Satyam Maytas Not Sundaram

A year after the Satyam fraud

2010-01-10T05:41:00.000-08:00

9 January 2010

Exactly a year ago Ramalinga Raju went from owning the country's fourth largest IT company, the $2-billion Satyam Computers, to the Hyderabad jail.

His dramatic transit took the lid off a humungous financial fraud, obscured until then by a complex web of fictitious companies, clients, transactions, receipts and even fictitious income tax payment certificates. Corporate India, and very much everyone else, was left gaping in disbelief. The mask had come off an icon of India's celebrated new economy, baring him as a swindler, not just of Satyam's crores but also the trust of millions of shareholders whose wealth, worth Rs 14,162 crore, vanished in one fell swoop on January 7 last year - the day his cunning run came to an end.

So, a year down the line, where is Raju? At the Nizam's Institute of Medical Sciences (NIMS), the chosen sanctuary for VIPs in distress. It's the same hospital where K Chandrasekhar Rao was taken when he went on a fast that led to the Centre's hurried decision to bifurcate Andhra Pradesh and where India's richest MP Lagadapati Rajagopal rushed to when he too went on a fast to reverse the bifurcation decision. Raju is, of course, not fasting. He is apparently being treated for a minor heart ailment, but more worryingly, also for a damaged liver induced by the deadly hepatitis C virus.

Raju has been in jail without bail ever since January 9 last year. Apparently, he was not seriously interested in bail. The reason: Being out would bring him face to face with persons whom he owed money. Barely days before Y S Rajasekhara Reddy's sudden death a little over three months ago, Raju got admitted at NIMS. The Satyam scamster has been in hospital ever since, with a short break in jail. His brother Rama Raju, his finance honcho, Srinivas Vadlamani, and seven others - including the two Price Waterhouse Coopers (PwC) auditors who are accused of colluding with Raju - are still in jail.

Meanwhile, the Central Bureau of Investigation (CBI) has filed three chargesheets. They seek to establish not only Raju's confession of cooking the books of Satyam but also his devious modus operandi. What's more, the CBI claims the swindle is bigger than what Raju has confessed to - that he started siphoning money out of the company two years earlier than what he has claimed. The third chargesheet, filed earlier this week, says that the Rajus produced forged income tax payment certificates - worth Rs 329 crore - from the US and other foreign countries to seek income tax exemption in India. "If convicted, Raju will be put away for at least 10 years in jail," said a top criminal lawyer in Hyderabad. "But the complex scam will have to be established. The Rajus are lining up the best defence lawyers."

Already, Raju has lost control of Satyam and Maytas Infra, the company that he was building for the future. It's believed that it is only a matter of time before Maytas Properties, Raju's real estate firm, too will slip out of Raju's hands. The CBI probe is continuing and a fourth chargesheet would be filed at the end of the present round of investigations which are focusing on how (and if) Raju ferreted money overseas and the channels he used to bring it back into the country.

According to the CBI chargesheets, Raju's giant con began in 1999 - two years before 2001 (the year Raju is claiming he started fudging Satyam's accounts). The money was allegedly diverted to the front companies floated by Raju and his brothers. The accounts of Satyam were settled by writing off this amount as "doubtful advances" . It's hardly surprising that these front companies were involved in agri business, an euphemism for buying land - Raju's big passion to satisfy which hefty amounts were routinely pilfered from Satyam.

As per CBI investigations, the Rajus owned 6012 acres of land in Karnataka, Nagpur, Chennai and Andhra Pradesh, out of which as much 4817 acres of land was in Greater Hyderabad. However, there are many who believe Raju's land bank is even bigger. Given the complexity of his operations, the CBI has probably not been able to detect it all. The CBI chargesheet says Ramalinga Raju, his brothers Rama Raju and Suryanarayana Raju, and their family members "acquired several thousands of acres of land, several thousands of square yards of housing plots and several thousands of square feet of built up area."

What's interesting is that much of the land was owned by privately-held Raju companies in which his extended family members, country cousins and even cooks, drivers and gardeners were directors. These 132 'directors' (benamidars ) have all been booked by the Enforcement Directorate under the Prevention of Money Laundering Act. The benamidars claim they never had any control over the assets or any clue about the papers they were asked to sign. Following their written statements, the ED has attached 297 immovable properties, including a house built on a 4000-square yard plot in Hyderabad's tony Jubilee Hills where Raju's elder son Teja Raju lives. Of course, the attachment order can be challenged in a higher court.

Raju's lust for land had to be met with fistfuls of money. Much of it came illegally from Satyam. Raju borrowed a sum of Rs 1,221 crore from banks on the basis of fabricated board resolutions between 2000 and 2008 and, as per the chargesheet, "misappropriated these monies of Satyam detrimental to its interest." Curiously, the interest on these loans was paid by Satyam. How Satyam shelled out interest on loans that were never reflected in its books without attracting the attention of the audit committee or the board of directors is a matter of surprise. The Rajus also merged a part-owned Satyam subsidiary, the loss-making Nipuna, with Satyam, for which two companies - one incorporated in Mauritius and the other in Cayman Islands - were paid off handsomely for parting with their shares in Nipuna. The ownership of these two companies is still to be established.

There were a host of other tricks. One of them was to create fictitious companies that ostensibly contracted work to Satyam and brought in revenues to the company. To impart credibility in these fraudulent operations, some staffers were also assigned to these 'projects'. From the side of these fictitious customers, fictitious mails were also sent to the staffers from fictitious email accounts to create the impression that the project was being monitored by them. "The scope of the fraud was mind boggling . It required a very twisted, even if sophisticated , mind to conjure it all up," an official connected to the investigation told TOI. The CBI has established that in 2006, just to service seven fictitious customers, an amount of Rs 65.88 cores was actually spent as salaries and other overheads. In the process, Satyam raised 63 bills to demand Rs 431 crore. This sum never came into the company but was shown as received. The result: inflation of Satyam's revenues that helped push up its scrip.

Analysts tracking the case say that nemesis has caught up with Raju and he will be punished not only by the due process of law but also by the hepatitis C virus that doctors say is possibly as dangerous as the HIV virus. But the full story of the fudge will never be known unless Raju decides to bare it all. For now, he is mum: he has said nothing beyond his confessional statement to the police.
Courtesy;TOI

Ramalinga Raju and 5 others chargesheeted by CBI after one year

2010-01-07T21:49:00.000-08:00

Hyderabad, Jan 7 (PTI) Tainted chairman of Satyam Computers B Ramalinga Raju and five others were chargesheeted by CBI today for allegedly filing false income tax returns resulting in a loss of Rs 126.57 crore to the company and shareholders.

Besides Raju, the others chargsheeted included his brother B Rama Raju, the then CFO V Srinivas, the then Vice President (Finance) G Ramakrishna of Satyam Computers and two auditors of PricewaterhouseCoopers -- S Gopalakrishnan and Talluri Srinivas.

The 30-page chargesheet was filed in a designated court here under sections 120-B (criminal conspiracy), 409 (criminal breach of trust), 420 (cheating), 467 and 468 (forgery for the purpose of cheating), 471 (use of forged documents as genuine) and 477-A (falsification of accounts) of the IPC.

The chargesheet cited 32 documents and 26 witnesses and the entire documentation runs into 3552 pages.

Ramalinga Raju made gardeners, drivers kings

2010-01-07T21:48:00.000-08:00

2 Jan 2010

HYDERABAD: In disgraced Satyam boss Ramalinga Raju’s land, even gardeners were made maharajas! Several gardeners, truck drivers and others, who were working in the mango gardens and orchards, belonging to Raju brothers, for meagre salaries of Rs 4,000 to Rs 5,000 per month, have been found to possess more than 50 acres of land worth crores of rupees.

Not only this, these workers were also made directors of several fictitious companies floated by Raju. And a majority of these lands are situated in a single village called Loyapalli of Ibrahimpatnam mandal in Ranga Reddy district.

Records with the Enforcement Directorate (ED) show that the Raju brothers had purchased as much as 4,200 acres of land in this village alone in 2006.

Though official records state that the entire land was purchased for a mere Rs 30 crore, its actual price is much more and its present value is not less than Rs 4,200 crore at the rate of Rs 1 crore per acre. The ED has so far attached 312 properties acquired by the Raju brothers allegedly with the Satyam scam money.

In 2006, for example, a 54 acre plot in Loyapalli village was purchased for Rs 36 lakh and was registered in the name of Ch Suryanarayana Raju, a gardener working in the mango orchards of Raju brothers at a monthly salary of Rs 5,000. When the ED sleuths quizzed this gardener on his source of income, he revealed that the land was purchased by the Raju brothers through SRSR Holdings company and the sale deeds and other papers were also lying with them.

“They have just used my name and the question of my paying income tax for this amount does not arise because this is not my income and I never filed any IT returns nor do I possess a PAN card,” the gardener told the ED authorities. Interestingly, after this purchase, the Raju brothers made this gardener a director in several of their fictitious companies floated for holding the land.

The same is the case with K Venkatapathi Raju, another gardener in whose name 54 acres were purchased and M V Suryanarayana Raju, a garden supervisor whose name was used for registering a 56-acre land. Likewise, S V Samba Murthy Raju, a truck driver working with the Rajus has 53 acres of land registered against his name.

Samba Murthy Raju was also made director of two companies, Sahayadri Green Lands Company and Devagarbha Agros. The EDs Hyderabad Zone authorities had attached all these properties.

Satyam scam is of over Rs.14,000 crore: CBI

2009-11-27T05:43:00.000-08:00

Hyderabad: The accounting scam at Satyam Computer Services is to the tune of Rs.14,000 crore (Rs.140 billion/$2.8 billion) and not Rs.7,800 crore (Rs.78 billion) as the company's disgraced former chairman B. Ramalinga Raju stated earlier this year, the Central Bureau of Investigation (CBI) has said.
The federal agency Tuesday filed a 200-page charge sheet in the special court for CBI cases here that had details of properties acquired by Raju and other accused and their financial transactions abroad through fictitious firms.

'The quantum of scam and the loss suffered by investors has been quantified. The loss suffered by investors works out to over Rs.14,000 crore,' said CBI Deputy Inspector General Lakshminarayana.

The accounting fraud, which shocked India, came to light Jan 7 when Raju quit as Satyam chairman while confessing that he had cooked the company's accounts and inflated profits over several years.

The CBI official said with the filing of the additional charge sheet the agency had completed the probe into the accounting fraud.

The agency, however, is contemplating to file separate charge sheets pertaining to the diversion of funds and the fraud perpetrated by the accused with regard to filing of income tax returns of Satyam.

The additional charge sheet said Raju and the other accused had acquired assets worth Rs.350 crore.

'The huge assets acquired by the accused with the fraud amounts have been identified. A total of 1,065 properties whose documented value is Rs.350 crore have been identified which include around 6,000 acres, 40,000 square yards of housing plots and 90,000 square feet of built-up area,' said a CBI statement.

The accused had also raised loans of Rs.1,220 crore by forging the resolutions of the board of directors, apart from inflating profits by Rs.450 crore by showing fictitious customers, CBI said.

The
statement said the accused falsified the accounts in the matter pertaining to the acquisition of shares of a Hyderabad-based company.

The accused have also resorted to criminal breach of trust in the matter pertaining to declaration and disbursement of dividends. Further evidence collected revealed the role of two statutory auditors in the fraud.

'In the supplementary charge sheet, we have filed the charges under various sections of Indian Penal Code like 120 B (criminal conspiracy), 409 (criminal breach of trust), 419 (impersonation), 420 (cheating), 467, 468 and 471 (all pertaining to forgery),' the CBI official said.

The first charge sheet was filed April 7.

In addition to the nine accused, the investigating agency has also levelled charges against internal auditor V.S. Prabhakar Gupta.

Gupta, arrested two days ago, has been charged with breach of trust, forgery, cheating and fabrication of accounts.

'In the supplementary charge sheet, we have cited 301 additional witnesses and nine material objects. We have also filed 1,550 additional documents. With this the quantity of documents in this case has gone up to 55,000,' Lakshminarayana said.

The multi-disciplinary investigation team comprising officials of the CBI, the income tax department, enforcement directorate and the Reserve Bank of India, has also gathered details of Raju's bank transactions in Mauritius.

Raju and his brother and then managing director Rama Raju were arrested by the Andhra Pradesh police Jan 9. Former chief financial officer Vadlamani Srinivas was picked up the next day.

Two auditors were also arrested the same month.

The CBI, which began the investigations in February, arrested three executives of Satyam's finance wing in April.

All the accused are currently lodged in Chanchalguda central jail here.

Ramalinga Raju stable in intensive care unit

2009-09-08T04:47:00.001-07:00

8 Sep 2009,

HYDERABAD: Disgraced founder of Satyam Computer Services Ltd B Ramalinga Raju remained in the intensive care unit of a government-run hospital Tuesday after he suffered a cardiac arrest in a jail here. His condition is said to be stable.

Raju, who was in Chanchalguda Jail along with seven other accused in connection with the Rs.78 billion ($1.43 billion) accounting fraud in Satyam, was given first aid by the jail authorities after he complained of chest pain Monday evening. He was then shifted to the Nizam's Institute of Medical Sciences (NIMS).

Doctors conducted various tests on him and some of the reports are expected later Tuesday, hospital officials said.

Resident Medical Officer of NIMS M Srinivas told reporters that the cause of the pain would be known after the reports of all the tests were fully evaluated.

Srinivas said the former Satyam boss was undergoing treatment in the intensive care unit and his condition was stable.

Raju's lawyer Bharat Kumar, however, claimed that Raju suffered a heart attack. According to him, Raju has a block in his arteries but the same could not be removed as he is also suffering from Hepatitis C.

Raju, who will turn 55 Sep 15, has been lodged in jail since Jan 9, two days after he shocked the corporate world by admitting to a Rs 78 billion accounting fraud in the IT major.

Raju's brother B Rama Raju, chief financial officer Vadlamani Srinivas, three other employees of Satyam and two auditors are also in jail.

They have been charged with cheating, forgery and criminal conspiracy and are being tried for the same.

Following Rajus's confession, the government appointed a board to run Satyam, one of India's leading IT companies. The company was bought by Tech Mahindra in April and renamed Mahindra Satyam.

Former Satyam chief Ramalinga Raju suffers heart attack

2009-09-08T04:46:00.002-07:00

8 Sep 2009, ET Bureau

HYDERABAD: B Ramalinga Raju, former chairman of scam-tainted Satyam Computer Services , was admitted to the Nizam’s Institute of Medical Sciences (NIMS), following a heart on Monday evening.

Raju was lodged in the Chanchalguda prison in January 9 this year, two days after he confessed to perpetrating a Rs 7,000-crore fraud at Satyam.

