Satyam fiasco, Utility Energytech terminated the contact with Maytas and invoked the mobilisation guarantee of Rs 40 crore.
Maytas then initiated arbitration proceedings alleging that land for the project was not acquired in time. It sought a stay on execution of the performance guarantee, which was underwritten by ICICI. Its contention was that Utility Energytech must not receive the money pending the arbitration proceeding.
Solicitor Ashu Thakur, on behalf of Maytas, said that the court had stayed the invocation of the performance guarantee till May 15. Within this time, Maytas filed an appeal against the order. However, the bank was not served the appeal in which the said order was passed, said the bank’s counsel Venkatesh Dhond.
ICICI seeks representation on Maytas Infra board
Press Trust of India / New Delhi May 21, 2009,
ICICI Bank has approached the Corporate Affairs Ministry seeking representation on the board of Maytas Infra, a company promoted by the kin of disgraced Satyam founder Ramalinga Raju.
The bank, ministry sources said, is keen to have its representation on the board of the cash-strapped company, which recently approved the corporate debt restructuring plan with a view to revitalising the company.
Besides IDBI Bank, State Bank of India and IL&FS, ICICI Bank is a major lender to the Maytas Infra.
ICICI Bank, when contacted, refused to comment on the development.
The request of ICICI Bank would be examined by the Corporate Affairs Ministry, sources said, adding the final decision will be taken by the Company Law Board (CLB).
While hearing the petition of the government in the Maytas Infra case in February, the CLB asked ICICI Bank and other financial institutions whether they wanted a representation on the company board.
At that time all the three financial institutions -- IDBI Bank, ICICI Bank and IL&FS -- told the CLB that they were not interested in board membership of the Hyderabad-based company.
ICICI Bank has approached the Corporate Affairs Ministry seeking representation on the board of Maytas Infra, a company promoted by the kin of disgraced Satyam founder Ramalinga Raju.
The bank, ministry sources said, is keen to have its representation on the board of the cash-strapped company, which recently approved the corporate debt restructuring plan with a view to revitalising the company.
Besides IDBI Bank, State Bank of India and IL&FS, ICICI Bank is a major lender to the Maytas Infra.
ICICI Bank, when contacted, refused to comment on the development.
The request of ICICI Bank would be examined by the Corporate Affairs Ministry, sources said, adding the final decision will be taken by the Company Law Board (CLB).
While hearing the petition of the government in the Maytas Infra case in February, the CLB asked ICICI Bank and other financial institutions whether they wanted a representation on the company board.
At that time all the three financial institutions -- IDBI Bank, ICICI Bank and IL&FS -- told the CLB that they were not interested in board membership of the Hyderabad-based company.
After Infosys, Wipro drops Satyam from rival list
21 May 2009,PTI
NEW YORK: Scam-hit Satyam seems to be losing its status as a noteworthy rival for the top Indian IT firms, as Wipro has become the second major player in this space after Infosys to drop its name from the list of competitors.
Satyam used to be a regular in the list of competitors mentioned by its larger peers like Infosys and Wipro in their annual report filings with the US market regulator Securities and Exchange Commission.
However, Satyam's name is conspicuously absent in Wipro's latest annual report filing for the financial year ended March 31, 2009. Prior to this, Infosys also dropped Satyam's name from its list of noteworthy rivals in its latest annual report filing, filed with SEC earlier this month.
All the three Indian IT firms, Infosys, Wipro and Satyam are listed in the US -- Infosys on Nasdaq and the rest two on the New York Stock Exchange.
Before it was hit by the country's biggest-ever fraud admitted to by its founder and then chairman Ramalinga Raju in January, Satyam was known as the fourth-biggest software exporter from the country after TCS, Infosys and Wipro.
Satyam Computer has already embarked upon a revival path after its government-appointed board finalised a deal to sell controlling stake of 51 per cent in the company to domestic conglomerate Mahindra Group.
The other names and factors about competition in Infosys' latest annual filing have remained broadly unchanged from the previous year.
Infosys has said that it competes with "consulting firms such as Accenture Limited, Atos Origin, BearingPoint Inc, Cap Gemini SA, and Deloitte Consulting LLP."
Besides, it also competes with divisions of large global technology firms such as HP and IBM, IT outsourcing firms such as Computer Sciences Corp, Keane, Logica and Perot Systems; offshore technology services firms such as Cognizant, Tata Consultancy Services and Wipro Technologies Limited.
Other companies named as its competitors include "software firms such as Oracle Corporation and SAP AG; business process outsourcing firms such as Genpact Limited and WNS Global Services; and in-house IT departments of large corporations."
However, Wipro and Infosys have not clarified the reasons for Satyam's omission from among their competitors.
About competition, Wipro said that its "competitors are located internationally as well as in India. We expect that competition will further increase and will potentially include companies from other countries that have lower personnel costs than those currently in India."
"We believe we compete favourably with respect to each of these factors and believe our success has been driven by quality leadership, our ability to create client loyalty and our expertise in targeted select markets," it added.
NEW YORK: Scam-hit Satyam seems to be losing its status as a noteworthy rival for the top Indian IT firms, as Wipro has become the second major player in this space after Infosys to drop its name from the list of competitors.
Satyam used to be a regular in the list of competitors mentioned by its larger peers like Infosys and Wipro in their annual report filings with the US market regulator Securities and Exchange Commission.
However, Satyam's name is conspicuously absent in Wipro's latest annual report filing for the financial year ended March 31, 2009. Prior to this, Infosys also dropped Satyam's name from its list of noteworthy rivals in its latest annual report filing, filed with SEC earlier this month.
All the three Indian IT firms, Infosys, Wipro and Satyam are listed in the US -- Infosys on Nasdaq and the rest two on the New York Stock Exchange.
Before it was hit by the country's biggest-ever fraud admitted to by its founder and then chairman Ramalinga Raju in January, Satyam was known as the fourth-biggest software exporter from the country after TCS, Infosys and Wipro.
Satyam Computer has already embarked upon a revival path after its government-appointed board finalised a deal to sell controlling stake of 51 per cent in the company to domestic conglomerate Mahindra Group.
The other names and factors about competition in Infosys' latest annual filing have remained broadly unchanged from the previous year.
Infosys has said that it competes with "consulting firms such as Accenture Limited, Atos Origin, BearingPoint Inc, Cap Gemini SA, and Deloitte Consulting LLP."
Besides, it also competes with divisions of large global technology firms such as HP and IBM, IT outsourcing firms such as Computer Sciences Corp, Keane, Logica and Perot Systems; offshore technology services firms such as Cognizant, Tata Consultancy Services and Wipro Technologies Limited.
Other companies named as its competitors include "software firms such as Oracle Corporation and SAP AG; business process outsourcing firms such as Genpact Limited and WNS Global Services; and in-house IT departments of large corporations."
However, Wipro and Infosys have not clarified the reasons for Satyam's omission from among their competitors.
About competition, Wipro said that its "competitors are located internationally as well as in India. We expect that competition will further increase and will potentially include companies from other countries that have lower personnel costs than those currently in India."
"We believe we compete favourably with respect to each of these factors and believe our success has been driven by quality leadership, our ability to create client loyalty and our expertise in targeted select markets," it added.
Satyam may sack 8,000 non-billable staff
Satyam Computer is likely to sack most of its non-billable staff of up to 8,000 working in marketing, HR and administration wings, after Tech Mahindra takes charge of the company from June 1.
A Satyam official said there is no doubt that there will be large-scale sacking mostly of the support and non-billable staff (other than hardcore software engineers) once Tech Mahindra (the new owner of the company) directors come on board from June 1.
The surplus staff is about 10,000-12,000 and the 'least painful' ways of sacking is asking the bench, non-billable and support staff to go.
The company spokesperson, when contacted, said that at the moment these are mere speculations.
Sources also said the outsourcer may opt for "virtual pool" sacking method whereby the company would ask some of the staff to take 75 per cent of its salary and take one-year off and look for a job elsewhere with the fragile assurance that they would be recalled, if required.
A Satyam official said there is no doubt that there will be large-scale sacking mostly of the support and non-billable staff (other than hardcore software engineers) once Tech Mahindra (the new owner of the company) directors come on board from June 1.
The surplus staff is about 10,000-12,000 and the 'least painful' ways of sacking is asking the bench, non-billable and support staff to go.
The company spokesperson, when contacted, said that at the moment these are mere speculations.
Sources also said the outsourcer may opt for "virtual pool" sacking method whereby the company would ask some of the staff to take 75 per cent of its salary and take one-year off and look for a job elsewhere with the fragile assurance that they would be recalled, if required.
Satyam has 10,000 surplus staff: Tech Mahindra
23 May 2009, ET Bureau
NEW DELHI: About 10,000 employees, a quarter of Satyam Computer Services’ total headcount, are surplus, and the company was looking for “the least painful way” to deal with the situation, the CEO of its new owner, Tech Mahindra, said on Friday.
Among the options the new Satyam management is toying with include across-the-board salary cuts, virtual benching of employees, and sending some of them on a sabbatical or to work with NGOs, as it looks to cut costs and regain its reputation in the global markets.
“We are trying to find the easiest and least painful way,” Tech Mahindra MD and CEO Vineet Nayyar said after a company board meeting.
Satyam, one of the pioneers of technology outsourcing, shocked corporate India in January when its founder B Ramalinga Raju confessed that he had been tampering with the company’s accounts for years. The government then ordered a high-level probe, sacked the company board, and appointed a crack team of independent directors.
Tech Mahindra, the IT arm of the $6.7-billion Mahindra Group, bought Satyam at an open auction by agreeing to pay Rs 2,889 crore for a 51% stake. The acquisition has been approved by India’s Company Law Board and Germany’s anti-trust body. On the issue of the $1-billion fraud and forgery lawsuit filed against Satyam by the UK-based Upaid, Mr Nayyar said the firm would prefer an out-of-court settlement as opposed to a long-term litigation.
“It is in their (Upaid’s) interest and our interest, but there has to be a meeting of minds,” he added.
The Satyam board meeting, which Mr Nayyar attended as a special invitee, was held here to review the firm’s progress and to get an update on the restatement of accounts by its new auditors KPMG and Deloitte.
The two auditing firms are restating Satyam’s accounts for the past six years. “They (the auditors) will have to go back as far as possible as there are issues relating to earlier times. We hope that in the next 2-3 quarters, we will get something done,” said Kiran Karnik, chairman of the Satyam board.
Satyam is expected to see a dip in its revenues as the work being done for clients, which have cancelled their contracts, is phased out, he said.
Mr Nayyar added that Satyam, which had lost a few clients in the wake of Mr Raju’s admission, has not lost any client in the past one month.
Tech Mahindra representatives, including CEO Mr Nayyar, global operations head CP Gurnani, strategic initiatives president Sanjay Kalra and M&M’s IT sector president Ulhas N Yargop, will join the Satyam board from June 1.
NEW DELHI: About 10,000 employees, a quarter of Satyam Computer Services’ total headcount, are surplus, and the company was looking for “the least painful way” to deal with the situation, the CEO of its new owner, Tech Mahindra, said on Friday.
Among the options the new Satyam management is toying with include across-the-board salary cuts, virtual benching of employees, and sending some of them on a sabbatical or to work with NGOs, as it looks to cut costs and regain its reputation in the global markets.
“We are trying to find the easiest and least painful way,” Tech Mahindra MD and CEO Vineet Nayyar said after a company board meeting.
Satyam, one of the pioneers of technology outsourcing, shocked corporate India in January when its founder B Ramalinga Raju confessed that he had been tampering with the company’s accounts for years. The government then ordered a high-level probe, sacked the company board, and appointed a crack team of independent directors.
Tech Mahindra, the IT arm of the $6.7-billion Mahindra Group, bought Satyam at an open auction by agreeing to pay Rs 2,889 crore for a 51% stake. The acquisition has been approved by India’s Company Law Board and Germany’s anti-trust body. On the issue of the $1-billion fraud and forgery lawsuit filed against Satyam by the UK-based Upaid, Mr Nayyar said the firm would prefer an out-of-court settlement as opposed to a long-term litigation.
“It is in their (Upaid’s) interest and our interest, but there has to be a meeting of minds,” he added.
The Satyam board meeting, which Mr Nayyar attended as a special invitee, was held here to review the firm’s progress and to get an update on the restatement of accounts by its new auditors KPMG and Deloitte.
The two auditing firms are restating Satyam’s accounts for the past six years. “They (the auditors) will have to go back as far as possible as there are issues relating to earlier times. We hope that in the next 2-3 quarters, we will get something done,” said Kiran Karnik, chairman of the Satyam board.
Satyam is expected to see a dip in its revenues as the work being done for clients, which have cancelled their contracts, is phased out, he said.
Mr Nayyar added that Satyam, which had lost a few clients in the wake of Mr Raju’s admission, has not lost any client in the past one month.
