Thursday, January 08, 2009

The Simple Explanation to What Happened at Satyam

Everyone is asking the question: What happened to Satyam's Rs 5,400 crore cash that was on the books. Amid all the hype, here's the simple story.

Ramlinga Raju found a way to give Rs 5,400 crore to his son's real estate companies Maytas Infrastructure and Maytas Properties. This money had already been siphoned out before the declaration that Satyam was buying out the two Maytas companies.

However, the shareholder revolt that followed forced Ramlinga Raju to cancel the buyouts. But the money had already been transferred out.

The other simple story: Satyam had been fudging figures for years. There was no substantial cash in any case. The only way to show this cash as spent, was to acquire Maytas and show is as an asset purchased for the cash.

This way cash from reserves would be shown as investments or cash paid for aquisition.

Either way, Ramlinga Raju screwed up.

Posted by Eclectic Investor at 6:27 PM  

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3 Comments:

Padma said...

True that Mr.Raju came out with such a story. But is it possible to do so without outside help?
Where were the so called hi funda auditors PwH and the banks when these happenings were going on?
you should say that not only Raju and his family but the whole corporate system screwed the layman. And who is always at the receiving end - the layman. And you should know, public memory is shortlived. Other Rajus may appear in some other guise and then also we will be taken for a ride.

8:55 PM  
Padma said...

True that Mr.Raju has come up with such a story. But is it possible to have done this without others having no inkling of it? Where were the hi fi auditors PwH and the high class bankers when these happenings were going on for nearly seven years, as Raju has said? We should make all these people answerable to the general public. But they all know for sure that public memory is shortlived and within no time Raju will surface as some other conman. In fact, it is not only Raju and his family that screwed us, the whole so-called system of corporate governance has screwed us

9:01 PM  
MakannPanga said...

hey... what ever happend in styam was really sad...eventually one of my fren lost his job and another one is waiting for the appointment letter.....
suman

12:21 PM  

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