According to his lawyer Bharat Kumar, Raju suffered a heart attack at around 4.30 pm and his condition was serious when he was shifted to the hospital. “He was taken twice to NIMS over the past 10 days for treatment of type C Hepatitis. A medical board constituted by the state government examined him and recommended treatment for a couple of months. He had blocks in his arteries, but was unable to take medicines as he was suffering from liver disorder,” said Bharat Kumar.

Several applications for bail were rejected by the lower court and the Andhra Pradesh High Court. The CBI, which filed a charge sheet, also moved a petition to conduct lie-detector and polygraph tests. But Raju moved a counter-petition , challenging the validity of these tests. A lie-detector test cannot be conducted on a person who has a critical ailment.

Raju was shifted late Monday evening from the Chanchalguda jail to NIMS. His brother B Rama Raju and former chief financial officer Srinivas Vadlamani are also lodged in the same prison for conspiring in the same fraud.

YSR Death: Who's going to save Ramalinga Raju?

2009-09-08T04:46:00.001-07:00

Thursday, September 3, 2009

Hyderabad, Sep 3: With the death of the 'son of soil', AP Chief Minister YS Rajashekhara Reddy there were scores of people who were heartbroken.

Buzz up!However, the people who will truly mourn the Chief Minister's death will not just be limited to farmers, party members and workers, as the ex-CEO of Satyam Computers, Mr Ramalinga Raju too may have to join the mourning.

When the Satyam Computers fraud came out in the open, it was a popularly debated fact if YSR was shielding the architect behind the epic Rs 7,800 crore scam.

During this period, YSR faced criticism for supporting and protecting Ramalinga Raju. While his request for the CBI probe into to scam was seen as an effort to protect Ramalinga Raju, his government constantly became the victim of scathing attacks of leaders and the public.

So, now the question is will the demise of YS Rajashekhara Reddy have an impact on Ramalinga Raju and his accomplices, and how?

Court extends Ramalinga Raju's remand by 14 days

2009-09-08T04:45:00.001-07:00

PTI 5 August 2009

HYDERABAD: A local court on Wednesday extended the judicial remand of Satyam founder B Ramalinga Raju and eight other accused in the multi-crore rupee fraud case in the IT company by 14 days.

The XIV Additional Chief Metropolitan Magistrate extended the remand of Ramalinga Raju, his brother Rama Raju, former Satyam CFO Vadlamani Srinivas, former auditors of Price Waterhouse S Gopalakrishnan and Talluri Srinivas and three former employees of the IT firm till August 19.

The accused, who have been lodged in the Chanchalguda jail, were produced before the magistrate on Wednesday.

Criminal cases against Maytas Properties promoters

2009-07-26T07:26:00.001-07:00

The Hyderabad police has registered cheating and criminal breach of trust cases against the promoters of Maytas Properties, an unlisted company owned by the family of Satyam Computer Services Ltd founder B Ramalinga Raju, who is in jail after confessing to manipulating Satyam’s accounts.

Speaking to Business Standard, Deputy Commissioner of Police (Detective) R S Praveen Kumar said the police registered the cases yesterday following a complaint from a member who bought property at Hill County, Bachupally, a residential project promoted by Maytas Properties on the outskirts of the city.

The complainant told the police that he paid about Rs 77 lakh to buy the property and the company promised to deliver it in March 2008 but did not do so, citing the crash in the real estate market.

The police have registered cases under Section 406 (criminal breach of trust) and Section 420 (cheating). “We will investigate the case based on the complaint,” Kumar said, adding that that the cases were filed against B Rama Raju, Maytas Properties, vice-chairman and younger son of Ramalinga Raju.

People who bought flats at Hill County have been on the warpath for some weeks now since pressure from their monthly loan instalments was building up. They have held demonstrations at the construction site, at Rama Raju’s residence and also staged a hunger strike in protest against the delay.

Hill County is a Rs 1,100-crore project out of which the company has collected Rs 654 crore by selling residential property. It currently has Rs 100 crore as receivables and Rs 200 crore as vendor liabilities. The project envisaged construction of 840 apartments and 326 independent villas. The flats were priced between Rs 50 lakh and Rs 1.5 crore, while the price of villas ranged from Rs 1.5 crore to Rs 2.5 crore.

Last week, the company’s government-appointed director Ved Jain announced that it was looking at parting with a stake in the residential project.

Maytas Properties writes to angry clients

2009-07-26T07:25:00.002-07:00

Hyderabad July 23, 2009

Maytas Properties, hit by both the recession in real estate and the Satyam accounting scam, has written to angry clients to give it more time.

Vice-Chairman B Rama Raju has written to the Hill County Home Owners Welfare Association, the body of clients in its prestigious project here which is now stuck for want of money. The customers, all of whom have paid a huge amount for a promised luxury home, are threatening prosecution.

“I am committed to do the project,’’ he promised in the letter, adding assurances of positive developments soon.

The police have registered cases against Rama Raju and Maytas Infra vice chairman Teja Raju, both sons of Satyam Computer Services’ founder B Ramalinga Raju, following a complaint from two members of the association for delaying the project.

“Several conditions, both internal and external, have contributed to the challenges that the company was facing in raising the funds to complete the Hill County project”, Rama Raju stated in the letter, a copy of which is available with Business Standard.

Maytas Properties is one of the two companies the Satyam founder had made an abortive bid to acquire in December last year to cover the huge scam that he finally couldn’t keep hidden. Maytas ran into problems after it failed to keep its promise of delivering the homes at the Rs 1,100-crore Hill County project in March 2008. Hill County, located at Bachupally on the city outskirts, was to have 840 apartments and 326 bungalows. These were priced between Rs 50 lakh and Rs 2.5 crore.

The company had collected Rs 654 crore from property buyers, who says they are paying monthly installments of Rs 50,000 upwards, though the flats and independent houses are yet to be ready.

Rama Raju says the current economic conditions, including the slowdown of demand in real estate, lack of investor interest and tightening of credit by financial institutions have made the company’s pursuit for funds a lot more difficult.

“In addition, what appears to be a never-ending pursuit by investigating agencies had to be dealt with immediately, thus diverting our attention” from the core issue of raising funds, he said. Adding that the company was now in discussion with some investors and financial institutions to complete the construction at Hill County.

He added the promoters have offered to provide additional collateral to realise the required funds. “Barring any unforeseen events, we are looking forward for a positive outcome soon.’’

'No trace of Maytas funds in Satyam'

2009-07-26T07:25:00.001-07:00

22 July 2009

HYDERABAD: In a fresh twist to the Satyam-Maytas saga, the top honchos of Mahindra Satyam denied having any knowledge of Rs 600 crore having found its way from Maytas Infra and Maytas Properties coffers into Satyam.

Vineet Nayyar, executive vice-chairman of Mahindra Satyam, told TOI that they have not received any communication from the two Maytas companies seeking a refund. "People can claim anything. But as far as we are concerned, till the Satyam accounts are restated we cannot say how much money has gone out of Satyam or into it," said Nayyar. "The forensics are being done by our finance team to untangle the financial manipulations at Satyam. We are in the process of restating the accounts," he added.

It was only on Saturday that government-appointed director of Maytas Infra and Maytas Properties, Ved Jain had declared that the two companies, promoted by Ramalinga Raju's sons, had given Rs 380 crore and Rs 220 crore, respectively, by way of inter-corporate deposits (ICDs) to Satyam and that they had initiated proceedings to get the money back. Jain had claimed that there were records that the money had ended up at Satyam from Maytas Infra and Maytas Properties via certain Maytas controlled companies and that they had the documentary proof to support their claims.

Gearing up to battle class action lawsuits filed in US, new owners of Satyam do not seem to be in a mood to entertain the latest in a series of claims by the Rajus. Even as the Mahindras had, on an earlier occasion, said that they had found no evidence of Satyam having received any cash from Maytas, Ramalinga Raju's brother Suryanarayana Raju had staked claim to Rs 1230 crore.

He had claimed, in a letter that Satyam owed the money to a clutch of private companies owned by him. The Mahindras, who just upped their stake in Satyam to 42.7% through subsidiary Venturbay early last week, are already grappling with the legal issues facing the company.

US SEC reviews progress on restatement of Satyam a/cs

2009-07-26T07:24:00.002-07:00

24 Jul 2009, ET Bureau

HYDERABAD: A high-level US Securities and Exchange Commission team reviewed the progress on the restatement of accounts of Satyam Computer Services on Thursday with audit firm KPMG, Mahindra Satyam CEO CP Gurnani told ET.

The US SEC team, accompanied by Sebi officials also met Tech Mahindra officials, the new owners of Satyam, to discuss a host of issues including re-statement of the manipulated accounts.

Global audit firms KPMG and Deloitte have been commissioned to conduct a forensic audit of Satyam’s accounts, after founder B Ramalinga Raju confessed to fudging the books for seven years.

The US SEC is probing the violation of US Securities law by former Satyam executives after a clutch of class action suits were filed by law firms representing shareholders of Satyam in the US. Shareholders alleged that the executives issued false and misleading statements.

A senior Mahindra Satyam official said the restatement exercise is on track and is likely to the completed by December this year. Sebi is probing the insider trading of shares by Raju and his family as investigating agencies including the CBI suspect that the promoters made windfall gains by rigging share prices and invested the money in realty deals.

In an interim report on the Satyam investigation, SEBI has recommended prohibiting Satyam’s esrtwhile auditors and the audit firm Price Waterhouse from auditing accounts of listed companies for a certain period.

CBI chief calls on senior officials at Satyam

2009-07-26T07:24:00.001-07:00

Hyderabad July 25, 2009

Central Bureau of Investigation (CBI) sleuths, led by its director Ashwini Kumar, met senior officials of fraud-hit Satyam Computer Services, now rebranded as Mahindra Satyam, at its headquarters here on Friday.

“The CBI team was here to get first-hand information on the possible acquaintance of some staff with the company’s (jailed) founder, Ramalinga Raju. We don’t know further details of the closed-door meeting, as about 30 CBI security personnel cordoned off the entire office area. Several officials of the company, along with some senior management members, were present in the meeting,” a company source said.

He indicated the CBI team was likely to visit the IT outsourcing major’s headquarters again in a day or two. The CBI chief arrived here on Thursday to review the progress made by the bureau on its investigation into the multi-crore accounting fraud at Satyam.

Meanwhile, a petition filed by legal counsel for Ramalinga Raju yesterday, asking for quashing of the July 9 order of a lower court which allowed the CBI to conduct a lie detector test (polygraph test) and brain mapping (F300 testing) on Raju and his brother and former managing director B Rama Raju, and former chief financial officer Srinivas Vadlamani, all accused in the multi-crore scam, came up for hearing today.

Raju’s counsel contended the tests violated fundamental rights of the accused and would subject them to pressure. The confessions, anyway, would not be admissible in court. The CBI counsel sought time till July 27 from the court to file a reply. He told the court it would not conduct the tests till July 30. The CBI feels crores of rupees were also misappropriated from Satyam, for which they have yet to get proof. The accused, on whom the forensic tests were to be conducted, did not reveal the information with regard to the alleged defalcation and therefore, these were necessary to aid in the investigation.

The lower court felt it was a fit case to agree to allow the lie detector test and brain mapping.

Satyam scam: SEC team meets CBI, SEBI, KPMG officials

2009-07-26T07:23:00.000-07:00

Hyderabad, July 25 The United States’ Securities Exchange Commission (SEC) team has held discussions with Mr Ashwani Kumar, CBI Director, and the Securities and Exchange Board of India (SEBI), on the Rs 7,136-crore Satyam scam at the IT major’s Infocity campus at Madhapur here on Friday.

The three-member SEC team also quizzed auditors of KPMG, which is taking part in the restatement of the balance sheets of the company. KPMG is doing a forensic study on how the scam was perpetrated over the years.

The SEC team, which conducted a preliminary probe in February 2009 soon after the scam broke out, had sought the permission from the Union Government and the CBI to carry out its own investigation into the issue.

Mr Ashwani Kumar, who reviewed the CBI’s probe into the scam, went to the Satyam campus along with his colleagues in the Multi-Discliplinary Investigating Team on Friday. The SEC team reportedly enquired into the role played by PriceWaterhouse, the statutory auditors for Satyam for years during the scam period.

Case adjourned

Meanwhile, the Andhra Pradesh High Court has adjourned hearing on the appeal by the counsel of Mr B. Ramalinga Raju (the former Satyam Chairman), questioning a lower court’s decision to permit CBI to conduct a lie-detector test and brain-mapping on Mr Raju. “Hearing has been deferred to July 28. The CBI gave an undertaking that it would not conduct the tests before that date,” said Mr S. Bharatkumar, counsel for Mr Raju.

The Satyam Saga - As it Unfolds

2009-07-26T07:22:00.000-07:00

22 September 2008: Satyam Computer Services won the Golden Peacock Global Award for excellence in corporate governance for 2008 given by the World Council for Corporate Governance. On that day, the Satyam stock ended down 4.69% at Rs 352.75.

16 December 2008: Satyam announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and chairman B Ramalinga Raju and other insiders held 36% in Maytas Infra and 35% in Maytas Properties. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services. The announcement was made after market shut on that day.

Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.

The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to cope with slowing outsourcing business. Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development.

Following the surprising announcement, Satyam's American depository receipt (ADR) plunged on 16 December 2008 as investors reacted negatively to its plan to buy two related companies. The ADR of Satyam Computer Services, which closed down $6.85, or 55%, at $5.70 on the New York Stock Exchange, jumped 50% in after-hours trading to $8.89. Even after the evening rally they were still down 28% from 15 December 2008's close of $12.30. On that day, the Satyam stock ended up 0.49% at Rs 226.50.

17 December 2008: Folowing a negative investor reaction, Satyam called off the deal which it had announced after trading hours in India on 16 December 2008. Satyam announced the decision to call off the deal before trading hours in India on 17 December 2008. However, the Satyam stock slumped 30.22% to end at Rs 158.05 on 17 December 2008 as investors judged Satyam's move as a total disregard for corporate governance and shareholders. On that day, the Satyam stock slumped 30.22% to end at Rs 158.05.

18 December 2008: Shares of Satyam spurted 7.15% to end at Rs 169.35 after the company said during trading hours on that day that its board will meet on 29 December 2008 to consider buyback of shares.

Satyam's decision to consider buyback was aimed at soothing investors nerves after the stock slumped 30.22% to Rs 158.05 on 17 December 2008, hitting a five-year low in intraday trade, with investors exiting the counter due to poor corporate governance. Satyam claimed of having a large cash pile of $1.1 billion, which marketmen hoped the company could use for buyback. On that day, the Satyam stock jumped 7.15% to end at Rs 169.35.

19 December 2009: UK-based online and mobile payment services player Upaid Systems filed a motion against Satyam in a state court, requesting testimony of Satyam's chairman B Ramalinga Raju, chief financial officer Srinivas Vadlamani and global head of corporate governance G Jayaram in connection with Satyam's failed attempt to strip all surplus cash from Satyam to to buy two closely held companies.

