Posts Tagged ‘Prof Krishna Palepu’

NOW TWO MORE SERIOUS QUESTIONS EMERGE IN THIS SORDID SATYAM SAGA UNFOLDING!

Thursday, January 8th, 2009

Now Two More Serious questions need to be answered in this continuing Satyam Saga !

QUESTION NO 1

DID RAMALINGA RAJU INTIMATE LENDERS TO SELL HIS PLEDGED SHARES BEFORE RELEASING HIS CONFESSION LETTER TO REALISE A BETTER PRICE TO CLEAR MORE OF THE LOAN ? 

This is very much posssible as the Promoters Holdings was 8.61 % on December 16,2008 when Satyam announced the controversial Maytas Takeover Proposal but has since dropped to below 4%…It so transpires that promoters had pledged their shares to raise funds…Ramalinga Raju claims in his confession that the understated  Liability of Rs 1230 crs in Satyam is on account of his raising funds for the Company against his own Shares !

Lenders have sold these pledged shares post December 16,2008….Question arises as to whether the disgraced Ramalinga Raju pre-warned the Lenders to selloff before he released his confession letter yesterday morning…This would have got the Lenders a better price as Satyam share was murdered yesterday from Rs 175 to close at Rs 40 on release of the Confession Letter

Another Thought !…If Raju claims he arranged Rs 1230 crs for Satyam against his shares then what was the accounting entry passed in the Books of Satyam for this ?…as Monies should have come into Satyam,the Debit obviously would have been “Bank” but where was the Credit given for the Double Entry ?…If it was ,as it should have been,given to the Lenders to reflect their Lender Status in the Books then where is the understatement ?…..Understatement arises only when the Credit was not given to the Lenders but to some other Accounting Head…It cannot have been a Single Entry…Books would not have tallied !….What the hell were the auditors Price Waterhouse doing ? How did these entries escape them in both Substance and Form ! ?

I want to know where the Credit was given in the Satyam Accounts for such funds as Raju claims were arranged by him against his shares !   

OUESTION NO 2

NOW WE KNOW WHY THE MAYTAS PROPOSAL WAS STRUCTURED THE WAY IT WAS ! QUESTION IS WHICH ‘BIG FOUR FIRM ‘ CONNIVED WITH SATYAM TO BRING UP THE VALUE OF THE MAYTAS DEAL TO US $ 1.6 BILLION ! TO MATCH THE SATYAM ASSET HOLE ?

IF INDEPENDENT DIRECTORS WERE IN THE DARK,THEN WHEN THIS MAYTAS DEAL WAS PROPOSED AT THE BOARD,THEY SHOULD AND WOULD HAVE IMMEDIATELY QUESTIONED WHY ALL SATYAM CASH WAS BEING USED AND WHY THE DEAL WAS BEING ROUTED THROUGH SONS OF SATYAM PROMOTER RAMALINGA RAJU AND NOT DIRECTLY GIVEN TO MAYTAS !…AT THIS STAGE THESE GREAT ACADEMICS,PROF KRISHNA PALEPU OF HARVARD,PROF RAMMOHAN RAO,(DEAN OF ISB) AND DR MANGALAM SRINIVASAN AND INTEL ICON, MR VINOD DHAM WOULD HAVE REALISED THE DUBIOUS REASONS FOR SUCH A STRUCTURING AND THE CRIMINALITY THAT WOULD STAND EXPOSED…THEY SHOULD HAVE NOTED THEIR DISSENT IN THE MEETING !

THERE WAS NO REAL CASH TO EXCHANGE FOR THE MAYTAS INVESTMENT OR PROPERTIES…THEREFORE IF THE DEAL WAS ROUTED TO MAYTAS DIRECTLY, THEN ONE OF THE MAYTAS COMPANIES, BEING LISTED,WOULD COME IN THE PUBLIC EYE FAST AS IT  WOULD HAVE TO SHOW CASH RECEIVED OR RECEIVABLE AND THIS WOULD HAVE EXPOSED THE HOLE IN SATYAM CASH !

NOW ON A S.O.S BASIS, RAMALINGA RAJU NEEDED TO QUICKLY PASS AN ACCOUNTING ENTRY IN  SATYAM BOOKS TO SHOW THE TRANSFER OF CASH TO PROPERTIES OR INVESTMENTS IN MAYTAS COMPANIES…THE HOLE WAS RS 7000 CRS…SO WORKING BACKWARDS AND IN CONNIVANCE WITH A ‘BIG FOUR FIRM’ VALUER THE DEAL WAS ANNOUNCED AT AN INFLATED US $ 1.6 BILLION !….AND WOULD YOU BELIEVE IT ! THE LIKES OF MR VENUGOPAL DHOOT OF VIDEOCON SIDED WITH RAMALINGA RAJU IN SAYING THIS WAS A GOOD DEAL !

