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The Indian Economy (Page 28)

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Posted: 07 January 2009 at 10:04am | IP Logged

Satyam: Founder Raju Resigns; Admits Financial Fraud

 

The wheels have come off at Satyam Computer Services . The company tried to acquire 2 other companies and backed off after Ramalinga Raju backtracked. Shocked the Indian stock market on Wednesday with news that Raju has resigned after admitting he overstated the strength of the company's balance sheet and misreported the company's profits.Raju confesses to trying to use the the failed acquisitions to "fill the fictitious assets with real ones." A stunning tale, which is going to cost holders a lot of money.

Satyam: Can The Street Ever Trust Management Again?

The astonishing turn of events yesterday involving Satyam Comptuer Services may have left the company with a permanent taint. Certainly, it raises questions about management's judgment; if nothing else, it shows a tin ear for predicting the reactions of investors.

To review: Satyam yesterday morning announced plans to spend $1.6 billion, well in excess of its $1.1 billion in balance sheet cash to buy a pair of construction and infrastructure companies controlled by the company's chairman, B. Ramalinga Raju, and his sons. In short, the deal amounted to a transfer of all of the company's cash (and then some) to its chairman and his family, in the process moving the IT services provider into an entirely unrelated business. The Street reacted by cutting the company's share price by more than 50% and howling that the deal raised huge corporate governance questions; in the afternoon, Satyam relented and canceled the deal.

Under the proposed deal, Satyam had agreed to buy 100% of privately held Maytas Properties, a developer of master planned communities and other projects, for $1.3 billion, and 51% of publicly traded Maytas Infra, which provides infrastructure construction, for $300 million.

The Maytas companies are controlled by Raju's sons; "Maytas" is Satyam spelled backwards. The Maytas Properties site lists B. Rama Raju Jr. as vice chairman; the Maytas Infra site lists its vice chairman as B. Teja Raju, another son of B. Ramalinga Raju.

Meanwhile, on Monday the CEO of Maytas Infra, P.K. Madhav was arrested in Hyderabad in connection with his role at Nagarjuna Finance, which has been accused of failing to return 1 billion rupees to depositors. Also arrested was the CEO of the Nagarjuna group, K.S. Raju. One has no idea if the two Rajus are related.

On the Street, analysts continue to shy away from Satyam

There are  serious corporate governance concerns, given a management team that announces $1.6 billion in deals 38% of SAY's market cap before the announcement and then cancels them less than 10 hours afterwards in deference to the views expressed by many investors.
CThe situation has seriously dented investor confidence, and that it will be difficult for the confidence to be restored. Suggestions are on to switching into Infosys.
Questions will linger on, perhaps for a long time. Among the most obvious: Why did the company's board not oppose the deal? The company's business was already deteriorating, and today cut estimates on the company by 14% for the March 2010 fiscal year and 17% for FY 2011, the fundamentals are now peripheral to the central issue, valuation damage will last. The the stock is a Sell. The stock is now cheap, but there are some reservations. While one is excited to get such an established IT services investment at a synthetic discount, and people are encouraged by management flexibility, investors remain stunned that investors were put in this position to begin with. Freedman says that "it will be a tough road to restore management credibility."
SAY, which yesterday fell $6.85, or 55%, to $5.70, today has rebounded $2.39, or 42%, to $8.09. Even after the bounce, yesterdays antics have chopped SAY's stock price by 36%.

Satyam shares crash 77% after overstatement
Chairman resigns after revealing "non-existing" cash
Shares of Satyam Computer Services crashed 77% in Mumbai Wednesday, after the founder and chairman of India's fourth-largest software company resigned, saying the company had inflated its cash and bank balances on the balance sheet by more than $1 billion.
Chairman B. Ramalinga Raju said the balance sheet as of Sept. 30 had inflated non-existing cash and bank balances of 50.40 billion rupees ($1.04 billion), understated a liability of 12.3 billion rupees, and overstated debtors' position of 4.9 billion rupees.
In a letter to the board, made available to the stock exchange, Raju wrote that he was making the announcement with deep regret, and tremendous burden that I am carrying on my conscience."
"The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years what started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years," he said.
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju added.
A Satyam founding family member and managing director, B. Rama Raju, also resigned.
Satyam's board, which convened in Hyderabad to discuss its next steps, said it received Raju's resignation letter.
"We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders," said board member Ram Mynampati, who was named interim CEO.
 