Upaid had urged the top Satyam officials to clarify as to why the company went through with the Maytas deal, in case they were looking at moving cash out of the books largely because they feared Satyam could loose the Upaid's earlier filed case.

Upaid and Satyam are locked in a two-pronged legal battle, one, a forgery case filed by Upaid against the Satyam management seeking damages of over $1 billion, and the other, a disparagement case levelled by Satyam against the little known UKbased company.

The forgery case dates back to early 2000, when Satyam was working on a contract job for U-paid . Upaid says that it ran into problems with Qualcomm and Verizon and had to settle the case with them under grossly unfavourable terms due to forgery by Satyam officials. On that day, the Satyam stock ended down 3.87% at Rs 162.80.

23 December 2008: The World Bank confirmed that it has barred Satyam Computer from doing business with it for eight years, starting September 2008, due to data theft and paying bribes to its staff. The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices. On that day, the Satyam stock slipped 13.55% to end at Rs 140.40.

25 December 2008: Satyam Computer asked the World Bank to withdraw 'inappropriate' statements about the Indian outsourcer and to issue an apology for harm done to the company.

Earlier On 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September 2008. Media reports had suggested that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it. Equity markets were shut on that day on account of Christmas holiday.

26 December 2008: Satyam said Mangalam Srinivasan, non-executive and independent director of Satyam resigned from the company effective 25 December 2008. On that day, the satyam stock ended 0.41% up at Rs 135.50.

29 December 2008: Satyam said Professor Krishna G Palepu, non-executive director and Vinod K Dham, non-executive and independent director of the company resigned from the company effective 28 December 2008. The outsourcer did not give any reason for the resignations.

Satyam, before trading hours on the same day had postponed the board meeting set on 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details. On that day, the satyam stock ended 9.41% up at Rs 148.25.

30 December 2008: Media reports suggested some institutional investors in the company had approached IT firms and private equity players for a stake sale. The report cited market participants as its sources. On that day, the satyam stock ended 8.33% up at Rs 160.60.

31 December 2008: Media reports suggested US-based computer firm Hewlett-Packard may buy a stake in Satyam. Hewlett-Packard (HP) was reported to be attracted by the Satyam's lucrative business software practice. Reports suggested that buying stake in Satyam could give HP an opportunity to challenge its rival IBM with bigger, low-cost offshore capabilities. On that day, the satyam stock ended 5.95% up at Rs 170.15.

3 January 2009 (Saturday): Founder-promoters stake declined from 8.64% to 5.13%t as financial institutions with whom the entire stake was pledged dumped the shares. Of the remaining 5.13% stake (around 3.45 crore shares) with the promoters, around 2.19 crore shares (or roughly 63% of the holdings) were still reported to be pledged with various lenders.

6 January 2009: Satyam denied media reports that suggested that Tech Mahindra had approached Satyam for an all-share merger. On the same day, Satyam had announced that the share of promoters' group in the company had further dwindled with lending agency IL&FS Trust Company selling off 1.03 crore shares afresh. On that day, the satyam stock ended 7.31% up at Rs 179.10.

7 January 2009: Satyam's chairman Ramalinga Raju resigned the company and admitted fraud of reporting inflated figures in the accounts of the firm. As per the announcement, Satyam's balance sheet as on 30 September 2008 had inflated cash and bank balances of Rs 5040 crore, inflated debtors of Rs 490 crore and non-existent accrued interest of Rs 376 crore. Against this the liability was understated by Rs 1230 crore.

Raju said the Q2 September 2008 results had overstated operating revenues by Rs 588 crore, thereby overstating the operating profits and cash to that extent.

The gap in the balance sheet has arisen purely on account of inflated profits over the period of last several years, Raju confessed adding that every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap, Raju said.

Raju said in the last 2 years a net amount of Rs 1230 crore was arranged to keep operations going. He said this was done by pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers, Raju said.

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones, Raju said. Maytas's investors were convinced that this is a good divestment opportunity and a strategic fit, he said.

Raju ended the statement with an apology to Satyam's staff and shareholders and said he was prepared to face the legal consequences.

On the same day, Satyam Computer announced of forming a new team to look into its day-to-day affairs, following the resignation of its chairman Ramalinga. The interim CEO of Satyam, Ram Mynampati, sent a letter to the management and staff, announcing the formation of a new team that consisted of persons who have spent 10 years in the company and twenty years in the industry. On that day, the satyam stock tumbled 77.69% up at Rs 39.95.

8 January 2009: Media reports suggested Satyam's banker Citibank froze more than 30 operational accounts of Satyam Computer. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm. Equity markets were shut on that day on account of Moharram.

11 January 2009 (Sunday): In a swift action to salvage the beleaguered Satyam Computer Services, the government, after market hours on Friday (9 January 2009), sacked the remaining three directors erstwhile board on Satyam, including the interim CEO Ram Mynampati. The government then set up a three-member board on 11 January 2009 in a bid to restore confidence in the outsourcing company rocked by India's biggest corporate scandal.

The new three-member board consists of Deepak Parekh, chairman of Housing Development Finance Corporation. Kiran Karnik, former president of the National Association of Software and Service Companies (Nasscom), a technology lobbying group, and C Achutan, a former official at the Securities and Exchange Board of India (Sebi). All the three members would act as independent directors. Corporate Affairs Minister Prem Chand Gupta expressed the hope that the new board would be able to provide the necessary vision, along with responsible and accountable leadership, to the company in this hour of crisis.

23 January 2009: Larsen & Toubro raised its holding in Satyam Computer Services to 12% from 4% earlier. L&T hiked stake in Satyam as the initial cost of investment in Satyam was at risk.

Following the additional share purchase, L&T's average acquisition price of around 12% stake in Satyam dipped to Rs 80 a share from the Rs 174, it paid earlier.

L&T had acquired 4% in Satyam at Rs 174 per share before Satyam's founder B Ramalinga Raju admitted on 7 January 2009 of a Rs 7,000-crore accounting fraud at the IT firm.

If the stake reaches 15%, L&T will then, as per the regulator's takeover guidelines, have to make an open offer for an additional 20% stake in Satyam.

27 January 2009: The government-appointed board of Satyam Computer Services appointed the Boston Consulting Group (BCG) as the management advisor to support the directors and the Satyam leadership team.

Goldman Sachs and Avendus were appointed investment bankers to advise the company on the way forward. A dedicated three-member BCG will work closely, free of charge, during this revival process, Deepak Parekh, board member, had said.

5 February 2009: The government-appointed board of fraud-scarred Satyam Computer Services on Thursday, 5 February 2009, appointed A S Murty, a Satyam executive for 15 years, as chief executive officer (CEO). Murty will be the chief executive with immediate effect, the company said in a statement. Murty was the Global Business Head of Satyam.

The board also said it has received bank lines of credit for Rs 600 crore toward working capital requirements. The money will help the company tide over its financial challenges, the board said.

The board said it had brought on two additional advisers: Homi Khusrokhan, who has served as managing director of Tata Chemicals, Tata Tea, Glaxo Laboratories India and Wellcome India; and Partho Datta, a chartered accountant who will focus on restating the company's scrambled third-quarter results.

6 February 2009: The government announced the appointment of Nasscom past-president Kiran Karnik as chairman of its six-member board.

13 February 2009: The Securities & Exchange Board of India (Sebi) relaxed takeover regulations for companies whose boards have been superseded and replaced by the Government or other regulatory authority. This smoothened the way for a possible sale of Satyam Computer Service, the only company that currently fits this description.

19 February 2009: The Company Law Board (CLB) allowed the government-appointed board of Satyam to bring in a strategic investor through an open bidding process. For this purpose, the CLB also permitted the board to increase the authorised share capital and issue preferential shares.

Currently, the authorised capital of Satyam is 80 crore shares of Rs 2 each, of which 67.3 crore shares have already been issued. The CLB has authorised the Satyam board to pass a resolution to amend the capital clause of the Memorandum of Association to raise its authorised capital. Accordingly, the authorised capital of Satyam will increase from Rs 160 crore comprising 80 crore shares, to Rs 280 crore comprising 140 crore shares.

The Satyam board has been directed to devise a mechanism for transparent, open and competitive process without furthering the interest of any particular acquire. Besides, the board will also have to obtain requisite approvals from the Securities & Exchange Board of India. The process of selection of a strategic investor will be overseen by a retired judge of the Supreme Court or former Chief Justice of India.

6 March 2009: The Sebi approved selling 51% stake in Satyam through global bidding process.

As part of the two-phased bidding process, a chosen investor will acquire newly issued equity shares representing 31% of Satyam's share capital and then make a mandatory minimum public offer to buy a further 20% stake. The bidders are expected to have total net assets in excess of $150 million.

9 March 2009: Satyam commenced a competitive bidding process for selection of an investor to acquire 51% equity stake. Interested bidders were asked to submit a detailed expression of interest and the proof of availability of at least Rs 1500 crore by 20 March 2009.

4 April 2009: The government appointed board of Satyam extended the deadline for submitting financial bids for acquiring a controlling stake in the firm to 13 April 2009 from 9 April 2009 as bidders sought more information.

13 April 2009: Tech Mahindra was declared as the winning bidder for a majority stake in Satyam Computer with a winning bid of Rs 58 a share. Tech Mahindra to pay Rs 1750 crore for a preferential allotment of 30.28 crore shares, amounting to 31% of Satyam's equity. This will be followed by an open offer to acquire an additional 20% within 55 days. The acquisition is expected to cost the company around Rs 2,900 crore.

After evaluating each bidder's technical bid the government appointed board of Satyam Computer and Justice Barucha confirmed Tech Mahindra as the highest bidder as there was no bid within atleast 90% of the Tech Mahindra's bid. Larsen & Toubro (L&T), and Wilbur Ross were others who put in technical bid for Satyam Computer Services. L&T had bid at Rs 45.90 a share and Wilbur Ross at Rs 20.

20 April 2009:Tech Mahindra deposited the funds needed for taking the majority stake in fraud-hit Satyam Computer. Tech Mahindra was to pay Rs 1750 million for a 31% preferential allotment of new shares and would then make an open offer for a further 20% of Satyam.

Funds for the 31% stake as well as the open offer have been deposited by Tech Mahindra, Satyam's government-appointed chairman Kiran Karnik had told media at Satyam's headquarters in Hyderabad.

22 April 2009:Tech Mahindra said its open offer for an additional 20% stake in Satyam Computer at Rs 58 per share will begin on 12 June 2009 and close on 1 July 2009. The open offer to Satyam’s shareholders was made by Venturbay Consultants, an unlisted arm of Tech Mahindra.

The maximum consideration payable under the open offer is Rs 1154 crore. Pursuant to successful completion of the offer, Tech Mahindra's holding in Satyam would go up to 51%. Kotak Mahindra Capital Company is the manager to the offer.

21 June 2009: Satyam Computer Services has been renamed Mahindra Satyam, two months after being taken over by Bangalore-based Tech Mahindra. The new robust brand is envisaged to represent the core values of the Mahindra group and the inherent strength of the Satyam brand.

Satyam bullish under 'umbrella of governance'

2009-07-03T22:27:00.002-07:00

ZDNet Asia, July 03, 2009

SINGAPORE--It has had the dubious honor of being dubbed the "Enron of India", but the revamped Satyam is now "extremely bullish" about its Asia-Pacific market prospects and confident of its governance, say company executives.

The newly-minted Mahindra Satyam--after the successful bid by Indian services giant Tech Mahindra--has tweaked its model of governance, which had been a "perceivable flaw", said Vineet Nayyar, executive vice chairman of Tech Mahindra and Mahindra Satyam.

Former Satyam Chairman B. Ramalinga Raju admitted to fraud and resigned in January amid a scandal over inflated profit reporting.

Speaking at a media briefing in Singapore Friday, Nayyar noted that the company's governance model has since been reorganized to allow greater responsibility and accountability. He added that incentives between sales and delivery teams have also been realigned, and there is greater transparency in the reporting of costs and profitability in the various business units.

"What you see in Mahindra Satyam is the congruence of the capabilities, skills and depth of knowledge of Satyam...now under the umbrella of governance which will adhere to the highest ethical standards [that Mahindra is known for]," he said.

Region's business picking up
Nayyar acknowledged that Satyam lost out on a large Telstra request-for-proposal issued earlier this year, but said the company's customers in the region still have "fairly positive" sentiments toward the company.

"It's not as if we've been banned or barred... We did lose a very large order, but there's still life beyond that [Telstra] order," he said. "On the other hand, all other clients [that] have stayed with us are staying with us, and are giving us further orders."

Philip Carter, IDC's associate research director for services in the Asia-Pacific region, told ZDNet Asia that apart from Mahindra Satyam losing a couple of key clients such as Telstra and the National Australia Bank, the company has made at least one recent deal in the region. Singapore's Land Transport Authority, he said, had awarded Mahindra Satyam a contract several weeks ago.

Over in the United Kingdom and Ireland, Satyam's existing clientele had signed US$2.5 million worth of contracts with the company during the first quarter of financial year 2009, Satyam's U.K. and Ireland head for noted earlier this month.

Carter said Tech Mahindra's coming into the Satyam picture has had a positive touch, but there were also challenges moving forward. A number of Mahindra Satyam executives hailed from Tech Mahindra, essentially a second-tier player focused on one vertical--telecoms. That presents management credibility issues, as well as a danger of talent attrition given management changes.

In addition, while the backing of Tech Mahindra may offer credibility in terms of financial stability and corporate governance, there is a "long process" in terms of sustaining and that credibility in the regional market, said Carter.

"There's been positive energy in terms of credibility building up, but I won't go as far to say they'll make the shortlist for every single major services contract," he pointed out.

Expansion in the pipeline
According to Mahindra Satyam's Asia-Pacific managing director Rohit Ghandi, the company is "extremely bullish" about the way forward.

The new Satyam, he added, would "be gunning very strongly for new business", through a combination of selling additional services to existing clients and pushing for new customer wins. For instance, the company is planning to roll out infrastructure services as well as BPO (business process outsourcing) services in Australia and New Zealand (ANZ).

Ghandi said Mahindra Satyam would concentrate on growing market share in countries Satyam formerly was active in--ANZ, China, Japan, Malaysia, Singapore and Thailand--before making expansion moves. However, Indonesia is a likely target as Tech Mahindra has an existing strong presence in the market.

The Asia-Pacific region, he added, is targeted to contribute 10 percent to 15 percent to Mahindra Satyam's overall revenues. Singapore, with headcount in excess of 400, will remain the regional headquarters for the company. Mahindra Satyam has over 2,000 employees across the region.