Tech Mahindra representatives, including CEO Mr Nayyar, global operations head CP Gurnani, strategic initiatives president Sanjay Kalra and M&M’s IT sector president Ulhas N Yargop, will join the Satyam board from June 1.
CLB may withdraw its board members from Satyam after June
24 May 2009, PTI
NEW DELHI: Tech Mahindra, the new owner of Satyam, is likely to have full-board representation on the scam-tainted company soon as the government withdraws its six board members anytime next month.
A board member of Satyam said: "We get the indication from Company Law Board that once the four Tech Mahindra nominees join the Satyam board in June 1, CLB may direct the government - nominated board members to resign and ask Tech Mahindra to have the entire board representation any day after that.
Sources in CLB said it may give the direction after getting status report from the company. But at the moment there was no such request either from the government or any of the board members appointed by it.
When contacted Satyam Board Chairman Kiran Karnik said "Our (the government-inducted board's) job is done. There is a new owner now, there is stability in the company".
The company, according to sources, is also looking at changing the brand of Satyam like name and logo as it perceives the word fraud is now associated with it forever. These are long term policy decisions and can only happen once Tech Mahindra fully takes over.
Once the government takes off its board members, Tech Mahindra along with its own members can also appoint independent members as per the requirement, said the member.
Yesterday Venturbay Consultants (an arm of Tech Mahindra) appointed four nominees on the board of Satyam, which will make a total of 10 directors on the Board.
The CLB in January had appointed Kiran Karnik, Deepak S Parekh, C Achuthan, Tarun Das, S Balakrisha Mainak and T N Manoharan to the Board and had said they would continue on the Board until further orders of Company Law Board.
Tech Mahindra acquired 31 per cent in Satyam Computers in April and its open offer for another 20 per cent would start in June 12.
NEW DELHI: Tech Mahindra, the new owner of Satyam, is likely to have full-board representation on the scam-tainted company soon as the government withdraws its six board members anytime next month.
A board member of Satyam said: "We get the indication from Company Law Board that once the four Tech Mahindra nominees join the Satyam board in June 1, CLB may direct the government - nominated board members to resign and ask Tech Mahindra to have the entire board representation any day after that.
Sources in CLB said it may give the direction after getting status report from the company. But at the moment there was no such request either from the government or any of the board members appointed by it.
When contacted Satyam Board Chairman Kiran Karnik said "Our (the government-inducted board's) job is done. There is a new owner now, there is stability in the company".
The company, according to sources, is also looking at changing the brand of Satyam like name and logo as it perceives the word fraud is now associated with it forever. These are long term policy decisions and can only happen once Tech Mahindra fully takes over.
Once the government takes off its board members, Tech Mahindra along with its own members can also appoint independent members as per the requirement, said the member.
Yesterday Venturbay Consultants (an arm of Tech Mahindra) appointed four nominees on the board of Satyam, which will make a total of 10 directors on the Board.
The CLB in January had appointed Kiran Karnik, Deepak S Parekh, C Achuthan, Tarun Das, S Balakrisha Mainak and T N Manoharan to the Board and had said they would continue on the Board until further orders of Company Law Board.
Tech Mahindra acquired 31 per cent in Satyam Computers in April and its open offer for another 20 per cent would start in June 12.
Satyam looking at measures to cut costs
22 May 2009 PTI
NEW DELHI: Concerned over rising cost hitting the revenue, Satyam Computer on Friday said it is looking at cutting down costs.
"The customer front is good, stable. But costs are high... the revenues would be less," company Chairman Kiran Karnik told reporters after a meeting with the board members and officials of Tech Mahindra, which is taking over Satyam Computer.
The company today discussed a host of cost-cutting measures that can be explored.
Tech Mahindra Chief Executive Vineet Nayyar said Satyam had 10,000 excess employees in its 40,000-strong headcount.
"The company has 10,000 excess staff. We are looking at least painful ways to take care of this," Nayyar said.
On the other hand, Karnik said the company is not looking at layoffs, it is exploring sabbatical and virtual bench strategy.
Karnik said today's meeting discussed the challenges to the bottomline, how to handle (excess) people, HR and real estate among others.
Satyam witnessed a flurry of client loss following its disgraced founder Ramalinga Raju's admission to multi-crore rupees accounting fraud in January.
Today Satyam shares surged by 11.54 per cent on the BSE.
Last month, Tech Mahindra had acquired 51 per cent in the Hyderabad-listed Satyam through an auction for Rs 2,099 crore.
Karnik said the new auditors Deloitte and KPMG made presentation today at the meeting and said it would take minimum six months for restatement of company's accounts.
On the protracted legal battle with UK-based mobile solution firm Upaid, Nayyar said an out-of-court settlement is favourable and the company would explore that option.
Meanwhile, in a filing to the Bombay Stock Exchange, Satyam said four nominee directors of Tech Mahindra, including its Chief Executive Vineet Nayyar, have been today appointed on the board of the company, with effect from June 1.
The other three nominee directors on behalf of Venturbay Consultants (an arm of Tech Mahindra), include C P Gurnani, Sanjay Kalra and Ulhas N Yargop, Satyam said.
Gurnani currently heads Tech Mahindra's global operations, Kalra is President Strategic Initiatives while Yargop is President for IT sector and a member of the Group Management Board of Mahindra & Mahindra.
"Following the effectiveness of the appointment of Venbturbay Directors, there will be a total of 10 directors on the board," Satyam said.
In January the government had appointed Kiran Karnik, Deepak Parekh, C Achuthan, Tarun Das, T N Manoharan and S Balakrishna Mainak on the board of Satyam Computer after its founder Ramalinga Raju disclosed of a multi-crore financial fraud in the company's books of accounts.
NEW DELHI: Concerned over rising cost hitting the revenue, Satyam Computer on Friday said it is looking at cutting down costs.
"The customer front is good, stable. But costs are high... the revenues would be less," company Chairman Kiran Karnik told reporters after a meeting with the board members and officials of Tech Mahindra, which is taking over Satyam Computer.
The company today discussed a host of cost-cutting measures that can be explored.
Tech Mahindra Chief Executive Vineet Nayyar said Satyam had 10,000 excess employees in its 40,000-strong headcount.
"The company has 10,000 excess staff. We are looking at least painful ways to take care of this," Nayyar said.
On the other hand, Karnik said the company is not looking at layoffs, it is exploring sabbatical and virtual bench strategy.
Karnik said today's meeting discussed the challenges to the bottomline, how to handle (excess) people, HR and real estate among others.
Satyam witnessed a flurry of client loss following its disgraced founder Ramalinga Raju's admission to multi-crore rupees accounting fraud in January.
Today Satyam shares surged by 11.54 per cent on the BSE.
Last month, Tech Mahindra had acquired 51 per cent in the Hyderabad-listed Satyam through an auction for Rs 2,099 crore.
Karnik said the new auditors Deloitte and KPMG made presentation today at the meeting and said it would take minimum six months for restatement of company's accounts.
On the protracted legal battle with UK-based mobile solution firm Upaid, Nayyar said an out-of-court settlement is favourable and the company would explore that option.
Meanwhile, in a filing to the Bombay Stock Exchange, Satyam said four nominee directors of Tech Mahindra, including its Chief Executive Vineet Nayyar, have been today appointed on the board of the company, with effect from June 1.
The other three nominee directors on behalf of Venturbay Consultants (an arm of Tech Mahindra), include C P Gurnani, Sanjay Kalra and Ulhas N Yargop, Satyam said.
Gurnani currently heads Tech Mahindra's global operations, Kalra is President Strategic Initiatives while Yargop is President for IT sector and a member of the Group Management Board of Mahindra & Mahindra.
"Following the effectiveness of the appointment of Venbturbay Directors, there will be a total of 10 directors on the board," Satyam said.
In January the government had appointed Kiran Karnik, Deepak Parekh, C Achuthan, Tarun Das, T N Manoharan and S Balakrishna Mainak on the board of Satyam Computer after its founder Ramalinga Raju disclosed of a multi-crore financial fraud in the company's books of accounts.
Tuesday, May 12, 2009
Consumer body rejects Satyam shareholders' compensation plea
12 May 2009 ET Bureau
NEW DELHI: India’s apex consumer disputes panel has declined to entertain a petition by retail shareholders of fraud-hit Satyam Computer Services seeking a compensation of about Rs 5,000 crore for the lost value of the company’s shares.
The National Consumer Disputes Redressal Commission (NCDRC) on Monday rejected to entertain the petition, the first of its kind here, citing lack of infrastructure to handle such cases.
“We do not have the infrastructure to deal with such kind of petition ... the Central Bureau of Investigation (CBI) and the Company Law Board (CLB) are already seized with the matter,” an NCDRC bench comprising justice KS Gupta and member Rajyalashmi Rao observed. The Satyam scam had came to light in January.
The petitioners, Midas Touch lnvestors Association, a privately-funded investor protection group, had argued that the scam had affected about 3 lakh retail shareholders and they must be compensated. The petition was the first investor redressal complaint in India after the Satyam crisis, filed in line with the various suits pending in US courts against the company, also listed on US bourses.
Virendra Jain, director of the organisation, said they were exploring other options to get justice for small investors. After Raju’s confession, Satyam’s share price had plunged from Rs 544 in May 2008 to Rs 11.50 in January 2009.
It is currently hovering at around Rs 40-45.
Satyam has since been taken over by Tech Mahindra after the company won a public bid monitored by the government-appointed board of the company.
Besides the disgraced promoters, the Midas petition also names Satyam’s former independent directors and the ex-auditor PwC as respondents liable to pay compensation. Midas’ contention was that independent directors and auditors are appointed by shareholders at the annual general meeting for a service. If they fail in their duty, those who hired them — the shareholders — have a right to compensation under consumer protection law.
NEW DELHI: India’s apex consumer disputes panel has declined to entertain a petition by retail shareholders of fraud-hit Satyam Computer Services seeking a compensation of about Rs 5,000 crore for the lost value of the company’s shares.
The National Consumer Disputes Redressal Commission (NCDRC) on Monday rejected to entertain the petition, the first of its kind here, citing lack of infrastructure to handle such cases.
“We do not have the infrastructure to deal with such kind of petition ... the Central Bureau of Investigation (CBI) and the Company Law Board (CLB) are already seized with the matter,” an NCDRC bench comprising justice KS Gupta and member Rajyalashmi Rao observed. The Satyam scam had came to light in January.
The petitioners, Midas Touch lnvestors Association, a privately-funded investor protection group, had argued that the scam had affected about 3 lakh retail shareholders and they must be compensated. The petition was the first investor redressal complaint in India after the Satyam crisis, filed in line with the various suits pending in US courts against the company, also listed on US bourses.
Virendra Jain, director of the organisation, said they were exploring other options to get justice for small investors. After Raju’s confession, Satyam’s share price had plunged from Rs 544 in May 2008 to Rs 11.50 in January 2009.
It is currently hovering at around Rs 40-45.
Satyam has since been taken over by Tech Mahindra after the company won a public bid monitored by the government-appointed board of the company.
Besides the disgraced promoters, the Midas petition also names Satyam’s former independent directors and the ex-auditor PwC as respondents liable to pay compensation. Midas’ contention was that independent directors and auditors are appointed by shareholders at the annual general meeting for a service. If they fail in their duty, those who hired them — the shareholders — have a right to compensation under consumer protection law.
Monday, May 11, 2009
Satyam investors seek Rs 5000 cr compensation over share crash
11 May 2009, ET Bureau
NEW DELHI: Investors have approached a consumer court in New Delhi against fraud-hit Satyam Computer Services, seeking compensation for the lost Decoding the Satyam buy value of the company’s shares, taking inspiration from about six similar suits filed against the company by investors in the US.
Midas Touch Investors’ Association (MTIA) has approached the National Consumer Redressal Commission seeking compensation of Rs 4,987.50 crore (about $1 billion) for three lakh Satyam shareholders, who lost their money when Satyam shares crashed to Rs 11.50 in January this year from Rs 544 last May. The scrip has now stabilised at about Rs 45.
Besides the company, the petition names Satyam’s former promoters, ex-independent directors and the ex-auditor, Price Waterhouse, as respondents liable to pay compensation. This is the first time shareholders have approached a consumer court in the country for compensation for the losses suffered due to fall in share price. The court will hear the petition on Monday.
The investor body approached the consumer court as only this platform can order compensation for all goods sold, including shares and debentures, if there is a deficiency on the part of the seller.
MTIA is an investor protection panel which gets its resources from the investor education and protection fund maintained by the ministry of corporate affairs for taking up investor grievances with the government and regulators. The petition has been filed under section 21 of the Consumer Protection Act, 1986, which deals with the unfair practice of promoting sale of goods (shares, in this case) through false representation and deficiency in service, as well as, claim for damages.
