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Satyam Saga
SEBI orders probe

Mumbai, January 7
The Securities and Exchange Board of India (SEBI) today ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers Services Limited, which is mired in controversies, with its promoter chairman B Ramalinga Raju resigning today afer detailing financial irregularities to the Board of Directors.

Sensex plunges 749 points
Mumbai, January 7
The benchmark Sensex came down by a whopping 749 points on concerns over corporate governance after India's fourth-largest IT company by sales Satyam Computer Services admitted that its accounts were manipulated.
People look at a large screen displaying BSE's benchmark share index on the facade of the Bombay Stock Exchange building in Mumbai People look at a large screen displaying BSE's benchmark share index on the facade of the Bombay Stock Exchange building in Mumbai on Wednesday.
— Reuters






EARLIER STORIES



A general view shows the headquarters of the Russian natural gas monopoly giant Gazprom building through a gate with the emblem in Moscow
A general view shows the headquarters of the Russian natural gas monopoly giant Gazprom building through a gate with the emblem in Moscow on Wednesday. All deliveries of Russian gas through Ukraine were halted on Wednesday intensifying a bitter dispute between Moscow and Kiev, which risks depriving Europeans of gas amid freezing weather. — AFP

India Inc in ‘deep shock’
New Delhi, January 7
India Inc today expressed "deep shock" and "disbelief" at the Satyam saga stating that loopholes must be plugged in regulation, audit and governance to restore the confidence of the stakeholders in corporate firms.

The IT icon who went wild
Hyderabad, January 7
From being an IT icon to a wily manipulator of the company accounts, the downfall has been swift and shocking for Satyam Computer Services chairman B Ramalinga Raju.

It’s a stand-alone case: Nasscom
Bangalore, January 7
The India Inc today launched an overdrive to distance itself from the Satyam Computers after its chairman B Ramalinga Raju made startling disclosures in his resignation letter about huge accounting frauds by him to keep the company afloat.

But, Satyam may not be the only one
New Delhi, January 7
“It is a tragic turn of events for Indian investors because they have made investment in companies believing that these highly-priced stocks are of companies that are genuinely doing sound business,” said a stock broker when asked about the fraud at A group company Satyam Computers.

FinMin faces resistance on 3G price hike
New Delhi, January 7
The Finance Ministry is facing stiff resistance from within the government over its proposal to double the reserve price for the third generation (3G) mobile telephony spectrum.

Fuel prices may be cut again
New Delhi, January 7
Indications of the ruling Congress slipping into the election mode became clear with Union Petroleum Minister Murli Deora today indicating that the UPA government was in a mood to further scale down prices of petrol, diesel, kerosene and LPG in the light of free fall of crude oil prices in the international market.

RCom launches GSM services in Haryana
Gurgaon, January 7
Reliance Communications (RCom) today announced the launch of its mobile GSM Services in over 750 towns and 6,759 villages of Haryana.

Two killed in explosion at RPL refinery
Ahmedabad, January 7
Two persons were killed and several injured in an explosion at Reliance Petroleum's (RPL) newly commissioned only-for-exports refinery at Jamnagar in Gujarat.





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Satyam Saga
SEBI orders probe
Tribune News Service and UNI

NYSE halts trading in Satyam

New York/New Delhi: New York Stock Exchange on Wednesday halted trading in Satyam Computer at its bourses in the US as well as Amsterdam in Europe, after founder and chairman Ramalinga Raju disclosed financial bungling at the Indian IT major. "Yes, the stock is halted in New York and Amsterdam," a spokesperson for NYSE Euronext said in an emailed reply on queries whether trading were being halted in Satyam shares. — PTI

Mumbai, January 7
The Securities and Exchange Board of India (SEBI) today ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers Services Limited, which is mired in controversies, with its promoter chairman B Ramalinga Raju resigning today afer detailing financial irregularities to the Board of Directors.

