Satyam - India's Enron?

It all looks like a dream. A month back, it was a well respected company and people were happy on the returns. Now the shares are in the dust bin. From 250 bucks to 30 bucks. Looks like Satyam will go out of business within the next few months - or weeks! So what happens now?

Satyam has over 50,000 employees. In the troubled economy, I don't think all of them will get jobs soon. This essentially means 50,000 people with less or no salary. Almost all of them would have got one or more house loans. As most of these people are based in Hyderabad, the real estate there is going to get a hit. More houses will come for sale - which will cause prices to come down. A definite hit to real estate and the banks who have given loans.

The next short term hit would be the Indian IT companies. With all the global meltdown and Obama's non-so friendly views on outsouring, this will simply add worries to the other service companies like Infosys & TCS. They might gain some projects which were with Satyam, so in the long run, when everyone forgets that a company called Satyam exists, they will have a bigger share in the pie.

As usual corporate policies and goverment practices will be questioned and more new regulations will be imposed. This is not just in India, Satyam is listed in US as well and still gets to go away with this fraud for years together.

The auditors will be more scrutinized. Satyam was audited by the famous Price Waterhouse Coopers. When Satyam claimed to have 5,000 Crore Rupees in banks, they didn't even check the bank balance? hmmm bad. I guess these guys should get punished a lot.

After all the Maytas deal & troubles, some employees of Satyam started a website for supporting their honest CEO and God father (http://www.ramalingaraju.com/) They blame that media is bad and they are not seeing his work on making Satyam as India's pride. I wish they realize that Satyam is now India's shame :-(

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2 comments:

  1. Sathyaprakash D Says:

    well said.

    but i thought u would say few words about M&A which might lead to retaining clients and employees. (some optimism)...

    and also, i thought u emphasized only home loans and real-estate. not about one who want to just support his/her family. (some sympathy)...

    ~sathya

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