Neither the Companies Act nor the rules governing capital markets provide for compensating shareholders for loss — whether it’s the risk equity investors take or on account of fraud. MTIA says independent directors and auditors are appointed by shareholders at the annual general meeting for a service. If they fail in their duty, those who hired them — the shareholders — have a right to compensation under the consumer protection law.
The reports of the directors and auditors in Satyam were fictitious, says the association. “The responsibility of directors and statutory auditors to shareholders is evident from the fact that they address their reports to the shareholders of the company,” said Virendra Jain, founder of MTIA.
The suit has implications for Tech Mahindra, which won the bid to buy majority stake in the company, as Satyam is named as a respondent liable for paying compensation. “It’s true that Satyam is a victim of fraud. However, it has benefited from the manipulated share price which led to better brand value, better business contracts and access to the brightest workers in the field,” Mr Jain said.
NEW DELHI: Investors have approached a consumer court in New Delhi against fraud-hit Satyam Computer Services, seeking compensation for the lost Decoding the Satyam buy value of the company’s shares, taking inspiration from about six similar suits filed against the company by investors in the US.
Midas Touch Investors’ Association (MTIA) has approached the National Consumer Redressal Commission seeking compensation of Rs 4,987.50 crore (about $1 billion) for three lakh Satyam shareholders, who lost their money when Satyam shares crashed to Rs 11.50 in January this year from Rs 544 last May. The scrip has now stabilised at about Rs 45.
Besides the company, the petition names Satyam’s former promoters, ex-independent directors and the ex-auditor, Price Waterhouse, as respondents liable to pay compensation. This is the first time shareholders have approached a consumer court in the country for compensation for the losses suffered due to fall in share price. The court will hear the petition on Monday.
The investor body approached the consumer court as only this platform can order compensation for all goods sold, including shares and debentures, if there is a deficiency on the part of the seller.
MTIA is an investor protection panel which gets its resources from the investor education and protection fund maintained by the ministry of corporate affairs for taking up investor grievances with the government and regulators. The petition has been filed under section 21 of the Consumer Protection Act, 1986, which deals with the unfair practice of promoting sale of goods (shares, in this case) through false representation and deficiency in service, as well as, claim for damages.
Neither the Companies Act nor the rules governing capital markets provide for compensating shareholders for loss — whether it’s the risk equity investors take or on account of fraud. MTIA says independent directors and auditors are appointed by shareholders at the annual general meeting for a service. If they fail in their duty, those who hired them — the shareholders — have a right to compensation under the consumer protection law.
The reports of the directors and auditors in Satyam were fictitious, says the association. “The responsibility of directors and statutory auditors to shareholders is evident from the fact that they address their reports to the shareholders of the company,” said Virendra Jain, founder of MTIA.
The suit has implications for Tech Mahindra, which won the bid to buy majority stake in the company, as Satyam is named as a respondent liable for paying compensation. “It’s true that Satyam is a victim of fraud. However, it has benefited from the manipulated share price which led to better brand value, better business contracts and access to the brightest workers in the field,” Mr Jain said.
'No regrets over Satyam'
11 May 2009, ET Bureau
For Larsen & Toubro (L&T), Satyam is history, says chairman & MD AM Naik, who is more occupied with his pet project of identifying and grooming next-gen leaders at India's largest engineering firm. Only that will get rid of the company's legacy of seniority-driven promotion policy, which has created a leadership "vacuum", he says. The next chairman, who will succeed Mr Naik, when he retires in September 2012, may be in the saddle for only three to five years. But the one who comes next will serve a 10-year term, says Mr Naik.
How's life after Satyam?
Life is as usual. Satyam came as a sudden opportunity, and we tried to bag it. We had bid at a price which we thought was right. We could not stretch our bid because we had already picked up Satyam shares at higher price. We bought a 4% stake before the scam broke, and later we purchased another 8% to bring down to the average price of acquisition to Rs 82 a share. We submitted a bid of Rs 46 a share, which, if we were to win, would put our average acquisition cost at Rs 56 a share. It was pretty close to Tech Mahindra's winning bid of Rs 58 a share. If L&T had to beat Tech Mahindra in the first round, it would have to put a price of Rs 65, which would make our average cost of acquisition Rs 71. In that case, Satyam would have been overvalued.
Is it an opportunity lost?
Every opportunity one misses looks to be a loss, and sometimes appears to be a gain. Satyam was an opportunity, which we would love to have won, but the fact that we lost it also gave a chance to go back to our core operations. So I don't regret. In the process, we got a consolation prize as well. L&T Infotech has become a known brand in the overseas markets, thanks to our participation in the Satyam auction. Our sales guys tell me that now they at least get an audience with important foreign players.
Was it a personal disappointment?
We had put in huge efforts to bid for Satyam and a lot of expectation was created amongst the Satyam employees and customers. So, it was a disappointment initially but I overcame it quickly. For me, Satyam is history. We have left it far behind us. I wish all the best to Tech Mahindra management, which has got a tremendous track record of success. And we want to get our investment of Rs 700 crore back.
For Larsen & Toubro (L&T), Satyam is history, says chairman & MD AM Naik, who is more occupied with his pet project of identifying and grooming next-gen leaders at India's largest engineering firm. Only that will get rid of the company's legacy of seniority-driven promotion policy, which has created a leadership "vacuum", he says. The next chairman, who will succeed Mr Naik, when he retires in September 2012, may be in the saddle for only three to five years. But the one who comes next will serve a 10-year term, says Mr Naik.
How's life after Satyam?
Life is as usual. Satyam came as a sudden opportunity, and we tried to bag it. We had bid at a price which we thought was right. We could not stretch our bid because we had already picked up Satyam shares at higher price. We bought a 4% stake before the scam broke, and later we purchased another 8% to bring down to the average price of acquisition to Rs 82 a share. We submitted a bid of Rs 46 a share, which, if we were to win, would put our average acquisition cost at Rs 56 a share. It was pretty close to Tech Mahindra's winning bid of Rs 58 a share. If L&T had to beat Tech Mahindra in the first round, it would have to put a price of Rs 65, which would make our average cost of acquisition Rs 71. In that case, Satyam would have been overvalued.
Is it an opportunity lost?
Every opportunity one misses looks to be a loss, and sometimes appears to be a gain. Satyam was an opportunity, which we would love to have won, but the fact that we lost it also gave a chance to go back to our core operations. So I don't regret. In the process, we got a consolation prize as well. L&T Infotech has become a known brand in the overseas markets, thanks to our participation in the Satyam auction. Our sales guys tell me that now they at least get an audience with important foreign players.
Was it a personal disappointment?
We had put in huge efforts to bid for Satyam and a lot of expectation was created amongst the Satyam employees and customers. So, it was a disappointment initially but I overcame it quickly. For me, Satyam is history. We have left it far behind us. I wish all the best to Tech Mahindra management, which has got a tremendous track record of success. And we want to get our investment of Rs 700 crore back.
Consumer forum rejects plea on compensation in Satyam case
May 11, 2009
The National Consumer Disputes Redressal Commission today refused to hear an investor body's petition seeking a compensation of Rs 4,987.5 crore for three lakh retail shareholders of fraud-hit Satyam, saying it is not equipped to deal with such cases.
"We do not have the infrastructure to deal with such kind of petititon...CBI and CLB (are) already seized with the matter," observed a Bench of the National Consumer Disputes Redressal Commission comprising Justice K S Gupta, presiding member and Rajyalakshmi Rao, member, while rejecting the Midas Touch Investors Association's (MTIA's) petition.
Midas Touch, a consumer protection organisation, filed a petition before the Consumer Commission seeking compensation for the retail investors of Satyam who had suffered because of the accounting fraud perpetrated by the founder of the Hyderabad-based IT company, B Ramalinga Raju, for years.
"We are exploring all options to see how this can be taken forward. It is disappointing and sends a wrong message to retail investors in India and globally," MTIA Director Virendra Jain told reporters after the hearing, which lasted just five minutes.
The petition, which sought a compensation of Rs 4,987.5 crore for about three lakh retail investors of Satyam on the basis of a formula, was mentioned before the Commission by advocates Madhumita Bhattacharjee and Yeeshu Jain.
The National Consumer Disputes Redressal Commission today refused to hear an investor body's petition seeking a compensation of Rs 4,987.5 crore for three lakh retail shareholders of fraud-hit Satyam, saying it is not equipped to deal with such cases.
"We do not have the infrastructure to deal with such kind of petititon...CBI and CLB (are) already seized with the matter," observed a Bench of the National Consumer Disputes Redressal Commission comprising Justice K S Gupta, presiding member and Rajyalakshmi Rao, member, while rejecting the Midas Touch Investors Association's (MTIA's) petition.
Midas Touch, a consumer protection organisation, filed a petition before the Consumer Commission seeking compensation for the retail investors of Satyam who had suffered because of the accounting fraud perpetrated by the founder of the Hyderabad-based IT company, B Ramalinga Raju, for years.
"We are exploring all options to see how this can be taken forward. It is disappointing and sends a wrong message to retail investors in India and globally," MTIA Director Virendra Jain told reporters after the hearing, which lasted just five minutes.
The petition, which sought a compensation of Rs 4,987.5 crore for about three lakh retail investors of Satyam on the basis of a formula, was mentioned before the Commission by advocates Madhumita Bhattacharjee and Yeeshu Jain.
Fidelity reduces stake in Satyam
10 May 2009, PTI
MUMBAI: Foreign fund house Fidelity has reduced its stake in beleaguered IT company Satyam Computer to 4.02% after offloading shares worth Rs 55.80 crore, through an open market transaction.
Fidelity, through its various investment arms, offloaded 1.18 crore shares representing 1.76% stake of Satyam Computer, the IT firm said in a disclosure on the Bombay Stock Exchange.
Prior to the transaction, the fund house held a 5.77% stake, while now it holds 4.02% stake, or 2.70 crore shares, in Satyam Computer. Earlier this month, Tech Mahindra completed the process for acquiring 31% in Satyam Computer.
Tech Mahindra, through its subsidiary Venturbay Consultants, had been alloted 30.27 crore shares, or 31% stake, in the firm. Last month, Tech Mahindra had outbid others in the race to acquire a majority stake in the scam-tainted IT firm, following which Venturbay had deposited Rs 1,756 crore in the escrow account as the subscription amount for the initial shares.
At the end of the March quarter, Fidelity through its arms — the Fidelity Diversified International Fund and the Fid Funds (Mauritius) Ltd — held 8.71 per cent stake in the company.
MUMBAI: Foreign fund house Fidelity has reduced its stake in beleaguered IT company Satyam Computer to 4.02% after offloading shares worth Rs 55.80 crore, through an open market transaction.
Fidelity, through its various investment arms, offloaded 1.18 crore shares representing 1.76% stake of Satyam Computer, the IT firm said in a disclosure on the Bombay Stock Exchange.
Prior to the transaction, the fund house held a 5.77% stake, while now it holds 4.02% stake, or 2.70 crore shares, in Satyam Computer. Earlier this month, Tech Mahindra completed the process for acquiring 31% in Satyam Computer.
Tech Mahindra, through its subsidiary Venturbay Consultants, had been alloted 30.27 crore shares, or 31% stake, in the firm. Last month, Tech Mahindra had outbid others in the race to acquire a majority stake in the scam-tainted IT firm, following which Venturbay had deposited Rs 1,756 crore in the escrow account as the subscription amount for the initial shares.
At the end of the March quarter, Fidelity through its arms — the Fidelity Diversified International Fund and the Fid Funds (Mauritius) Ltd — held 8.71 per cent stake in the company.
Maytas Infra board confident of executing projects
May 11, 2009,
The board of Maytas Infra that approved debt recast plan last week, made a presentation to the corporate debt restructuring (CDR) forum. At the forum, the board of directors reviewed the status on built-operate-transfer projects of the company along with the Hyderabad Metro Rail project and the future action to be taken.
"As the CDR scheme is likely to be approved soon, the board is optimistic on the execution of various projects taken up by the company," the company said in a statement.
Major lenders to Maytas Infra, whose outstanding is estimated to be around Rs 1,700 crore, who participated in the meet to review the CDR, included ICICI Bank and IDBI.
Maytas Infra had landed in a financial crisis post the aborted attempt by Satyam Computer Services to acquire a majority stake in it. The board has not yet finalised a new CEO for the company. The former CEO PKS Madhav, had quit in January. Thereafter, Teja Raju, son of B Ramalinga Raju, former chairman of Satyam, has been discharging the CEO responsibilities.
The board of Maytas Infra that approved debt recast plan last week, made a presentation to the corporate debt restructuring (CDR) forum. At the forum, the board of directors reviewed the status on built-operate-transfer projects of the company along with the Hyderabad Metro Rail project and the future action to be taken.
"As the CDR scheme is likely to be approved soon, the board is optimistic on the execution of various projects taken up by the company," the company said in a statement.