A constituent of the 30-stock benchmark Sensex, ended down 77%, dragging down the Sensex by 7.3% to 9,586.88.
Satyam's New York-listed American Depository Receipts plunged 75% to $2.38 in pre-market trade. The stock did not open immediately for trading, however. 
The founders held 8.61% in Satyam as of Sept. 30.
Among other large Satyam shareholders, Aberdeen Asset Management held a 9.2% stake through various funds as of Oct. 10, while Fidelity Investments, the world's top fund manager, was the third-largest holder with a stake of over 4%.
In particular, Fidelity's Diversified International Fund held 23 million shares as of Oct. 31.
Shock
Market participants as well as regulators also expressed shock over the incident at one of India's best-known companies overseas. The incident also raised fears that India's largest corporate fraud to date will impact other companies and foreign investment. 
It's a major blow to sentiment. Market sentiment had just about started to improve after a long period of time, but with this development, the confidence is again getting shattered.
Satyam's announcement iss an event of horrifying magnitude.
"Our main efforts are to make sure that whatever facts are available with any regulatory agency are [disclosed], and investors know the truth," Bhave told CNBC TV18 business news channel, Dow Jones Newswires reported.
Market heavyweight Reliance Industries sank 12.5%, and Reliance Communications skidded 17%.
Shares of other software majors outperformed the broad market, however, with Tata Consultancy Services dropping 0.8% and Wipro
rising 0.2%, while Infosys Technologies  climbed 1.7%.
At their Mumbai closing price Wednesday, Satyam shares are down 82% from its closing price on Dec. 16, when it announced plans to acquire two infrastructure companies managed by the company's founders.
The company canceled the takeover plan within 24 hours after the shares tumbled, but the move hurt the company's credibility, built over the last 21 years since the company was founded in 1987.
Its image was hurt further last month, when the World Bank barred the company for eight years from bidding for contracts, alleging the software company had given improper benefits to its employees.
 
Text of the letter:

To the Board of Directors

Satyam Computer Services Ltd.

From B. Ramalinga Raju

Chairman, Satyam Computer Services Ltd. 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:

1. The Balance Sheet carries as of September 30, 2008

a. Inflated (non-existent) cash and bank balances of 50.40 billion rupees ($1.04 billion) (as against 53.61 billion reflected in the books).

b. An accrued interest of 3.76 billion rupees which is non-existent.

c. An understated liability of 12.30 billion rupees on account of funds arranged by me.

d. An overstated debtors position of 4.90 billion rupees (as against 26.51 billion reflected in the books)

2. For the September quarter (Q2) we reported a revenue of 27.00 billion rupees and an operating margin of 6.49 billion rupees (24 pct of revenues) as against the actual revenues of 21.12 billion rupees and an actual operating margin of 610 million rupees (3 percent of revenues). This has resulted in artificial cash and bank balances going up by 5.88 billion rupees in Q2 alone.

The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualized revenue run rate of 112.76 billion rupees in the September quarter, 2008, and official reserves of 83.92 billion rupees). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations -- thereby significantly increasing the costs.

Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in a take-over, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten.

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas' investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam's problem was solved, it was hoped that Maytas' payments can be delayed. But that was not to be. What followed in the last several days is common knowledge. I would like the Board to know:

1. That neither myself, nor the Managing Director (including our spouses) sold any shares in the last eight years -- excepting for a small proportion declared and sold for philanthropic purposes.

2. That in the last two years a net amount of 12.30 billion rupees was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers.

3. That neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results.

4. None of the board members, past or present, had any knowledge of the situation in which the company is placed. Even business leaders and senior executives in the company, such as, Ram Mynampati, Subu D, T.R. Anand, Keshab Panda, Virender Agarwal, A.S. Murthy, Hari T, S.V. Krishnan, Vijay Prasad, Manish Mehta, Murali V, Sriram Papani, Kiran Kavale, Joe Lagiola, Ravindra Penumetsa; Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or Managing Director's immediate or extended family members has any idea about these issues.