SEBI general manager A Sunil Kumar will be the investigating authority and has been asked to submit a report to the board at the earliest.

SEBI, in a release here, said the Investigating Authority may seek the assistance of officers of the Board and any other person and these people shall be bound to render such assistance. The Investigating Authority is also empowered to exercise the powers under Section 11 (3) and 11C of the SEBI Act, 1992 for the purpose of investigation, the release said.

SEBI is further satisfied that in the interest of the investors and in public interest/securities market, no notice should be given to the persons to be investigated and therefore it is ordered that in terms of the provisions of the said regulations the above investigation may be conducted without such notice.

It shall be obligatory upon the persons being investigated to extend cooperation and furnish such information and material as may be required by the Investigating Authority in accordance with the Regulations.

Earlier in the day, SEBI said it would take appropriate action in the Satyam case in coordination with the Ministry of Corporate Affairs.

Speaking to the media shortly after receiving the letter from former Satyam chairman B Ramalinga Raju, SEBI chief CB Bhave said the first priority of the regulator would be to unearth the truth and produce the same before investors.

"We have to go beyond this letter and find out what actually happened," Bhave said. He added that the Satyam fiasco involved the Companies Act and "violated the listing agreement with SEBI". The regulator also added that the conduct of the auditors, who audited and certified the accounts, would be under scrutiny.

Bhave said the regulator would now have to probe if fudging of books was rampant among other companies as well. Bhave added that the regulator would ensure that such frauds would be dealt with. He admitted that similar frauds could be occurring elsewhere as well and mechanisms would be put in place to detect them.

"It is a matter which requires our attention on a continuing basis," Bhave said.

SEBI said it was also in touch with stock exchanges on the matter.

Other regulators are also getting into the act. As the spotlight shifted on the conduct of Satyam's auditors, PriceWaterhouseCoopers (PWC) which certified the IT company's books, The Institute of Chartered Accountants of India (ICAI) said any of its members who were found guilty would be barred from practicing for life.

The Union Ministry of Corporate Affairs has announced that the role of directors and auditors at Satyam would be scanned by ICAI and the apex body of Company Secretaries — ICSI.

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Sensex plunges 749 points

Mumbai, January 7
The benchmark Sensex came down by a whopping 749 points on concerns over corporate governance after India's fourth-largest IT company by sales Satyam Computer Services admitted that its accounts were manipulated.

Panic selling was seen across the board as all sectoral indices ended in the red with an average fall of 2.08 per cent to 16.95 per cent.

Satyam Computer plunged into a deep crisis, as chairman B Ramalinga Raju resigned after admitting to major financial wrong-doing, which might keep foreign investors away for the time being.

His brother and the managing director of the Company, B Rama Raju, also resigned. The promoters' share in Satyam has now dipped to just over 3 per cent, and that too is pledged with lenders.

The market regulator SEBI also said that it would take all necessary steps under the law. The counter was at the receiving end and slumped by 77.69 per cent at the end.

The Bombay Stock Exchange 30-share Sensex initially touched a high of 10,469.72, up by nearly 134 points, but it collapsed like a pack of cards after news of Satyam Computer filtered in.

It tumbled to close at 9,586.88, a net loss of 749.05 points, never seen since October 24, 2008, or 7.25 per cent over the previous close. The Sensex ended first in negative territory after January 1.

The broader 50-share Nifty of the National Stock Exchange also plunged 192.40 points or 6.18 per cent to 2,920.40 from the previous close.

Counters of realty, refinery and banking stocks also suffered a sharp setback and contributed to the fall. — PTI

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India Inc in ‘deep shock’

New Delhi, January 7
India Inc today expressed "deep shock" and "disbelief" at the Satyam saga stating that loopholes must be plugged in regulation, audit and governance to restore the confidence of the stakeholders in corporate firms.

The two apex chambers - Ficci and CII - said it was time corporate India did some serious introspection and improved governance standards.