Major lenders to Maytas Infra, whose outstanding is estimated to be around Rs 1,700 crore, who participated in the meet to review the CDR, included ICICI Bank and IDBI.
Maytas Infra had landed in a financial crisis post the aborted attempt by Satyam Computer Services to acquire a majority stake in it. The board has not yet finalised a new CEO for the company. The former CEO PKS Madhav, had quit in January. Thereafter, Teja Raju, son of B Ramalinga Raju, former chairman of Satyam, has been discharging the CEO responsibilities.
Maytas Infra to rejig equity stakes in Hyderabad Metro
11 May 2009, ET Bureau
HYDERABAD: The board of Maytas Infra, the cashstrapped infrastructure firm, is reviewing the equity holding of three other stakeholders in the Rs.12,000 crore Hyderabad Metro Rail project, even as it has begun negotiations with banks to raise funds.
The firm is a lead partner in Maytas Metro Rail (MML), a special purpose vehicle floated to execute the project to improve connectivity in the city. Nav Bharat Ventures, Ital Thai and IL&FS and the state government are the other stake-holders .
“The equity holding of consortium partners will be decided only at the time of the financial closure as they will pick up stakes then. The initial shareholding plan is likely to be crystallized then,” said an official privy to the development . Going by the concessionaire agreement , Maytas Infra holds a 26% stake in the consortium. Nav Bharat Ventures has a 16% stake, while Ital Thai and IL&FS hold 5% each. The state government holds 11% and the balance 37% is with the consortium members. The board is in talks with the consortium members to review the shareholding pattern.
The timing of the review of stakes in MML is significant, as it comes close on the heels of an allegation made by a city-based NGO that the company has been promoted as another Raju family venture rather than a professional consortium.
MML started with a share capital of Rs 5 lakh with 50, 000 equity shares of Rs 10 each. In September last year, Maytas Infra was allotted 44,995 shares and B Teja Raju 5,000 shares. Nandini Raju, Ramalinga Raju’s wife, and three others had one share each. Three other consortium members did not hold any shares in MML. “Shares will be allotted to other stake holders after the financial closure” , said the official.
The project was to achieve financial closure in March this year, but missed the deadline . The firm has not yet deposited the Rs 240 crore performance guarantee for the project with Hyderabad Metro Rail limited (HMRL). The project is in a limbo as MML failed to mobilise resources after Ramalinga Raju confessed to the Rs 7,000 crore fraud at Satyam. It then sought a six-month extension and the proposal is noew pending with the government.
A government appointed board member to salvage the firm said that the financial closure would be achieved within the next two months. It is, however, not clear if banks will be willing to lend money for the controversial project. On Saturday, banks agreed to restructure the company’s outstanding dues in a corporate debt restructuring plan. Apart from a moratorium on the Rs 1,700 crore outstanding liabilities and paring the rate of interest, banks will also provide extra funds to get the projects going, Ved Jain, Member on Maytas Board and former President of Institute of Chartered Accountants said.
A clutch of banks including State Bank of India, IDBI, ICICI Bank, Hong Kong and Shanghai Banking Corporation (HSBC), Citibank NA and HDFC Bank have reportedly lent to the firm. Besidesthe metro rail, Maytas infra has an order-book of Rs 8,000 crore.
HYDERABAD: The board of Maytas Infra, the cashstrapped infrastructure firm, is reviewing the equity holding of three other stakeholders in the Rs.12,000 crore Hyderabad Metro Rail project, even as it has begun negotiations with banks to raise funds.
The firm is a lead partner in Maytas Metro Rail (MML), a special purpose vehicle floated to execute the project to improve connectivity in the city. Nav Bharat Ventures, Ital Thai and IL&FS and the state government are the other stake-holders .
“The equity holding of consortium partners will be decided only at the time of the financial closure as they will pick up stakes then. The initial shareholding plan is likely to be crystallized then,” said an official privy to the development . Going by the concessionaire agreement , Maytas Infra holds a 26% stake in the consortium. Nav Bharat Ventures has a 16% stake, while Ital Thai and IL&FS hold 5% each. The state government holds 11% and the balance 37% is with the consortium members. The board is in talks with the consortium members to review the shareholding pattern.
The timing of the review of stakes in MML is significant, as it comes close on the heels of an allegation made by a city-based NGO that the company has been promoted as another Raju family venture rather than a professional consortium.
MML started with a share capital of Rs 5 lakh with 50, 000 equity shares of Rs 10 each. In September last year, Maytas Infra was allotted 44,995 shares and B Teja Raju 5,000 shares. Nandini Raju, Ramalinga Raju’s wife, and three others had one share each. Three other consortium members did not hold any shares in MML. “Shares will be allotted to other stake holders after the financial closure” , said the official.
The project was to achieve financial closure in March this year, but missed the deadline . The firm has not yet deposited the Rs 240 crore performance guarantee for the project with Hyderabad Metro Rail limited (HMRL). The project is in a limbo as MML failed to mobilise resources after Ramalinga Raju confessed to the Rs 7,000 crore fraud at Satyam. It then sought a six-month extension and the proposal is noew pending with the government.
A government appointed board member to salvage the firm said that the financial closure would be achieved within the next two months. It is, however, not clear if banks will be willing to lend money for the controversial project. On Saturday, banks agreed to restructure the company’s outstanding dues in a corporate debt restructuring plan. Apart from a moratorium on the Rs 1,700 crore outstanding liabilities and paring the rate of interest, banks will also provide extra funds to get the projects going, Ved Jain, Member on Maytas Board and former President of Institute of Chartered Accountants said.
A clutch of banks including State Bank of India, IDBI, ICICI Bank, Hong Kong and Shanghai Banking Corporation (HSBC), Citibank NA and HDFC Bank have reportedly lent to the firm. Besidesthe metro rail, Maytas infra has an order-book of Rs 8,000 crore.
Maytas Board clears corporate debt restructuring exercise
9 May 2009, ET Bureau
HYDERABAD: SBI Capital Markets has been mandated to re-structure the dues aggregating to over Rs 5,000 crore of Maytas Infra to banks.
Corporate debt re-structuring exercise was reviewed and cleared by the board at a meeting here on Saturday.
Maytas Infra, the infrastructure firm run by B Teja Raju, son of disgraced B Ramalinga Raju borrowed over Rs 5,000 crore from various banks But, the company was unable to repay the loans as many of its projects are in a limbo.
Several banks including State Bank of India (SBI), ICICI , IDBI, Hong Kong and Shanghai Banking Corporation (HSBC), Citibank NA and HDFC Bank Ltd have reportedly lent to the company and a clutch of firms promoted by the Raju family.
Major lenders, IDBI and ICICI made a presentation to Maytas' board and were also present at the meeting to review the CDR, said a coampny statement.
HYDERABAD: SBI Capital Markets has been mandated to re-structure the dues aggregating to over Rs 5,000 crore of Maytas Infra to banks.
Corporate debt re-structuring exercise was reviewed and cleared by the board at a meeting here on Saturday.
Maytas Infra, the infrastructure firm run by B Teja Raju, son of disgraced B Ramalinga Raju borrowed over Rs 5,000 crore from various banks But, the company was unable to repay the loans as many of its projects are in a limbo.
Several banks including State Bank of India (SBI), ICICI , IDBI, Hong Kong and Shanghai Banking Corporation (HSBC), Citibank NA and HDFC Bank Ltd have reportedly lent to the company and a clutch of firms promoted by the Raju family.
Major lenders, IDBI and ICICI made a presentation to Maytas' board and were also present at the meeting to review the CDR, said a coampny statement.
Thursday, May 7, 2009
Satyam-linked Maytas in talks to restructure debt
Tue May 5, 2009 Maytas in talks to restructure $34 mln loan, shares rise
Govt-appointed board members say not ruling out stake sale
Order book at $1.7 bln, to recover $100 mln from customers
NEW DELHI, May 5 (Reuters) - Indian builder Maytas Infra Ltd , linked to the fraud-tainted founders of Satyam Computer is in talks to restructure $34 million loans, officials said on Tuesday, sending its shares up 5 percent.
"We are having a financial difficulty. Cash-in-hand may be there, but I have a liability also," Ved Jain, one of the four directors appointed by the government after it began a probe into Maytas, told a news conference.
The cash-strapped company is negotiating with its 17 lenders, including State Bank of India and ICICI Bank , to restructure its debt of 17 billion rupees ($34.5 million), he said.
Anil Agarwal, another director, said the board had approved a a corporate debt restructuring package. "In the next couple of weeks this will be on," he said.
The company will hire SBI Capital Markets to implement the restructuring, the officials said.
Govt-appointed board members say not ruling out stake sale
Order book at $1.7 bln, to recover $100 mln from customers
NEW DELHI, May 5 (Reuters) - Indian builder Maytas Infra Ltd , linked to the fraud-tainted founders of Satyam Computer is in talks to restructure $34 million loans, officials said on Tuesday, sending its shares up 5 percent.
"We are having a financial difficulty. Cash-in-hand may be there, but I have a liability also," Ved Jain, one of the four directors appointed by the government after it began a probe into Maytas, told a news conference.
The cash-strapped company is negotiating with its 17 lenders, including State Bank of India and ICICI Bank , to restructure its debt of 17 billion rupees ($34.5 million), he said.
Anil Agarwal, another director, said the board had approved a a corporate debt restructuring package. "In the next couple of weeks this will be on," he said.
The company will hire SBI Capital Markets to implement the restructuring, the officials said.
Maytas to raise fresh funds, not ruling out stake sale
5 May 2009,
NEW DELHI: The government-appointed board of Maytas Infra Ltd, an infrastructure firm linked to fraud-hit Satyam Computers, Tuesday said it was planning to raise funds through fresh loans and, if necessary, through a stake sale.
"The corporate debt restructuring, which we have initiated in consultation with our lenders will not only try to reschedule loans but also look at raising fresh loans for existing projects," said Anil K. Agarwal, a government-appointed director of the firm.
The company, run by Satyam co-founder and chairman B. Ramalinga Raju's son Teja Raju, has been mired in controversy after the Rs.78-billion Satyam scam came to the fore.
The government has rejigged the Maytas board and appointed four new directors - Agarwal, K. Ramalingam, O.P. Vaish and Ved Jain - after the Satyam scandal.
With orders being cancelled and clients withholding payments, the Hyderabad-based infrastructure firm has been pressed for funds to continue operations.
"Some orders have been cancelled. It's because of the slowdown in the economy and the Satyam case. But we are talking to our clients and are expecting payments of Rs.500 crore soon," said director Jain, who was also a former president of the Institute of Charted Accountants of India.
The company is in talks with all of its 17 lenders to help restructure its loan repayment schedule and has appointed SBI Capital as the consultant. The outstanding debt of the company stands at about Rs.1,700 crore.
Prominent among the lenders are ICICI Bank, which has lent about Rs.400 crore to the company. SBI has lent about Rs.200 crore.
However, the board seemed quite hopeful that the company would be back on track as it had quite a healthy order book and the necessary expertise to execute such orders.
"The company can be revived. It has an order book of about Rs.8,500 crore other than the pending Hyderabad metro project worth Rs.15,000 crore," said Maytas chairman and director Ramalingam.
The board also said the company might sell stake to get out of the current cash crunch. "We are not ruling out a stake sale," said Jain. The promoters hold about 85 percent in Mayatas Infra.
Mayats, which has about 1,800 employees on its rolls, is being investigated by the Serious Fraud Investigation Office - the investigative arm of the ministry of company affairs to examine whether funds were diverted from Satyam to the infrastructure company.
"The accounts of the company will be restated after we get all reports from the investigating agencies," said Jain.
NEW DELHI: The government-appointed board of Maytas Infra Ltd, an infrastructure firm linked to fraud-hit Satyam Computers, Tuesday said it was planning to raise funds through fresh loans and, if necessary, through a stake sale.
"The corporate debt restructuring, which we have initiated in consultation with our lenders will not only try to reschedule loans but also look at raising fresh loans for existing projects," said Anil K. Agarwal, a government-appointed director of the firm.
The company, run by Satyam co-founder and chairman B. Ramalinga Raju's son Teja Raju, has been mired in controversy after the Rs.78-billion Satyam scam came to the fore.
The government has rejigged the Maytas board and appointed four new directors - Agarwal, K. Ramalingam, O.P. Vaish and Ved Jain - after the Satyam scandal.
With orders being cancelled and clients withholding payments, the Hyderabad-based infrastructure firm has been pressed for funds to continue operations.
"Some orders have been cancelled. It's because of the slowdown in the economy and the Satyam case. But we are talking to our clients and are expecting payments of Rs.500 crore soon," said director Jain, who was also a former president of the Institute of Charted Accountants of India.
