50,000 Satyam employees face bleak future

50,000 Satyam employees face bleak future

The mood in Satyam Computers is one of shock and disbelief. The letter by Ramalinga Raju has sent shock waves and employees are seething in anger for being let down by their boss in such a manner.

Satyam has more than 50,000 employees on its rolls and now they are all feeling very insecure. The fate of the company is more or less sealed and the magnitude of the fraud is also turning away many suitors.

The employees are now uploading their resumes at the job portals in thousands. As many as 15,000 Satyam employees uploaded their updated resumes on Thursday. More are likely to follow suit today.

The global meltdown has had its effect on the job market and many jobs have shrunk and some have totally disappeared. So it is highly unlikely that many of the Satyam employees will find a suitable new job in the immediate short run.

Satyam CFO Vadlamani attempts suicide News

Satyam CFO Vadlamani attempts suicide News

Srinivas Vadlamani, the chief financial officer of Satyam who is also allegedly involved in the IT company fraud, attempted to commit suicide early this morning, say market sources. But he is safe, sources add.

Disgraced former Satyam chairman Ramalinga Raju in his letter to Sebi and board of directors admitting fraud, had not absolved the CFO. His name is the only one missing from Raju’s list of those who are unaware of the real situation.

Interim CEO Ram Mynampati in a press conference on Thursday said that Vadlamani had put in his papers. The decision on his resignation is to be taken in January 10 board meeting. The CFO has been absconding from his home in downtown Malkajgiri for the last two days.

He is said to have attempted suicide in the house of some relative in Ameerpet area, sources said. Confirmation from the police about the incident is still awaited.

Satyam urgently needs Rs 150cr- Mynampati

Satyam urgently needs Rs 150cr- Mynampati

Satyam’s senior management executive Ram Mynampati has informed the government that the troubled IT firm would need Rs 150 crore to meet insurance liabilities of its US employees.

“We have received a mail or two from Mynampati. They indicated that they would need something of the order of Rs 150 crore to take care of the health insurance liabilities of the employees in the US,” economic affairs secretary Ashok Chawla told reporters here.

Mynampati is in the US to talk to clients and reassure them of the company’s ability to continue serving them, besides restoring confidence among employees in the aftermath of a Rs 7,800 crore financial fraud disclosed by founder Ramalinga Raju last week.

Chawla said there is no immediate plan for a government bailout for Satyam, although Commerce and Industry Minister Kamal Nath had indicated that the government was willing to extend financial support to the company.

“Not at this stage,” Chawla said when asked if the government would offer any bailout to the IT firm now.

Asked if the new board has already approached the government for Rs 150 crore assistance, he said: “Board members have got down to work… they will be getting in touch with the ministry of corporate affairs.”

The company’s new board, comprising Deepak Parekh, Kiran Karnik and C Achuthan, had agreed on meeting financial needs as a top priority.

On whether the government would provide any indirect support to Satyam, Chawla said: “It depends on the board coming to kind of conclusion; what is their requirement and the actual accounts indicating what it is”.

Satyam with holds salaries Cutt for two months

Satyam with holds salaries Cutt for two months

Satyam Computer on Friday announced holding back employees salaries for two months, even as rumours were rife that the company might lay off close to 15,000 workers in the coming days.

The offices of Satyam Computer were rife today with the talks about forthcoming pink-slips at the company, which needs over Rs 500 crore every month just to meet its staff costs and has admitted that its cash position was not encouraging.

Employees said they have received an e-mail saying the company would hold back salaries for two months and asked staffers to bear with it.

However, the company spokesperson declined knowledge of any such e-mail and the issue would be looked into.

Even as the company spokesperson denied any layoff plans as of now, the rumours put the estimated job cuts at close to 15,000 by the end of this month.

Employees at the company said on condition of anonymity that they were hearing about imminent lay-off of people who were sitting on the bench or were close to completing their assigned projects. Besides, those being retained would be asked to take substantial salary cuts, they added.

At the same time, global HT consultancy firm Hay Group’s Practice Leader Mark Thompson said that employees would suffer the most from the fraud.

Global HR consultancy firm HayGroup’s Practice Leader Mark Thompson said: “Based on past experience … as with Enron, Worldcom and the Mirror Group, it is likely to be the employees who will suffer most from the fraud perpetrated by their bosses.”

In early 2000, the collapse of energy trader Enron had left thousands of people out of work, another 8,500 had lost their jobs at accounting firm Arthur Andersen; and Tyco eliminated 15,000 employees in February

Top Satyam Bosses Fly Out of Country

Top Satyam Bosses Fly Out of Country

HYDERABAD: Satyam’s former interim CEO Ram Mynampati is not the only one to quietly go abroad. Two other senior staffers of Satyam are also
currently out of India.

While senior vice president and director Virendra Agarwal has gone to Singapore, another senior VP and director Keshub Panda has pushed off to London. Mynampati, now in the US, is an American citizen. Most of his immediate family members also have US passports.

Satyam insiders claim that all three executives have journeyed overseas to reassure clients and make collections for bills due.

“But the possibility of their travelling overseas to avoid questioning by the police and other regulatory bodies cannot be discounted,” a senior Satyam staffer admitted. He felt that the chances of Mynampati ever returning are very remote.

It is learnt that the three decided to go abroad on January 9. Satyam insiders claimed that letters to clients were dispatched after Ramalinga Raju quit.

The letters counselled the clients to bear with the situation in Satyam and generally sought their support.

“Between January 7 and 9 phone calls were made to clients. But making phone calls is one thing and interacting in person is quite another. In fact, some clients wanted presentations from the company in person. So it was decided that they would go and physically meet them,” a senior Satyam staffer said.