Having put these facts before you, I leave it to the wisdom of the board to take the matters forward. However, I am also taking the liberty to recommend the following steps:

1. A Task Force has been formed in the last few days to address the situation arising out of the failed Maytas acquisition attempt. This consists of some of the most accomplished leaders of Satyam:, Subu D, T.R. Anand, Keshab Panda and Virender Agarwal, representing business functions, and A.S. Murthy, Hari T and Murali V representing support functions. I suggest that Ram Mynampati be made the Chairman of this Task Force to immediately address some of the operational matters on hand. Ram can also act as an interim CEO reporting to the board.

2. Merrill Lynch can be entrusted with the task of quickly exploring some Merger opportunities.

3. You may have a restatement of accounts' prepared by the auditors in light of the facts that I have placed before you.

I have promoted and have been associated with Satyam for well over twenty years now. I have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries. Satyam has established an excellent leadership and competency base at all levels. I sincerely apologize to all Satyamites and stakeholders, who have made Satyam a special organization, for the current situation. I am confident they will stand by the company in this hour of crisis.

In light of the above, I fervently appeal to the board to hold together to take some important steps. Mr. T.R. Prasad is well placed to mobilize support from the government at this crucial time. With the hope that members of the Task Force and the financial advisor, Merrill Lynch (now Bank of America) will stand by the company at this crucial hour, I am marking copies of this statement to them as well.

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.

l am now prepared to subject myself to the laws of the land and face consequences thereof.



Edited by jagdu - 07 January 2009 at 10:05am

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Posted: 08 January 2009 at 9:24am | IP Logged

Bear Facts: Scams Unravel in Downturns

Satyam is just the latest scandal but is unlikely to be last scheme to unravel.
 NOW WE KNOW WHY they're called market corrections: because so many participants wind up in the facilities of the Department of Corrections after the market drops and reveals the frauds previously obscured by rising prices.

Add to the rogue's gallery the name of B. Ramalinga Raju, whom few Americans ever heard of before he admitted Wednesday that he cooked the books of Satyam Computer Services, one of India's biggest computer outsourcing services company he founded and headed to the tune of $1 billion. While that makes him a piker by Bernie Madoff standards, the late Sen. Everett Dirksen's observation about a billion here, a billion there and soon you're about real money still applies to the private sector (albeit less so to the government with the federal deficit forecast at over $1 trillion.)

Still, the scandal has been dubbed the Enron of India which may be too parochial since Raju did business with hundreds of Fortune 500 companies and his company's shares were listed in Mumbai and Amsterdam with American Depositary Receipts on the New York Stock Exchange. The Indian-traded shares plunged 80%, which dragged down the Mumbai bourse down 7%, before the ADRs were halted on the Big Board Wednesday.

Raju said his scheme attempted to cover up profits shortfalls, but which snowballed over time. He tried to obscure the cash deficiency by having Satyam buy two companies controlled by his family late last year, a seeming self-dealing ploy that caused a rebellion by institutional investors.

Until the scam unraveled, Raju was held in high regard, not unlike Bernie Madoff. Indeed, Raju was the Ernst & Young Entrepreneur of the Year in 2007. According to a posting on Satyam's Website the award is in recognition of Raju's efforts not only to build a best-in-class business that is making its market on the global platform, but also for taking innovative steps to positively impact society. If we cam learn to make ordinary people do ordinary things, then it goes without saying, more significant things happen, and change comes about very quickly said Raju said reflecting on the award.

Indeed. Satyam's ADRs plunged from near 30 last summer to around 5 in December in the investor revolt over Raju's scheme to play a shell game by selling his property company at an inflated price to Satyam without the IT company's board approval.

It's only when business and the market start to unravel that such scandals erupt because they're easier to cover up in good times. Each cycle features its own scams. During the tech-telecom bust at the beginning of the decade, Enron and WorldCom went bust. So far, the current collapse has featured Madoff and Satyam.

Every bubble creates useful idiots who justify it to the suckers who buy into to it. And crooks to take advantage of them. Once the bust comes, both are revealed. These are unlikely to be the last.



