Recently there were many news articles talking about the stock market issue that happened with Satyam Computers. Most newspapers were cryptic, either to protect their advertisement interests or because they did not understand the issue. This blog entry (in tamil) explains what happened in a very simple and clear manner. The language used by the author hides the fact that he has a good inside understanding of “going public” movement of the corporates. We have witnessed the negatives of a highly interconnected world market during this global downturn. This issue is a rare one where international players protected the interests of Indian stockholders.
http://jyovramsundar.blogspot.com/2008/12/blog-post_19.html
Tags: satyam, satyam computers, stock marketNo related posts.
13 Comments
Please read the article below about this issue posted in Hindu newspaper.
http://www.thehindubusinessline.com/2008/12/20/stories/2008122050010800.htm
The news article writer is a well read IIM business professor, quotes Mahabarata, sanskirit etc..Uses buzz words maximization, signaling etc..
But he does not tell what the problem was? And inspite of his education and language, if you persevere to understand what he says-He does have a few good points..And compare this to the simple writing of Jyovramsundar in tamil..
Hope I never have to listen to this professor talk!
Oops. Horrible news from Mr. Raju of Satyam, the company which got “best corporate governance” for 2 years! There goes the trust….
pl see the below link :
http://www.jyovramsundar.blogspot.com/2009/01/blog-post_1051.html
i am not understanding that what happened in satyam
will you explain happend in satyam
why this many crisis is going on
plz replay me
Nice Update!
Thanx
The story behind satyam current state is, Company’s former Chairman Mr B. Ramalinga Raju had betrayed the company’s balance sheet by showing a false record to the Investors & Public.
As per his personal balanced book, the balance sheet had only few hundred crore rupees.
But what shown to the public & investors was company was running @ a profit having more than 7000 crore as its reserve.
Also this market crash, economic fluctuation & his last attempt of acquring Mayta’s which all stood against his expectation’s, he made his decision to quit his position from the Organisation.
Now the question is about the Job & life of thousands of Employee’s in Satyam :(
Market is also against these people..
Peer’s very sad & I feel sorry to see u @ situation..
why this situation arised..!please tel me?
Why this situation arised??
Its very simple … GREED.
Yes no one wants to explain in plain English.As a non financial guy I will give my spin on what happened.
He wanted to buy Maytas in a desperate attempt to hide the false entries of 1 billion+ in the Satyam books. Since Maytas is associated with his family I suppose he was willing to take the 1 billion hit and transfer the false 1 billion entry from Satyam to Maytas and then hopefully no one would be the wiser except of course for his very angry family members. However with all his business savvy he failed to realize that buying a company unrelated to the IT sector made no sense and I am sure his business case was pretty tough to sell. Hence the stock plummeted. It continued to plummet after he withdrew the buy offer but it was too late. The investors probably lost confidence and smelled a rat. The rat got caught and he had to fess up.
it is very embarassing situation faced by an indian
this situation should have been prevented..
what reasion behind the satyam
I dont know all the details behind it…We can shortly say the reason is greed..But that is not adequate. Let me put the reasons as I understand it.
The CEOs and directors are supposed to run the co for the stock holders. Stockholders are the real owners. The Rajus of Satyam had around 8% ownership which was later reduced to 5%.
Satyam CEO had a lot of his family wife, son, brother as director in his co. The directors job is to monitor/replace CEO when he is not performing. And CEOs job is to produce the positive nos in yearly balance sheet.
Ramalinga Raju cooked up the nos in his balance sheet so that he showed fake profits although the co was making losses. It is highly unlikely the software co was making loss while wipro and Infosys were minting money. It is mostly likely they were inefficient or most importantly diverting money. This can be done through investment in fake cos or family cos. Why do cos fake profits? Because they want the stocks to be at higher price. Why because they dont keep cash at home instead keep only stock certificates. Anyways thats what Ramalinga Raju was doing.
At one point it reached a stage he could not fake his mos anymore. He tried to make a bond with his sons real estate co, to hide the nos that were missing as a last ditch attempt. FOr ex, you could pay a million $ for a good for nothing service and write it off. Although no money was given and no service was provided. I think in this case Raju tried to show he was investing in his sons co. Ofcourse he wont give any money but will just get some shares from his sons co. and this he can show to his stockholders. The Institutional(Mutual fund managers) investors did not allow him to do that.
So now his nos were faked and it was time to show his annual report. You cant just print money at this point. That when he owned up.
So the reason is CEO not doing his job, directors not doing their job..and most importantly conflict of interest of CEO and directors(family wealth vs cos).