For Satyam, 62% of all business comes from the US where Ram Mynampati will have to meet scores of clients. Europe contributes over 20% of the business and Keshub Panda looks after this region. Virendra Agarwal looks after Asia Pacific/Africa/Middle East markets which account for over 15% of Satyam’s business.

Meanwhile, senior staffers of Satyam who had said that they were happy after hearing of government-appointed directors have now changed their status message to “feeling less unhappy” compared to their state after Raju left. These staffers confessed that there was still a vacuum in the company. “With the appointment of new directors, there is at least a cheque-signing authority in the company but without a full-time CEO, there is no day to day decision-making authority,” a senior manager admitted.

“Maybe the government will step in and provide some liquidity for the time being. But if clients and investors do not feel comforted, then there is very little chance of the company being able to stand on its feet,” a senior Satyam staffer said.

The fact that the entire top level leadership of Satyam is under a cloud has added to the sense of disquiet among staffers.

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Satyam chief admits to fraud, quits

Satyam chief admits to fraud, quits


HYDERABAD: Byrraju Ramalinga Raju resigned as chairman of Satyam Computers, India’s fourth largest Information Technology company, on Wednesday after admitting to the Board of Directors that accounts were fudged to the tune of Rs. 7,106 crore over “several years.” His brother, B. Rama Raju, also resigned as Managing Director and Chief Executive Officer (CEO).

Before stepping down, Mr. Ramalinga Raju recommended that Ram Mynampati, board member and president, be made interim CEO, to run the show.

The 53-year-old business tycoon quit ahead of a crucial meeting of the board on January 10. The resignation climaxed a turbulent period of three weeks when the company was plunged into a crisis following an aborted attempt to acquire Maytas Infra and Maytas Properties, promoted by Mr. Raju’s sons, on December 16.

Markets reacted virulently to Mr. Raju’s admission of hiding several facts from the board and the stakeholders. Satyam’s stock nosedived on the Bombay Stock Exchange to an all-time low of Rs. 39.95, losing 77.69 per cent, though it opened at Rs. 188.70. Securities and Exchange Board of India (SEBI) Chairman C.P. Bhave described Mr. Raju’s disclosure as an event of “horrifying magnitude.”

In his five-page letter to the directors, Mr. Raju confessed that the company’s balance sheet inflated cash and bank balances of Rs. 5,040 crore which never existed and an accrued interest of Rs. 376 crore which was also non-existent. Also, a liability of Rs. 1,230 crore was understated and the debtor position of Rs. 490 crore “overstated.”

The Satyam chief said: “The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years.” Every attempt made to eliminate the gap failed, he said and apologised to all “Satyamites and stakeholders.”

Clean chit to executives

Barring Chief Financial Officer Srinivas Vadlamani, Mr. Raju gave a “clean chit” to the top executives, board members and also his and his brother’s families. “Neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results,” he said.

Meanwhile, SEBI was in touch with the Ministry of Corporate Affairs to take all necessary steps against the 21-year-old company, which employs 53,000 and has operations in 65 countries serving 185 Fortune 500 companies. Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy ordered a preliminary inquiry by the CID into whether the State government could initiate any criminal action.

Dr. Reddy wrote to Prime Minister Manmohan Singh, urging him to constitute a management team comprising Azim Premji of Wipro, N.R. Narayana Murthy of Infosys and S. Ramadorai of TCS to manage the affairs of Satyam to restore the confidence of the global customers so that the interests of employees and other stakeholders were protected. This arrangement could be in place until a credible alternative management was put in place.

Auditing firm DSP Merrill Lynch terminated its engagement with the company soon after Mr. Raju announced his resignation.

Mr. Raju said he would continue in his position “only till such time the current board is expanded.”

A PTI report said Mr. Raju is believed to have left for the U.S. in connection with a court case.

Ramalinga Raju’s letter

I. 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.

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 (annualised revenue run rate of Rs 11276 crore in the September quarter, 2008, and official reserves of Rs 8392 crore).

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 Rs 1230 crore 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. T.R. Prasad is well placed to mobilise 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.

(B. Ramalinga Raju)

Copies marked to:

1. Chairman SEBI

2. Stock Exchanges

Raju Admits Fraud in Satyam Balance Sheet

I. Raju Admits Fraud in Satyam Balance Sheet

Satyam chairman - Ramalinga Raju, has revealed that balance sheet figures were tampered and inflated profits were shown.

Raju has also said that the Maytas deal was a last attempt to plug this fictitious cash into real assets. September quarter revenue was at Rs 2,112 crore whereas the amount mentioned in the balance sheet was Rs. 2700 crore. Similarly, operating margins for September was Rs. 61 crore as against the reported sum of Rs. 649 crore.

Raju said a task force has been formed to address the situation. He has also maintained in his letter that board members were unaware of this tampering.


II. Ramaling Raju admits to Rs 4000-cr fraud

Hyderabad: Satyam Computer Services founder chairman B. Ramalinga Raju resigned from the IT major’s board after admitting a fraud to the tune of Rs 4000 crore ($823 million) in the balance sheet of the company.

In a notification to the stock exchanges, the Hyderabad-based IT firm said Ramalinga Raju and Managing Director Rama Raju had resigned early Wednesday and that the Securities and Exchanges Board of India (SEBI) had been informed.

The balance sheet has inflated cash balances of Rs 5,040 crore and accrued interest of Rs 376 crore is non-existent. Rs 1,230 crore, which was arranged to Satyam, is not reflected in the books.

He admitted that the second quarter numbers were inflated to Rs 2,700 crore when the actual figure was only Rs 2,112 crore. He also said that other Board members were unaware of the real numbers.

“Rama Raju shall continue in the position till such time the board is expanded and the continuance is to ensure enhancement of the board,” the company said in the notification.