Last Updated: January 07, 2009 12:42 IST
Under attack over $1.6 billion acquisition fiasco of firms promoted by his family Satyam [Get Quote] Computer Chairman B Ramalinga Raju on Wednesday resigned and said he would subject himself to the "laws of land".
Minutes later, the company also announced resignation of its managing director B Rama Raju.
In a letter to the board, Raju has given balance sheet details. In a shocking revelation, he has said that the balance sheet details over the years was fictitious.
The balance sheet has inflated cash balances of Rs 5,040 crore (Rs 50.40 billion) and accrued interest of Rs 376 crore (Rs 3.76 billion) is non-existent. Rs 1,230 crore (Rs 12.30 billion) was arranged to Satyam and is not reflected in the books.
He admitted that second quarter numbers were inflated to Rs 2,700 crore (Rs 27 billion) when the actual figure was Rs 2112 crore (Rs 21.12 billion). He also said that other board member were unaware of the real numbers.
He admitted that the accounts manipulation started a few years ago. The attempts to stop manipulation failed, he said in his confession.
The Satyam balance sheet, as on September 30, 2008, had an accrued interest of Rs 376 crore (Rs 3.76 billion) which is non-existent. It also had an understated liability of Rs 1,230 crore (Rs 12.30 billion) on account of funds arranged by Ramalinga Raju. The balance sheet showed an overstated debtors position of Rs 490 crore -- Rs 4.90 billion -- (as against Rs 2,651 crore -- Rs 26.51 billion -- reflected in books).
The gap in balance sheet has arisen purely on account of inflated profits over a period of last several years.
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.
Satyam, considered a ripe proposition for acquisition, was pushed into crisis after Raju was forced to abandon the acquisition of Maytas Infrastructure and Maytas Properties promoted by his son.
In a regulatory filing the company said Raju would continue to be the chairman till the board is expanded.
"Under the circumstances I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded. My continuance is just to ensure enhancement of the board over the next several days or as early as possible," B Ramalinga Raju said.
Satyam shares nosedived by nearly 54 per cent to Rs 83 after resignation of chairman, and managing director. DSP Merrill Lynch has terminated its engagement with Satyam Computer, the IT firm informed the Bombay Stock Exchange.
Meanwhile, reacting to the Satyam fiasco Sebi chairman C B Bhave said that the Satyam chairman's 'confession to the board is an event of horrifying magnitude'.
1 comments:
Being a satyam employee myself, with Raju's resignation and scam I doubt the clients will want to stick with satyam. There could be mass layoffs over the next few months as Satyam faces more (if not already in trouble!) loss of projects. The workforce could come down to 25000 in the next few months provided there is a change in management team in Satyam and there is focus on redevelopment of the brand.
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