The company is in talks with all of its 17 lenders to help restructure its loan repayment schedule and has appointed SBI Capital as the consultant. The outstanding debt of the company stands at about Rs.1,700 crore.
Prominent among the lenders are ICICI Bank, which has lent about Rs.400 crore to the company. SBI has lent about Rs.200 crore.
However, the board seemed quite hopeful that the company would be back on track as it had quite a healthy order book and the necessary expertise to execute such orders.
"The company can be revived. It has an order book of about Rs.8,500 crore other than the pending Hyderabad metro project worth Rs.15,000 crore," said Maytas chairman and director Ramalingam.
The board also said the company might sell stake to get out of the current cash crunch. "We are not ruling out a stake sale," said Jain. The promoters hold about 85 percent in Mayatas Infra.
Mayats, which has about 1,800 employees on its rolls, is being investigated by the Serious Fraud Investigation Office - the investigative arm of the ministry of company affairs to examine whether funds were diverted from Satyam to the infrastructure company.
"The accounts of the company will be restated after we get all reports from the investigating agencies," said Jain.
Maytas Infra open to stake sale
6 May 2009
NEW DELHI: Maytas Infra, promoted by the sons of Satyam Computer's disgraced founder Ramalinga Raju, is open to stake or asset sale to raise funds, required to implement on-going projects. However, the company is not interested for a strategic partner in the company.
Chairman of the company K Ramalingam said that at present the management is focusing on a revival plan and collecting dues from its customers. However, he did not rule out stake sale in future, without bringing in a strategic partner. Company's promoter, Ramalinga Raju owns around 85% stake in the company.
"The company is currently working out a revival plan and has already appointed SBI Capital Market for corporate debt restructuring (CDR)," he said. The board has also restructured the management of the company by appointing two presidents C S Bansal and Rajendra Nimje, who will spearhead the company. It is learnt that after assessing their performance, one of them will soon be appointed as CEO of the company.
As for the current position of the company, the chairman said it has a healthy order book worth over Rs 8,500 crore, excluding the Rs 15,000-crore Hyderabad Metro rail project. "Financial closures for all the Rs 8,500-crore projects have already taken place and they are expected to be completed in the next 24 months," government-appointed director Ved Jain said.
Jain added that existing funds are sufficient to carry out the projects. Of the Rs 8,500-crore projects, Rs 5,000 crore are for irrigation projects, which are not on built-operate-transfer basis.
Regarding the Hyderabad Metro rail project, Jain said, "There are certain issues regarding the acquisition of land, and that Maytas Infra has moved an application to the Andhra Pradesh government asking for extension for financial closure of the project." The company was originally scheduled to complete financial closure by mid-March.
For arranging funds for the Metro rail project, Jain added that the board will take up the issue in the next meeting, likely to take place next week.
When asked about the presentation of accounts for the year ending 2008-09, Jain said, "It will take some time as the investigating agencies are still doing their work. Once the probe is complete, the company will be able to give true picture of the company." He also added that the new account is not required for the CDR as banks are aware of the various issues the company is facing.
On the exact position of employees in the company, Ramalingam said at present there are 1,800 employees and though a few employees left the organisation post-Satyam scam, many of them are willing to come back, which is a good sign.
On the revival plan, the chairman said the company has an outstanding debt of approximately Rs 1,700 crore and an order book of more than Rs 8,500 crore, apart from the Hyderabad Metro rail project, worth Rs 15,000 crore. He said at present the company has a receivable of Rs 500 crore. The company has not paid salary to its staff for last three months. Ramalingam said that the company will soon start paying the salary.
NEW DELHI: Maytas Infra, promoted by the sons of Satyam Computer's disgraced founder Ramalinga Raju, is open to stake or asset sale to raise funds, required to implement on-going projects. However, the company is not interested for a strategic partner in the company.
Chairman of the company K Ramalingam said that at present the management is focusing on a revival plan and collecting dues from its customers. However, he did not rule out stake sale in future, without bringing in a strategic partner. Company's promoter, Ramalinga Raju owns around 85% stake in the company.
"The company is currently working out a revival plan and has already appointed SBI Capital Market for corporate debt restructuring (CDR)," he said. The board has also restructured the management of the company by appointing two presidents C S Bansal and Rajendra Nimje, who will spearhead the company. It is learnt that after assessing their performance, one of them will soon be appointed as CEO of the company.
As for the current position of the company, the chairman said it has a healthy order book worth over Rs 8,500 crore, excluding the Rs 15,000-crore Hyderabad Metro rail project. "Financial closures for all the Rs 8,500-crore projects have already taken place and they are expected to be completed in the next 24 months," government-appointed director Ved Jain said.
Jain added that existing funds are sufficient to carry out the projects. Of the Rs 8,500-crore projects, Rs 5,000 crore are for irrigation projects, which are not on built-operate-transfer basis.
Regarding the Hyderabad Metro rail project, Jain said, "There are certain issues regarding the acquisition of land, and that Maytas Infra has moved an application to the Andhra Pradesh government asking for extension for financial closure of the project." The company was originally scheduled to complete financial closure by mid-March.
For arranging funds for the Metro rail project, Jain added that the board will take up the issue in the next meeting, likely to take place next week.
When asked about the presentation of accounts for the year ending 2008-09, Jain said, "It will take some time as the investigating agencies are still doing their work. Once the probe is complete, the company will be able to give true picture of the company." He also added that the new account is not required for the CDR as banks are aware of the various issues the company is facing.
On the exact position of employees in the company, Ramalingam said at present there are 1,800 employees and though a few employees left the organisation post-Satyam scam, many of them are willing to come back, which is a good sign.
On the revival plan, the chairman said the company has an outstanding debt of approximately Rs 1,700 crore and an order book of more than Rs 8,500 crore, apart from the Hyderabad Metro rail project, worth Rs 15,000 crore. He said at present the company has a receivable of Rs 500 crore. The company has not paid salary to its staff for last three months. Ramalingam said that the company will soon start paying the salary.
Maytas Infra seeks fresh funds to stay afloat
6 May 2009, ET Bureau
NEW DELHI: Maytas Infra, a firm 85% owned by Satyam’s disgraced founder B Ramlinga Raju’s family, said it needed to raise fresh funds — mainly debt — to run its daily operations.
The infrastructure construction firm is seeking corporate debt restructuring (CDR) for its total borrowings of Rs 1,700 crore, as it faces cash crunch and finds it increasingly difficult to recover dues worth Rs 500 crore from clients.
“The customers have not been paying in time. That’s why we have asked banks to lend us to tide over short-term financial crunch,” Maytas Infra chairman K Ramalingam said at a press meet. The company has initiated legal proceedings against some customers over recovery of dues. Talking about equity infusion in the company, another company director, Ved Jain, said the company was “neither foreclosing the option nor exploring it” at present.
Following revelations of accounting fraud at Satyam and allegations of wrongdoing at Maytas Infra, the government recast Maytas Infra board appointing four new directors. These included former head of Airports Authority of India, K Ramalingam as Maytas chairman, besides Ved Jain, OP Vaish and Anil K Agarwal.
Mr Ramalingam didn’t specify the exact fund requirement, but another Maytas director, Anil K Agarwal, said the process of CDR is being initiated, which should lead to rescheduling of loans as well as some fresh lending by banks.
The Hyderabad-based company has roped in SBI Capital as consultant for the CDR process, which would involve 17 banks and may take at least two months for implementation. ICICI Bank and the SBI are two leading lenders to Maytas with an exposure of Rs 400 crore and Rs 200 crore, respectively.
Maytas, which employs 1,800 staffers, has also seen 5-6 construction orders — mainly road projects — worth Rs 300 crore getting cancelled after the controversy surrounding the company became public, Mr Jain said.
Maytas has confirmed orders worth Rs 8,500 crore to be executed in two years. It excludes the Rs 15,000-crore Hyderabad Metro project which was awarded over a year ago, but is facing problems in securing funds.
Mr Jain said Maytas has sought six-month extension from Andhra Pradesh government for the financial closure of the metro project that was supposed to be achieved by March 18, 2009. The government’s inability to complete certain formalities and acquire land for the project has delayed the financial closure, he added.
The company didn’t say by when its accounts for FY09 will be published, but indicated it would be done only after government completes its investigation.
NEW DELHI: Maytas Infra, a firm 85% owned by Satyam’s disgraced founder B Ramlinga Raju’s family, said it needed to raise fresh funds — mainly debt — to run its daily operations.
The infrastructure construction firm is seeking corporate debt restructuring (CDR) for its total borrowings of Rs 1,700 crore, as it faces cash crunch and finds it increasingly difficult to recover dues worth Rs 500 crore from clients.
“The customers have not been paying in time. That’s why we have asked banks to lend us to tide over short-term financial crunch,” Maytas Infra chairman K Ramalingam said at a press meet. The company has initiated legal proceedings against some customers over recovery of dues. Talking about equity infusion in the company, another company director, Ved Jain, said the company was “neither foreclosing the option nor exploring it” at present.
Following revelations of accounting fraud at Satyam and allegations of wrongdoing at Maytas Infra, the government recast Maytas Infra board appointing four new directors. These included former head of Airports Authority of India, K Ramalingam as Maytas chairman, besides Ved Jain, OP Vaish and Anil K Agarwal.
Mr Ramalingam didn’t specify the exact fund requirement, but another Maytas director, Anil K Agarwal, said the process of CDR is being initiated, which should lead to rescheduling of loans as well as some fresh lending by banks.
The Hyderabad-based company has roped in SBI Capital as consultant for the CDR process, which would involve 17 banks and may take at least two months for implementation. ICICI Bank and the SBI are two leading lenders to Maytas with an exposure of Rs 400 crore and Rs 200 crore, respectively.
Maytas, which employs 1,800 staffers, has also seen 5-6 construction orders — mainly road projects — worth Rs 300 crore getting cancelled after the controversy surrounding the company became public, Mr Jain said.
Maytas has confirmed orders worth Rs 8,500 crore to be executed in two years. It excludes the Rs 15,000-crore Hyderabad Metro project which was awarded over a year ago, but is facing problems in securing funds.
Mr Jain said Maytas has sought six-month extension from Andhra Pradesh government for the financial closure of the metro project that was supposed to be achieved by March 18, 2009. The government’s inability to complete certain formalities and acquire land for the project has delayed the financial closure, he added.
The company didn’t say by when its accounts for FY09 will be published, but indicated it would be done only after government completes its investigation.
Open to stake sale in future, says Maytas infra
5 May 2009, PTI
NEW DELHI: Maytas Infra, promoted by the kin of Saytam Computer's disgraced founder Ramalinga Raju on Tuesday said it is open to the possibility of a stake sale in future, even though it does not need a strategic partner now.
"We are not ruling out stake sale in future... We are not foreclosing any option as regards stake sale in future, but right now, we don't see (the need for) any strategic partner, we are focusing on a revival plan," Chairman of the company K Ramalingam told reporters here.
At present, promoters and promoter group hold close to 85 per cent stake in the company, he added.
He said the company is currently working out a revival plan and has already appointed SBI Capital Market for Corporate Debt Restructuring (CDR).
The board has also restructured the management of the company by appointing two presidents -- C S Bansal and Rajendra Nimje, who will spearhead the company.
As for the current position of the company, the Chairman said it has a healthy order book worth over Rs 8,500 crore, excluding the Rs 15,000-crore Hyderabad Metro Rail project.
Financial closures for Rs 8,500-crore projects have already taken place and they are expected to be completed in the next 24 months, a government-appointed director Ved Jain, said.
Jain added that existing funds are sufficient to carry out the projects. Of the Rs 8,500-crore projects, Rs 5,000 crore are for irrigation projects, which are not on Built-Operate- Transfer basis.
NEW DELHI: Maytas Infra, promoted by the kin of Saytam Computer's disgraced founder Ramalinga Raju on Tuesday said it is open to the possibility of a stake sale in future, even though it does not need a strategic partner now.
"We are not ruling out stake sale in future... We are not foreclosing any option as regards stake sale in future, but right now, we don't see (the need for) any strategic partner, we are focusing on a revival plan," Chairman of the company K Ramalingam told reporters here.
At present, promoters and promoter group hold close to 85 per cent stake in the company, he added.
He said the company is currently working out a revival plan and has already appointed SBI Capital Market for Corporate Debt Restructuring (CDR).
The board has also restructured the management of the company by appointing two presidents -- C S Bansal and Rajendra Nimje, who will spearhead the company.
As for the current position of the company, the Chairman said it has a healthy order book worth over Rs 8,500 crore, excluding the Rs 15,000-crore Hyderabad Metro Rail project.
Financial closures for Rs 8,500-crore projects have already taken place and they are expected to be completed in the next 24 months, a government-appointed director Ved Jain, said.
Jain added that existing funds are sufficient to carry out the projects. Of the Rs 8,500-crore projects, Rs 5,000 crore are for irrigation projects, which are not on Built-Operate- Transfer basis.
