Satyam Computers Chairman Ramalinga Raju Resigned from the Board
“It was like riding a tiger without knowing how to get off without being eaten” summed the IT king, Ramalimgam Raju. For the uninitiated, the news is out. One of the most glaring frauds of Indian corporate market is officially declared. Satyam has been pushed to the cleaners with no immediate redemption is at sight. In what could be a shock reaction and a very correct one at that; the Satyam Shares plummeted to the half way mark amidst reports of rumors turning into validated statements.
Satyam has probably breathed its last for a very long time. The master strategist, the highly
reputed Mr. Ramalingam Raju is the fallen hero. He confessed how the operating figures and the reported figures have been different for the company since a long time now and how the misappropriation was somehow controlled for such time. In the absence of any further path, he had to come out in the open with all the dubious declarations.
The shares have witnessed a fall of hardly precedented 77.69% on a single trading day with the portfolio holders running for timely cover. Oversubscription again is the bane. In this particular context, Satyam has matched strides with the infamous Enron which declared bankruptcy after confessing huge oversubscription. Satyam has showed its worth far more than the actual one, in the books of profit. It has further shown non-existent accrued receipts and blown the profit far over the actual figure.
Such profits have attracted investors for long. Now the idea of having invested in Satyam is like a sour memory for all the portfolio holders. Raju admitted an operating margin fraud to the tune of tenfold overstatement. He confessed to the media how the operating margin of 61 crore is being shown as 649 crore. In such an event, an artificial balance of 588 crore rupees has been used by the company to show steadiness to its investors.
Last Traded Price of Satyam Shares as on 7th January- 39.95 INR
The announcement came at an opportune time and perhaps it is preplanned to let the institutional investors find an honorable exit. Inflated account balances have become an epidemic and lead many to think of reputed organizations as machines of cheating and manipulation. Raju nailed the truth harder on the investors by suggesting that an amount of 1230 crores was being arranged by Satyam by pledging the share of promoters. This was to keep floating somehow. But then, as is the norm with the world, the fuel can only run so long.
Satyam’s books are entirely manipulated but it has not happened for the first time. Enron did it; Lehmann came out in the open. Perhaps this is only the proverbial tip of the iceberg. What happens when something as big as GM or may be DC (looking for liquidation) comes out with something identical. All this leads an investor to think, is money really safe somewhere or are even bank Fixed Deposits jeopardized?
What will become of over 50,000 of employees Satyam has on its rolls if Mr. Ramalingam Raju decides to call it quits without a succession plan in place? Well! The answer floats in the wind.
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