Ramalinga Raju’s letter to the Board of Directors and SEBI

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 Rs 5040 crore ($1.04 billion) (as against 53.61 billion reflected in the books).
b. An accrued interest of Rs 376 crore which is non-existent.
c. An understated liability of Rs 1230 crore on account of funds arranged by me.
d. An overstated debtors position of Rs 490 crore (as against 26.51 billion reflected in the books)

2. For the September quarter (Q2) we reported a revenue of Rs 2700 crore and an operating margin of Rs 649 crore (24 pct of revenues) as against the actual revenues of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenues). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone. Read more

January 7, 2009 | Filed Under Market Outlook | Leave a Comment 

Merrill Lynch terminates advisory agreement with Satyam

In a letter to Securities and Exchange Board of India (SEBI), Merrill Lynch said that it has opted to terminate the advisory agreement with Satyam Computer Services following the revelation of accounting irregularities in the books of SATYAM.

Please take a look at the original letter.

MerrillLynch Letter to SEBI
 

January 7, 2009 | Filed Under Market Outlook | Leave a Comment 

Satyam has been removed from NIFTY and SENSEX

Following the fraud acknowledgement by the promoter B Ramalinga Raju, NIFTY in a statement has announced that Satyam would be removed from Nifty 50, and Reliance Capital would be included in its place effective January 12th 2009. It would get removed from other NSE indices CNX 100, S&P CNX 500,CNX IT and the CNX Services sector index.

BSE in an announcement said that Sun Pharma would replace satyam computers in Sensex. Glaxosmithkline Pharmaceuticals would replace satyam in BSE 100. It would also get removed from BSE 200, BSE 500, BSE Teck and BSE IT indices.

Read more

January 7, 2009 | Filed Under Market Outlook | Comments Off 

Satyam Financial irregularities

Satyam’s chief B Ramalinga Raju resigned after a shocking revelation about financial irregularities in the Indian software major. It was a stunning news and first of its kind in Indian stock market.

In a letter to board of directors, SEBI and exchanges he revealed that as of September there exists an inflated cash (non-existent but shown in books) and bank balances of Rs 5040 crores. He admitted that fictitious assets were created to cover the improper balance sheet entries and the recent MAYTAS acquisition trial is also part of that.

He also mentioned that it has been happening for years and started off to cover a marginal gap between actual operating profit booked and that stated in the books few years ago. It means the profits are shown higher purposefully.  As there was a large difference between the actual profits and that stated in the balance sheet he decided to acquire MAYTAS to make the fictitious assets real; but the deal failed. Had it gone successfully he would have shown MAYTAS assets for the so called ‘great cash reserves’.

Satyam’s share price tumbled 78% in BSE after the news got out. It settled at Rs40 at the end of the trading. It last nearly 10,000 crores of its market capitalization. In the pre market trade of NYSE Satyam’s ADR s were traded down 91%. Read more

January 7, 2009 | Filed Under Market Outlook | Leave a Comment 

Indian Markets Next week August 4th 2008

The political stability is not a concern now for the Indian markets. Inflation has surged again. After decreasing to 11.89% a week earlier, it again increased to 11.98% for the week ended July 19th. This increase can be attributed to the higher prices of some food and manufactured products.

The talk of the previous week was sudden increase in repo rate by the Reserve Bank of India to contain inflation. The RBI announced a 0.5 percentage hike in the repo rate to 9 percent which is at a seven-year high and lifted the cash reserve ratio (CRR) by 0.25% to 9 per cent. RBI also lowered its GDP growth forecast for the country to 8 per cent for 2009, down from between 8 per cent and 8.5 per cent previously. Markets slumped as soon as the news was out. But markets gain the momentum at the end of the week even when the global markets were down.

On August 1st the crude oil last traded at $125.10. It increased on the account of Israeli announcement on Iran’s nuclear program. Though some important support levels are crossed it’s still interesting to watch the markets this week. This whole year would be a gestation period as some global factors still need to come in good.

 

 

August 3, 2008 | Filed Under Market Outlook | Leave a Comment 

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