Expressing "deep shock and disbelief", Ficci president Rajeev Chandrasekhar said "this fraud on the investors and employees of the company shows a systemic breakdown in audit and board oversight ... Questions will need to be asked and quickly how this happened and who caused it to happen."

CII president K V Kamath said there was a "need to immediately examine the loopholes in regulation, accounting, audit and governance that allowed such lapses to occur and address them with urgency".

He said corporate India must "reflect on ways to demonstrate its quality of governance and enhance the confidence of stakeholders." However, both chambers insisted that the admission of "massive financial irregularity" in Satyam's books of accounts should not be seen as a blot on all Indian firms.

"While the occurrence of such events in a major company is a matter of deep regret, CII believes it would be inappropriate for this to be the basis of questioning of general governance standards in other companies," Kamath said.

Industry chamber Assocham wants a special committee set up to investigate the entire Satyam issue so that "culprits are identified and brought to book". — PTI

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The IT icon who went wild
Suresh Dharur
Tribune News Service

Hyderabad, January 7
From being an IT icon to a wily manipulator of the company accounts, the downfall has been swift and shocking for Satyam Computer Services chairman B Ramalinga Raju.

The disgraceful exit of Raju, the promoter of India’s fourth largest software company, has sent shock waves in Andhra Pradesh, which is one of the favoured destinations of the global IT industry.

Ironically, Raju was synonymous with the growth of the IT sector for several years now and was widely credited with ensuring a pride of a place for AP on the international IT map.

Riding on the crest of outsourcing boom, Satyam Computers rose from a humble beginning in 1987 with 23 employees to become a leading global player with 53,000-strong staff spread over 66 countries and having 185 Fortune 500 companies as its customers.

The journey of the 54-year-old Raju from a humble family of agriculturists in West Godavari district to become one of India’s most successful IT players has earned him an iconic status among the youth.

A commerce graduate from Lyola College, Vijayawada, Raju pursued MBA from Ohio University in the USA before returning to India to start business. After trying his hand at textile and construction business, he saw potential in the emerging software industry and founded Satyam Computers in 1987.

There was no looking back since then. Satyam won numerous national and international awards in its long journey and was listed on the New York Stock Exchange in 2001.

Raju has maintained good rapport with the successive governments of TDP and Congress. His family-owned firms Maytas Properties and Maytas Infra are engaged in real estate, construction and infrastructure business.

Maytas Infra, owned by his son, had recently bagged the prestigious Rs 12,000-crore Hyderabad Metro Rail project. Following today’s development, questions are being raised over the future of the Metro project.

Satyam and Maytas have been sanctioned three Special Economic Zones (SEZs) each in the state.

The crisis erupted following Satyam’s decision to acquire Maytas firms at a cost of $1.6 billion. It was widely seen as an attempt to benefit the family members of Raju at the cost of Satyam’s shareholders.

Following angry reaction from shareholders, the company backtracked on the proposal but not before suffering a dent in its international image. This was followed by resignation of four independent directors from the company.

“Going by the extent of fraud, Ramalinga Raju can be called Harshad Mehta of the software industry,” commented an analyst.

Meanwhile, Chief Minister Y S Rajasekhar Reddy said a CID inquiry would be ordered into the affairs of Satyam to protect the interests of shareholders.

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It’s a stand-alone case: Nasscom
Shubhadeep Choudhury
Tribune News Service

Bangalore, January 7
The India Inc today launched an overdrive to distance itself from the Satyam Computers after its chairman B Ramalinga Raju made startling disclosures in his resignation letter about huge accounting frauds by him to keep the company afloat.

In a statement, Nasscom, the apex body of the IT-BPO industry in India, expressed its shock at the disclosures made by the Satyam chairman today and said it was a “stand-alone case” and did not reflect the behaviour of corporate India as a whole.