THE VALUATION OF THE DEAL BY A ‘BIG FOUR FIRM’ WAS FRADULENTLY DONE AS IT WAS CLEARLY GUIDED BY THE AMOUNT OF THE CASH AND DEBTORS HOLE IN THE ASSETS OF SATYAM

WHAT A SHAME FOR INDIAN BUSINESS ETHICS  AND CORPORATE GOVERNANCE AND A SLAP ON THE FACE TO ALL EXCHANGES,AUDITORS,SHAREHOLDERS,ANALYSTS,REGULATORS AND BANKERS FOR NOT REALISING THIS SHAM FOR YEARS ON END !

FOR INSTANCE WHAT SHOULD HAVE RUNG WARNING BELLS FOR A POTENTIAL CASH HOLE WAS THAT WHILE SATYAM EARNED RS 1716 CRS IN 2007-8 IT’S DIVIDEND PAYOUT WAS A MEAGRE RS 274 CRS,INCLUDING TAX…THAT”S JUST A MISERLY 16% PAYOUT…IT COULD NOT HAVE DONE MORE BECAUSE IT DID NOT HAVE ANY REAL CASH EVEN THOUGH IT SHOWED RS 3960 CRS CASH AND BANK BALANCES AT MARCH 31,2008 ! 

THE BOTTOMLINE IS THAT SMALL INVESTORS HAVE BEEN THE VICTIMS…SATYAM’S  ANNUAL REPORT OF 2007-8 SHOWS THAT THERE WERE 218530 SHAREHOLDERS OF WHICH 195940 OR 90 % WERE SMALL SHAREHOLDINGS WITH HOLDINGS IN THE 1-500 SHARES CATEGORY

THE DISGRACED CHAIRMAN,RAMALINGA RAJU’S CHAIRMAN’S COMMUNIQUE IN THE ANNUAL REPORT ALSO BEGINS WITH THE STATEMENT 

” FISCAL 2008 WAS AN OUTSTANDING YEAR FOR SATYAM.WE ACHIEVED RECORD REVENUES AND RECORD NET INCOME.”

ALL A BLOODY LIE ! AS IS THE ANNUAL REPORT COVER BOAST OF ‘A COMMITTMENT TO VALUE CREATION’…..PRAY TELL ME !,MR RAMALINGA RAJU ….HOW COULD YOU KNOWINGLY BOAST LIKE THIS WHEN YOU CONFESS THAT YOU’VE BEEN COOKING UP THE BOOKS FOR YEARS ! ?…DOES COOKING UP CREATE VALUE ! ?

SHAME ON YOU ! AND SHAME ON US FOR ALLOWING OURSELVES TO BE LED ON BY YOU !   

I’ve deliberately given in Bold Capital most of the above to reflect the intensity of killing anger and the real imminent danger facing our Capital Markets which this confession by Raju has unleashed

I’ve had ringside seats for  Twenty years in the Fields of Auditing,Accounting,Consulting,Media and Brokerage Houses,having worked with leading names in every field In India and Overseas ….Have lived through and been witness to the unfolding of several Scams and have commented on them through the years in media articles and in my addresses and workshops across India and Overseas

Whether it was the Reliance Duplicate Shares Scam,the Harshad Mehta BR Scam followed by the CR Bhansali and MS Shoes Scam  or the Ketan Parekh Scam or even the IPO Modus Operandi to gain unfair allotment advantage using Benami Demats accounts….I’ve gone into depth in all to figure how they did what they did and what drove them to do so…..I’ve revealed cases of Insider Trading in my adresses and training workshops and seen them being conveniently buried quietly by authorities

So it angers me no end to see heads and experts (I’m fighting the temptation to name them !) offering their take on this Satyam Saga……they themselves have either been involved or indulged in Serious and Significant Malpractises in the Capital Markets and Corporate World or were instrumental in burying cases so the accused got away !

We need a Serious Cleansing of Our System…but with the deep rooted nexus and connivance of all ,it is only shareholder activism that will bring about this cleansing,otherwise retail investors will be continued to be seduced to our markets only to be made suckers by those who are are listed,control,regulate,manipulate and run it in various garbs !…because like the ‘Double Entry Requirement’ in Accounting there is a Double Entry in our Markets too…For every Seller there must be a Buyer,read Sucker !    

Finally Satyam’s Raju resigns shockingly admitting a massive Fraud and share price sinks from Rs 175 to Rs 50 this morning,murdering Shareholders and Capital Markets in one stroke !!!

