“Fiscal 2008 was an outstanding year for Satyam. We achieved record revenues and record net income.”
Source: 21st Annual Report 2007-08, Satyam Computer Services Limited
January 7, 2009
“Dear Board Members,
It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice:
- The Balance Sheet carries as of September 30, 2008
Inflated (non-existent) cash and bank balances of Rs.5,040 crore (as against Rs. 5361 crore reflected in the books)
An accrued interest of Rs. 376 crore which is non-existent
An understated liability of Rs. 1,230 crore on account of funds arranged by me
An over stated debtors position of Rs. 490 crore (as against Rs. 2651 reflected in the books) - For the September quarter (Q2) we reported a revenue of Rs.2,700 crore and an operating margin of Rs. 649 crore (24% Of revenues) as against the actual revenues of Rs. 2,112 crore and an actual operating margin of Rs. 61 Crore (3% of revenues). This has resulted in artificial cash and bank balances going up by Rs. 588 crore in Q2 alone.”
Source: Letter to the board of directors of Satyam Computer Services Ltd.
It’s hard to believe that the aforementioned are the wordings of Mr. B. Ramalinga Raju, the founder and ex-Chairman of Satyam, India’s fourth largest IT services company. What a contrast – unbelievably a sad chapter in India’s IT story.
Everyone is hurt and so am I. To me, Mr. Raju was Satyam, personified but is he the only one to blame. True, he hurt investors. True, he cheated the people who contributed in making Satyam what it is today. But, is he the only one? What about the other directors? What about PricewaterhouseCoppers, the accounting giant? What about SEBI? What about the stock exchanges? There are many more questions that need to be answered. Surely, there is much more than what meets the eye.
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