Edited by jagdu - 08 January 2009 at 9:25am
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Posted: 09 January 2009 at 10:14am | IP Logged

Satyam: Sanskrit for 'Enron'

Overregulation is the quickest way to make a bad scandal worse.So it turns out that corporate fraud doesn't just happen in America. News that the CEO of one of India's biggest IT outsourcing companies, Satyam, cooked the books to the tune of at least $1 billion has shocked investors and sparked talk of stricter regulations. Before policy makers act, our advice is to remember Enron's aftermath.

[Review & Outlook] AP

B. Ramalinga Raju

B. Ramalinga Raju, who confessed this week, says his fraud started small, to cover a marginal gap between actual operating profit and the one reflected in the books, and grew over time. The slowing economy made it harder to conceal. He resigned Wednesday, true for once to his company's name "Satyam" is Sanskrit for "truth."

The scandal certainly highlights a failure of corporate governance on a grand scale. Satyam's board, which included until recently a Harvard professor specializing in corporate governance and a business school dean, missed Mr. Raju's fraudulent dealings for an as yet unknown number of years. So did the independent auditor, PricewaterhouseCoopers. So did, presumably, many other companies that did business with Satyam -- such as its creditors -- that in retrospect could have exercised stricter due diligence.

Which just goes to show that fraud is possible even under the nose of smart overseers. In addition, Satyam, based in Hyderabad, was bound by India's lengthy corporate law, and by the rules of the Bombay Stock Exchange, the New York Stock Exchange and Euronext in Amsterdam, where the company was listed.

Rather, enforcement is the weak spot in India. Trials of alleged wrongdoers can drag on interminably, with appeals stretching to a decade. When punishment comes, it's so far after the fact that it loses value as a deterrent to other would-be white-collar criminals. A key test of India's commitment to clean up corporate governance will come in how efficiently its justice system prosecutes Mr. Raju.

Policy makers will also have to balance regulatory reforms with their compliance costs on the economy. India's developing economy can't afford burdensome, expensive and largely ineffective regulations like Sarbanes-Oxley, which imposed huge costs on American business and drove investment overseas after Enron.

Instead, it would be better to continue liberalizing India's markets to give investors more opportunity to exercise their own breed of oversight. Satyam's shareholders sent the stock price plunging in revolt last month over Mr. Raju's plan to buy two infrastructure companies run by his sons. Shareholders then thought it was simply cronyism. Mr. Raju's letter suggests it was actually a last-ditch effort to find cash to cover up his fraud. The merger's collapse may have precipitated the exposure of the scheme.

India already has another crucial weapon against fraud: the free press. The domestic media has latched onto the Satyam fraud mercilessly, labeling it India's Enron moment and a shame and scandal. That kind of embarrassment and brand damage should serve as a lesson to any CEO.

There will always be dishonest people in the world, as Bernie Madoff's clients know all too well. Regulators can take some steps to deter white-collar crime. But Satyam's case shows how market forces play a role in policing companies, too. The challenge, and not just in India, is to avoid needlessly hamstringing the private sector that fuels economic growth. And that's the truth.

The Co-Pilot of 'Slumdog'

How a little-known Indian filmmaker helped shape the acclaimed movieIn 2007, a little known casting director named Loveleen Tandan was hired to find actors for the movie Slumdog Millionaire, a love story that springs from the chaotic streets of Mumbai. But in filling the parts Ms. Tandan also helped reshape the project itself, and emerged with a big role of her own as the film's co-director in India. It's not a credit that could exist in any other film, she says.

[The Co-Pilot of Slumdog] 

Slumdog Millionaire director Danny Boyle (center) says our first good decision was hiring co-director Loveleen Tandan (right).

Slumdog Millionaire is a Danny Boyle film, as the closing credits announce. The British director known for indie hits such as Trainspotting steered the movie from script to screen. He's in the running for best director at the Golden Globe awards this Sunday. But to pull off what critics call the film's greatest feat, an explosive rendering of place and people, Mr. Boyle incorporated key artistic and cultural cues from his collaborators in India, such as Ms. Tandan's urging to translate a third of the dialogue into Hindi.