Nayyar added that Tech Mahindra and Mahindra Satyam will "for the time being" be run as separate entities but will tap on each other's relevant expertise as well as cross-selling opportunities. The two companies, he noted, have synergies that may result the merging of operations, but that would not take place at least in the next one to two years.

Who's who in Mahindra Satyam

2009-07-03T22:27:00.001-07:00

Executive New post Former post

Vineet Nayyar Executive vice chairman, Tech Mahindra and Mahindra Satyam Vice chairman and managing director, Tech Mahindra
C.P. Gurnani CEO Head of global operations, sales and marketing, Tech Mahindra
S. Durga Shankar CFO Senior vice president, mergers & acquisitions, Mahindra & Mahindra
A.S. Murthy CTO CEO, Satyam
Rakesh Soni COO; head of delivery for manufacturing, banking and financial services, emerging verticals and strategic accounts COO, Tech Mahindra
Keshab Panda Head, business development and operations for manufacturing, banking and financial services, emerging verticals and strategic accounts Chief of Continental Europe, energy and utilities and manufacturing operations, Satyam
Atul Kanwar Head, business development and operations for regional business groups Chief business development officer, Tech Mahindra
Manish Mehta Head, delivery for regional business groups Head, system, analysis and program (SAP) development, Satyam
T.R. Anand Head, business development and operations for telecoms, tech infrastructure, media & entertainment, and semiconductor (TIMES); head, channel business Director and senior vice president for TIMES, Satyam
Ravi Bommakanti Head, delivery for TIMES Director and senior vice president and global head of insurance, Satyam
Hari T Chief people officer and chief marketing officer Global marketing head, Satyam
Source: Mahindra Satyam and HT Media

As Reported by-:ZDNet Asia

Tech M stake in Satyam to be 42.7% after preferential issue

2009-07-03T22:26:00.003-07:00

Business Standard / New Delhi July 3, 2009

Tech Mahindra, the new owner of Satyam Computer Services (which is being rebranded as Mahindra Satyam), is in the process of approaching the Satyam board and the Company Law Board (CLB) to acquire additional shares via preferential allotment. The company had tendered an open offer to acquire an additional 20 per cent at Rs 58 a share but there were few takers, since the secondary market price hovered over Rs 70. Tech Mahindra, through its subsidiary Venturbay, had already acquired a 31 per cent stake in the company. Tech Mahindra's Chief Financial Officer Sonjoy Anand explains the company's stance on the issue.

What will be your next step, since the open offer did not get the desired result?
Our open offer was for acquiring the additional 20 per cent of Satyam, which is around 199 million shares. But since the share prices have gone up, the open offer has not been successful (the company’s stock is trading at 30 per cent higher than the open offer price of Rs 58). Some did tender to the open offer, but the number is very small.

So you will now acquire the additional equity through a preferential allotment...
Yes. This has been mentioned in the open offer, too. So now we will go back to Satyam with a request for a preferential offer. We did mention this earlier, that, in such a scenario we will subscribe to shares to make good the difference between the requirement of 199 million shares and the number of shares tendered in the open offer. This will bring our stake in the company to approximately 42.7 per cent. A spokesperson added: The open offer ended as of yesterday and we are in the process of collating the final numbers. The board will take a decision at the earliest, keeping these in consideration.

...and the outlay for this remains the same?
Yes, the outlay for acquiring through preferential offer route remains the same at Rs 1,155 crore. This will be fresh equity being issued by Satyam and the number of shares being acquired as well as the price remains the same.

How soon will this process be over?
It will take some time. We will be approaching the CLB soon. As of now, we have decided only about the preferential offer.

Satyam: PwC CEO raises more questions

2009-07-03T22:26:00.001-07:00

2 Jul 2009

HYDERABAD: Chairman and CEO of PricewaterhouseCoopers, India, Ramesh Rajan’s statement given to the Central Bureau of Investigation (CBI) last week has raised more questions. Even as Rajan admitted to the CBI that Satyam’s audit was not done by Price Waterhouse (PW) and that S Gopalakrishnan and Srinivas Talluri were in no way attached to the firm PW, chartered accountants are surprised as to how the CEO never issued such statements on earlier occasions, when balance sheets of several listed companies were signed under the name of PW, by partners of Lovelock & Lewes.

Apart from Gopalakrishnan and Talluri, this list includes the names of P Ramakrishna, Sharmila A Karve, Anuradha Tuli and Kaushik Dutta. Among the various companies whose books have been audited by these six people are, GMR, Lanco, Saint Gobain, Moser Baer India Limited, Rain Commodities Limited, Infoedge and Satyam.

The balance sheets of these companies for 2007 and 2008, some of which are in the possession of this newspaper, clearly states that the firm’s share holders had formally appointed PW as its statutory auditor. The books have, however, been signed by either of these auditors who are not partners with PW but Lovelock & Lewes.

“How is it that PW never made an issue of this then? The only explanation perhaps is that the firm was also receiving certain benefits from these auditors and, hence, chose to keep quiet,” alleges a city-based chartered accountant. But this is not the only trap PW is caught in.

Considering that the firm did not refute this partnership by estoppels (or presumption), as called in auditing parlance, with the six auditors, PW can at any point be pulled up under the Companies Act of 1956.

Section 11 of this Act clearly states that “no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying out any other business (apart from banking)...”. However, if these six auditors are added to the list of existing partners of PW the number exceeds this figure. Elaborating on this, another CA says, “There are two firms by the name PW in India. The one with head office in Kolkata has 20 partners and the other with head office in New Delhi has 18 partners (as per ICAI records, also available to TOI). Now, if we add these six auditors to any of these firms the number will be more than 20.”

“This in turn declares the two PW firms as unregistered companies according to the Act and, hence, under Section 226 of the same Act, does not authorise any of its partners to audit the books of any company,” said sources further adding, “In that case the audits conducted by these partners so far stand invalid.”

Questioning why PW has remained quiet about all this until now, CAs and other auditors in the country say that the firm is also punishable for this under various sections of the Companies Act.

Andhra Pradesh includes inflated Satyam figures in IT export revenues

2009-07-03T22:25:00.001-07:00

2 Jul 2009

HYDERABAD: The Andhra Pradesh government on Thursday said the state has posted a 24.5 per cent growth in information technology export revenues during 2008-09, higher than the projected national growth of 20.65 per cent, but this includes the inflated figures submitted by the scam-tainted Satyam Computer Services.

The exports during the year were Rs 32,509 crore against Rs 26,122 crore during 2007-08. The growth rate, however, has come down to 24.5 percent from 41 percent in the previous year.

The IT/ITES export figures for the last financial year include Rs 4,231.93 crore of Satyam, making it the top most exporter. The fraud-hit IT major had claimed exports of Rs 3,331.30 crore during 2007-08.

Officials of Software Technology Parks of India (STPI) here said they had to go by the figures submitted by the previous management of Satyam.

"We have included the figures after due certification process," STPI Hyderabad director P Venugopal told a news conference Thursday.

He, however, hastened to add that validation of the same would be done only in September.

Satyam founder and former chairman B. Ramalinga Raju shocked corporate India in January this by admitting to committing a Rs 7,800-crore accounting fraud by inflating the company's profits over several years.

Tech Mahindra bought Satyam in an open auction in April and last month re-named it as Mahindra Satyam.

STPI director general N. Krishnan said there could be 5 to 10 percent variation in the export figures submitted by the company and the actual exports. The audited figures will be available in August or September, he said.

Krishnan said the exports from STPI units were estimated at Rs 204,662 crore against Rs 180,155 crore 2007-08.

"The national growth rate has been lower than that of Andhra Pradesh," he said

Gurnani wants Mahindra Satyam known for transparency

2009-06-26T03:24:00.002-07:00

25 Jun 2009, PTI

MUMBAI: New Mahindra Satyam CEO C P Gurnani has said that he would strive for making the company known for its transparency and governance standards.

In a communication to associates in the company, Gurnani, who was heading the global operations of Tech Mahindra before his new assignment said, "We have redesigned the organisation structure to make it more customer-centric and agile and decision making in the company is being accelerated."

He further said that the access to customers and geographic penetration is enhanced.

"My priority is to get the company re-energised and leverage these strengths (delivery excellence, domain experiences) effectively, to gain traction for accelerated growth," Gurnani said in a letter written to -----

Tech Mahindra named Gurnani to succeed A S Murthy on Tuesday.

"I am interested in future when we are recognised for our governance standards, transparency and values. I am interested in future when our associates are fearless and can match up to business challenge that comes their way," he said.

"... Unfortunate events following January have taken thier toll on the company and have seriously dented out image, business and morale. Ever since April, when Tech Mahindra emerged as an investor, I have had the opportunity to travel and meet some of our customers... one thing common was whatever be the past, they are interested in the future.

India's Satyam Computer announces new brand name

2009-06-26T03:24:00.001-07:00

MUMBAI (AFP) — Indian outsourcing firm Satyam Computer announced Monday it was re-branding itself as it tries to recover from the country's worst-ever corporate scandal.

In a statement to the Mumbai stock exchange, the firm said it will now trade under the name "Mahindra Satyam", reflecting the purchase of the company two months ago by mid-sized outsourcer Tech Mahindra.

The company will also adopt a new logo from the Mahindra group.

In April, Tech Mahindra paid nearly 600 million dollars for a majority share of Satyam, which has been struggling since its founder confessed in January to falsifying accounts in India's biggest accounting fraud.

"The re-branding symbolises an amalgamation of the Mahindra group's values with Satyam's fabled expertise," said Anand Mahindra, vice chairman of the Mahindra group.

A statement said the firm would maintain Satyam in its name because it signifies "commitment, purpose and proficiency."

Satyam, ranked as India's fourth-largest outsourcer by revenues when the scandal broke, acts as a back office for some of the world's biggest companies including Nestle, General Electric and General Motors.

Earlier this month, the Hyderabad-based firm reported modest but better-than-expected quarterly profits, raising hopes it could recover.

Satyam: Second round of top-level appointments on Thursday

2009-06-26T03:23:00.002-07:00

24 Jun 2009, PTI

New Delhi: Mahindra Satyam will see another round of reshuffling of top executives tomorrow that will see outgoing CEO AS Murthy getting a new designation and US-based head of commercial division Ram Mynampati being replaced.

Mynampati, who was the President of the Commercial and Healthcare Divisions, has been replaced by Keshav Panda, sources close to the development said.

Panda, who was the head of the Europe business would be replaced by someone from within the Tech Mahindra Group.

Mynampati, also a former board member, had taken over as the interim Chief Executive in January after founder B Ramalinga Raju admitted to have cooked the books of the company for years.

Mynampati was subsequently removed after the government stepped in and disbanded the board and appointed new directors.

Besides this, Tech Mahindra is likely to be make further announcements on top level rejig tomorrow in Hyderabad, the source added.

Yesterday, Tech Mahindra appointed C P Gurnani CEO of Mahindra Satyam and S Durgashankar as the new Chief Financial Officer with immediate effect.

Gurnani succeeded A S Murthy, who was appointed as CEO by the government board after the multi-crore rupee scam broke out in the then Satyam Computer Services. Gurnani has been heading the global operations of Tech Mahindra.

ICAI to ban guilty Satyam auditors?

2009-06-26T03:23:00.001-07:00

June 24, 2009

Institute of Chartered Accountants of India (ICAI) came under immense public scrutiny after the auditor's role being questioned in the whole of Satyam fiasco.

Now, almost after six months after the Satyam story came to light, ICAI is ready with its investigations on the auditor’s role and is all set to give its verdict soon.

The needle of suspicion in the entire Satyam scam lay on the two auditors of Price Waterhouse, S Gopalakrishnan and S Talluri, who are now set to be banned for life from practicing.

ICAI, whose panel has found them guilty, will be taking the harsh decision.

The disciplinary committee, whose report will be submitted soon, is set to declare that both the individuals are guilty of gross lapses in the auditing of Satyam's day-to-day transactions and it wants them banned from practice for life.

Meanwhile, Price Waterhouse refused to comment on the decision. Initially, the firm had backed the auditors, but then later on suspended them. ICAI also declined to comment on the findings, but it is now clear that the lapses in auditing were serious.

What still remains unclear is—why is it only the individual and not the firm, which is held guilty?

Satyam case: US accounts under lens

2009-06-26T03:22:00.000-07:00

25 Jun, 2009

HYDERABAD: The CBI now investigating diversion of Satyam funds abroad have identified three "suspicious" foreign bank accounts in the US which are held in the name of three different individuals.
About Rs 60 crore belonging to Satyam were channelised into the accounts that stand in the name of these three non Indian persons.

When CBI sleuths questioned Ramalinga Raju and Rama Raju on these accounts they claimed that three foreign nationals were officially connected to Satyam and the money was deposited for business reasons.

But the CBI did not find these transactions reflected in Satyam's books and with the help of Interpol is now seeking to crack the details about these individuals. CBI sources also told that the agency has discovered several transactions made through Indian banks but has not been able to track details of end users of these funds.

What is proving difficult is that the movements took place on foreign soil where CBI has no presence. "We have to depend on Interpol and other international agencies. Its a long drawn out process but we have set it into motion," CBI sources said.
CBI also suspects that what has been discovered is only the tip of an iceberg and there might be many more such foreign accounts yet to be traced. Meanwhile, the local CBI court posted the matter pertaining to conducting of lie detector tests on Raju brothers to June 30 following request of counsel for Rajus who sought some more time to present their arguments in this case.

Council to decide on draft report

2009-06-26T03:21:00.000-07:00

22 Jun 2009

MANGALORE: The central council of The Institute of Chartered Accountants of India (ICAI) will meet within the next fortnight to take a final call on the draft report submitted by the high powered committee set up by it to go into la affaire Satyam. The council, which met in Mumbai two-days ago has had preliminary discussions on the draft report submitted by the committee and the ICAI will go public with its findings after the meeting.

ICAI president Uttam Prakash Agarwal told reporters here on Monday that the high powered committee headed by him had quizzed the Satyam higher ups indicted for their alleged role in the IT firm violating laid down procedures of corporate governance. The report has taken note of the various procedural lapses that have occurred in Satyam under Ramalinga Raju and will suggest steps to avoid its recurrence in Indian corporate set up.

Agarwal clarified that ICAI does not have powers to take disciplinary action against Price Waterhouse Coopers (PWC), auditors of Satyam, who allegedly fudged the balance sheet of the IT firm. But the disciplinary committee of ICAI will certainly take necessary action against the partners of PWC for any of their professional misconduct if proved as per findings of the committee and could lead to cancellation of their licenses, he said.

HC declines stay in Satyam case

2009-06-13T03:51:00.000-07:00

11 Jun 2009,

HYDERABAD: Justice G Bhavani Prasad of the A P High Court on Wednesday declined to stay the process of questioning Raju brothers and their CFO Vadlamani Srinivas by the enforcement directorate (ED).