Sunday, May 3, 2009
Raju may face 'destruction of evidence' charge
3 May 2009 PTI
NEW DELHI: Satyam's disgraced founder and Chairman B Ramalinga Raju may face another serious charge of "destruction of evidence", with CBI saying that the fake Fixed Deposit Receipts (FDRs) were destroyed as soon as the multi-crore scam came to light.
The agency, which is probing the biggest corporate scam of the country, said in its chargesheet that Raju as Chairman of the company got generated FDRs of various banks from his personal computer only.
"...Once the fraud came to light, these original forged FDRs were got destroyed as part of the conspiracy, which amounts to destruction of evidence...knowing fully well that the financial health of the company was poor and also knowing fully well that the results were inflated," CBI said in its chargesheet.
CBI has also found that the fake FDRs were of huge amount as the interest on these deposits was projected to be over Rs 375 crore as against the actual interest income of Rs 7.42 lakh only.
The investigating agency, during its analysis of the computer of Raju, found that FDRs were designed and later printed from the same machine, the sources said adding the fake certificates were retrieved from the mirror images designed on the computer.
On the role of auditors, CBI said even though there were 135 "control deficiencies" identified in the integrated audit conducted in accordance with the standards of Public Accounting Oversight Board (PCAOB), PriceWater House's S Gopalakrishnan, who held the company account from 2001-07, "did not bring these controlled deficiencies to the notice of audit committee and thereby facilitated the continuance of the fraudulent practices unabated".
The agency said that the letter pads of M/S PriceWater House were recovered from the computer systems of Satyam Computer. These letters were supposed to be written by the auditors and addressed to the banks seeking confirmations about the balances, it added.
"Gopalakrishnan, as part of the conspiracy, got these letters generated in the computer systems for the purpose of creation of records, which depicts his privy and involvement in the conspiracy," CBI said.
Gopalakrishnan also made Satyam Computers generate certain letters addressed to the banks, directing them to directly inform the auditors, CBI said
It further said, "However, these letters were generated merely for the purpose of record, which shows the role of the accused auditor in the criminal conspiracy. This has been proved by Government Examiner of Questioned Documents (GEQD) opinion.
"But for his active cooperation and disregarding the crucial evidence available with him, this fraud would not have taken place for so may years."
CBI has already got permission from the court to continue with its probe during which the agency will be focusing on money re-routing and remittances made from abroad.
NEW DELHI: Satyam's disgraced founder and Chairman B Ramalinga Raju may face another serious charge of "destruction of evidence", with CBI saying that the fake Fixed Deposit Receipts (FDRs) were destroyed as soon as the multi-crore scam came to light.
The agency, which is probing the biggest corporate scam of the country, said in its chargesheet that Raju as Chairman of the company got generated FDRs of various banks from his personal computer only.
"...Once the fraud came to light, these original forged FDRs were got destroyed as part of the conspiracy, which amounts to destruction of evidence...knowing fully well that the financial health of the company was poor and also knowing fully well that the results were inflated," CBI said in its chargesheet.
CBI has also found that the fake FDRs were of huge amount as the interest on these deposits was projected to be over Rs 375 crore as against the actual interest income of Rs 7.42 lakh only.
The investigating agency, during its analysis of the computer of Raju, found that FDRs were designed and later printed from the same machine, the sources said adding the fake certificates were retrieved from the mirror images designed on the computer.
On the role of auditors, CBI said even though there were 135 "control deficiencies" identified in the integrated audit conducted in accordance with the standards of Public Accounting Oversight Board (PCAOB), PriceWater House's S Gopalakrishnan, who held the company account from 2001-07, "did not bring these controlled deficiencies to the notice of audit committee and thereby facilitated the continuance of the fraudulent practices unabated".
The agency said that the letter pads of M/S PriceWater House were recovered from the computer systems of Satyam Computer. These letters were supposed to be written by the auditors and addressed to the banks seeking confirmations about the balances, it added.
"Gopalakrishnan, as part of the conspiracy, got these letters generated in the computer systems for the purpose of creation of records, which depicts his privy and involvement in the conspiracy," CBI said.
Gopalakrishnan also made Satyam Computers generate certain letters addressed to the banks, directing them to directly inform the auditors, CBI said
It further said, "However, these letters were generated merely for the purpose of record, which shows the role of the accused auditor in the criminal conspiracy. This has been proved by Government Examiner of Questioned Documents (GEQD) opinion.
"But for his active cooperation and disregarding the crucial evidence available with him, this fraud would not have taken place for so may years."
CBI has already got permission from the court to continue with its probe during which the agency will be focusing on money re-routing and remittances made from abroad.
But for the forgery, Satyam was a work of art: Damodaran
3 May 2009, PTI
NEW DELHI: Had it not been for a fraud, the way things were manipulated for over seven years in IT major Satyam Computer could be a "work of art", former SEBI Chairman M Damodaran said.
"If it were not for a dishonest purpose, the planning and execution to the minutest detail was a work of art," he said at a gathering of CEOs hosted by CEO Clubs, a business network organisation, yesterday.
Damodaran, who is on the board of software firm Tech Mahindra, which made the successful bid for Satyam, said the fraud at Satyam was "unique" and he believes it is an isolated case, not reflective of the state of affairs of India Inc.
Expressing hesitation to reply to a query on the major takeaways for market regulator after the Satyam fiasco, he said he retired as the chief of the Securities and Exchange Board of India over a year now.
Damodaran, ING Group's Chief Representative and Adviser in India, however, said the idea should be to catch some of the big frauds and punishment should be swift and fast to act as a deterrent for others.
He cited the example of Harshad Mehta and Nick Leeson. While the courts sat on the case till Mehta himself died, Leeson was arrested, served the punishment, released, wrote a book and started afresh, he said.
NEW DELHI: Had it not been for a fraud, the way things were manipulated for over seven years in IT major Satyam Computer could be a "work of art", former SEBI Chairman M Damodaran said.
"If it were not for a dishonest purpose, the planning and execution to the minutest detail was a work of art," he said at a gathering of CEOs hosted by CEO Clubs, a business network organisation, yesterday.
Damodaran, who is on the board of software firm Tech Mahindra, which made the successful bid for Satyam, said the fraud at Satyam was "unique" and he believes it is an isolated case, not reflective of the state of affairs of India Inc.
Expressing hesitation to reply to a query on the major takeaways for market regulator after the Satyam fiasco, he said he retired as the chief of the Securities and Exchange Board of India over a year now.
Damodaran, ING Group's Chief Representative and Adviser in India, however, said the idea should be to catch some of the big frauds and punishment should be swift and fast to act as a deterrent for others.
He cited the example of Harshad Mehta and Nick Leeson. While the courts sat on the case till Mehta himself died, Leeson was arrested, served the punishment, released, wrote a book and started afresh, he said.
Three big Satyam clients pledge to stay with company
3 May 2009, PTI
NEW DELHI: In a news that could bring cheer to Satyam employees, three of their big clients Nestle, Nissan and CIBA who were on wait and watch mode have assured to continue business with the firm.
"Clients such as Nestle and Nissan has already expressed confidence in the company and had assured us that they will continue with us," an official privy to the development said.
One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments has also given some additional business to Satyam last month, the person added.
Analysts had feared that post the acquisition of the firm by Tech Mahindra clients of Satyam who were sitting on the fence would jump to other vendors. However, post the acquisition some of the companies had expressed confidence in the entity and pledged to continue business with them.
Auto major Nissan for whom Satyam provides application management had also said they would continue business with the firm. The company has also got an endorsement from another SAP client CIBA.
Moreover, UK, Switzerland and Germany who have earlier imposed some strict norms on Satyam employees for getting Visa have eased them.
Post the Satyam crisis, employees of Satyam were asked to be present in person and appear for visa interviews. However, now they have eased the norms and the employees need not be present for the interview in person.
Satyam Computers plunged into crisis after its founder B Ramalinga Raju in January admitted to have cooked the books of the company for year.
In April, IT firm Tech Mahindra announced to acquire a 51 per cent stake in the beleaguered firm for Rs 2,900 crore.
Earlier, the government-appointed Chairman of Satyam Kiran Karnik had said that though some clients have left the company but Satyam have got some new work as well.
NEW DELHI: In a news that could bring cheer to Satyam employees, three of their big clients Nestle, Nissan and CIBA who were on wait and watch mode have assured to continue business with the firm.
"Clients such as Nestle and Nissan has already expressed confidence in the company and had assured us that they will continue with us," an official privy to the development said.
One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments has also given some additional business to Satyam last month, the person added.
Analysts had feared that post the acquisition of the firm by Tech Mahindra clients of Satyam who were sitting on the fence would jump to other vendors. However, post the acquisition some of the companies had expressed confidence in the entity and pledged to continue business with them.
Auto major Nissan for whom Satyam provides application management had also said they would continue business with the firm. The company has also got an endorsement from another SAP client CIBA.
Moreover, UK, Switzerland and Germany who have earlier imposed some strict norms on Satyam employees for getting Visa have eased them.
Post the Satyam crisis, employees of Satyam were asked to be present in person and appear for visa interviews. However, now they have eased the norms and the employees need not be present for the interview in person.
Satyam Computers plunged into crisis after its founder B Ramalinga Raju in January admitted to have cooked the books of the company for year.
In April, IT firm Tech Mahindra announced to acquire a 51 per cent stake in the beleaguered firm for Rs 2,900 crore.
Earlier, the government-appointed Chairman of Satyam Kiran Karnik had said that though some clients have left the company but Satyam have got some new work as well.
Friday, May 1, 2009
The lies of Satyam: What CBI missed
Apr 30 2009
The chargesheet filed by the Central Bureau of Investigation (CBI) is more a confirmation of B Ramalinga Raju’s confession letter than a detailed investigation into the scam. The Satyam founder’s claims have been vindicated. But the agency has failed to uncover any new information relating to the financial misappropriation in the Hyderabad-based software firm. The points which the CBI seems to have missed or chosen to ignore:
Fund diversion
The investigative agency has missed out several points that could have led to unearthing of the alleged fund diversion from Satyam. It has found the disgraced Satyam founder to be honest in his confession about inflating profits and cash balances, but the agency does not throw any light on what happened to the money obtained by the Rajus. This is more remarkable considering that the union minister for corporate affairs, Prem Chand Gupta had said that the Serious Fraud Investigation Office (SFIO) had found preliminary evidence of money diversion from Satyam’s coffers.
Maytas land bank
The CBI has not tracked the source of income with which Raju succeeded in building a 6,000-acre land bank. The aborted December 16 Satyam-Maytas deal had valued Maytas Properties’ land at Rs 6,000 crore. The deal had led to a chain of events that unravelled the biggest corporate fraud in India.
282 missing firms
The chargesheet says Raju had floated 327 front companies in the names of the members of his extended family. Of these, eight companies had raised Rs 1,744-crore loans from non-banking finance companies (NBFCs). If Raju had used eight companies to raise loans and 37 companies to lend to Satyam, what was the reason for floating the additional 282 companies? Strangely, the CBI seems to have ignored to elaborate on this point, merely saying that they were floated for agriculture business.
Interest and tax
Then, there is the issue of foreign depository receipts (FDR) deposit rates not being in sync with the interest received. For example, Satyam received interest of Rs 1.05 crore on fixed deposits of Rs 66 lakh during 2000-01. This works out to be a whopping 158 per cent per annum. Further, the tax deducted at source (TDS) for first quarter (Q1) of 2008 at Rs 169.50 crore against an FDR interest income of Rs 323.84 crore, works out to over 50 per cent, while the next quarter interest TDS is only Rs 30.50 crore on an interest income of Rs 375.45 crore. Obvious discrepancies which have no answers in the chargesheet.
Share sale
In his statement, Ramalinga Raju said neither he nor his family had sold any shares in the last eight years. The CBI contradicts this, saying “over the years, the promoters of the company have sold the shares in the open market and received huge amounts.” The listed details of share sale do not say what was sold and when. The total amount received has been given as Rs 715 crore. Yet in the section on the role of B Rama Raju, brother of Ramalinga Raju, the chargesheet says “out of the said Rs 715 crore in the year 1999-2000, he (Rama Raju) has received Rs 26.68 crore as gift from his family. Is Ramalinga right on this point too?
Ultimately, an apex investigating agency is expected to unravel details meticulously. The charge-sheet in several places is poorly drafted and in others glosses over obvious questions. Perhaps the agency needs to refocus its energies on the biggest scam in the country.