As soon as she did it, the scenes just transformed, says Mr. Boyle. A good decision follows a good decision, and our first good decision was hiring Loveleen.

Ms. Tandan's unusual credit, "co-director (India)," reflects the unique demands of the film, which jumps through time to trace the main character's path from street orphan to TV quiz-show contestant. It also stems from Mr. Boyle's goal of boosting Ms. Tandan's professional profile. But in giving her billing second only to his own, Mr. Boyle has inadvertently sparked some debate among critics and filmgoers about her contributions, as well as the traditional notion of directing as a solo craft.

Co-director credits of any kind are rare, except in animated films. To protect the concept of singular vision (and reduce the kind of pile-on titles typical in the producer category) the Director's Guild of America passed a bylaw in 1978 that said there could be no more than one director per feature film. Waivers are occasionally granted, like in the recent case of brothers Joel and Ethan Coen, who both collected a directing Oscar for No Country for Old Men. Controversy over the issue erupted in 2004 when Fernando Meirelles, director of the Brazilian film City of God, received an Oscar nomination and won while his female co-director, Katia Lund, was passed over.

After the 2009 Golden Globe nominations were announced in December, a Chicago film critic launched an online campaign to question the governing Hollywood Foreign Press Association about why Ms. Tandan had not been nominated for best director along with Mr. Boyle. If she's co-director during the filmmaking and marketing process, why isn't she co-nominee when the awards are passed out? says campaign organizer Jan Lisa Huttner.

When she caught wind of Ms. Huttner's campaign, Ms. Tandan quickly sought to quell it. I can't tell you how embarrassed I am by this, she wrote in a letter to the HFPA. The suggestion is highly inappropriate, and I am writing to you to stress that I would not wish it to be considered.

Like Ms. Tandan, the movie's U.S. distributor, Fox Searchlight, and its producer, Christian Colson, say her credit is being misconstrued to mean she is on equal creative footing with Mr. Boyle. Instead, Mr. Colson says, her strange but deserved title of co-director (India) was invented over a Coca Cola and a cup of tea to recognize her as "one of our key cultural bridges."

Ms. Huttner hasn't dropped her effort. She says her real mission (with Oscar nominations coming Jan. 22) is to spotlight how rare it is for female directors to be in the awards race. Only three women have been nominated for best director Golden Globes (Barbara Streisand won for "Yentl"), and three have been nominated in that category at the Oscars, with no winners.

Ms. Tandan's link to Hollywood has been as a casting director. Director Mira Nair hired the New Delhi native to fill the sprawling cast of her 2000 film Monsoon Wedding and recommended her to Mr. Boyle. She is hugely responsible for the foundation of 'Slumdog, says Ms. Nair. Once you trust that it is authentic, you can go with the pop quality of it. She had the nose for it.

Almost as soon as she signed on, Ms. Tandan's duties on "Slumdog" began to expand beyond mere casting. She holed up for four days in a beachfront Mumbai hotel with the project's principals, Messrs. Boyle and Colson and screenwriter Simon Beaufoy, drinking tea, analyzing the script and trading lines in character. It was the most fantastic time of the film, says Ms. Tandan, who helped the team identify potential cultural gaffes.

In the film, three core characters are depicted at three times in their lives, starting as impoverished children. As the team traveled to Calcutta and elsewhere to cast its slumdogs, a problem emerged: The middle-class youths who auditioned and spoke English didn't have the uninhibited spark of the real street kids the team met, none of whom spoke English.

The casting excursions continued for eight months. On one of them, Ms. Tandan pressed the idea of rewriting the children's dialogue in Hindi. Mr. Boyle, who had promised studio executives an English language film, was cautious. Ms. Tandan created an audition tape on her own, running street kids through a key scene where a character locks his brother into an outhouse. Persuaded, Mr. Boyle informed his bosses subtitles would appear in much of the movie's first third.

Realizing Ms. Tandan's coaching of the kids would have to continue through shooting, Messrs. Boyle and Colson offered her the co-director credit. Later, when Mr. Boyle wasn't satisfied with some of the footage coming back from a camera team shooting on its own, the director put Ms. Tandan in charge of it. Some of her second unit shots appear in the climax where crowds huddle outside around televisions.

