My Thoughts !

Wow! so all these years they have inflated the profit and cooked the books. In the statement released to SEBI, stock exchanges and to the board, he says that none of the board members knew this situation till now (neither the promotor's family members knew it). Here is the letter:

To the Board of Directors
Satyam Computer Services Ltd. Dear Board Members, It is with deep regret, at tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice:

1. The Balance Sheet carries as of September 30, 2008
   • Inflated (non-existent) cash and bank balances of Rs.5,040 crore (as against Rs. 5361 crore reflected in the books)
   • An accrued interest of Rs. 376 crore which is non-existent
   • An understated liability of Rs. 1,230 crore on account of funds arranged by me
   • An over stated debtors position of Rs. 490 crore (as against Rs. 2651 [cr.] reflected in the books)
2. For the September quarter (02) we reported a revenue of Rs.2,700 crore and an operating margin of Rs. 649 crore (24% Of revenues) as against the actual revenues of Rs. 2,112 crore and an actual operating margin of Rs. 61 Crore ( 3% of revenues). This has resulted in artificial, cash and bank balances going up by Rs. 588 crore in Q2 alone.

The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualized revenue run rate of Rs. 11,276 crore in the September quarter, 2008 and official reserves of Rs. 8,392 crore). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations — thereby significantly increasing the costs.

Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in a take-over; thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten.

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas’ payments can be delayed. But that was not to be. What followed in the last several days is common knowledge.

I would like the Board to know:

1. That neither myself, nor the Managing Director (including our spouses) sold any shares in the last eight years — excepting for a small proportion declared and sold for philanthropic purposes.

2. That in the last two years a net amount of Rs. 1,230 crore was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged share[s] by the lenders on account of margin triggers.

3. That neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results.

4. None of the board members, past or present, had any knowledge of the situation in which the company is placed. Even business leaders and senior executives in the company, such as, Ram Mynampati, Subu D, T.R. Anand, Keshab Panda, Virender Agarwal, A.S. Murthy, Han T, SV Krishnan, Vijay Prasad, Manish Mehta, Murali V. Sriram Papani, Kavale, Joe Lagioia, Ravindra Penumetsa, Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or Managing Director’s immediate or extended family members has any idea about these issues.

Having put these facts before you, I leave it to the wisdom of the board to take the matters forward. However, I am also taking the liberty to recommend the following steps:

1. A Task Force has been formed in the last few days to address the situation arising but of the failed Maytas acquisition attempt. This consists of some of the most accomplished leaders of Satyam; Subu D, T.R. Anand, Keshab Panda and Virender Agarwal , representing business functions; and A.S. Murthy, Han T and Murali V representing support functions. I suggest that Ram Mynampàti be made the Chairman of this Task Force to immediately address some of the operational matters on hand. Ram can also act as an interim CEO reporting to the board.

2. Merrill Lynch can be entrusted with the task of quickly exploring some Merger opportunities.

3. You may have a testatement of accounts’ prepared by the auditors in light of the facts that.I have placed before you.

I have promoted and have been associated with Satyam for well over twenty years now I have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries. Satyam has established an excellent leadership and competency base at all levels. I sincerely apologize to all Satyamites and stakeholders, who have made Satyam a special organization, for the current situation. I am confident they will stand by the company in this hour of crisis.

In light of the above, I fervently appeal to the board to hold together to take some important steps Mr T R Prasad is well placed to mobilize support from the government at this crucial time. With the hope that members of the Task Force arid the financial advisor, Merrill Lynch (now Bank of America) will stand by the company at this crucial hour, I am marking copies of this statement to them as well.

Under the circumstances, I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded. My continuance is just to ensure enhancement of the board over the next several days or as early as possible.

I am now prepared to subject myself tothe laws of theland and lace consequences thereof.

(B. Ramalinga Raju)
Copies marked to:
1. Chairman SEBI
2. Stock Exchanges

In one of my previous companies (which is small and privately held), I happened to meet few of the board members and had chance to interact with them. I was surprised that how little they were knowledged about the core product and the business it brings to the company. In my opinion they all had lot of other stuff to do and for just sitting in the board they get a good Honorarium. So they don't want to spoil that by talking/questioning. Thats exactly what had happened in case of the "independent" board members of Satyam as well. hmmm corporates!