The chargesheet filed by the Central Bureau of Investigation (CBI) is more a confirmation of B Ramalinga Raju’s confession letter than a detailed investigation into the scam. The Satyam founder’s claims have been vindicated. But the agency has failed to uncover any new information relating to the financial misappropriation in the Hyderabad-based software firm. The points which the CBI seems to have missed or chosen to ignore:
Fund diversion
The investigative agency has missed out several points that could have led to unearthing of the alleged fund diversion from Satyam. It has found the disgraced Satyam founder to be honest in his confession about inflating profits and cash balances, but the agency does not throw any light on what happened to the money obtained by the Rajus. This is more remarkable considering that the union minister for corporate affairs, Prem Chand Gupta had said that the Serious Fraud Investigation Office (SFIO) had found preliminary evidence of money diversion from Satyam’s coffers.
Maytas land bank
The CBI has not tracked the source of income with which Raju succeeded in building a 6,000-acre land bank. The aborted December 16 Satyam-Maytas deal had valued Maytas Properties’ land at Rs 6,000 crore. The deal had led to a chain of events that unravelled the biggest corporate fraud in India.
282 missing firms
The chargesheet says Raju had floated 327 front companies in the names of the members of his extended family. Of these, eight companies had raised Rs 1,744-crore loans from non-banking finance companies (NBFCs). If Raju had used eight companies to raise loans and 37 companies to lend to Satyam, what was the reason for floating the additional 282 companies? Strangely, the CBI seems to have ignored to elaborate on this point, merely saying that they were floated for agriculture business.
Interest and tax
Then, there is the issue of foreign depository receipts (FDR) deposit rates not being in sync with the interest received. For example, Satyam received interest of Rs 1.05 crore on fixed deposits of Rs 66 lakh during 2000-01. This works out to be a whopping 158 per cent per annum. Further, the tax deducted at source (TDS) for first quarter (Q1) of 2008 at Rs 169.50 crore against an FDR interest income of Rs 323.84 crore, works out to over 50 per cent, while the next quarter interest TDS is only Rs 30.50 crore on an interest income of Rs 375.45 crore. Obvious discrepancies which have no answers in the chargesheet.
Share sale
In his statement, Ramalinga Raju said neither he nor his family had sold any shares in the last eight years. The CBI contradicts this, saying “over the years, the promoters of the company have sold the shares in the open market and received huge amounts.” The listed details of share sale do not say what was sold and when. The total amount received has been given as Rs 715 crore. Yet in the section on the role of B Rama Raju, brother of Ramalinga Raju, the chargesheet says “out of the said Rs 715 crore in the year 1999-2000, he (Rama Raju) has received Rs 26.68 crore as gift from his family. Is Ramalinga right on this point too?
Ultimately, an apex investigating agency is expected to unravel details meticulously. The charge-sheet in several places is poorly drafted and in others glosses over obvious questions. Perhaps the agency needs to refocus its energies on the biggest scam in the country.
'TechM will be No 1 in other areas with Satyam buyout'
29 Apr 2009, ET Bureau
Excerpts of the interaction of the top management of Tech Mahindra and their employees at the “Tech Mahindra All Hands Meet Conference” last week. TechM is set to be the new owner of Satyam Computer Services.
Sanjay Kalra,President , International Operations Vineet Nayyar, Vice Chairman, MD and CEO
Sanjay Kalra: (President , International Operations)
If you start at the top, while our focus is the telecom ecosystem, only a very small slice of their business is telecom. And they work in all kinds of verticals, be it finance, be it commercial, health care, aerospace, etc. So, this is one big difference from Tech Mahindra that they focused on several verticals, including telecom which clearly is not as significant in size as it is for us.
The second large difference we see is that their service offerings, while our service offerings are focused on IT services, system integration, application development maintenance, and BPO, their areas of ERP and their areas of technology where they clearly are very well advanced. Their BPO is not as enhanced and advanced as ours is. So, what you would say is that if you look at their portfolio, the overlap is rather minimal with us. There will be overlap in the technology areas. So, this is the kind of capabilities they come to bring to the table.
Vineet Nayyar: (Vice Chairman, Managing Director and CEO):
As you can see that there is one of the perceived weaknesses of TechM and almost in every all-hands meet we’ve had, there was always one or two persons asking when are we going to get into other verticals. We have got into other verticals in a very, very big way. We have talked to lot of customers of Satyam. The customers showed incredible loyalty and at least 60% to 70% of the customers which were with Satyam are still with them.
They have 500 active customers at this point and their top clients include British Petroleum, Chevron, you name it, the top, or Citibank. At the moment, their employee strength is around 45,000. It has come down marginally over the last three months. The exact tally at this point is not known but it would be around 40,000 to 42,00 employees, including subsidiary, they have a few subsidiaries and with that it will be a little more.
How was this transaction structured?
We have created a special purpose vehicle and it is this special purpose vehicle which is acquiring the 51% stake in Satyam Computer Services at the rate of Rs.58 per share. To put it, simply, we are paying about 2,900 Crores for this company, out of which 1,800 Crores will come back to the company. So, our total outgo is of the order of about 1,000 Crores for acquiring Satyam.
We have revenue of around $1 billion. Satyam’s revenue was about $1.80 billion but there has been significant client attrition after the scandal. We believe it would be around $1.2 billion going forward. So, together, we would be in a range of about $2.2 billion in a very, very diversified fashion. As always, we will be #1 in telecom. But with the acquisition of Satyam, we will also be #1 in large number of other areas, including business intelligence and enterprise solutions. Obviously, this will de-risk our model and this will give us a strong suite in consulting and enterprise business solutions. Most importantly, it diversifies not only our verticals, but it diversifies our currency.
Lastly, we would clearly be now a Tier-One Company. And with Tier-One Company, our valuation would obviously go up. Does this mean that we are going to merge immediately with Satyam? The answer is no. We will have at least two to three years of parallel run. We will have Satyam with its own identity functioning as it was earlier. Clearly, there will be some management support from Tech Mahindra as it is a Tech Mahindra owned subsidiary. Similarly, TechM will continue on its own trajectory. And two years down the road possibly, or three years down the year possibly, we would integrate both the companies, so that you would have one large TechM.
What are the challenges going ahead?
There are legal cases too which we have to look at, there is restatement of accounts which we have to look at, there is an overhang resulting from the fraudulent activities of the earlier promoter which includes everyone from CBI to FERA violations. We would have to deal with government agencies and provide them with all the information. This does not impact on us or on our own management, but it is without doubt a distraction.
Excerpts of the interaction of the top management of Tech Mahindra and their employees at the “Tech Mahindra All Hands Meet Conference” last week. TechM is set to be the new owner of Satyam Computer Services.
Sanjay Kalra,President , International Operations Vineet Nayyar, Vice Chairman, MD and CEO
Sanjay Kalra: (President , International Operations)
If you start at the top, while our focus is the telecom ecosystem, only a very small slice of their business is telecom. And they work in all kinds of verticals, be it finance, be it commercial, health care, aerospace, etc. So, this is one big difference from Tech Mahindra that they focused on several verticals, including telecom which clearly is not as significant in size as it is for us.
The second large difference we see is that their service offerings, while our service offerings are focused on IT services, system integration, application development maintenance, and BPO, their areas of ERP and their areas of technology where they clearly are very well advanced. Their BPO is not as enhanced and advanced as ours is. So, what you would say is that if you look at their portfolio, the overlap is rather minimal with us. There will be overlap in the technology areas. So, this is the kind of capabilities they come to bring to the table.
Vineet Nayyar: (Vice Chairman, Managing Director and CEO):
As you can see that there is one of the perceived weaknesses of TechM and almost in every all-hands meet we’ve had, there was always one or two persons asking when are we going to get into other verticals. We have got into other verticals in a very, very big way. We have talked to lot of customers of Satyam. The customers showed incredible loyalty and at least 60% to 70% of the customers which were with Satyam are still with them.
They have 500 active customers at this point and their top clients include British Petroleum, Chevron, you name it, the top, or Citibank. At the moment, their employee strength is around 45,000. It has come down marginally over the last three months. The exact tally at this point is not known but it would be around 40,000 to 42,00 employees, including subsidiary, they have a few subsidiaries and with that it will be a little more.
How was this transaction structured?
We have created a special purpose vehicle and it is this special purpose vehicle which is acquiring the 51% stake in Satyam Computer Services at the rate of Rs.58 per share. To put it, simply, we are paying about 2,900 Crores for this company, out of which 1,800 Crores will come back to the company. So, our total outgo is of the order of about 1,000 Crores for acquiring Satyam.
We have revenue of around $1 billion. Satyam’s revenue was about $1.80 billion but there has been significant client attrition after the scandal. We believe it would be around $1.2 billion going forward. So, together, we would be in a range of about $2.2 billion in a very, very diversified fashion. As always, we will be #1 in telecom. But with the acquisition of Satyam, we will also be #1 in large number of other areas, including business intelligence and enterprise solutions. Obviously, this will de-risk our model and this will give us a strong suite in consulting and enterprise business solutions. Most importantly, it diversifies not only our verticals, but it diversifies our currency.
Lastly, we would clearly be now a Tier-One Company. And with Tier-One Company, our valuation would obviously go up. Does this mean that we are going to merge immediately with Satyam? The answer is no. We will have at least two to three years of parallel run. We will have Satyam with its own identity functioning as it was earlier. Clearly, there will be some management support from Tech Mahindra as it is a Tech Mahindra owned subsidiary. Similarly, TechM will continue on its own trajectory. And two years down the road possibly, or three years down the year possibly, we would integrate both the companies, so that you would have one large TechM.
What are the challenges going ahead?
There are legal cases too which we have to look at, there is restatement of accounts which we have to look at, there is an overhang resulting from the fraudulent activities of the earlier promoter which includes everyone from CBI to FERA violations. We would have to deal with government agencies and provide them with all the information. This does not impact on us or on our own management, but it is without doubt a distraction.
Cash reserves help IT biggies stay in shape
2 May 2009 ET Bureau
MUMBAI: It is said what one does in the past matters the most when times are tough. And if this is true, then the country’s top three IT companies —
Tata Consultancy Services, Infosys Technologies and Wipro — have a reason to cheer. Their balance sheets for FY09 show that the IT biggies are sitting on healthy reserves and surplus, which can help them in times of crisis, said experts.
Reserves and surplus account of a company consists mainly of retained net profits over the years, apart from share issue premium. Unlike manufacturing companies where the reserves and surplus prominently reflect fixed manufacturing assets, for IT companies liquid assets such as cash and equivalents, sundry debtors, and loans and advances constitute as much as two-third of the reserves and surplus.
“The reserves and surplus account of an IT company mainly represents liquid assets, since the sector is not capital intensive unlike manufacturing companies. For IT companies, it means huge cash,” said investment advisor SP Tulsian.
The largest IT exporter TCS reported reserves and surplus of Rs 15,502 crore at the end of FY09, up 28% from last year. For Infosys, which trails TCS in revenues, it was up by 33% to Rs 17,968 crore. Wipro, which is third in line, recorded a rise of nearly 20% in its reserves and surplus at Rs 13,630 crore.
“Top IT companies have been running profitable operations, which have shored up the reserves and surplus accounts. This shows the strength of a company and since these are highly liquid in nature, it also reflects their ability to face challenging environment,” said Infosys CFO V Balakrishnan.
However, the large reserves of top Indian IT companies are in sharp contrast with the practices followed by their larger global peers. For instance, IBM and Microsoft have not retained their earnings. These companies distribute their excess profits among stakeholders. Earlier this week, IBM declared buyback of shares amounting to $3 billion. The company has also raised its dividend by 10% - the 14th consecutive year in which it is increasing its dividend.
However, the management of Indian IT companies and accounting professionals whom ET spoke to feel that large reserves help in tough times. “Conservation of cash is essential given the uncertain environment. Cash provides safety and also fuels inorganic growth by facilitating acquisitions,” said Aravind Viswanathan, senior manager (investor relations) at Wipro. The company reduced its dividend from Rs 6 per share in the previous year to Rs 4 per share in FY09, PR Ramesh partner at Deloitte agrees. “It’s a good strategy on the part of companies to preserve cash in uncertain times. That provides for a war chest,” he said.
MUMBAI: It is said what one does in the past matters the most when times are tough. And if this is true, then the country’s top three IT companies —
Tata Consultancy Services, Infosys Technologies and Wipro — have a reason to cheer. Their balance sheets for FY09 show that the IT biggies are sitting on healthy reserves and surplus, which can help them in times of crisis, said experts.
Reserves and surplus account of a company consists mainly of retained net profits over the years, apart from share issue premium. Unlike manufacturing companies where the reserves and surplus prominently reflect fixed manufacturing assets, for IT companies liquid assets such as cash and equivalents, sundry debtors, and loans and advances constitute as much as two-third of the reserves and surplus.
“The reserves and surplus account of an IT company mainly represents liquid assets, since the sector is not capital intensive unlike manufacturing companies. For IT companies, it means huge cash,” said investment advisor SP Tulsian.
