Satyam Computer Services head quartered at Hyderabad, India whose founder-chairman B Ramalinga Raju has resigned from the IT major's board . Raju has taken this step after admitting a multi-crore fraud in the company’s accounts.Satyam is the country's fourth largest IT firm and has has over 51,000 employees.In a shocking disclosure, he has revealed some financial irregularities in the company which including an inflated cash balance of Rs 5,040 crore. I personally never expected such events to happen in IT gaint like Satyam.Mr. Raju can face upto 7 years of imprisonment in addition to monetary penalties for forging accounts, breach of trust and misappropriating funds.
Raju said that he feared takeover due to poor finance performance. Coming clean on financial irregularities, he said that the company had Rs 1,230 crore worth of understated liability as of September 30. Raju also revealed that he tried to fill fictitious assets with Maytas deal. Raju in a press conference said that the company carries inflated cash balance of Rs 5,040 crore. He also reported of Rs 588 crore artificial cash in Satyam’s books. Raju said that every attempt to eliminate the gap failed and he had to take this step . Raju sincerely apologised to all Satyamites and stakeholders, who have made Satyam a special organisation. Moreover recently the world bank has also banned Satyam for next few years because of data theft and bribery cases and it wont allow Satyam to bid for any of its bussiness projects.
In a notification to the stock exchanges, the Hyderabad-based IT firm said Raju and Managing Director Rama Raju had resigned early Wednesday and that the Securities and Exchanges Board of India (SEBI) had been informed.On Raju’s disclosure, SEBI chief said the issue has serious implications and the regulator will take coordinated action. His decision was conveyed to the company’s board members. The company was supposed to hold a board meeting this Saturday.Listed at New York Stock Exchange, the company could face regulatory action in the US, analysts said.Raju recommended DSP Merrill Lynch be entrusted the task of quickly exploring some merger opportunities but the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam.
According to Raju, Ram Mynampati will act as an interim CEO. The resignations, ahead of January 10 board meeting, pushed the company into crisis and paved the way for immediate restructuring of the board and the management to come out of this crisis.
Shares of the company plunged by over 75 per cent soon after the resignations. Satyam, considered a acquisition, which pushed Satyam into crisis after Raju was forced to abandon the acquisition of Maytas Infrastructure and Maytas Properties promoted by his son.All the top news channels and newspaper like ndtv, ndtv profit , ibn, economic times websites are filled up with news from Satyam.Current share price of Satyam is rupess 40 as on 07/01/2009 19:00 IST listed in Bombay Stock Exchange (BSE).
After all these events struggle of the IT sector deepens and other IT major companies like Cognizant, IBM and others , who were considering taking over Satyam may reconsider their decisions after todays events.
I wish Satyam can come out of this mess as soon as possible and make INDIA proud as it used to do earlier. Please share your views and coments.