I guess the whole problem with Satyam was that the promoters had a very little share of 8% (unlike 51%) and they don't want someone/some other company to take over Satyam. So they started to cook the books. Now that its overcooked, they had no other choice.

What could happen next? Forget the great CEO Ramalinga Raju. As the politicians say, the law will take its own course. We will see in few years. Coming to Satyam, either the leaders within will for a strong management team and come out from the crisis or it will be taken over by HCL/Reliance/some one else or it will simply get out of business within 2 years. The last might happen because an IT company's biggest asset is its engineers. They will start quitting the company owing to the fears of their house loans and credit card bills; the projects will get more delayed; and more companies will let go of the contracts; more employees leave/fired - you see its a spiral all the way down to zero.

Satyam was a wonderful example of Indian IT dream. Started small with less money & people and made all the way into Top 5 IT companies with billions of dollars of revenue. I wish it stayed there rather crashing down this far, this soon, just because the promoter wanted to hold control.

A lesson learnt in the hard way for Indian IT :-(

Digging into the code, you never know what kind of comment you will get. Looks like looking into the Bugzilla also gets to you some interesting comments. Today I got to see this:

Real Programmers consider "what you see is what you get" to be just as bad a concept in Text Editors as it is in women. No, the Real Programmer wants a "you asked for it, you got it" text editor -- complicated, cryptic, powerful, unforgiving, dangerous

Prestige is one the biggest real estate promoters in Bangalore. They have been operating for a long time and have always created posh residential and commercial buildings. I guess their biggest project is Prestige Shantiniketan, which is right next to ITPL. It spawns more than 100 acres. Its a mini township project and has both residential & commercial buildings, a huge swimming pool, Radission hotel, Forum mall, everthing you can think of. Its under construction for a very long time. Yesterday evening, when I was coming back to home from office, there was a huge crowd in the road. I first thought it might be an accident, but it turned out to be the crowd looking at one of the buildings, which collapsed. I thought this is going to be a big buzz, but when I saw the newspapers this morning, there were no enough news except in The Hindu & Times of India. From the news, they claim that there was some work going on in the top floor and it collapsed first. Then few minutes later, due to the weight of the collapsed floor, the floor below that collapsed. And then the one below. Finally all the floors collapsed and it took around an hour, so every worker in the site were miraculously escaped. Only four got injured, that too because they fell down while running away from the site. When police arrived at the site, all the 100+ workers and engineers were already taken to a "safe place". This includes the injured persons, who got treated in near by hospital as out patients. Even before preliminary investigations begun, the Prestige group says that there were no damages to the super structure and no loss of life. The first one is a lie, as I can visibly see at least 3 pillars in a bent position. You can see one of the pillars in the below image from The Hindu:

The second one also could be a lie, because I don't believe that only 100 people will be working in that 100 acre project. Now this raises few questions. Why were all the eye witnesses removed from the place immediately. They were able to find the reason and blame the Malaysian company as soon as the building collapsed. They never did any investigation. How did they arrive at the decision. Now that we know that if a contractor gives a product, no matter the quality is, they will simply use it. There is absolutely no quality control. What about the buildings which are not collapsed? They might collapse as soon as someone move in?

Its not just the building that collapsed. Its the trust on the Prestige Groups that is collapsed. I guess it will be tough for them to sell any more high rise buildings. The ones that are already sold out, might be coming for a resale at a very cheaper prices and there will be no takers. This will propagate to other high raise buildings as well.

Irony of this is looking at the site plan, they have named this building as "World Trade Center, Tower B"

Yeah, I switched jobs again :-)

I've now joined Eclipse's Platform UI team thru IBM. Its interesting to see that writing blog helped me to land a job. No definitely not this personal blog, but its my other blog Eclipse Tips. This move basically changes a few things. Like now my official laptop is not a MacBookPro, but a Lenova ThinkPad loaded with Windows ** Sigh **. One thing that didn't change is my location. I will still be staying in Coimbatore, working remotely and visiting Bangalore in regular intervals.