Wednesday, January 7th, 2009

I had told you Satyam’s Chairman Ramalinga Raju was actually Ravana and he was a goner…just read my blogs of December 17,2008 and December 19,2008…..You cannot believe this guy…he’s got a history of hoodwinking…he bought Rajesh Jain’s Indiaworld for US $ 116 Million in 2000…this was a hogwash deal only to launder Money !

Regulators Move in Now ,this very Minute, and freeze assets of Satyam to try and salvage something ! 

This morning Raju resigned and blew the Satyam share price away from Rs 175 to Rs 50 after releasing a letter claiming that he had committed a fraud and had cooked the Satyam Books for Years…There are Fictitious Assets on the book and understated liabilities of over Rs 1200 crs…There is no Cash of Rs 5000 crores as shown in the Books

This is an extremely sorry Day for Indian Capital Markets…..In one single Stroke,Raju has killed the Trust developed over years by Domestic and Overseas Investors in Indian Companies and their Promoters

Satyam was one of the Three Bellweather IT Stocks along with Infosys and TCS and would you believe it ! …It seems to have been build on Lies and a Pack of Cards !

Raju and Satyam, fooled and shocked all of us…he has made an all revealing Confession after he was cornered and had no place to hide

  • Investors and Shareholders
  • Bankers
  • Institutions
  • Employees
  • Auditors,Price WaterHouse
  • Independent and Non Executive Directors
  • Stock Exchanges in India and Overseas
  • Regulators….ICAI,SEBI,RBI,Ministry of Company Affairs
  • Media

There is no doubt in my Mind that this is a CRIMINAL ACT and can be categorised as both an Acoounting Fraud and a Securities Fraud 

Before any evidence is Destroyed,those responsible directly for this Fraud and those responsible for Dereliction of Duty in and out Satyam must be taken into custody

What the Hell were the Independent and Non Executive Directors,Vinod Dham,Prof Krishna Palepu,Dr Rammohan Rao and Dr Mrs Srinivasan doing…sleeping !? What the hell were the Auditors Price Waterhouse and the Bankers doing !?….How could they show Cash in the Bank of over Rs 5000 crs in the Books when there was no cash at all ! Who valued the Maytas Deal at US $ 1.6 Billion ?…All their Big Reputations are finished in this unfolding sordid Satyam Drama

The Audited Accounts signed by Price Waterhouse for the Half Year at September 30,2008 show cash of Rs 5700 crs and Debtors of over Rs 2000 crs and accrued Interest due from the Bank !……Now Raju claims most of this is fictitious…..How has Price Waterhouse signed without even 50% verification of major assets !

Methinks Price Waterhouse are on the way of Arther Anderson who wound up after fouling up on Enron…atleast in India…One Mr Srinivas Talluri,Partner of Price Waterhouse,Hyderabad, has signed the Accounts….As on March 31,2008 the Balance Sheet Size was shown at Rs 7381 crs….this climbs past Rs 8000 crs at half year September 30,2008…Now Chairman,Raju confesses most of this is fictitious…With Equity at Rs 134 crores and 67 crores shares of Face Value of Rs 2 in existence it would mean a Book Value of @ Rs 120 !….But if all is fictitious,there is NO BOOK VALUE !….SHARE PRICE SHOULD THEN BE VEERING TOWARDS ZERO 

The Ratio of Cash/Share is completely meaningless for Satyam…There is just fictitious Cash !

The Tragedy is what will happen now is that all Indian Stocks quoted in India and overeseas will be beaten down big and many may just not recover !

Who Next after Raju and Satyam !?…Ambani Groups ! ?…with so many cases and investigations on against these big groups for Business,Shares and Funds Misuse and Manipulation, can we expect them too to have the courage to come clean and confess ! ?…Doubt It !…It would be disaster for our Capital Markets many times the size of Satyam. 

Sell all shares in your portfolio…with Raju of Satyam murdering our Markets ,it is unlikely they will be reborn again soon…India Brand has been dented  visibly and Foreign Investors,either through Private Equity,Venture deals or direct Primary and Seconday Investment Routes are simply put off from India and may look to exit their Investments asap…Sensex has to seek lower levels to reflect the poor Corporate Governance,Dereliction of Duty by Regulators and growing disgust,disillusionment and distrust of Indian Companies and it’s Promoters

Ramalinga Raju’s Fraud and Dereliction of Duty by his Directors, Auditors and Bankers has murdered thousands of Shareholders and in doing so has put our Capital Markets in Intensive Care

Satyam R I P…I don’t see Satyam being salvaged !…though many on Media Channels right Now are suggesting there yet is hope for Satyam and it has some Business model and thousands of employees…The Revenue and Profit Figures are strong on the Book but are simply not credible !…so who will Buy out Satyam !….Of course books show no Debt…Hope atleast this is True !…because this could be the starting point for any salvage ,if possible ! 

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