Satyam [Get Quote] Computer on Monday plunged into a deep crisis, as B Ramalinga Raju resigned as its chairman after admitting to major. Did Satyam Computer Services’ promoter B Ramalinga Raju make a calculated move In a letter to the Planning Commission Deputy Chairman, Montek Singh. Satyam Computers founder and chairman Ramalinga Raju has to get off without being eaten,” Ramalinga Raju said in a letter to Satyam’s board of C B Bhave said that the Satyam chairman’s ‘confession to the board is an.
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The beleaguered IT giant, already under scanner over the aborted acquisition of firms promoted by the chairman’s family, received a rude shock days ahead of its January 10 board meeting, with Raju stepping down along with his brother and Managing Director B Rama Raju. While Raju recommended DSP Merrill Lynch be entrusted the task of “quickly exploring some merger opportunities,” the company informed the stock exchanges that the investment banker has terminated its engagement with Ramakinga.
Noting that every attempt to eliminate gaps in balance sheet, purely on account of inflated profits over several years, failed, Raju said: Low percentage of promoter confdssion in the company, where four independent directors resigned in the last two weeks over the acquisition fiasco, could lead to a takeover and expose the gap, he said in the letter, also sent to regulator SEBI.
The promoters’ share in Satyam has now dipped to just over 3 per cent that too is pledged with lenders. Shares of Satyam plunged by over 40 per cent immediately after the announcement of resignations, necessitating an overhaul of the Board and management.
Raju will continue as chairman till the Board finds a replacement, even as speculation was rife that Satyam President Ram Mynampati would take over as Chairman.
Rama Raju would also continue as Managing Director, but only till the time the Board is expanded. Ramalinga Letted requested the Board to “hold together” to take some important steps, while hoping that one of the Board members T R Prasad was “well-placed to mobilise support from the government at this crucial time.
Satyam conession the country’s fourth largest IT firm and has has over 51, employees. Giving details of the financial irregularities, Raju said the company’s balance sheet as of September 30 carries “inflated non-existent cash and bank balances of Rs 5, crore as against Rs 5, crore reflected in the books.
Rraju balance sheet also carries “an accrued interest of Rs crore which is non-existent, an understated liability of Rs crore on account of funds arranged by me Rajuan overstated debtors position of Rs crore as against Rs crore reflected in the books,” Raju said. He further said that Satyam reported a revenue of Rs crore Rs 27 billion for the September quarter and an operating margin of Rs crore 24 per cent of revenue as against the actual revenue of Rs crore Rs The differential in the real profits armalinga the one reflected in the books was further ra,alinga by the fact that the company had to carry additional resources and assets to justify higher level of operations thereby significantly increasing the costs,” he said.
Ramalinga Raju admits to accounting fraud, resigns – Livemint
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 rauu. But that was not to be,” he said. Raju, however, confessiln that neither he, 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.
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’.
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A new low for India Inc.