Satyam Chairman and MD Resigns

Steeroid · 8th January 2009, 11:33

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Originally Posted by ballkey

I dont agree with this. The Indian government & society has greatly benefited from the IT revolution, that which Satyam was part of. Even if they do not generate employment to the scale India needs, they were fantastic as a PR vehicle. The whole perception of India being a dusty backward 3rd world hell-hole was turned around by this movement.

I agree with w12 - for years the software industry have cribbed about the government and have always complained and even boasted about how they made it DESPITE the government. They were not wrong - govt support was minimal or non-existent. But they cannot go running back to the government after badmouthing them for so long.

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Originally Posted by ballkey

If Ratan Tata gets hundreds of crores in subsidies for setting up a Nano plant, why not Satyam?

Tata is going to build something that will bring in more revenues - he wasnt asking for a rescue.

IMHO Satyam does not deserve a rescue. A takeover by another company is the inevitable result for a mismanaged result, and that is the way it should be.

diabloo · 8th January 2009, 11:42

Here is a company which siphoned off IT investors' money to quench their real-estate greed and when they collapse you want Govt to help them with tax payers money?

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Originally Posted by ballkey

If Ratan Tata gets hundreds of crores in subsidies for setting up a Nano plant, why not Satyam?

androdev · 8th January 2009, 11:47

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Originally Posted by w 12

Privatisation of profits and nationalisation of losses is crony capitalism at its worst.

well said my friend. it is not government's job to clean up the mess created by ill-managed companies. i want my tax money to be spent on more deserving welfare projects.

w 12 · 8th January 2009, 11:49

Quote:

Originally Posted by ballkey

1.The Indian government & society has greatly benefited from the IT revolution, that which Satyam was part of. 2. The whole perception of India being a dusty backward 3rd world hell-hole was turned around by this movement.

3. This is where the Government can help; they can ensure that Satyam remains solvent, and has the operating capital and the leadership that would enable them to pull-through. 4. Notwithstanding the dubious books, they still seem to be a profitable company, albeit with thin margins. 5. If Ratan Tata gets hundreds of crores in subsidies for setting up a Nano plant, why not Satyam?

It is not the job of government ot prop up failing businesses. In that case there would be many more claimants.

1.All segments of Indian industry benefit the indian government & society. Lakhs of workers in garment units of tirupur or daimond workers of surat or autocomponents in coimbatore have lost their job due to global recession, & government is not bothered.Why should one expect a special treatment for satyam ?

2. May be Your perception. Not necessarily true.

3. Government is not obliged to help. As per Nasscom & IT czars, IT industry is a global delivery model based on excellence & hence does not need government intervention e.g. affirmative action. Now to run to government at first sign of trouble underlines doublespeak of the industry.

4. If it is a profitable company ,some one will take it over. If it is not, it will sink. Free market economy works both ways .

5. Satyam & other IT companies also got lot of subsidies in terms of cheap land, Tax holiday , double taxation treaty etc . Infact IT industry got their tax holiday extended recently., after extensive lobbying.

appuchan · 8th January 2009, 11:49

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Originally Posted by srishiva

I hope Infosys, TCS and Wipro who might get the Satyam's customers will also be considerate towards Satyam's employees. I don't think they deserved this especially during this bad job market.

I hope Indian IT cos will get something out of this. But its not easy considering the level of discomfort it has created among its existing customers. Some of them may very well opt for more established MNCs such as IBM, Accenture or HP-EDS instead of "trying their luck" once again.

Also most of the companies will be offering "cash less" transition of existing accounts from Satyam to them including resources. This will be a win-win-win scenario for customers, satyam employees and the new vendor.

greenhorn · 8th January 2009, 12:10

Satyam Computers sacks over 30 employees over alleged fraud -The Economic Times

oh the sweet Irony

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CHENNAI: Satyam Computers has terminated over 30 employees following internal audit findings that they may have 'fudged' bills after being relocated to Chennai from Hyderabad.

"They might complain that they are being laid off because of the global economic slowdown. But it is never the intent of the company to put people away just to save some amount of money... This is done as part of good governance. The audit is done by an independent body. There were areas with certain bills where doubts over 'potential fraud' arose. For example, two of the associates might have moved their belongings together but might have submitted separate bills as showing they had moved it separately or they might have submitted false bills. We want to be above board on integrity issues."

given2fly · 8th January 2009, 12:14

Quote:

Originally Posted by appuchan

I hope Indian IT cos will get something out of this. But its not easy considering the level of discomfort it has created among its existing customers. Some of them may very well opt for more established MNCs such as IBM, Accenture or HP-EDS instead of "trying their luck" once again.

Also most of the companies will be offering "cash less" transition of existing accounts from Satyam to them including resources. This will be a win-win-win scenario for customers, satyam employees and the new vendor.

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Originally Posted by Steeroid

IMHO Satyam does not deserve a rescue. A takeover by another company is the inevitable result for a mismanaged result, and that is the way it should be.

