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Joke of the Day !…..Satyam has won several awards for Corporate Governance


Satyam has won the Golden Peacock Global Award for Excellence in Corporate Governance for 2008…..This award was given recently on September 23, 2008

Relations Global Rankings (IRGR) rated Satyam as the company with Best Corporate Governance Practices for 2006 and 2007.

It also won the Golden Peacock Award for Excellence in Corporate Governance from the Institute of Directors in New Delhi in 2002

One thing is for Sure….Satyam is unlikely to win any such recognition awards in the Future  after Founder Chairman,B Ramalinga Raju blundered big time in announcing the Maytas Acqusition yesterday…It was seen as a Bail-out for his Sons !…Even though he reversed the Decision overnight the Damage had been done….Check out an earlier Blog today on this

Satyam becomes Asatyam as Founder Ramalinga becomes Ravana !

Holding less than 10% of Satyam’s equity,Founder Chairman,B Ramalinga Raju,got a Board Resolution passed to buy out 51 % of the Equity in his Son’s Companies Maytas (Satyam spelled backwards !) Infrastructure and a 100% Stake in Maytas Properties for a whopping aggregate of US $ 1.6 Billion or nearly Rs 8000 crs !

As if Satyam’s Cash Reserves are his fathers properties to buy out those of his Sons  !

This is nothing short of a Financial Rape of All Shareholders of Satyam by it’s Promoters

Ramalinga became Ravana with just this one blatantly immoral and unethical announcement even though he has tried to justify it

Even though he reversed it overnight under severe Institutional pressure,he does not become Rama again !

What the hell were the Board of Directors doing when passing such an acquisition !?…Is there is no genuine Independent Director on Board !? Mr Raju says it was a unanimous Board decision

Have a look at the Satyam Board…There are Nine Directors,of which Five are designated as Independent and Non Executive Directors and include world reknown names of Vinod K Dham of Intel and Prof M RamMohan Rao,Dean of ISB….I do not know whether  these Directors were present at the Meeting that decided the Maytas Acquisition…The 2007/8 Annual Report states of Four Meetings held in 2007/8, Mr Dham attended one in person and participated through Video Conference in the remaining three … we can assume video conferencing facility continues in this Financial Year 2008/9 and that Mr Dham attended this crucial meeting too through Video Conference

Companies Act needs to be amended strongly to deny promoters holding such a low level of Shareholding (8.74 % in Satyam) to “siphon” off large funds of the Company (US $ 1.6 Billion or @ Rs 8000 crs ) through only a Board meeting without seeking shareholders approval through an EGM or at the AGM

Satyam has become Asatyam overnight and this morning it’s share price reacted 28% to drop to Rs 162

Shareholders were shell shocked and FIIs and Domestic Institutions were fast to condemn this moving out of cash of Rs 8000 crs from Satyam to it’s Promoters who own the Maytas Companies

Satyam is tarnished overnight and the trust lost in a day will takes years to regain,if at all…all because of Poor Corporate Governance and the daylight Robbery attempted to be committed by the Founder,B Ramalinga Raju also now known as Ravana

The basis for the US $ 1.6 Billion Valuation of Maytas Companies has not been disclosed,although Mr Raju came on TV and, was clearly uncomfortable when fielding questions, disclosed that a Big Four Accounting Firm’s help had been taken !….The Valuation is as huge as that of Unitech !…Could this Big Four Firm be it’s auditors,Price Waterhouse !?…if you recollect This same auditing Firm was banned by RBI for several years from auditing Banks after it’s disastrous Audit of Global Trust Bank where it failed to notice and therefore did not bring out the huge Financial Hole in the Listed Bank which led to it’s collapse. read more

IT Stocks freefalling despite the Rupee depreciating a record 25% this Year…Why ?

The BSE IT Index opened this Year in January at 4519 and today it has recorded an intra day low of 2566

In just over Nine Months this Year it has plunged by 43 %

How did this happen despite the Rupee depreciating a record 25% against the Dollar this Year.The Rupee was at Rs 39 to the Dollar earlier in the Year and today is threatening to touch Rs 49 to the dollar

The IT Sector is clearly an Export Oriented Sector and major revenues are in Dollars.The leader ,Infosys receives nearly 70% of it’s revenues in Dollars…so any rupee depreciation should add to the Bottomline 

The reasons for the IT Sector plunging too despite the Rupee Depreciation are several

  • There has been  an overall market crash and the healthy P/E Multiple ratings of 25 to 30 range for the IT Leaders have slipped into the 11-15 range 
  • There is a US Recession underway and the BFSI Sector has simply collapsed in the USA. Major Financial Houses and Banks in this Sector in the USA have been the Major Revenue Source for Indian IT Companies…Revenues from this Source have dwindled considerably 
  • When the Rupee had appreciated to below Rs 40 to the Dollar earlier in the Year most IT Companies preferred to play safe and had significantly increased their hedging exposure to combat this currency risk expecting the rupee to strengthen further .They are therefore unable to take advantage of this Rupee Depreciation that an unhedged position would have allowed them to.
  • Facing a Recession,US and Europe Companies have substantially trimmed their IT Spending Budgets…thus there is less Business and more Competition.Many existing clients have been renegotiating with IT Companies to scale down existing rates
  • Incremental Staff Costs on account of New Hiring  and Raise in Salaries is also affecting the margins of IT Companies affecting Earnings and therefore Valuation   

Clearly there is Consolidation visible in the IT Sector and the way forward adopted to sustain growth and scale has been through the inorganic route…Two major Deals have taken place….HCL Info has outbid Infosys to take over Axon, UK and just today TCS has announced a US $ 505 million takeover of Citibank’s BPO Operations in India 


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