The largest IT exporter TCS reported reserves and surplus of Rs 15,502 crore at the end of FY09, up 28% from last year. For Infosys, which trails TCS in revenues, it was up by 33% to Rs 17,968 crore. Wipro, which is third in line, recorded a rise of nearly 20% in its reserves and surplus at Rs 13,630 crore.
“Top IT companies have been running profitable operations, which have shored up the reserves and surplus accounts. This shows the strength of a company and since these are highly liquid in nature, it also reflects their ability to face challenging environment,” said Infosys CFO V Balakrishnan.
However, the large reserves of top Indian IT companies are in sharp contrast with the practices followed by their larger global peers. For instance, IBM and Microsoft have not retained their earnings. These companies distribute their excess profits among stakeholders. Earlier this week, IBM declared buyback of shares amounting to $3 billion. The company has also raised its dividend by 10% - the 14th consecutive year in which it is increasing its dividend.
However, the management of Indian IT companies and accounting professionals whom ET spoke to feel that large reserves help in tough times. “Conservation of cash is essential given the uncertain environment. Cash provides safety and also fuels inorganic growth by facilitating acquisitions,” said Aravind Viswanathan, senior manager (investor relations) at Wipro. The company reduced its dividend from Rs 6 per share in the previous year to Rs 4 per share in FY09, PR Ramesh partner at Deloitte agrees. “It’s a good strategy on the part of companies to preserve cash in uncertain times. That provides for a war chest,” he said.
Satyam's American pie vanishes without trace
30 Apr 2009, ET Bureau
Two-thirds of the $150 million that Satyam Computer Services raised from US investors through issue of American depository shares (ADS) in 2001 is not traceable, the Serious Fraud Investigation Office (SFIO), which probed India’s biggest corporate scam, has found.
The 14,000-page SFIO investigation report to the government has revealed that only $50 million of the ADS collections made it to the company's Indian bank accounts, said an official who has seen the report.
“The investigation has found that Satyam promoters have showed that the money was parked with Citibank, but no such accounts were found with the said bank,” said the official who asked not to be named.
The matter is now being probed by the Enforcement Directorate, he said.
“As of now, there are no clear indications if the money was routed back to India through any other channel, but there is a probability that it may have found its way into Maytas Infra or Maytas Properties,” said the official.
Both the Maytas companies are owned by relatives of Satyam founder and former chairman B Ramalinga Raju, who shocked the world in January by revealing that India’s fourth-largest software exporter had been overstating its profits for years. The money may have also been diverted to other front companies owned by the Raju family, the official added.
With the SFIO investigation bringing out details of a flood of questionable details of the Satyam scandal that leave its total liabilities unclear, the challenge for Tech Mahindra is getting bigger.
The Mahindra group company had outbid L&T Infotech and US billionaire and turnaround specialist Wilbur Ross to strike a deal to buy a 51% stake in Satyam for Rs 2,910 crore.
Tech Mahindra, which announced a 19% jump in its consolidated revenues at Rs 4,465 crore for 2008-09 on Wednesday, has repeatedly said that the company remains upbeat on Satyam.
Last week, Satyam had announced its intention to delist its shares from New York Stock Exchange (NYSE) and the Euronext in Amster-dam due to financial and legal pressures and has started working in that regard.
Last year, Satyam got listed on Euronext in Amsterdam and became the first Indian company to get listed on three major exchanges - NYSE, Nasdaq and Euronext.
Non-US companies must take the ADS route to list their stock on American exchanges such as NYSE and Nasdaq. ADS are the US dollar-denominated equity of foreign companies that can be traded on American stock exchanges.
Two-thirds of the $150 million that Satyam Computer Services raised from US investors through issue of American depository shares (ADS) in 2001 is not traceable, the Serious Fraud Investigation Office (SFIO), which probed India’s biggest corporate scam, has found.
The 14,000-page SFIO investigation report to the government has revealed that only $50 million of the ADS collections made it to the company's Indian bank accounts, said an official who has seen the report.
“The investigation has found that Satyam promoters have showed that the money was parked with Citibank, but no such accounts were found with the said bank,” said the official who asked not to be named.
The matter is now being probed by the Enforcement Directorate, he said.
“As of now, there are no clear indications if the money was routed back to India through any other channel, but there is a probability that it may have found its way into Maytas Infra or Maytas Properties,” said the official.
Both the Maytas companies are owned by relatives of Satyam founder and former chairman B Ramalinga Raju, who shocked the world in January by revealing that India’s fourth-largest software exporter had been overstating its profits for years. The money may have also been diverted to other front companies owned by the Raju family, the official added.
With the SFIO investigation bringing out details of a flood of questionable details of the Satyam scandal that leave its total liabilities unclear, the challenge for Tech Mahindra is getting bigger.
The Mahindra group company had outbid L&T Infotech and US billionaire and turnaround specialist Wilbur Ross to strike a deal to buy a 51% stake in Satyam for Rs 2,910 crore.
Tech Mahindra, which announced a 19% jump in its consolidated revenues at Rs 4,465 crore for 2008-09 on Wednesday, has repeatedly said that the company remains upbeat on Satyam.
Last week, Satyam had announced its intention to delist its shares from New York Stock Exchange (NYSE) and the Euronext in Amster-dam due to financial and legal pressures and has started working in that regard.
Last year, Satyam got listed on Euronext in Amsterdam and became the first Indian company to get listed on three major exchanges - NYSE, Nasdaq and Euronext.
Non-US companies must take the ADS route to list their stock on American exchanges such as NYSE and Nasdaq. ADS are the US dollar-denominated equity of foreign companies that can be traded on American stock exchanges.
Satyam paid excess corporate tax
1 May, 2009
NEW DELHI: The troubled software company Satyam Computer Services Ltd paid excess tax. According to Serious Fraud Investigation Office (SFIO) Saty am paid an additional corporate tax of Rs 186.9 crore on account of inflated accounts.
According to a news article in a business daily, SFIO’s report on Satyam also shows that the company paid an excess incentive of Rs 338 crore to employees. The employees were getting the excess incentive over the last few years on account of inflated books.
The promoters made Rs 3,029.67 crore by selling equity between 2000 and 2009, made possible by price manipulation and insider trading, adds the news article. The SFIO report also suggests connivance by auditors.
NEW DELHI: The troubled software company Satyam Computer Services Ltd paid excess tax. According to Serious Fraud Investigation Office (SFIO) Saty am paid an additional corporate tax of Rs 186.9 crore on account of inflated accounts.
According to a news article in a business daily, SFIO’s report on Satyam also shows that the company paid an excess incentive of Rs 338 crore to employees. The employees were getting the excess incentive over the last few years on account of inflated books.
The promoters made Rs 3,029.67 crore by selling equity between 2000 and 2009, made possible by price manipulation and insider trading, adds the news article. The SFIO report also suggests connivance by auditors.
Raju gets ‘physical’; shows mind for matter
Express News Service 30 Apr 2009
HYDERABAD: In the sweltering heat, a few men were sitting on a bench outside the court hall here at a local court, waiting patiently for their turn to appear before the magistrate.
While one was engaged in an animated discussion on the electoral fortunes of a TRS candidate, another, a bespectacled ‘gentleman,’ was absorbed in Isaac Asimov’s Understanding Physics.
The remaining appeared only too happy to talk to their family members. The man talking politics was once the chief financial officer of Satyam, Vadlamani Srinivas and the TRS candidate in question is his college-mate. As for the science buff, he is none other than B Ramalinga Raju, main accused in the Satyam fraud case.
As the clock inched towards 11.45 a.m., the newly-appointed XIV Additional Chief Metropolitan Magistrate, K Sudhakar, who assumed charge this morning, summoned them and a head count was taken of all the nine men – Ramalinga Raju, B Ramaraju, Vadlamani Srinivas, auditors S Gopalkrishnan, Talluri Srinivas, Satyam’s former vice-president G Ramakrishna, senior manager D Venkatapathy Raju, Ch Srisailam and B Suryanarayana Raju.
‘‘Where were you sir?’’ the magistrate asked Ramalinga Raju and pat came the reply, ‘‘jail’’ from the man who was till then using his criminal brain to comprehend the laws of the universe. ‘‘And, you sir?’’ the magistrate turned to B Suryanarayana Raju, another accused.
‘‘On bail,’’ he replied.
Unlike in the past, this time, the accused were more vocal and without inhibitions, talking freely with their counsels and family members.
Ramalinga Raju was seen talking to his brother Suryanarayana and also taking some points on a note pad.
During his last visit to the court, Ramalinga Raju was found reading H G Wells’ History of the World. It was a sequel to the Outline of History, published in 1920 and perhaps, the first general history constructed on an evolutionary, sociological and anthropological basis.
HYDERABAD: In the sweltering heat, a few men were sitting on a bench outside the court hall here at a local court, waiting patiently for their turn to appear before the magistrate.
While one was engaged in an animated discussion on the electoral fortunes of a TRS candidate, another, a bespectacled ‘gentleman,’ was absorbed in Isaac Asimov’s Understanding Physics.
The remaining appeared only too happy to talk to their family members. The man talking politics was once the chief financial officer of Satyam, Vadlamani Srinivas and the TRS candidate in question is his college-mate. As for the science buff, he is none other than B Ramalinga Raju, main accused in the Satyam fraud case.
As the clock inched towards 11.45 a.m., the newly-appointed XIV Additional Chief Metropolitan Magistrate, K Sudhakar, who assumed charge this morning, summoned them and a head count was taken of all the nine men – Ramalinga Raju, B Ramaraju, Vadlamani Srinivas, auditors S Gopalkrishnan, Talluri Srinivas, Satyam’s former vice-president G Ramakrishna, senior manager D Venkatapathy Raju, Ch Srisailam and B Suryanarayana Raju.
‘‘Where were you sir?’’ the magistrate asked Ramalinga Raju and pat came the reply, ‘‘jail’’ from the man who was till then using his criminal brain to comprehend the laws of the universe. ‘‘And, you sir?’’ the magistrate turned to B Suryanarayana Raju, another accused.
‘‘On bail,’’ he replied.
Unlike in the past, this time, the accused were more vocal and without inhibitions, talking freely with their counsels and family members.
Ramalinga Raju was seen talking to his brother Suryanarayana and also taking some points on a note pad.
During his last visit to the court, Ramalinga Raju was found reading H G Wells’ History of the World. It was a sequel to the Outline of History, published in 1920 and perhaps, the first general history constructed on an evolutionary, sociological and anthropological basis.
Satyam scam hits Raju-promoted social outfit; 350 quit news
30 April 2009
Around 350 employees of Byrraju Foundation, a non-profit organisation founded by the family of ex-promoter of Satyam Computer Services Ramalinga Raju, currently in jail pending completion of fraud investigations, have quit since the Rs7,000 crore rupee scam surfaced in January.
The Foundation now has 850 people on its payroll, down from 1,200 immediately before the scam came to light, Byrraju Foundation chief executive officer Jacob Verghese told a news agency on Wednesday.
The employees left as they were told that only a part of their remuneration would be guaranteed, as the Raju family would not be able to support the foundation because of the legal trouble that they are in, he added.
"The Raju family used to provide Rs10-Rs20 crore out of the annual budget of Rs30 crore of the Foundation. After the family got into legal trouble, we told the employees that only 40-50 per cent of their salaries would be guaranteed. Many of them chose to quit,'' Verghese said.
He, however, claimed many of those who left still work as volunteers on weekends for the initiatives of the Foundation.
On the funding of the foundation, Verghese said the Raju family provided money out of its own pocket and "not a single penny was taken from Satyam''. The same is true for the Rs30-Rs40 crore per annum funding of EMRI, another non-profit body set up by the Rajus, populalry known as the Dial 108 service, that responds to highway emergencies.
Around 350 employees of Byrraju Foundation, a non-profit organisation founded by the family of ex-promoter of Satyam Computer Services Ramalinga Raju, currently in jail pending completion of fraud investigations, have quit since the Rs7,000 crore rupee scam surfaced in January.
The Foundation now has 850 people on its payroll, down from 1,200 immediately before the scam came to light, Byrraju Foundation chief executive officer Jacob Verghese told a news agency on Wednesday.
The employees left as they were told that only a part of their remuneration would be guaranteed, as the Raju family would not be able to support the foundation because of the legal trouble that they are in, he added.
"The Raju family used to provide Rs10-Rs20 crore out of the annual budget of Rs30 crore of the Foundation. After the family got into legal trouble, we told the employees that only 40-50 per cent of their salaries would be guaranteed. Many of them chose to quit,'' Verghese said.
He, however, claimed many of those who left still work as volunteers on weekends for the initiatives of the Foundation.
On the funding of the foundation, Verghese said the Raju family provided money out of its own pocket and "not a single penny was taken from Satyam''. The same is true for the Rs30-Rs40 crore per annum funding of EMRI, another non-profit body set up by the Rajus, populalry known as the Dial 108 service, that responds to highway emergencies.
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