Although several companies are trying to have a bite into Satyam Computers, according to Gartner study, the company is likely to exist in its current form.
It is expected to discontinue some of its businesses, service lines or cease to exist in certain geographies by 2010. The study indicated that even the name Satyam may not be around by that time, as the company is expected to undergo a complete change, in ownership and organizationally.
Satyam’s ability to sign on new clients during 2009 has significantly diminished, says the study. ‘‘In addition, it will be challenged to invest in client engagements, staff developments or R&D, all critical elements for IT services,’’ said Gartner’s V-P for research, Frances Karamouzis.
Serial entrepreneur and NewPath Ventures co-founder Vinod K Dham resigned from the board of Sasken Communications as an independent
director, a top official of the communications solutions provider said on Monday.
“Yes, Dham has resigned as a director of the company from the board on January 17,” Sasken chairman and managing director Rajiv C. Mody told IANS but declined to elaborate.
“We will inform you later, as we are busy with investors and analysts in a conference call on our third quarter performance,” Mody added.
The US-based Dham resigned from the board of the fraud-tainted Satyam Computer Services Dec 29 as an independent director over the IT bellwether’s aborted bid to acquire the two Maytas realty firms, run by the two sons of its disgraced founder and former chairman B. Ramalinga Raju.
The political blame game around Ramalinga Raju, the founder of Satyam Computer Services and main accused over the Satyam scam has begun. Andhra Pradesh Chief Minister Y S Rajashekhara Reddy on Monday dismissed charges that he was responsible for the rise of Satyam’s tainted founder Ramalinga Raju and instead sought to put the blame on his predecessor and TDP leader N Chandrababu Naidu.
“By the time I became the Chief Minister, Raju had already risen to very high level. I am not responsible. In no way, he needed my promotion. All the promotion was already done,” he told reporters.
The Satyam effect has starting spreading its tentacles, and has proved to have a negative impact on the Engineering students. IT (Information Technology) which used to be the Mecca of all jobs is now the outcaste.Students are prefering to take jobs in their core branches rather than move to the dwindling IT sector.
“I was offered a job as trainee employee at Satyam last year. But after the fiasco has happened at Satyam, I have changed my mind to get suitable job in other firm,” said Divyadeep Goyal, a student Mechanical Engineering student of University Institute of Engineering and Technology (UEIT), who was offered an annual package of Rs 3.25 lakh in Satyam.
Echoing similar views, Sumant, another final-year student of the same college, said, “The impact of Satyam fraud has been so damaging that we now do not have any intention to join the IT company. Rather we will look for job in other sectors.”
The total number of engineering students placed by Satyam from this region was not available but some colleges have shared their placement figures.
Almost 80 students from the Institute of Engineering and Technology were selected by Satyam last year, while 13 students were placed from Punjab Engineering College (PEC) and seven were from UIET.
Students were offered an annual package between Rs 3 lakh and 3.5 lakh.
According to placement officers of various colleges, engineering students are now looking at the core sector, comprising manufacturing and telecom sectors.
The Government certainly can not remain aloof and allow Satyam to die off especially when it provides occupation to 53,000 odd people and indirectly supports more than a million Indians. While it is debatable that whether the tax payers money be used to bail out a company which deliberately got involved in a scam.
The troubled Satyam Computer Services, facing a liquidity challenge, may get financial support from the government, which is willing to New Satyam board members consider “all aspects” of helping the crisis-ridden company, Commerce and Industry Minister Kamal Nath said on Monday.
Since it was a question of saving jobs and an international Indian brand, the government would consider all the proposals from the newly-constituted board, Nath said. When asked whether the government could extend even financial help to Satyam, Nath said, “Of course. There are many jobs at stake and institutional stakes.”
Huge losses to investors aside, the Satyam scandal has caused “serious damage” to India Inc’s reputation as well as the country’s regulatory authorities outside, the government has said.