As much as I agree with first part of the above statement, I disagree with the second. The only thing that should happen to Satyam is liquidation because its management is too dirty and its reputation shredded to nothing now. Hence any credibility of its operation at any level is purely nil on ethical grounds. GE, Banks & many other businesses work purely on Ethical grounds that involves no bribing, no forging of accounts amongst other things mentioned allover this thread. Since this company has nothing, why should some company come forward to buy it when its margins were undercut to win projects & instill false sense of security in the market and amongst shareholder. They simply don't deserve it just because some 45 thousand employees of certain IT company will go jobless and it is the third biggest company. I have mentioned Arthur Andersen's example before and will quote again. All you have to see is check their Wiki page. They had to surrender their accounting license despite being one of the 5 biggest accounting firms across the globe.

Secondly, there is no reason for 'get lucky again' feeling to be worked up here. HCL has just acquired Axon, MindTree got Aztecsoft, HP got EDS & IBM is busy with Cognos which does make some worthy software & is just not services like Satyam. Besides that, IBM is already in India with Network Solutions which is a big company in its own rights competing directly against Satyam in many markets. It doesn't make sense for them to acquire one company with its bulk and then go through integration process again. Any wise management will wait for the Satyam's client to revoke their contract and look for a new contractor to look after its systems.

Quote:

Originally Posted by w 12

It is not the job of government ot prop up failing businesses. In that case there would be many more claimants.

1.All segments of Indian industry benefit the Indian government & society. Lakhs of workers in garment units of tirupur or diamond workers of Surat or auto components in Coimbatore have lost their job due to global recession, & government is not bothered.Why should one expect a special treatment for satyam ?

3. Government is not obliged to help. As per Nasscom & IT czars, IT industry is a global delivery model based on excellence & hence does not need government intervention e.g. affirmative action. Now to run to government at first sign of trouble underlines doublespeak of the industry.

4. If it is a profitable company ,some one will take it over. If it is not, it will sink. Free market economy works both ways .

5. Satyam & other IT companies also got lot of subsidies in terms of cheap land, Tax holiday , double taxation treaty etc . Infact IT industry got their tax holiday extended recently., after extensive lobbying.

Fully agree with the above points. Business is not socialism and it's a free economy. Defaulters are bound to be packed and sent out of business irrespective of the public sentiments. Remember, the Sub-Prime crisis was too big to be ignored and should always be remembered as one-off instance. It is strictly not a norm and like w12 said, Government is not obliged to help it out. Punish who is the culprit and let's move on.

sonirohit · 8th January 2009, 12:19

Satyam has been in the news from day one for all the wrong reasons - I don't know if you are aware of the fact that it was once a blacklisted company in US (late 90's)....It has a number of suits filed against it - the biggest ones being from IBM & Upaid. If these 2 cases are to go against it - it means a liability of ~ $ 2 bn. Any company which takes over Satyam as a whole would be acquiring these liabilities also. Futher as reported by Raju the actual operating margins of the company as on Q2 end were 3% (which would further go down on account of bad news I assume that they'd be negative in the current quarter) - so no company is going to take over Satyam as a whole. The fate of this company is not known - tech Mahindra might buy a small telecom biz from Satyam.

A poor show by the promoters and spineless board members.

Clients would be wary of renewing their contracts with Satyam - earlier due to the world bank ban, forrester report cautioning them and now the accounting fraud. Satyam held the advantage only in terms of pricing over the other companies. Now the clients might look to extend their contracts with Infy/TCS or Wipro. Which have far better governance than Satyam and are more ethical organizations.

IMHO - Satyam is going to die a natural death over the next few months, some ripe business verticals will be picked up by smaller IT cos. Clients will move to other Indian IT cos and so will some of the Satyam's key people working for these clients.

I don't know what will happen to Raju & his family but - the entire land banks he had acquired in and around Hyderabad should be taken over and liquidated to pay off the debitors and shareholders & employees of Satyam who are the only losers of this entire debacle.

PS: I am neither an employee of Satyam nor a shareholder (Infact Satyam is the only company in which I have ever booked a loss of 40 Rs/Share)

diabloo · 8th January 2009, 12:29

What will happen to Hyderabad Metro project, which was to be executed by Maytas, which is in fact palindrome of Satyam?

Quote:

Originally Posted by sonirohit

I don't know what will happen to Raju & his family but - the entire land banks he had acquired in and around Hyderabad should be taken over and liquidated to pay off the debitors and shareholders & employees of Satyam who are the only losers of this entire debacle.

CtrlAltDel · 8th January 2009, 12:35

Quote:

Originally Posted by sonirohit

the entire land banks he had acquired in and around Hyderabad should be taken over and liquidated to pay off the debitors and shareholders & employees of Satyam who are the only losers of this entire debacle.

only debtors would get their money (atleast some amount if not all) back on liquidation. If anything is left after the debtors claim their pound of flesh, shareholders might get some pittance. Shareholders are co-owners and will have to bear the loss.

Employees would get only to what they are legally entitiled to in this scenario.