The judge reserved his order to June 12. The three accused in Satyam scam approached the court questioning the lower court's order which permitted the ED to question them and record their statements.

Appearing for Raju brothers, senior counsel S R Ashok told the court that the ED had filed its application for questioning the accused under 167 of CrPC in the lower court despite the fact that a magistrate court has no role to play in matters related to a special enactment like money laundering Act. More over, the counsel said, in the absence of any prima facie evidence, the ED cannot proceed further under this Act.

Defending the ED, assistant solicitor general A Rajasekhara Reddy argued that what the central agency is seeking to do is only recording the statements of the accused. If a prima facie case is not made out of these statements, we will drop the matter there, he said. But questioning the accused is a must, he said. Just because the accused are in jail, we sought the permission of the court to question them, he said.
Had they been available outside, we would have straght away summoned them and questioned them, he said. Because, the central counsel said, the ED has got judicial powers to do so and the accused are bound to appear before us, he said. Hence the provisions of CrPC need not come in the way of ED which is proceeding the money laundering Act, he said.

Rajus challenge ED order

2009-06-13T03:50:00.000-07:00

10 Jun 2009

HYDERABAD: B Ramalinga Raju, his brother B Rama Raju and Satyam Computers former chief finance officer Vadlamani Srinivas on Tuesday approached the AP High Court challenging the orders of a lower court which permitted the Enforcement Directorate to question them in the Satyam scandal.

It can be recalled the fourteenth additional chief metropolitan magistrate court, Nampally, permitted the ED to question Rajus, V Srinivas and former auditors of Price Waterhouse.

The ED booked a case against them under the provisions of Money Laundering Act. The petitioners contended that the order of the lower court was illegal as the alleged offence against them does not fall under the purview of this Act. The High Court will hear the petition on Wednesday.

Tech Mahindra says will not hike Satyam offer price

2009-06-11T10:07:00.002-07:00

11 Jun 2009, 2028 PTI

HYDERABAD: In the face of surge in stock prices of Satyam to about Rs 81 a share on the eve of the open offer for beleaguered company, its new owner Tech Mahindra on Thursday said it will not hike the offer price.

"Our agreement with the market regulator SEBI is for Rs 58 a share (the price at which it acquired 31 per cent stake in the open bidding)," Vineet Nayyar, Chief Executive of Tech Mahindra, told media after the Satyam board meeting.

Asked about options in case the open offer was not fully subscribed, Nayyar said "in case we do not get adequate response, we will go for preferential issue to take our holdings in the company to 42 per cent."

Satyam shares prices have been rising for the past three straight sessions after the company reported better than expected financial results on Tuesday. It posted a stand-alone profit of Rs 181 crore for the October-December 2008 quarter. However, the government-appointed board has decided against endorsing the open offer saying it would be construed as a "negative statement" about fundamentals.

Chairman of Satyam Board Kiran Karnik in a regulatory filling with the US market regulator SEC said, "that supporting the public open offer would tantamount to recommending the share holders to sell their holdings in Satyam."

Karnik further said some of the government-appointed members of the board may be disengaged from the firm within the next week. "Some of the (nominee) board members may leave Satyam within next week," Karnik said.

Following disclosure of accounting fraud by the founder Ramanlinga Raju on January 7, the goevrnemnt supeseded the board of the IT firm and appointed its own nominees to run the firm.

The goevrnment nominees include Kiran Karnik, CII chief mentor Tarun Das, HDFC Chairman Deepak Parerk and former ICAI President T M Manoharan.

Satyam Buyer in a Fix, as Share Price Rises

2009-06-11T10:07:00.001-07:00

Jun 11, 2009

Tech Mahindra, the Indian outsourcer that won the bid for majority ownership of embattled outsourcer Satyam Computer Services, may be in a fix following a sharp increase in Satyam's share price.Under the bid agreement in April, Tech Mahindra is offering to buy 20 percent of Satyam equity from shareholders at a price of 58 rupees (US$1.2). This is the price at which it purchased a 31 percent share in Satyam by a preferential issue of new equity.Satyam was plunged into a crisis after its co-founder B. Ramalinga Raju stated in January that the company had inflated revenue and profits for several years.The offer by Tech Mahindra to Satyam shareholders opens Friday and closes July 1. Satyam's shares have however soared on Indian stock markets after the company released on Tuesday unaudited results for the fourth quarter of last year, and for January and February this year. Satyam cautioned that the results were not reliable as they were based on data from their internal MIS (management information system).The figures showed that Satyam's revenue and profits were down in the fourth quarter from a year earlier. But the company posted a larger profit of 520 million rupees in February than in January when it had profits of 40 million rupees. Analysts interpreted the increase in profits as an indication that Satyam is now in a recovery phase.Investors on Indian stock exchanges pushed up the price of Satyam's shares for three consecutive days. The share traded on the Bombay Stock Exchange at 80.85 rupees on Thursday, far higher than the 58 rupees that Tech Mahindra is offering in its open offer to buy shares from Satyam's shareholders.A Tech Mahindra spokesman on Thursday declined to comment on whether the company was planning to hike the price for the public offer.If shareholders refuse to offer their shares for sale at prices lower than the current market price, the other option for Tech Mahindra would be to get to a 51 percent share in Satyam through another issue of preferential equity, say analysts. The bid agreement allows Tech Mahindra to take this route. Satyam on Thursday announced a program to cut staff costs by allowing some of them to take time off on reduced pay. Between 7,000 to 10,000 staff will be affected by the program, the company said. These are staff who have not been deployed on projects for more than three months. A number of Indian outsourcing companies have tried to cut costs during the economic downturn by reducing their "bench," which consists of staff who are not working on projects.

Satyam Surges by Daily Limit After Reporting Profit

2009-06-09T08:10:00.001-07:00

June 9- Satyam Computer Services Ltd. jumped by the daily limit in Mumbai trading after the software maker reported remaining profitable and retaining clients following the disclosure of India’s biggest corporate fraud.

Satyam rose 10 percent after posting a 520 million rupee ($10.9 million) unaudited profit and a 17.5 percent operating margin for February. The Hyderabad-based company said it won at least $380 million of orders from 215 clients since disclosing a $1 billion fraud by former chairman Ramalinga Raju in January.

“The numbers are better than what the market was fearing,” Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai, said by telephone. “The big positive is the margins,” which some investors had expected to drop to as low as 4 percent, he said.

Satyam climbed to 66.8 rupees, its biggest gain since June 2. The stock has declined 61 percent this year compared with the benchmark Sensitive Index’s 57 percent advance. Tech Mahindra Ltd., which in April won a bid to gain control of Satyam, surged 26 percent, the most since August 2006.

Winning the contracts in the face of “negative publicity” was a positive, Shah said.

The fraud has compounded Satyam’s woes as it fights to retain clients and sustain sales amid a global recession that has forced companies to lower technology spending.

Satyam may cut as many as 8,000 jobs because of a lack of available work, two company officials who did not wish to be identified said on June 5. The parent company had 41,622 employees on March 28, and its subsidiaries had a combined workforce of 4,088 as on Jan. 17, according to a statement.

Estimates, Assumptions

Satyam said the earnings had been prepared with data from the company’s internal management information systems, which may not be adequate, and books of accounts making certain estimates and assumptions. The figures, which had been shared with bidders for the controlling stake in the company, had not been reviewed or verified by an independent auditor, according to the statement.

Gains or losses pertaining to the inflated assets that Raju had disclosed have not been eliminated from the earnings, pending restatement of accounts, Satyam said.

“More information is always welcome,” Dipesh Mehta, a Mumbai-based analyst at Khandwala Securities Ltd., said by phone. Still, “this information is less reliable as it has been derived from the internally available management information system,” he said.

Satyam’s financial statements are being reviewed by KPMG and Deloitte Touche Tohmatsu after its former auditor, the Indian affiliate of PricewaterhouseCoopers LLP, said in January its audit reports on the software maker were no longer reliable

Satyam buy: Tech Mahindra raises Rs 550 cr from Tata Capital, IDFC

2009-06-09T08:09:00.001-07:00

9 Jun 2009, PTI

NEW YORK: To fund its takeover of scam-hit Satyam Computer, Tech Mahindra has raised Rs 550 crore from Tata Capital and IDFC by issuing debentures convertible into shares of its acquisition vehicle Venturbay Consultants.

Besides, Tech Mahindra has also borrowed Rs 1,450 crore from various banks, mutual funds, institutions and NBFCs at an interest rate of 10 per cent, part of which has been used for funding the acquisition of Satyam.

Disclosing Tech Mahindra's source of funds for the deal, a regulatory filing by the beleaguered IT firm here said the funding was from "internal resources, optionally convertible domestic debt, equity by Tech Mahindra in Venturbay and debt extended by Tech Mahindra to Venturbay."

In the first phase of acquisition, Tech Mahindra had paid about Rs 1,756 crore for 31 per cent equity through preferential allotment of shares in Satyam which is also listed at NYSE besides Indian bourses.

The filing with the US market regulator SEC said here that "Tech Mahindra has infused funds in Venturebay by using cash on hand" in connection with the initial 31 per cent stake purchase and the subsequent Rs 1,129 crore open offer for further 20 per cent equity.

Satyam spends over Rs 1,000 cr on salaries in Jan-March 2009

2009-06-09T08:07:00.000-07:00

9 Jun 2009, PTI

MUMBAI: Scam-hit Satyam Computer on Tuesday said that it has spent over Rs 1,000 crore on paying salaries to its employees in the first three months of this year.

According to the cash outlays information of the company for the first three months of this year, Satyam spent a total of Rs 1,026 crore on paying salaries and another Rs 342.72 crore in other employee-related segments.

The company made a cash outlay of Rs 91.17 crore on medical insurance for employees and Rs 251.55 crore on statutory compliance, the company said in the filing to the stock exchanges.

Overall, the company's total operating cash outlays stood at Rs 1,836 crore at the end of March this year.

The other expenditures of the company include - sub contractors, rent and utilities, travel and forex and other operating expenses.

At the end of March this year, the company's total headcount stood at 41,622, while its key subsidiaries, including Satyam BPO, had an employee strength of 3,828 associates.

Further, the non-operating cash outlays by the company in the three months period include - capital expenditures (Rs 52.54 crore), marked to market losses on account of foreign exchange contracts (Rs 147.81 crore) and repayment of loans (Rs 103.86 crore).

It also includes - deposits and margin money for bank guarantees and other non operative expenses, it added.

For the quarter ended December 2008, Satyam reported a consolidated net profit of Rs 160.50 crore and the total income stood at Rs 2,327.21 crore.

Maytas Infra says to start work on Karnataka airports

2009-06-09T08:06:00.000-07:00

Tue Jun 9, 2009
Construction firm Maytas Infra Ltd said on Tuesday its board has approved starting work at Gulbarga and Shimoga airports in Karnataka immediately.

Maytas holds rights to build the two small airports, as part of a consortium that includes units of Nagarjuna Construction and Vienna International Airport.

Media reports had earlier reported the state government serving notice to Maytas asking why implementation was running behind schedule.

The Hyderabad-based company, linked to the founders of fraud-hit Satyam Computer Services, also said its government-appointed board is also working on a plan for the Hyderabad Metro and Machilipatnam Port projects.

Ahead of the announcement, the shares ended up 4.96 percent at 83.6 rupees each.

Satyam has Rs.373 crore bank balance

2009-06-09T08:01:00.000-07:00

9 June 2009

Mumbai, June 9: India's fraud-hit IT giant Satyam Computer Services Tuesday said it had a bank balance of Rs.373 crore (about $75 million) at the end of March 2009, but at the same time, it also had a Rs.460-crore loan outstanding.

At the beginning of the year, the IT giant's outstanding loan stood at Rs.200 crore. The company later repaid Rs.100 crore before raising Rs.369 crore in fresh loans in the first quarter, Satyam said in a regulatory statement.

"The company's total bank balances as on March 31, 2009, were Rs.373 crore. Out of the sanctioned loan limit, as on March 31, 2009, the company had availed loans worth Rs.469 crore ($93.8 million)," the filing said.

The company registered a profit after tax (PAT) of Rs.181 crore in the quarter ended Dec 31, 2008, the IT bellwether said.

Satyam had earlier furnished the details on a non-disclosure agreement to its bidders.

"Such information was provided to select bidders subject to the execution of a non-disclosure and non-solicitation agreement," the company said.

Satyam's export turnover during the quarter was Rs.2,194 crore, while domestic earnings were reported at Rs.100 crore.

During January, when the gross discrepancies in the balance sheet came into light, the IT exporter reported a minuscule PAT of Rs.5 crore.

In February, its profit soared to Rs.52 crore though revenues dropped to Rs.676 crore, the statement said.

This is the first publicly disclosed earnings estimates from Satyam since the disgraced former chairman Ramalinga Raju confessed inflating the company's balance sheet and assets by Rs.7,800 crore or more than $1.6 billion

GEQD report confirms forgery in Satyam scam

2009-06-06T10:34:00.001-07:00

5 Jun 2009

HYDERABAD: The Union home ministry's Government Examiner of Questioned Documents (GEQD) has filed his report in the local CBI court which has reportedly confirmed the forgery committed by B Ramalinga Raju and other accused in the Satyam scam.

GEQD of Hyderabad, who is part of the directorate of forensic science working under the aegis of the Union home ministry, was earlier sent several documents signed by Raju and others. Certain cheques, fake fixed deposit papers, forged bank balance sheets - all signed by Raju and Co earlier along with their specimen signatures collected through CBI court - were sent to GEQD for verification.

In the verification, it was said, all the signatures tallied with one another. This means the charge of forgery for cheating can be established. In fact, the CBI, which is investigating into the scam, has charged the accused with IPC 468 also and the GEQD report would help them establishing the guilt of the accused in this regard.

After obtaining the report from GEQD, the CBI has filed this report in the court on Wednesday.

Court reserves order on ED's plea in Satyam case

2009-06-06T10:33:00.001-07:00

3 Jun 2009 PTI

HYDERABAD: A local court today reserved its orders for Friday on the Enforcement Directorate's petition, seeking permission to record the statements of the founder Satyam Computer B Ramalinga Raju and four other accused in the multi-crore rupee financial fraud case.

The XIV Chief Additional Metropolitan Magistrate Justice K Sudhakar after hearing the arguments posted his orders to June 5.

The Enforcement Directorate (ED) had filed a petition in the designated court of CBI on April 6 seeking its permission to record the statements of the accused in the jail to find out whether they have violated the Prevention of Money Laundering Act (PMLA).

The ED wanted to record the statements of Raju brothers, former CFO Vadlamani Srinivas and S Gopalakrishnan and Talluri Srinivas of Price Waterhouse.

Meanwhile, government examiner of questioned documents (GEQD), a central government forensic institute, today submitted its report in the court after verifying the signatures of the accused.