“While the law will take its course, this incident is particularly unfortunate as the Indian IT-BPO industry had set very high standards of ethics and corporate governance. This is a stand-alone case of failure of corporate governance and it is critical that it be viewed in this light. We are sure that all stakeholders would also treat this as an isolated issue. This is not in any manner a reflection on the industry or corporate India. We will ensure that customers and other stakeholders get the right perspective”, Nasscom said.

The statement added that Nasscom would work with the task force constituted by Satyam to rescue the company from the crisis. Nasscom said it would help the task force reach out to their customers and employees of Satyam and guide them through the transition.

“Nasscom advocates the highest standards of ethics for the industry and we will work with our members to re-commit to maintaining the highest standards of governance and transparency”, the statement said.

Agency reports also quoted Mohandas Pai, human resources director of the software giant Infosys, as having said that the Satyam fraud was an aberration. “I don't think it would shake clients' faith in other Indian IT companies. But the level of due diligence is sure to go up and in fact that would overtake other considerations. A lot of convincing has to be made by the companies now to clients”, Pai was quoted to have said.

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But, Satyam may not be the only one
Bhagyashree Pande
Tribune News Service

New Delhi, January 7
“It is a tragic turn of events for Indian investors because they have made investment in companies believing that these highly-priced stocks are of companies that are genuinely doing sound business,” said a stock broker when asked about the fraud at A group company Satyam Computers.

Indian industry associations are up in arms against the promoter of Satyam Computer, B Ramalinga Raju. However, it is strange that it is this industry that hailed Raju, when he won the Ernst and Young Entreprenuer of the Year Award in 2007, and in September the Golden Peacock Award for corporate governance.

Chartered accountants say, what is strange about the case is that Satyam was trying to show bloated revenues of 24 per cent (Rs 649 crore figure of September 2008 quarter), when actually his margin was only 3 per cent (Rs 61 crore). This is in line with his competitors Infosys and TCS, who also work on the same margin of around 20-25 per cent.

But, what is strange is why revenue margin of Satyam so thin as compared to his peers, or is it that the actual margins are low.

Usual business practice is that revenues are deliberately shown less, say 3-5 per cent and the rest is siphoned off by promoters for personal gains. Here the story is completely reverse, explain chartered accountants.

Stock market pundits, who recommend stocks like Satyam and others for investment, admit that window dressing balance sheet is not unique to India. The US takes a lead in this. The balance sheet of Lehman Brothers never existed and still people made investments through them. Most companies listed on the stock exchanges across the world do window dressing of their accounts, purely to get more investment, pull up stock price, attract more business etc. Satyam is not unique in the matter and it is not alone in committing this fraud if every Indian company is put on a scanner independently then there will be bigger frauds unravelling, they explain.

Satyam Chairman Ramalinga Raju had 55.7 million shares (amounting to 8.27 per cent stake) through SRSR Holdings, the promoter company of Raju, at the end of the September quarter. This came down in December to 5.13 per cent as lenders sold 21 million shares in open market transactions.

The corporate affairs ministry is referring the case to Serious Fraud Investigating Office. Besides, it will look at the roles of company directors, auditors, company secretaries etc.

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FinMin faces resistance on 3G price hike
Girja Shankar Kaura
Tribune News Service

New Delhi, January 7
The Finance Ministry is facing stiff resistance from within the government over its proposal to double the reserve price for the third generation (3G) mobile telephony spectrum.

After the Department of Telecom (DoT) expressed its reservations over the proposal, reports suggest that the Department of Industrial Policy and Promotion and Ministry of IT have supported the reserve price to remain at Rs 2,020 crore as was originally recommended by DoT.

Looking to achieve its initial target of garnering Rs 40,000 crore from the auction of the 3G spectrum, the Finance Ministry had put forward a proposal last week asking the DoT to double the reserve price of the 3G spectrum from the present Rs 2,020 crore to Rs 4,040 crore besides also doubling the pricing for the WiMAX services.