Mr. Boyle says he expects Slumdog to help nudge Ms. Tandan toward a directing career of her own. Ms. Tandan says she has already received some preliminary offers. Slumdog, she says, gave me the platform to become a director.



Edited by jagdu - 09 January 2009 at 12:50pm
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Posted: 11 January 2009 at 9:28am | IP Logged

India Names New Satyam Board

The Indian federal government Sunday moved to appoint three members to Satyam Computer Services Ltd.'s board after it sacked the beleaguered software exporter's current board and as its chairman and chief financial officer were arrested and taken into judicial custody.

[B. Ramalinga Raju]

B. Ramalinga Raju

At a press conference Sunday, India's Corporate Affairs Minister P.C. Gupta told reporters that the new board plans to meet in the next 24 hours to discuss further course of action for Satyam. In a statement, Satyam welcomed the appointments noting that it will ensure continuity of the company's operations. Satyam's leadership team has complete confidence in them, and pledges to work closely and in full cooperation with the new board, it said.

The government named to the new board Deepak Parekh, chairman of Housing Development Finance Corporation; Kiran Karnik, former president of information-technology industry body Nasscom; and C. Achutan, a former member of the Securities and Exchange Board of India. The new board will decide on the new chairman and name more members of the board, Gupta said. The government had said Friday that it plans to nominate 10 members to Satyam's board.

The first priority of the board will be to restore the company's credibility, customer confidence and employees' morale and to safeguard the interest of investors and other stakeholders, the minister said.

Parekh, speaking to Dow Jones Newswires, said the newly named board members will meet with the Registrar Of Companies which has access to company records at the southern city of Hyderabad Sunday night and the board will meet Monday.

We will assess the situation when we meet tomorrow. I haven't seen a Satyam balance sheet in my life, he said, declining to comment on the agenda of the board meeting.The latest development comes after the company's founder, Ramalinga Raju, and his brother, co-founder Rama Raju, were arrested Friday and taken into judicial custody until Jan. 23.

Chief Financial Officer Srinivas Vadlamani was arrested late Saturday and will also be taken into judicial custody until Jan. 23, V.S.K. Kaumudi, inspector general of the economic offenses wing of the criminal investigation department told Dow Jones Newswires Sunday. They face charges of criminal conspiracy, cheating and falsification of records. Kaumudi said a petition for police custody is set for hearing Monday. Ramalinga Raju resigned as Satyam chairman Wednesday after he admitted to overstating profits and creating a fictitious cash balance of more than $1 billion over several years by inflating the amount of debt owed to the company and understating liabilities.

The news sent shock waves across corporate India and put a question mark on the survival of Satyam, India's fourth-largest software exporter by revenue. Asked whether representatives of financial institutions holding a stake in the company may be given a seat on Satyam's board, the minister said: All options are open.

On Saturday, the Indian Ministry of Corporate Affairs said it received a letter from Lazard Ltd. seeking representation on the new Satyam board. But in a separate statement Sunday, Lazard Asset Management LLC, a financial and asset management arm of Lazard Ltd., said it hasn't sought a seat on the new board of the software exporter. Reports of Lazard Asset Management seeking a seat on the Satyam board are incorrect, spokeswoman Judi Mackey said in an e-mailed statement. On behalf of our investment clients, we have communicated to Securities and Exchange Board of India, the Ministry of Corporate Affairs of India and the interim management of Satyam. Our communication requested that, as a large shareholder, we would like to be informed on all matters being considered regarding Satyam. Lazard has a 7.4% stake in Satyam.

Satyam's survival as a going concern will depend almost entirely on its ability to retain existing customers, even as it attempts damage control after revelations of a massive fraud perpetrated by its top executive. Keeping its business intact will be Satyam's key focus in coming months. The company's clients include several Fortune 500 companies, such as GE Co., Nissan Motor Co. None so far have said they have pulled any business from Satyam, based in Hyderabad, India. When asked whether the company had talks with some existing Satyam clients on a change of vendor, Wipro Ltd. Chief Financial Officer Suresh Senapaty said: I can't say no.