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Originally Posted by diabloo

What will happen to Hyderabad Metro project, which was to be executed by Maytas, which is in fact palindrome of Satyam?

thats the big question now. as of now theoritically Maytas is not affected since it is a seperate company. the real effect can be seen after the Satyam board meeting this weekend.

Spitfire · 8th January 2009, 12:41

Love your job not your company - this line by NRN sounds so very true.

sonirohit · 8th January 2009, 12:44

Quote:

Originally Posted by CtrlAltDel

only debtors would get their money (atleast some amount if not all) back on liquidation. If anything is left after the debtors claim their pound of flesh, shareholders might get some pittance. Shareholders are co-owners and will have to bear the loss.

Employees would get only to what they are legally entitiled to in this scenario.

I do agree - that order of payment would be debtors and shareholders.

Quote:

Originally Posted by CtrlAltDel

thats the big question now. as of now theoritically Maytas is not affected since it is a seperate company.

Well that's a well known fact that Satyam Chariman/CEO/MD diverted the profits on account of falsifying the accounts into maytas. Although that's a separate company - it's funded by dirty money. SEBI/MCA/RC will probe and define an extent of the seriousness of the fraud before reaching to a conclusion.

Quote:

Originally Posted by CtrlAltDel

the real effect can be seen after the Satyam board meeting this weekend.

Will anything positive come out from the board meeting??? It's just going to be an eye wash. Typically - board meetings are held with the audited/provisional last quarter results and data for the current quarter. In the view the last quarter results are fudged - no way anything positive can come up. The board is just going to discuss how to plan an exit route IMHO rather than deciding anything in the stakeholder interest.

ST7677 · 8th January 2009, 12:53

My thoughts on...

Raju & other Sr mgmt of Satyam
I am not inclined to believe that Raju and other top brass are as holy as they are being projected. It looks like a very strong case of insider trading. While I would take what ever he said in his confession with a pinch of salt. He did mention that his shares were hypothicated, and sold on margin pressure before the meltdown happened. Where that money went no one knows? I know he said he used to pull up the business but do you still trust him? The money was never on the books anyway!

Profitability of business
The whole offshore model is based on cost arbitrage. I refuse to believe that it was making only 3% profit. Even companies fully based in US/Europe do make profit in this business.

So either Satyam was grossly mismanaged (which I doubt) or there was some money siphoning happening since long (which is still not confessed). Umm, did it go to help Maytas...?
The money is definitely laundered out of the operations, if not for himself, may be for his near and dear ones and other top brass, may be for Maytas, etc.

On Satyam's continuity
At this point there are very low chances of any take over - which Co would want to take a Company with a tarnished image, questionable book value, eroding customer base, eroding employee confidence, and big risk of class action law suites

The company would have definately survived, was it not listed in US. However IMO the biggest risk to the company now is from the Class Action Lawsuits which can get filed against it overseas. Since it (technology) is a single company, the liabilities can bring the whole company down. Let's not forget that it's not the scam itself which has pulled down big companies like Enron and Worldcom in past, it's the lawsuits!

In Short term, as rightly said without any real cash in the bank, the company is going to face serious cash flow issues. One one side it would be difficult to collect Account Receivables from the custmers (due to the uncertainty risk customers would see in completion of their projects) on other hand no lender would be willing to lend. Further all vendors would expedite their recoveries.
On Customer Base
Since company's rating is down, and lot's of Corp governance issues which have come up recently (which is very imp in off shoring business), many customers would start looking elsewhere both in immediate term and short term.
This would only get compounded by the Company's ability/inability to deliver smoothly at these difficult times while still focusing on customer business.
New business, don't even think about it!
On Competition
The smart companies would simply start talking directly to Satyam's customer base (and hopefully, if required, with the employees too).
I really doubt that any one would think of taking over Satyam company as such till it's book of accounts are re-audited and law suites if any are settled
Stock wise Satyam's loss would be it's competitors gain in terms for reallocation of IT funds from Satyam to Infy/Wipro/TCS, with a large part of it also moving to other sectors.

On IT industry/Brand India
It would be incorrect to blame India Inc / IT industries as this is not an isolated case, such things happen everywhere. Moreover this was a US listed SOX compliant company, which means it was also adhering to US accounting practices.FIIs are smart enough to understand this, however general sentiment regarding Indian IT industry (off shoring) and brand India at large might suffer due to this.
(It's like a defect in American car is a "see there are DEFECTs", where as a defect in a Japanese car is an exception)Finally on Satyam Employees
IMO they may be the worst affected stakeholders, even more than the Satyam stockholders. They could be facing a big gloom - salaries?, continuity?, work?.
Right now the employees would have been told to keep calm and stay quiet from media, forums, etc, but the same guys who are talking about being TOGETHER at difficult times will soon start talking about layoffs due to restructuring. (Even if the company survives, I doubt they would not have enough business/money to retain full staff.)
Being in IT industry, I shudder to think of what would have happened to me, was I working with Satyam - with so many liabilities, etc and nothing to look forward too. I pray for Satyam friends and sincerely hope they come out of this mess quickly.

WhiteKnight · 8th January 2009, 12:56

I am not fanning the fire. But I do see some mis-quoted information

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