Tech Mahindra to prepay Satyam loan

2009-06-06T10:32:00.001-07:00

4 Jun 2009, ET Now

The new owners of Satyam Computer Services plan to prepay a Rs 300-crore loan the company had taken in February in an indication of its improved financial position just a month after being taken over by Tech Mahindra.

Part of the money that Satyam received from Tech Mahindra when it bought a 31% stake in the Hyderabad-based company will be used to retire the loan, a person familiar with the development said.

Satyam’s board of directors has approved the early repayment. “The cash flow situation has improved as the company has been able to recover some of its dues,” he said.

The loan was raised from IDBI Bank and Bank of Baroda after the government-appointed board tasked with rescuing Satyam found that the company was cash-strapped and did not have enough funds to meet its short-term obligations.

The company’s founder B Ramalinga Raju said on January 7 that its accounts were manipulated, leaving an over Rs 7,000-crore hole in its books.

The one-year loan, carrying a 13.5% interest rate, was raised by pledging Satyam’s land in Hyderabad. The company only drew half the Rs 600 crore it was sanctioned by the banks.

Tech Mahindra, which in April won the bid for Satyam, has infused Rs 1,756 crore into the company by subscribing to a preferential issue of 30.27 crore shares at Rs 58 per share. An open offer to buy a further 20% stake will open on June 12.

Satyam May Cut Wages of Some Staff

2009-06-06T10:31:00.000-07:00

BANGALORE -- Fraud-hit Satyam Computer Services Ltd. plans to put about 8,000 employees who aren't working on any projects on standby for new contracts, and cut their salaries as part of its measures to reduce costs, two people familiar with the matter said Friday.

"Most of these people are already on a sabbatical and haven't been billed in recent times," one of the people told Dow Jones Newswires, asking not to be named.

The person said the company is considering paying only about 40%-50% of basic pay to employees on the bench.

Information-technology companies generally keep a part of their employees on standby, or the bench, to quickly deploy them if the company gets new projects. Satyam is considering putting employees on the bench and cutting their salaries as laying off such a large number of people could be difficult.

A decision on staff rationalization is yet to be taken, both the persons said, without giving any timeline for a decision.

India's federal Minister of Corporate Affairs Salman Khurshid recently said that Satyam's acquirer, Tech Mahindra Ltd., should deal with the issue of surplus employees with "sensitivity."

Tech Mahindra Chief Executive Vineet Nayyar, also now a member of the Satyam board, said last month that Satyam had an excess staff of around 10,000. The company has a total of about 40,000 employees.

The person said the employees put on the bench will remain entitled to medical reimbursements and provident fund. "They could be called back to full duty when projects are available," the person said.

While a company spokesperson could not be immediately contacted, T. Hari, Satyam's global marketing head, said, "We are exploring the most humane ways to tackle this issue."

Earlier Friday, the Business Standard newspaper reported that Satyam's board may meet June 11 to discuss the issue.

Satyam was plunged into turmoil when founder B. Ramalinga Raju said in January that he cooked the company's books, overstated profits and revenue, and created fictitious cash balances.

In April, a government-appointed board sold a 31% stake in Satyam to Tech Mahindra unit Venturbay Consultants Pvt. Ltd. Venturbay's open offer for an additional 20% stake in Satyam is slated to start June 12.

Satyam set to ink pact with M&M Group to tap aerospace customers

2009-06-02T07:34:00.000-07:00

2 Jun 2009, ET Bureau

HYDERABAD: Satyam Computer Services is firming up a joint-go-to-market strategy with the Mahindra & Mahindra (M&M) group of companies for customers in the aerospace and other engineering segments to boost revenues from its engineering practice.

Tech Mahindra, the new owner of Satyam, is a subsidiary of the M&M group. Satyam will ink a non-disclosure pact with its partner before starting negotiations with customers. EADS, the owner of Airbus, features in the list of Satyam’s clients in the IES space.

The joint go-to market strategy will entail design, sourcing and making components for aerospace customers and other clients in the IES space. This division contributes to around 6-7% of Satyam’s revenues.

“The capability to do end-to-end aerospace components will make our clients leverage on the expertise from the combined entities”, said Karthik, Head, Integrated Engineering Solutions (IES), Satyam Computers.

He reckons that the global economic melt-down notwithstanding, the aerospace sector offers significant business opportunities as clients are looking for a good value proposition coupled with competitive pricing.

The Hyderabad based outsourcer reported revenues of around $ 2 billion before its defamed founder B Ramlainga Raju admitted to perpetrating a Rs 7,000 crore financial fraud. Many clients snapped ties after the fraud, impacting its revenues.

While Satyam’s accounts are now being re-stated, Tech M is reportedly looking at combined annual revenues of around $ 2.2 billion.

Besides aerospace, Satyam also offers IES to clients in the automotive, consumer products, telecom and healthcare sectors, besides aerospace. Engineering firm M&M has an established presence in the Indian market, especially in auto segment.

Satyam’s IES division offers a bouquet of product design and development services, both mechanical and electronic. The Systech group of M&M, in particular, has an eco-system for manufacturing and sourcing components from India.

It is reckoned that Satyam’s aerospace engineering practice will stand to gain from Mahindra Systech’s manufacturing capabilities. And the proposed tie-up will allow Satyam to select different parts of value chain – right from design and engineering of sub-systems upto sourcing and manufacturing.

“Satyam’s IES strengths in design, mechanical and embedded electronics, and China sourcing are complemented by M&M group companies’ strength in manufacturing and India sourcing. This synergy to take designs from art-to-part can help both clients accelerate their new product development (NPD) cycles and thereby increase their profitability across the global markets”, he said.

Satyam appoints Australia, NZ head

2009-06-02T07:33:00.000-07:00

1 Jun, 2009,ANI

MELBOURNE: Satyam Computers has appointed Venki Prathivadi as country manager for Satyam Australia and New Zealand (ANZ) replacing Deepak Nangia.

The India based IT company has also appointed former chief information officer Vijay Prasad as principal advisor to the ANZ region to enable it to find its feet in the area after the set back in January following the revelation of a massive fraud.

It was learnt that the co company's founder and chairman, B Ramalinga Raju had over-inflated the value of its cash and bank balances by more than one billion US dollars.

Since the revelation of the fraud, number of Satyam's local customers including Telstra and National Australia Bank had cancelled its contracts or reduced their involvement with the company.

Australian software major Telstra had dumped the scandal-ridden outsourcing partner Satyam from an applications support contract believed to be worth $32 million a year.

Prathivadi has been with Satyam since 2003 and worked as the account director on the now-terminated Telstra contract.

200 jobs go as Satyam finds its feet

2009-06-02T07:32:00.000-07:00

June 02, 2009
SATYAM Computer Services has dropped its local headcount by 200 people as a result of the economic crisis.

Satyam yesterday announced the appointments of a new country head and a ``principal adviser'' for its Australian business as outsourcer tries to find its feet after being rocked by fraud allegations at its India headquarters.

Venki Prathivadi will replace Deepak Nangia and take the reins as country manager for Satyam Australia and New Zealand (ANZ), reporting to Asia-Pacific head TR Anand.

Mr Nangia left the business about a month ago to pursue other opportunities.

Last year, Mr Nangia said the outsourcer employed about 1000 staff locally and had another 700 staff in India servicing Australian customers.

This number has dropped, Mr Prathivadi said, with about 800 staff in Australia and about 500 in India servicing local customers.

``They've come down a little bit they're more in the 1200-1300 range,'' according to Mr Prathivadi who has been with Satyam Australia since 2003.

``There's generally been a global downturn and in response to that our numbers have come down a little bit.''

He could not say whether staff numbers would drop further or grow in the future.

``We will have to see how the economy holds up and we will respond accordingly. If the economy improves and there is a business uptake that could very well go up.''

He said there would not be a significant shake-up of the local operations.

``My priorities are to strengthen the relationships with customers in ANZ, build new business and take care of our associates,'' he said.

Satyam has also appointed a principal adviser to the ANZ region, which will be staffed by the company's former-CIO Vijay Prasad.

The local management restructure follows the revelation in January the Indian parent company's founder and chairman, B. Ramalinga Raju over-inflated the value of its cash and bank balances by more than $US1 billion ($1.28 billion).

Since the fraud scandal a number of customers including Telstra and National Australia Bank have either terminated contracts or reduced their involvement with Satyam.

Job cuts at Maytas Infra

2009-05-29T20:29:00.001-07:00

New Delhi May 29, 2009,

Maytas Infra, the listed company promoted by the family of Satyam founder B Ramalinga Raju, is looking to rationalise its employee strength. Consequently, there would be some job cuts and inductions.

To this effect, Maytas board on Thursday reviewed the HR policies of the company to take stock of the situation. “There will be some job cuts and inductions in the company,” a company executive said, but declined to reveal the numbers.

Maytas board, chaired by government-appointed member K Ramalingam, reviewed the key issues of the company in the last two days. Among other things, the company discussed with some of its joint venture partners the infusion of funds and early completion of works.
B.S

Maytas Infra approaches govt for help

2009-05-29T20:28:00.000-07:00

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.

Bombay HC denies relief to Maytas Infra

2009-05-29T20:27:00.001-07:00

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

Govt-appointed Satyam board to stay till open offer concludes

2009-05-29T20:23:00.002-07:00

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.

L&T Q4 net up despite Satyam provision

2009-05-29T20:23:00.001-07:00

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.

Tech Mahindra to appoint new Satyam CFO in two weeks

2009-05-29T20:22:00.000-07:00

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.

Learning from Satyam: How to Detect Fraud

2009-05-29T20:21:00.000-07:00

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.

ICICI gets more time to deposit Maytas money

2009-05-24T04:34:00.000-07:00

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.

ICICI seeks representation on Maytas Infra board

2009-05-24T04:33:00.000-07:00

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.

After Infosys, Wipro drops Satyam from rival list

2009-05-24T04:30:00.001-07:00

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.

Satyam may sack 8,000 non-billable staff

2009-05-24T04:29:00.001-07:00

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.

Satyam has 10,000 surplus staff: Tech Mahindra

2009-05-24T04:28:00.001-07:00

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.

CLB may withdraw its board members from Satyam after June

2009-05-24T04:27:00.000-07:00

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.

Satyam looking at measures to cut costs

2009-05-24T04:26:00.000-07:00

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.

Consumer body rejects Satyam shareholders' compensation plea

2009-05-12T05:47:00.001-07:00

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.

Satyam investors seek Rs 5000 cr compensation over share crash

2009-05-11T09:13:00.002-07:00

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.

'No regrets over Satyam'

2009-05-11T09:13:00.001-07:00

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.

Consumer forum rejects plea on compensation in Satyam case

2009-05-11T09:12:00.001-07:00

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.

Fidelity reduces stake in Satyam

2009-05-11T09:11:00.002-07:00

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.

Maytas Infra board confident of executing projects

2009-05-11T09:11:00.001-07:00

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.

Maytas Infra to rejig equity stakes in Hyderabad Metro

2009-05-11T09:10:00.000-07:00

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.

Maytas Board clears corporate debt restructuring exercise

2009-05-11T09:09:00.000-07:00

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.

Satyam-linked Maytas in talks to restructure debt

2009-05-07T08:55:00.000-07:00

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.

Maytas to raise fresh funds, not ruling out stake sale

2009-05-07T08:54:00.001-07:00

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.

Maytas Infra open to stake sale

2009-05-07T08:53:00.001-07:00

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.

Maytas Infra seeks fresh funds to stay afloat

2009-05-07T08:52:00.000-07:00

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.

Open to stake sale in future, says Maytas infra

2009-05-07T08:51:00.000-07:00

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.

Raju may face 'destruction of evidence' charge

2009-05-03T05:11:00.001-07:00

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.

But for the forgery, Satyam was a work of art: Damodaran

2009-05-03T05:10:00.001-07:00

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.

Three big Satyam clients pledge to stay with company

2009-05-03T05:09:00.000-07:00

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.

The lies of Satyam: What CBI missed

2009-05-01T19:50:00.001-07:00

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.

'TechM will be No 1 in other areas with Satyam buyout'

2009-05-01T19:48:00.000-07:00

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.

Cash reserves help IT biggies stay in shape

2009-05-01T19:46:00.000-07:00

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.

Satyam's American pie vanishes without trace

2009-05-01T19:45:00.001-07:00

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.

Satyam paid excess corporate tax

2009-05-01T19:44:00.001-07:00

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.

Raju gets ‘physical’; shows mind for matter

2009-05-01T19:41:00.000-07:00

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.

Satyam scam hits Raju-promoted social outfit; 350 quit news

2009-05-01T19:40:00.000-07:00

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.

Maytas board approves corporate debt restructuring package

2009-04-29T09:25:00.001-07:00

29 Apr 2009,

HYDERABAD: The board of cash-strapped Maytas Infra, promoted by disgraced founder of Satyam Computer Services B. Ramalinga Raju and his family, Wednesday approved a draft corporate debt restructuring (CDR) package and recast the management by appointing two presidents.

The two-day meeting of the board, chaired by K. Ramalingam, approved the draft CDR package, and is considering appointment of State Bank of India (SBI) Capital Markets for the purpose.

A representative from the SBI, a large lender to company, is already on the project management committee formed by the board recently to oversee the execution of pending contracts. Ravi Parthasarathy, chairman of Infrastructure Leasing and Financial Services, which has 14.5 percent stake in the firm, is also on the committee.

The CDR package is aimed at saving the firm from bankruptcy by reorganizing outstanding dues to financial institutions. The firm is also trying for fresh infusion of funds to complete ongoing projects.

A company statement issued at the end of the meeting said the board reposed full confidence in the revival plan and restructuring of Maytas Infra. The revival plan also has the support of the central government, it said.

"The board carefully analysed the financial position, current order book, cash flow, HR and other issues related with the restructuring of the company," the statement said.

The six-member board, including four government-appointed members, also appointed two presidents - C.S. Bansal and Rajendra Nimje.

The board, however, took no decision on appointing a new chief executive officer to replace Teja Raju, the son of Ramalinga Raju, who is now the acting CEO.

Ramalingam also met Andhra Pradesh Chief Secretary Ramakanth Reddy and apprised him of the company's business plans.

The meeting was significant as Maytas last month sought more time for achieving the financial closure for the proposed Rs.122-billion Hyderabad Metro Rail Project.

The mega project is among several that are in the limbo after the company plunged into a crisis following Ramalinga Raju's admitting to committing a Rs.78-billion accounting fraud in Satyam.

The confession followed his botched attempt to acquire Maytas Infra and Maytas Properties for Rs.80 billion last December.

The allegations that Raju diverted part of the scam money into his family firms created more problems for Maytas as it lost some projects in other states.

