In perhaps one of Corporate India’s worst unfolding chapters, Mr B. Ramalinga Raju, Founder-Chairman of the $2-billion Satyam Computer Services, dramatically stepped down on Wednesday admitting to faking financial figures of the company to the tune of Rs 7,136 crore, including Rs 5,040 crore of non-existent cash and bank balances.
The startling disclosure by Mr Raju, considered one of the poster boys of Indian IT, jolted the corporate world, investor community, Government and large pool of young professionals, pushing the fourth largest Indian IT company into a crisis, exposing it to acquisitions and leaving the future of 53,000 employees in balance.
On a day of fast moving developments, the Satyam scrip was slaughtered to a low of Rs 39. 95, down by 78 per cent, and several FIIs (which hold nearly 61 per cent) offloaded their shares. The market cap plummeted to Rs 2,705 crore from over Rs 12,000 crore on a single day.
Mr Ram Mynampati, President, was quickly made interim CEO to steer the troubled ship, while Mr Raju would continue till the new board was constituted on January 10.
Stunning his well wishers and investors, Mr Raju revealed the real motive behind the December 16 bid to acquire Maytas companies for $1.6 billion. It was to swap the fictitious cash reserves of Satyam built over years with the Maytas assets. Mr Raju thought the payments to Maytas could be delayed once the Satyam’s problem was solved.
But unprecedented investor outcry, media pressure and highly unfavourable economic conditions played spoil sport to Mr Raju’s plans, leading to his exit.
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