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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 !!!

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 ! 


5 thoughts on “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 !!!”

  1. Sell all shares?

    Cool down Gaurav, have a drink. This may provide a great opportunity to buy some very good companies which you wanted to buy but were expensive.

  2. Gaurav,

    I worked for Satyam at a very senior level a few years back.

    Within a year, I told several colleagues that the company’s revenues are highly suspect and majority of the management team led by Raju and his friends are highly unethical in their dealings.

    I left the firm really puzzled that no one in India had the guts to look into their actions.

    Also, many of the top fraudsters like Prabhat and his gang have fled the coop.

  3. Gaurav,

    Great article. These individuals Raju named in his letter are all directly involved in this fraud.

    Raju has also probably siphoned off more than $500 million in real cash off the books in the past year alone.

    These guys would have been led off in handcuffs if they were in the US.

  4. My Fear is that there are many ‘Satyams’ out there listed and are like Time Bombs ticking away…Ramalinga Raju,having been driven into a corner,has come clean and confessed…but will his lead be followed by others !?…Seriously Doubt it !…Therefore it is vital that Shareholder Activism assumes a Central Role….This would also force and put pressure on Authorities to take proactive and reactive action and measures to protect Shareholders Interests and expose Dubious and Fraudulent and Self Serving Promoters and Managment of Listed Companies and those like Auditors and Bankers that suffer from a Dereliction of Their Duties and may even collude and connive with them

  5. hi,
    write about Nagarjuna Group – Farudsters K S Raju and his Brother in law Dr K V L N Raju they have cheated nearly 150Crs in non repayment of Fixed Depositors money

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