Satyam Fraud, Satyam share down 78% after Raju’s resign

In a letter to the Satyam board members, Raju said that the company reported inflated revenues over years. He 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.

His decision was conveyed to the company’s board members. The company was supposed to hold a board meeting this Saturday.

Even since announcing the controversial Maytas deal, Raju was under pressure from investors as the decision raised issues over corporate governance.

In a dramatic revelation, Raju said that the balance sheet has inflated cash & bank balance of Rs 5040 crore. No board member had any knowledge of the real situation as against books. The balance sheet was inflated and accrued interest of Rs 376 crore in the books is non-existent.

He said in the letter that Rs 1230 crore was arranged to Satyam, which is not reflected in books. Ram Mynampati will act as interim CEO. Merrill Lynch can be entrusted to explore the merger options. Raju asked auditors for restatement of accounts in the light of new facts.

Raju in his letter further said that the Q2FY09 reported revenues of Rs 2700 crore Vs actual revenue of Rs 2112 crore. The Q2FY09 operating margin reported was Rs 649 crore against Rs 61 crore. The Q2FY09 numbers had Rs 588 crore of artificial cash in books.

Find Satyam’s chairmen resignation letter  -> satyam_computer_services_ltd_07010911


12 thoughts on “Satyam Fraud, Satyam share down 78% after Raju’s resign

  1. Mr Raju has betrayed the trust of investors and still trying to shield his coconspirators.He still banks on the “influence ‘(undue?) of Mr.T.R.Prasad to bail out the Company .What Mr.Prasad was doing all along?Only capitalising his clout in Government.He need not offer to be subjected to laws of land which he well knows are too ineffective to deal with such frauds.

  2. Fast growth….unlimited potential…india inc
    Buzz words that kept all and sundry rocking. Today the cat is out of the bag. It is matter of shame that cooked up data was projected as achivements all around. I really pity the employees as they are now left in the lurch. I am doubly sure that more and more corporate skeletons and going to tumble out. Lets respect genuine buiness people and henceforth not get carried away. So much so for our value systems and dharma.

  3. Listen to what they realy do and then blog out and one more thing when we are down our competitors will push us into trash when we are separated although we are down we should have to unite our hands remembering our joint success which has happened previously. so think out our economy and act accordingly and take part in the growth of every one even when they are down instead dont kill them by spreading blog like this

  4. I have thought enough. I didnt join Satyam because of the “FAULTY” process of recruitment like Hey you are from the same college .. come to 3rd round directly .. or hey some relationship .. come to 3rd round directly.. that dislike against the management had grown 100 folds today .. Something percolates from top .. I have also heard that there has been a PRO TELGU force within the company ..subjugatiing North India IT Workers .. what the HELL is that .. the name SATYAM has contradicted to what it has done .. I have full sympathy for the 50,000 employees of SATYAM .. they have beem cheated .. also the Shareholders ..

  5. it is not just about Satyam. Pretty sure, if SEBI starts looking into the accounts of all Companies listed in NYSE or BSE, they will find a lot of irregularities.

    Unless it is a govt owned subsidiary like ONGC or GAIL, they do not show the real figures in their balance sheet.

    The question is if all companies do it, then y is satyam?. The reason is that Raju is either bit by some consiousness bug or having some kind of a realization.

  6. 1)Atleast he has accepted his fraud.Karunanithi and CHidambaram promised
    2 acre land for 26 lack farmers which they never gave.Karuna/PC
    are occupying the top post now.They will never admit their fraud.
    2)They are giving money to win elections.No politicians will accept
    3)The Govt was saved through money and horse trading in the vote of
    confidence.The Honest PM too wont admit the guilt.
    4)Spectrum charge Govt wont accept
    5)TR Baalu openly told in Parliament he used wrote a letter to Petro
    ministry to have a favour for his neighbour.
    6)No politicians have come forward to accept and face the legal proceedings
    for any corruption charge.
    7)Worse they help those people to run from the country.The heartbeat
    of Indian administration is corruption and criminalism.
    8)If you dig many corporate deals,Govt deals things will get nastier.
    Govt will never do it as it will hurt growth and image.
    9)Govts will use stock market as another revenue base.Already ministers
    are having links with realtors and infra companies.

    So Govt will let the issue die down.Govt had scapegoats like
    Natwar,Shivraj Patil in the past.Now Raju is a scape goat.Lets
    face the election with huge money.Secularism is under threat.COme on

  7. 1. All stock exchange listed companies in India must comply with RTI Act (Right To Information Act)….

    2. Because these companies OWN and OPERATE on public aka shareholders money which is 10 times the company quarterly revenue……

    3. And to prevent Wage Slavery companies in services industry must give stock options to all its employees.

    4. Ramalinga Raju might have transferred 5000 crores of SATYAM money to MAYTAS through HAWALA channels.

  8. Raju’s Letter is a LIE–>

    I think i have an interesting point to make. They say little knowledge is too dangerous. But having watched satyam’s events on daily basis, i am quite sure there is a big probability, that my claim can be true ,though its definitely a dangerous claim.

    What if this ramalinga raju’s letter is just a big “Lie” .
    I am going to make some assumptions here:
    1. Maytas was really the source of trouble and never it was satyam, as raju claims.
    2. There were no inflated profits and Satyam’s balance sheets are clean.

    These assumptions leave us with the question – “Then why Mr.Raju has to give a letter that the profits were inflated” – which leads to third assumption of mine.
    3. Mr. Raju had diverted money from satyam’s balance sheet into Maytas or somewhere and claims that there were artifical money due to inflated profits.

    Now this is a interesting deduction and most of you are going to dismiss it by saying they are just assumptions. There is a strong reason why this can’t be just assumption.
    Answer this. What could be the reason for Mr.raju to inflate the profits. Do you really think the fear of competition and need of posting good margins can drive a person of his stature, to risk his life and to commit such a big fraudelent activity.

  9. Thanks for visiting my blog. You have a nice blog, with interesting topics. I have written a post on corporate malfeasance. This thing about Satyam is relatively a trend in the corporate governance, sadly. Unethical, and still justifiable?

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