Seeking to dismantle the existing board and to nominate ten new directors at the beleaguered IT firm, the Centre has said in its petition before the Company Law Board that the “interests of the company will not be safe in the hands of the present board of directors.”
“The admission of fraudulent manipulation of the financial affairs has created an adverse impression in the minds of the trade, business and industry across the world.”
“This has also resulted in serious damage to the reputation of Indian Corporate sector and the regulatory mechanism in the eyes of the world,” the government said.
Allowing the government to nominate 10 new directors, the CLB said in its order that the “present board of directors stands suspended with immediate effect” and the new board should meet within seven days of its constitution and “take necessary action to put the company back on the road.”
It also asked the new board to submit periodical reports to the Centre and the CLB on the company’s state of affairs.
The CLB also observed that the residual board members at the company after a string of resignations are those “who were also party to the impugned decision to invest substantial funds in the companies related to Raju, the decision of which was the starting point of the downward trend in the fortunes of the company.”
Besides Satyam, Ramalinga Raju and brother Rama Raju, the government in its petition has also named the company’s CA and auditor Price Waterhouse, Company Secretary as well as all the directors.
This include also those independent directors who have resigned — Vinod Dham, Rammohan Rao, K G Palepu and Mangalam Srinivasan, as well as former Cabinet Secretary T R Prasad, V S Raju and interim CEO Ram Mynampati.
The CLB has also asked all the respondents to submit their replies to the petition by February 20.
The CLB had ordered the Central Government to immediately constitute a fresh board of the company with not more than ten “persons of eminence as directors.”
“The Central Government may also designate one of them as the Chairman of the Board… The said Board will continue till further orders.”
The government said in its petition that Satyam has about three lakh shareholders, over 53,000 employees and has clients in over 60 countries, besides India. It has received a number of awards for best corporate governance.
In the face of the Satyam scam and its deadly repurcussions, Indian firms are looking into methods to avoid scenarios of such scams within their companies.
Indian companies have started to review and document their risk management policies and practices to check corporate fraud in the wake of the Rs.70 bn Satyam Computer Services scam, a survey by an industry lobby says.
A quick analysis by the Associated Chambers of Commerce and Industry of India (Assocham) with feedback of over 400 leading corporates, said that to deter possible corporate frauds, companies have commenced re-codifying their risk management policies.
However, about 85 percent of the respondents said although Clause 49 of the market regulator’s Listing Agreement clearly states that the management and the board of directors must accept responsibility for not issuing accurate financial statements, most officials at this level managed to get off the hook even if found guilty.
On the other hand, about 80 percent of respondents argued that putting these programmes and controls in place will help organisations to set the tone of zero-tolerance to fraud and create a mechanism for employees to report wrongdoing to the appropriate authorities.
As part of its probe on scam-tainted Satyam, RBI today collected particulars of transactions that various banks including SBI and ICICI Bank had with the IT company. “We have submitted the details of our business deals with Satyam to the Reserve bank.
In the wake of these developments (in Satyam), banks are bound to be extra cautious while lending to such corporates,” SBI’s Chief Financial Officer Ashok Mukand told PTI here. When asked, Citibank declined to comment if the company was its client and whether the bank had given details to RBI. “We are unable to comment due to client confidentiality,” a spokesperson of the bank said.
The Satyam scam effect has started its infectious presence. U.S. listed stocks of other Indian companies have started taken a severe beating.
Indian stocks listed on the American bourses suffered a loss of close to $ 2 billion in a week, following unfolding of India’s biggest
Despite, a halt in trading in Satyam Computer from Wednesday, the rest of the 15 Indian stocks on US bourses bore the brunt of the negative market sentiment and witnessed a fall of $1.94 billion in their combined market capitalisation in the week ending January 9.
Meanwhile, the Hyderabad-based company, which traded on the first two day of the week, added $ 2.66 billion on the speculations that some rival IT firm might acquire it. The combined market-cap of all firms excludes Satyam’s valuations for the two days.
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