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'Slumdog Millionaire', Winslet Top Golden Globes

"Slumdog Millionaire" lived up to its underdog theme at Sunday's Golden Globes, sweeping all four of its categories, including best drama and director for Danny Boyle.

"Golden Globes, or the GGs as we very affectionately refer to them  your mad, pulsating affection for our film is much appreciated. Really, deeply appreciated," Mr. Boyle said.

"Slumdog Millionaire" also won best screenplay and musical score, firming up its prospects for the Academy Awards. The film features a generally unknown cast in the story of an orphan boy in Mumbai who rises from terrible hardship to become a champ on India's version of "Who Wants to Be a Millionaire," all the while trying to reunite with a lost love from his childhood.

"We really weren't expecting to be here in America at all at one time, so it's just amazing to be here," said Simon Beaufoy, whose winning script was adapted from Vikas Swarup's novel "Q & A."

The award was accepted by "The Dark Knight" director Christopher Nolan, who said he and his collaborators were buoyed by the enormous acclaim and acceptance the film and Mr. Ledger's performance have gained worldwide.

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Posted: 13 January 2009 at 10:12am | IP Logged
a

Edited by jagdu - 13 January 2009 at 10:20am
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Posted: 13 January 2009 at 10:19am | IP Logged

India's Nasty Surprise

Who'd have thought that staid Satyam would implode?

MANY INVESTORS EXPECTED to see a few bush-league corporates bite the dust this year in Asia. Few expected the first contender to be supposedly solid and family-run Satyam, which started last week feted as a shining beacon in the outsourcing sector and ended it reduced to a sad clich: India's Enron.

The Hyderabad-based information-technology firm, whose shares are listed in Mumbai and New York once counted such firms as General Electric and Nestl as its clients. Not for much longer. The revelation that Satyam's founder and former chairman, Ramalinga Raju, fabricated $1 billion or 94% of its reported cash reserves rocked India's business community. Raju resigned after announcing the fraud to the world Wednesday and revealing that, with his brothers, he'd been cooking Satyam's books for years.

It was impossible to imagine that this could happen. One can't believe that five or six years' worth of misappropriated books and accounts missed the scrutiny of auditors. Satyam's Mumbai stock plummeted 78% on the news, dragging India's main index, the BSE Sensex 30, down 7%.

Though Satyam is an isolated case, there's worry that the rot goes deeper. This isn't a one-man show, One's afraid of even opening the door. This was a systemic fundamental failure. In a nightmare moment, others would start to worry how many Satyams there are around in the market.

Not Too Shabby: Most Asian markets advanced, but a scandal bashed India.

The spotlight will fall on Satyam's independent directors, as well as its banking partners, and chief auditor PricewaterhouseCoopers. Questions will also be asked of the country's regulators, including the chief stock supervisor, the Securities and Exchange Board of India. Analysts for years had voiced suspicion about Satyam's figures, but during India's bull-market years  2004 through 2007 doubts were largely overshadowed by investor exuberance.

Investors proved surprisingly lenient to India's $50 billion outsourcing industry. Mumbai-listed shares of Wipro and Tata Consultancy Services (TCS.India) finished Wednesday almost unchanged, while Infosys Technologies (INFO.India) gained 2%.

Only smaller HCL Technologies (HCLT.India) was blasted; it shed 16%.

Analysts expect the big Indian IT firms, as well as foreign outsourcing majors to pick up clients fleeing Satyam. And Wipro's Senepathy speculates that many companies would be interested in buying Satyam, but declines to invoke his own corporation as a bidder. Infosys ruled out bidding for the tainted firm.

As for the overall outlook for India's information-technology outfits, their average earnings could be rising 22% this fiscal year, which ends in March. But perhaps their profits up only 7% in fiscal 2010.

atina IF-Rockerz
atina
atina

Joined: 19 January 2006
Posts: 9886

Posted: 14 January 2009 at 8:49am | IP Logged
wow good posting Jagdu.......My husband would love all your postings here.....about Sathyam... I am sending the links to him....as I am at work right now.
 
Good job buddy...I am so proud of you dear


Edited by atina - 14 January 2009 at 8:50am

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