Raju beat regular system in Satyam to generate fake bills: CBI

2009-04-29T08:27:00.001-07:00

New Delhi, Apr 27 (PTI) The CBI has found that officials at Satyam Computer have bypassed regular system of creating invoices to generate fake bills, which were later used to show inflated revenues worth Rs 4,500 crore.
"The invoices were generally created using a series of software applications meant for creating and maintaining the projects, generating project IDs, software 'Ontime' for calculating hours put in by an employee," a CBI spokesperson said in a release here.

The bills were generated on Project Bill Management System (PBMS) of the company using data received from the 'Ontime' and rates agreed upon with the customer. Based on the billing advise generated by PBMS, the Invoice Management System (IMS) generated the invoices, he said.

"In order to handle any emergency needs, Satyam Computer had another method through which invoices were directly generated in the IMS by porting the date directly into the system bypassing the regular application flow," the spokesperson said.

The agency found that in order to perpetrate this fraud, the accused had allegedly planted a surreptitious programme in the source code of the IMS creating a user id 'Super User' with the power to hide or unhide the invoices in the system, the official said. PTI

Satyam inflated sales by Rs 47.46 billion, says CBI

2009-04-29T08:26:00.002-07:00

28 Apr 2009,

NEW DELHI: The Central Bureau of Investigation (CBI) has said that the fraud-hit Satyam Computer Services inflated sales by Rs 47.46 billion.

The CBI said that with the help of cyber forensic techniques, it was able to decipher modus operandi of Satyam corporate fraud.

"It happened like this-the accused were hiding some of the invoices that was generated through Excel porting. As a result, the concerned business circles were not aware that such invoices are existing. These invoices were not dispatched to the customers even. In fact these false invoices were generated for purpose of inflating the sales and thus inflating the revenue of the company. As a result of further investigation, individuals who generated and hidden these false invoices have been identified," said Harsh Bahl, a CBI spokesman.

The bail application of former chairman of Satyam, Ramalinga Raju and others was dismissed by the trial court on April 25.

In early January, Ramalinga Raju shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter. The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.

Satyam, which counts Citigroup Inc, Cisco Systems Inc. and General Electric among its clients, has not reported results since releasing its July-September figures in October.

Its accounts are in the process of being reconciled and restated.

Satyam’s accounting system was manipulated: CBI

2009-04-29T08:26:00.001-07:00

28 Apr 2009, ET Bureau

NEW DELHI: The CBI has finalised investigations into falsification of accounts and forgery of documents in the Satyam fraud case and found that the accounting system was manipulated to inflate the company’s sales by Rs 5,117 crores.

Using cyber forensic techniques, the investigating agency said it had uncovered the modus operandi used by the accused to show inflated sales by Satyam Computers Service.

According to the CBI, officials at Satyam created a protocol to manipulate software computing man hours spent on client projects in order to show inflated sales by Satyam to the tune of Rs 4,746 crores. Through this protocol, the CBI said, the accused bypassed the regular system and created false invoices that were shown only to the company’s finance department and not clients. However, the CBI investigations till now only pertains to misdeeds owned up by accused Ramalinga Raju and throws no light on the alleged diversion of funds.

“Investigation further revealed that these invoices were generated for the purpose of inflating the sales and the amounts pertaining to these false and fabricated invoices were shown as receivables in the books of accounts of M/s SCSL thereby dishonestly inflating the revenues of the company,’’ a CBI spokesperson said in a release here. The CBI found 7,561 fake invoices worth Rs 5,117 crores in the course of the investigations . Out of these 7,561 invoices, the CBI said, the accused entered 6,603 of these false invoices amounting to Rs 4,746 crores into the books of accounts.

The investigating agency further said that it had identified the individuals who had generated and hidden these false and fabricated invoices and also identified the computer server where incriminating electronic records were stored. CBI said that the incriminating data had been retrieved and that the agency had also got opinions from computer forensic experts.

“As a result of this detection, the actual modus operandi as well as the individuals who have perpetrated the fraud have been identified which resulted in unearthing the whole fraud and helped in finalisation of the investigation,” CBI said. Meanwhile, a trial court on Saturday also dismissed the bails application of accused B Ramalinga Raju, B Ramaraju and V Srinivas. Apart from these three accused, five others are in custody.

Judicial remand of Satyam accused extended by 14 days

2009-04-29T08:25:00.000-07:00

Press Trust Of India / Hyderabad April 29, 2009

The judicial remand of former Satyam Chairman B Ramalinga Raju and seven other accused was extended by 14 days today by a local court here.

All the accused in the multi-crore rupee fraud case were produced before the XIV Additional Chief Metropolitan Magistrate K Sudhakar, who extended their remand till May 13.

Earlier, B Ramalinga Raju and other accused were brought to the court at 10.30 am in a police van from the Chanchalguda jail. As per court procedure, the accused were to be present in the court to receive a copy each of the charge sheet filed by the CBI against them.

However, CBI Public Prosecutor Venkat Ramana informed the judge that copies of the charge sheet could not be brought to the court as they are kept in a make-shift office of the CBI and there were difficulties in transporting them.

He told the court that the CBI is ready to provide copies of the charge sheet at the office. This is the third time that B Ramalinga Raju has been produced before court since his arrest.

Defence counsel Bharat Kumar objected to this saying that providing copies of the charge sheet to the accused is mandatory as per court norms, and he insisted on them.

The CBI prosecutor requested time from the court to make the copies available.The judge directed the CBI to provide copies of the charge sheet to the accused on May 4.

Besides Ramalinga Raju, his brother and former Satyam MD Rama Raju, ex-CFO Vadlamani Srinivas, former director of Price Waterhouse S Gopalakrishnan and his deputy Talluri Srinivas, Satyam employees G Ramakrishna, Venkatpati Raju and Srisailam were produced in the court

Ramalinga Raju’s another brother Suryanarayana Raju of SRSR advisory firm was also present in the court. He is on anticipatory bail.

Defence counsel Bharat Kumar objected to this saying that providing copies of the charge sheet to the accused is mandatory as per court norms, and he insisted on them.

The CBI prosecutor requested time from the court to make the copies available. The judge directed the CBI to provide copies of the charge sheet to the accused on May 4.

Besides Ramalinga Raju, his brother and former Satyam MD Rama Raju, ex-CFO Vadlamani Srinivas, former director of Price Waterhouse S Gopalakrishnan and his deputy Talluri Srinivas, Satyam employees G Ramakrishna, Venkatpati Raju and Srisailam were produced in the court Ramalinga Raju’s another brother Suryanarayana Raju of SRSR advisory firm was also present in the court. He is on anticipatory bail.

Raju used over 7,000 false invoices to fudge books

2009-04-28T04:37:00.001-07:00

27 Apr 2009, PTI

NEW DELHI: The financial fraud perpetrated by the founders of Satyam Computer Services was executed through a well-planned accounting system that used as many as 7,561 fraudulent invoices worth Rs.5,117 crore to inflate the company's sales, the Central Bureau of Investigation (CBI) alleged Monday.

To perpetrate the fraud, the accused also created an identity and code that not only bypassed all other accounting systems, but also managed to hide the fraudulent invoices from other departments, the premier investigating agency said.

"Investigations revealed that the accused have already entered 6,603 out of these false and fabricated invoices amounting to Rs 4,746 crore into their books of accounts thereby inflating the revenues of the company to this tune," said the CBI in a statement.

The CBI came to the conclusion using cyber forensic techniques to unearth the alleged Rs 780 crore ($1.5-billion) scam that is alleged to have been perpetrated by group's founder B. Ramalinga Raju and his associates.

The accused had used an emergency option of feeding invoices directly to the company's inventory management software, which in normal circumstances would be routed and validated through several software systems.

Simultaneously, the scamsters generated a new identification code called "Super User", that enabled them to hide or "unhide" invoices created in the company's Invoice Management System, thereby making the fraudulent invoices invisible to other departments.

"The amounts pertaining to these false and fabricated invoices were shown as receivables in the books of accounts of Satyam, thereby inflating the revenues of the company," the statement said.

The agency also identified the computer server used for storing the "incriminating data" resulting in the identification of the perpetrators of the fraud, unearthing the quantum of the fraud, and the modus operandi used by the accused.

Meanwhile, the trial court rejected the bail application of the Raju brothers and former chief financial officer V. Srinivas April 25 and gave CBI the permission to conduct further investigation into acquisition of assets by the accused and diversion of funds.

Satyam’s accounting system was manipulated: CBI

2009-04-28T04:36:00.001-07:00

Satyam inflated sales by Rs 47.46 billion, says CBI

2009-04-28T04:35:00.000-07:00

Infosys generates $250 mn free cash: Nilekani

2009-04-25T21:19:00.002-07:00

24 Apr 2009, PTI

NEW DELHI: Software exporter Infosys on Friday said that the company generates 250 million dollar free cash every quarter and will use the slowdown to fine tune their business.

In an interview to CNN, Infosys Co-chairman Nandan Nilekani said, "Infosys has a very strong position. We have two billion dollar in cash. We produce 250 million dollar every quarter in free cash flow."

However, Nilekani added for the coming financial year, the company's growth would decline by 3-6 per cent in dollar terms because of the uncertainty in the global economy.

"We are waiting for this whole thing to get over," he said.

Talking about the clients reaction to the slowdown, he said "I think our customers are cautious. They are still waiting and watching, and seeing how and when the recovery will happen. I think they're very, very prudent about their IT spending. So we are seeing all that on our business. It's a very uncertain environment out there."

The clients are waiting and watching, because they don't really know how long this crisis will last. They're waiting for growth to come back. They're waiting for liquidity to improve, he added.

Further the company co-chairman said, "We actually use this occasion to really even fine-tune your business even further, and be ready for the next upturn whenever it comes."

The company announced its fourth quarter results this month and reported first ever sequential fall in its revenue in a decade for the March 2009 quarter.

TechM may raise open offer price

2009-04-25T21:19:00.001-07:00

25 Apr 2009, ET Bureau

NEW DELHI: Hinting at a possible increase in its open offer price for Satyam, the new owner Tech Mahindra has advised shareholders of crisis-hit IT firm to wait till June 22 for the final price before tendering their shares. The open offer for acquiring 20% equity in Satyam at Rs 58 a share is set to commence on June 12 and close on July 1.

While market regulator SEBI has ruled that the open offer price cannot go below Rs 58 per share, the acquirer, in its public announcement, has said that it can raise the offer price by June 22. “As the offer price cannot be revised during seven working days prior to the closure of the offer, it would, therefore, be in the interest of shareholders to wait until the commencement of that period to know the final offer price,” Tech M said.

Tech Mahindra, which won the bid to acquire Satyam Computer Services, has made a public announcement to acquire 20% of the it company through its wholly-owned subsidiary Venturbay Consultants, a move that is aimed at increasing the new owner’s stake to 51%.
However, the offer price need not be necessarily hiked as Tech Mahindra can raise its stake to 51% at the same price of Rs 58 through a second preferential allotment if it fails to garner 20% equity through the open offer.

Rajus used 17 aides to manipulate demat accounts

2009-04-25T21:18:00.002-07:00

25 Apr 2009, ET Bureau

HYDERABAD: Seventeen trusted lieutenants of B Ramalinga Raju, the defamed promoter of Satyam Computer Services, and his family were made to open demat accounts to fraudulently trade in shares of the promoters of the beleaguered IT firm.

Investigations by the Central Bureau of Investigation (CBI) reveal that the promoters of Satyam — Raju’s mother Applanarasamma, his brother Suryanarayana Raju and his wife Jhansi Rani — sold their shares in 1999 to 17 employees and made a killing in the market. The modus operandi shows the promoters transferred the physical shares through endorsement in the names of these 17 individuals, who, in turn, deposited the same in their demat accounts and then sold these shares through five investment companies.

The investment companies, floated by Raju and his family, included Elam Investment, High Grace Investments, Fincity Investments, High Sound Investments and Veeyes Investments. Later, these investment companies sold these shares in the market.

The money was transferred to the individual accounts of these 17 employees and their families. The latter, in turn, transferred the funds to the promoters and the transfers were done through cheques.

In 2000-01 the promoter’s family got around Rs 75 crore, of which Raju’s mother received Rs 5.5 crore, Suryanarayana Raju got around Rs 12.78 crore and his wife Jhansi Rani Rs 24.84 crore .

In the same year, these promoters also sold shares through the investment company and gifted the money to some of the family members. Featuring in this list are Ramalinga Raju (Rs 27.91 crore) and his brother Rama Raju (Rs 26.89 crore). Ramalinga Raju’s wife Nandini Raju received Rs 10.20 crore, while Rama Raju’s wife Radha Raju got Rs 9.70 crore. Ramalinga Raju’s son Rama Raju Jr was also a beneficiary and received Rs 1.97 crore.

Over the years, the promoters sold their shares in the open market and made around Rs 715 crore even though Satyam was not performing well. “The accused made hay when the sun was shining by off-loading the shares, while other investors may have been holding on to the shares with the false hope that their value would rise,” said the CBI in its charge-sheet.

From September 2006, the promoters of Satyam held their shares in a corporate entity SRSR Holdings. Suryanarayana Raju, the director of SRSR holdings, began pledging them as security with various non-banking companies on behalf of the 327 front companies floated by Raju and his family. He appointed several trusted employees as directors of these front companies to mask the fraud.

Ramalinga Raju admitted to fudging the books of Satyam in January this year. The CBI has charged him and eight others of conspiracy, cheating, falsifying accounts, generating forged valuable securities and tampering evidence.
Capital market regulator Sebi is also probing into insider trading of shares and has given inputs to other investigating agencies, said people familiar with the development.

Tech Mahindra gets go ahead to buy stake in Satyam Computers

2009-04-25T21:18:00.001-07:00

24 Apr 2009, ET Bureau

HYDERABAD: IT services firm Tech Mahindra on Friday got the crucial anti-trust approval from Germany, a pre-requisite for concluding a stake buy in Top Indian outsourcing cos

The Pune based IT services firm also needs an anti-trust from the US to conclude its stake buy in the beleaguered IT firm.

It has already got clearances from the domestic bourses, according to statement issued by Satyam.

Tech Mahindra emerged the highest bidder for Satyam at Rs 58 per share. It will acquire a 31% stake through a preferential offer and an additional 20% stake through a mandatory open offer. The open offer will be made at Rs 58 per share. The price can be raised seven days before the closure of the open offer, going by SEBI guidelines.

Satyam plunged into a crisis after its defamed founder B Ramalinga Raju confessed to perpetrating a Rs 7,000 crore financial fraud.

Tech Mahindra clarification on Satyam open-offer pricing

2009-04-25T21:17:00.002-07:00

24 Apr 2009,

NEW DELHI: Tech Mahindra, the new owners of the crisis-hit IT firm Satyam Computer, has clarified that the public announcement which it made to Satyam shareholders, urging them to wait till June 22 for the final price before tendering their shares, is one of many disclosures that an acquirer is expected to make under applicable law in a public announcement.