Its been a one hectic week @ IBM with all the paper work, inductions, team lunch in Nandana Palace and an team outing in Golden Palm resort ;-) Now that I have some time, I wrote an initial draft of what it feels to be in the Big Blue. Then I looked into each bullet point in every page of the Black Book of "Business Guidelines" and edited the portions which I'm not supposed to reveal. Here is the edited one:

I'm joining IBM as XXXXXX XXXXX and will be seated in the XXXXX XXXXX building in XXXXXX city. Believe it or not, I'm in Band XX and getting an annual income of Rs XXX.XX Crores. There are many things that are good about IBM. For instance the XXXXXX XXXXX software that is used internally for XXXX XXXX XXXX and XXXX. Now how many companies really do that? Companies with this massive size usually won't XXXXXX XXXXX XXXXXX XXXXXX XXXXX XXXXX, but IBM choose to do it. In case you are not surprised, IBM also XXXXXXX XXX XXXXX XXXX with XXX XXXX XXXX XXXX XXX, so that XXXX XXX XXXX happens. If you ask me one thing I don't like about IBM, it would be: XXXX XXXX XXXX the XXX XXX when XXXX XXXX. Hope you agree with me completely.

Yeah, and the usual disclosure. Any opinion expressed here, in any other blogs, forums, websites, "Letters to the Editor" column in "The Hindu" daily, weekly magazine's sudoku column, my daughter's drawing book and scribbling on the toilet papers, are not necessary my employers opinion, but all my own.

In case you are publishing a newsletter or sending HTML formatted emails, don't rely on the images in it. Here is what I saw when I got an email:


When I opted to view the images, I get the full "picture" :-)

During the Valparai trip, if someone really enjoyed the trip to the core, it would be my daughter. Let the pictures speak:

From Priceless Expressions - 9

From Priceless Expressions - 9

From Priceless Expressions - 9

From Priceless Expressions - 9

From Priceless Expressions - 9

From Priceless Expressions - 9

From Priceless Expressions - 9

At Fiorano, with 10 hrs/day of official work timings and 6 days per week schedule, its easy to get addicted to work. For a break, guys planned for a 5 day trip to Goa last weekend, but then that got shortened to 3 days. I would have joined them, if not for the trip that I've planned with my family. I haven't gone for any trips in the past few months, so I really needed an outing.

I decided it will not be a sight-seeing trip and its only meant for lazing around. Valparai sounded like a perfect place. There are lot of tea estates and many bungalows owned by them for their owners/managers guest house. It will be occupied only for few weeks in an year, so the rest of the time it will be rented out. I've booked a room in the Indraprastha Bungalow, a property of Waterfalls Estate.

Its around 100 kms from my house and once I go above the Aliyar Dam, the road becomes so scenic. Its been raining & drizzling. With greenish everywhere and with the mist, the travel was so good.











We couldn't enjoy all the way till Valparai, as the Bungalow is actually 10kms before the town. The bungalow is built by the English when the ruled. There is a 100 year old pine tree which spells the age of the place.





But don't underestimate the luxuries of the place. Its posh and well maintained. A small garden with a big lawn is the one my daughter loved the most.







Whenever it didn't rain/drizzle, we went out for a walk inside the Tea Gardens. We even visited the Tea Factory in the evening and saw how tea is made from those leaves.









It doesn't come cheap compared to hotels, but not as costly as a resort as well. The owners of this place are very clear that hospitality is not their business. Its both their strength and their weakness. If you want a menu card with variety of dishes or a swimming pool, perhaps its not a place for you. But for a person like me, good food (the care taker Mr Perumal is an excellent cook), nice ambiance, add with the fact that no cellphone network could reach you there, its a perfect weekend getaway to laze around.

If you want to see the entire set of pictures, its here.

Found a good video thru a forward:


Loved this quote: "An India that no longer boycotts foreign made goods. But buys out the companies that makes them instead". :-)

... again.

Thanks everyone for your wishes.

PS: I almost forgot that a website in the name of Orkut exists. Looks like it reminds me and tells the world about this fateful day :-)

Today I was booking my tickets to Chennai in the IRCTC website. When I was about to click the "Pay Now" button there was small link saying "Click here to see the performance of the Payment Gateways". I was puzzled what the heck is that. I clicked and an XL file got dowloaded. It said how much money has been transacted thru each payment gateway last month. The total amount that IRCTC has received was 2491585261. Yes that little less than 250 crores!!! Infact the banks also benefit hugely by this. The charges for each payment gateway is a minimum of Rs 10 (for a debit card) or 1.85% (credit card). Here is the comparision chart. Calculate how much money they make!

The yearly total would be around 3,000 crores and they don't even care to give a nice looking feature rich website. Someone got to tell Lalooji that if they have a proper functioning website, they can even make more money and less crowd in the reservation counters.