In a note sent to Telecom Secretary Siddartha Behura, the Finance Ministry had said, "The reserve price may be increased from Rs 2,020 crore to Rs 4,040 crore for a pan-India allocation of two blocks of five MHz of 3G spectrum."

It added that the changes so made by the DoT should be returned to the Union Cabinet, more precisely the CCEA, to be ratified and notified.

However, the DoT is not in favour of any further increase in the base price as it feels that this would reduce interest in 3G auctions. The pre-bid conference held in late December had already got a poor response, especially from foreign players, whom the government was looking at to participate and push up the auction price.

This, incidentally, was also the reason apparently for the Finance Ministry to come forth with the suggestion to double the reserve price, which would have helped it garner the Rs 40,000 crore which had initially been set as the target.

The DoT is also of the view that doubling the base price would increase the cost of 3G services, which would make them more expensive for consumers.

Reports also suggest that with the controversy looming large over the issue, the DoT is also looking at proposing a compromise formula.

DoT is said to be preparing a note which will give an option of invoking its rights to cancel the bidding in consultation with the Ministry of Finance in case the bid amount does exceed the reserve price but is less than the revenue the government expects.

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Fuel prices may be cut again
Tribune News Service

New Delhi, January 7
Indications of the ruling Congress slipping into the election mode became clear with Union Petroleum Minister Murli Deora today indicating that the UPA government was in a mood to further scale down prices of petrol, diesel, kerosene and LPG in the light of free fall of crude oil prices in the international market.

Deora said the announcement of another cut might come soon, perhaps in the next couple of weeks. “We will try to reduce the prices of petrol and diesel in the next 2-3 weeks,” Deora said at the AICC headquarters.

He, however, refused to comment on the extent of reduction, saying that it had not been decided. But this time the government is also thinking of reducing cooking gas prices by Rs 20-25 a cylinder.

The government had last cut fuel prices on December 5, 2008, amidst plunging global crude oil prices. While petrol price was reduced by Rs 5 per litre and diesel by Rs 2 a litre, LPG prices remained untouched.

However, this time the government appears intent on making amends on that count. Deora suggested that apart from a cut in petrol and diesel prices, rates of domestic LPG cylinders might also be slashed. “There was loss on that count to the government,” he said, hinting at a reduction of Rs 20-25 per cylinder.

Meanwhile, Congress spokesman Abhishek Singhvi refused to accept that the decision was related to the upcoming Lok Sabha poll. “International crude prices are not governed by elections in India,” he said.

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RCom launches GSM services in Haryana
Tribune News Service

Gurgaon, January 7
Reliance Communications (RCom) today announced the launch of its mobile GSM Services in over 750 towns and 6,759 villages of Haryana.

The company also launched a first-of-its-kind Customer Experience Programme (CEP) for customers choosing Reliance Mobile GSM Services, a plan which offers up to 100 per cent savings to sub-Rs 300 Average Revenue Per User (ARPU) mobile customers in Haryana at a one-time subscription charge (including GSM SIM) of Rs 25 only.

"Reliance Mobile GSM entails offering a unique value proposition fine-tuned as per the needs of every segment of the 250 million GSM users market in the country", stated Atul Mehra, CEO, Haryana Circle, Reliance Communications.

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Two killed in explosion at RPL refinery

Ahmedabad, January 7
Two persons were killed and several injured in an explosion at Reliance Petroleum's (RPL) newly commissioned only-for-exports refinery at Jamnagar in Gujarat.

"There was a blast at the hydrogen plant at the refinery at Moti Khavdi in Jamnagar," a Reliance spokesperson said.

Pre-commissioning activities were on at the hydrogen plant when the compressor blew up, killing two of the nine workers present there. One worker was seriously injured and five sustained minor injuries.

When contacted, Jamnagar district collector V P Patel said there was a blast at the refinery at about 8 pm today and that two were killed, but added that the situation was under control. There was no fire in the plant, he added. — PTI

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