"This provision is not, however, an indication of our current intent to increase the offer price in the future and must not be construed in any other manner." it said in a statement.

Earlier, Tech Mahindra's announcement had generated speculation that it was considering a possible increase in its open offer price for Satyam.

"As the offer price cannot be revised during seven working days prior to the closure of the offer, it would, therefore, be in the interest of shareholders to wait until the commencement of that period to know the final offer price," PTI said, quoting Tech Mahindra.

Satyam gets nod from Federal Cartel Office of Germany

2009-04-25T21:17:00.001-07:00

April 24, 2009

Satyam Computer Services Limited stated that the Federal Cartel Office (FCO) of Germany has issued a letter permitting the completion of the acquisition of a controlling stake in the company by Venturbay Consultants Private Limited, a subsidiary controlled by Tech Mahindra Limited.

According to a Satyam spokesperson, FCO's permission is needed as Satyam has been listed on NYSE Euronext.

Satyam has also received ‘in-principle’ approvals from Bombay Stock Exchange Limited and National Stock Exchange of India Limited for the issuance of 302.76 million equity shares ('initial shares') of Rs 2 each at a premium of Rs 56 per share to Venturbay Consultants on a preferential basis. Upon allotment of the shares, Satyam will seek the approval of the BSE and NSE for listing and trading of the initial shares, the company stated in a press release on Friday.

Satyam already received the final approval from the Securities and Exchange Board of India (Sebi) for the company's takeover. Sebi sent two letters to Satyam granting certain exemptions from its Takeover Regulations to select an investor.

An English translation of FCO, BSE and NSE letters, all dated April 22, 2009, are being furnished to the US Securities and Exchange Commission.

Satyam, Tech Mahindra and Venturbay Consultants entered into a share subscription agreement for acquisition of 31 per cent share capital of Satyam. Following this, Tech Mahindra is required to make a public offer to acquire 20 per cent of the enhanced share capital of Satyam at a minimum price of Rs 58 per share.

Satyam had earlier announced that Euronext Amsterdam NV approved the company's application for delisting its American Depository Shares (ADS) from the NYSE Euronext. The ADS would be delisted and trading in the ADS would no longer be possible on Euronext Amsterdam with effect from May 20.
The company said that the mandatory cash tender offer by Venturbay Consultants would be now open for participation by investors holding their ADS through Euroclear Nederland (ECN holders).

Satyam fraud: What was Vadlamani’s role?

2009-04-21T07:59:00.002-07:00

Hyderabad, April 19
What was the role of Mr Vadlamani Srinivas, ex-CFO of Satyam Computer Services, who revealed that the FDs were non-existent, results manipulated and he just signed on instructions from Mr B. Ramalinga Raju, ex-Chairman, in the Rs 7,136-crore financial fraud?

Being at the centre of all financial dealings of Satyam, Mr V. Srinivas wilfully and actively manipulated financial data and guided the finance department staff in modifying the published results, which were false and forged, the Central Bureau of Investigation (CBI) has alleged.

In its charge sheet on the Satyam case, the CBI said Mr Srinivas got the monthly bank statements of various banks forged, he got issued forged bank balance confirmation letters and got the forged letters signed by Mr B. Rama Raju (Ex-Managing Director), an accused and brother of Mr Ramalinga Raju, showing purported transfer of funds and got forged FDs prepared.

All these forged documents were used for fraudulently inflating the cash and bank balance artificially in the books of accounts for several years, the CBI chargsheet has brought to light.

Though Mr Srinivas was never designated as Director, he subscribed his signature in the annual financial statements of the company as a Director, the investigating agency has charged.

The ex-CFO dishonestly got the falsified, inflated sales invoices generated and fed in the Oracle Financials System. He was in league with the other accused persons and perpetrated the fraudulent acts. Thus, he was privy to the offences, it concluded.

Further, Mr Srinivas guided the finance department personnel on the quantum of inflation of sales to be infused into the computer system from time to time. The CBI has retrieved evidence to this effect from his e-mail box, the chargesheet said.

Rosy presentations

Mr Srinivas along with Mr Ramalinga Raju gave deceptive replies on Satyam’s earnings during conference calls conducted every quarter to various investors, thus distorting the actual financial position.

During board meetings and the audit committee meetings, the ex-CFO made rosy presentations of the company’s financial health, despite knowing the real financial position. Similarly, by conniving with the Raju brothers, he worked against the interest of the company and shareholders, whose interests he was to protect.

While being party to perpetrating the fraud with the Raju brothers and other accused, Mr Srinivas was a beneficiary. He gained from the dividends received and the amount got by offloading shares at opportune moments, the CBI accused in the chargesheet.

Satyam surges 5 pc, Tech Mahindra dips 8 pc on BSE

2009-04-21T07:59:00.001-07:00

21 Apr 2009 PTI

MUMBAI: Satyam Computer Services on Tuesday surged over five per cent on the Bombay Stock Exchange with its new owner, Tech Mahindra, scheduled to make an open offer on Tuesday for a 20 per cent stake in the IT firm.

Meanwhile, shares of Tech Mahindra dipped as much as eight per cent in the intra-day trade on the bourses.

Tech Mahindra would today announce an open offer for a 20 per cent additional stake in Satyam.

Marketmen said there was a surge in Satyam scrip owing to the open offer, while the dip in Tech Mahindra was largely because investors turned cautious and dumped the stock.

The government-appointed board of Satyam met in Hyderabad yesterday. In the meeting, Tech Mahindra officials and Mahindra Group chief Anand Mahindra were invitees.

Tech Mahindra yesterday deposited Rs 2,910 crore for a 51 per cent controlling stake in Satyam Computer.

Shares of Satyam opened firm and rallied further to touch a high of Rs 50.15, up 5.47 per cent over previous close on the BSE.

Similar movement was seen on the National Stock Exchange, where the scrip surged 5.03 per cent to a high of Rs 50.10.

On the volume front, a good 1.55 crore shares changed hands on both the bourses.

Tech Mahindra deposits Rs 2,910 Cr for Satyam; looks for new CFO

2009-04-21T07:58:00.000-07:00

Apr 21, 2009
TM will make an open for 20% on Tuesday, while it's also on the lookout for a new CFO for Satyam.

Satyam Computer Services has said that Tech Mahindra, through its subsidiary Venturebay Consultants Pvt. Ltd, has deposited the cash for both the acquisition of 31% stake and subsequent open offer in seperate escrow accounts. Public offer for the 20% open offer will be made on Tuesday.

Since the funds have been submitted, Tech Mahindra can now appoint four nominees on the board of Satyam. The government appointed six directors will continue until further orders from Company Law Board.

The four Tech Mahindra representatives to join Satyam board are - Vineet Nayar, Vice Chairman and MD; CP Gurnani, President of International Operations; Sanjay Kalra, President of Strategic Initiatives; and Ulhas Yargop, Director at Tech Mahindra and President of IT sector, Mahindra Group. Tech Mahindra and Satyam also discussed the transition plan today.

Tech Mahindra, which will become a top tier IT firm after the deal, has deposited a total of Rs 2,910 crore in the escrow account for the acquisition of a controlling stake in Satyam. Tech Mahindra has deposited Rs 1,756 crore ($351 million) in one escrow account for acquisition for a 31% stake. This would be done through issue of fresh equity shares. It has deposited another Rs 1,154 crore ($231 million) for the open offer for the additional 20% stake.

Tech Mahindra has also said that Satyam will continue as a stand alone unit. Anand Mahindra, today addressed top 500 leaders at Satyam and has said that he could see a sense of palpable relief among the Satyam customers. Tech Mahindra is now on a lookout for a new CFO for Satyam and has said that it will name a new CFO in a few weeks.

Satyam's board is now waiting for various regulatory approvals to go ahead with the issue, including the nod from market regulator Securities & Exchange Board of India (SEBI). It has already got the Company Law Board nod.

Tech Mahindra, in which British Telecom has a 30% stake, raised Rs 875 crore for the acquisition through issue of debt securities. It has issued Rs 600 crore worth of non-convertible debenture (NCD) and the Rs 275 crore commercial paper issues, which have been subscribed by a clutch of mutual funds, banks and insurance companies. In a press conference held today, M&M group CFO, Bharat Doshi said, "Tech Mahindra has a strong balance sheet and that has made this possible."

Satyam: No layoffs now, salary cuts possible

2009-04-21T07:57:00.000-07:00

Tech Mahindra chairman Anand Mahindra on Monday ruled out immediate job losses among the 45,000-odd Satyam employees but added that an integration team “is already in place in Hyderabad to decide on the staff strength” for the acquired company. Speaking at a press conference after the first detailed meeting with the staff of the company taken over by Tech Mahindra last week, he said, “Our immediate plan would be to retain current customers, win back businesses and retain the key 100 associates.”

The plans also include finding a CFO for Satyam, said Vineet Nayyar, CEO of Tech Mahindra. “We are on the lookout for a CFO, who would be decided in the next few weeks.” One of the first tasks of the new incumbent could be asking for a salary cut of at least 10% across all categories, a source close to the company said.

Chairman of the government-appointed board, Kiran Karnik, said, “One cannot say anything on layoffs now. A list of key 100 employees, which was drawn by AS Murthy, and who were responsible to get businesses even during the crucial period after Raju’s disclosure, has been given to Tech Mahindra and (they) have been asked to retain them for an year.”

Karnik also said that more clarity about the company’s financials would be known once the 20% open offer announcement is made on Tuesday and also after the restatement of accounts.

Tech Mahindra has deposited the Rs 1,756 crore towards its 31% stake on Monday. It also put Rs 1,154 crore for public offer in a separate escrow account.

Three Tech Mahindra executives may join Satyam board

2009-04-20T06:53:00.001-07:00

20 Apr 2009

NEW DELHI: Three senior executives of Tech Mahindra are likely to be inducted in the Satyam board. The names doing the rounds are vice-chairman, MD & CEO Vineet Nayyar, president (international operations) CP Gurnani, and President (strategic initiatives) Sanjay Kalra.

Anand Mahindra, chairman of Tech Mahindra, who is in Hyderabad, is expected to address Satyam employees to provide them comfort amid concern that the new management may cut jobs.

Tech Mahindra will have its first official interaction with the Satyam board on Monday after obtaining the Company Law Board's approval for acquiring majority stake in troubled IT company.

Mahindra may also address all the vertical and process heads of Satyam and get an idea of the operations and business from the officials on the field.

"There is a board meeting on Monday. All Satyam directors and senior officials of Tech Mahindra will participate in the meeting to take stock of the situation," a Satyam Computer spokesperson said.

Tech Mahindra emerged as the highest bidder for majority stake in Satyam at Rs 58 a share in an auction held on last Monday. It has to pay Rs 1,756 crore by April 22, 2009 for 31% stake.

As per the bidding schedule, the payment of Rs 1,756 crore will ensure the ownership of Satyam to Tech Mahindra following which the Mumbai-based company has to acquire another 20% in an open offer to public.

Tech Mahindra to retain Satyam management team

2009-04-20T06:52:00.002-07:00

20 Apr 2009, , ET Bureau

HYDERABAD: Tech Mahindra Ltd, a mid-sized Indian IT outsourcer, said on Monday it had deposited the funds needed for taking the majority stake in fraud-hit Satyam Computer Services Ltd.

Tech Mahindra was to pay $351 million for a 31 percent preferential allotment of new shares and would then make an open offer for a further 20 percent of the company at a cost of about $231 million.

Funds for the 31 percent stake as well as the open offer have been deposited by Tech Mahindra, Satyam Chairman Kiran Karnik told reporters at the company headquarters in the southern Indian city of Hyderabad.

Tech Mahindra took over Satyam after it bid the highest last week for a controlling stake. The deal will propel Tech Mahindra into the top tier of Indian IT firms and throw a lifeline to the firm at the centre of India's biggest corporate scandal.

Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.

The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.

Tech Mahindra deposits funds for Satyam stake buy

2009-04-20T06:52:00.001-07:00

20 Apr 2009, REUTERS

HYDERABAD|MUMBAI: Tech Mahindra, the new owner of Satyam Computer Services, has decided to continue with the current management of the scam-hit firm for the transition period. Its priority is to focus on making Satyam’s business viable by halting customer attrition, boosting employee morale and leveraging the best practices of Satyam. “The plan is to work with the current management. The focus is more on governance and restoring customer confidence,” said a source close to Tech Mahindra. However, it will also soon name a chief financial officer, who may not be an insider. The CFO’s post had been vacant after S Vadlamani, the earlier CFO, quit.

Tech Mahindra will have its first official interaction with the Satyam board on Monday. All Satyam directors, senior Tech Mahindra officials and Anand Mahindra, chief of the Mahindra group, will take part in the Satyam board meeting in Hyderabad. Mahindra may also address all the vertical and process heads of Satyam and get an idea of the operations and business from the officials on the field.

The company was widely expected to announce its own man as CEO of Satyam, and the quiet and reserved Ulhas N Yargop, who heads the IT initiatives of the Mahindra group, was tipped to be the candidate. But, persons with knowledge of the situation told ET that the current Satyam management is set to continue during the transition phase.

According to highly-placed sources privy to the information, some of the key business leaders of Satyam who will be retained are TR Anand, who heads Satyam’s telecom business unit, Manish Mehta who spearheads the SAP practice, Keshab Panda who heads the Europe operations and the manufacturing and automotive industry practices, Virendra Aggarwal who steers Satyam’s operations for the rest of the world and Arvind Malhotra, who handles Satyam’s GE account.

AS Murty is understood to have kept himself out of this list. Under the sale agreement, it is binding on Tech Mahindra to retain 100 key employees of Satyam for a year, to ensure business continuity. The list of these 100 employees was furnished to the Pune-based IT firm in the information pack on Satyam, ahead of the due diligence.

“The list includes all the heads of vertical business units and horizontal competency units,” a source said. Top executives have been in Hyderabad for the past two days interacting with the Satyam management. “Other than the very senior people, Tech Mahindra doesn’t have any existing management they can loan to Satyam. It is a much smaller company and is confined to telecom. The telecom business is also very small for Satyam,” said the head of research of a broking firm.

As reported earlier by ET, Ram Mynampati, the interim chief executive officer of Satyam before the current CEO AS Murty took over, does not feature in the list of 100 key leaders. Mr Mynampati spearheads Satyam’s operations in the US and is also in-charge of the firm’s commercial and health business.

Tech Mahindra’s biggest challenge will be to trim Satyam’s employee strength and bring it on par with its business. Satyam has 48,000 employees, 80% of them working offshore and the remaining onsite. The offshore bench staff would be around 5,000, most of them with minimum experience. The company may save only around $4 million dollars if these jobs are axed. Around 5% of the onsite work force are unbillable.