Let Satyam Go Bankrupt 17 comments
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The Indian government is balking at writing a 1000 crore cheque to bail out Satyam (SAY) - as it rightly should be.
Satyam is a pack of lies. It is probably operating at 40% utilization rate, which means that 10-20K employees will need to be laid off just to right-size the company. Paying them salaries using taxpayers' money, even for couple of months ,would be completely unjustified. What has happened is sad, but let's not compound one mistake by committing other.
The best idea for all of Satyam's stakeholders is here. Even its creditors will recover something. Bankruptcy is a good idea for dead companies - creative destruction and reallocating capital of failed companies is an important concept of capitalism.
Their is one hope for the the Indian IT industry - Barack Obama and his plan for digitizing healthcare and investment in broadband access. Digitizing healthcare records appears to be a problem that is tailor made for offshoring. The obvious caveat is that Obama's priority is to create jobs in US - not India.
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economictimes.indiatim...
The payment, estimated to be in the region of $25-30 million and made by the scandal-scarred company from its own resources, relieved Satyam employees of a big worry and reinforced the growing estimate that Ramalinga Raju's claim that the company had Rs 1,100 crore in receivables could be correcty found
..
BK isn't in the Cards and the author here doesn't know what SAY has..obviously didn't know the RS 1,100 Crore found.
the US is bailing out the auto industry where folks were paid uneconomic wages and produced bad products for years, and worse the financial sector where many of the ones still employed were the ones who got rich and were wreckless in every way.
there is no way that 50k folks in a developing economy should have to lose their jobs if there is way to make the transition to a proper company orderly with a little bit of govt help.
We are hearing job losses from almost industry these days...there was a recent news about 10 mln jobs loss in gems and jewellery sector alone and mind you those who lost are paid very little in comparison to 50K+ software engg working in Satyam who can easily manage for few months before landing into a new job..
So Govt. should let the market forces do their job..and let SAY go bankrupt or acquired..
This bailout thing is a *** virus..I'm amazed at how alll and sundry leap to bailout as the only respite or cure from corporate snafus and gross mismanagement. If one cannot stomach the level of risk-reward ratio, they sh join something safer - and good luck finding it.
There is no need for bailout at this time
The old bd requested the $ and were sacked. The new bd has not requested money. No need to at this time.
www.bloomberg.com/apps...
Money Owed
The extent of aid needed will depend on the money Satyam is likely to receive as payment from customers for work it has rendered, Parekh told Bloomberg. Satyam has 17 billion rupees ($347 million) of pending payments from clients, he said. The audit will take eight to 12 weeks, Parekh said.
``The company has not asked for any package, they may not need that,'' minister Gupta said.
Satyam is seeking executives to replace managing director Rama Raju and chief financial officer Srinivas Vadlamani. The executives and founder Ramalinga Raju will seek bail tomorrow after having been remanded to custody until Jan. 23.
Former interim Chief Executive Officer Ram Mynampati had asked the government to provide 1.5 billion rupees in assistance to help the company meet payments on health insurance costs for employees based in the U.S., Economic Affairs Secretary Ashok Chawla told reporters in New Delhi today. Mynampati served for less than three days before the government sacked the board.
Just coming in and everybody in media said nothing existed which was false
Health Care Paid
economictimes.indiatim...
The IT major, reeling under the crisis of The Great Fall of Satyam
Five facts about Satyam
The Satyam scam
confidence since its disesteemed promoter confessed to faking books of accounts, has paid off health insurance premium for its employees in the US, government sources said.
The payment, estimated to be in the region of $25-30 million and made by the scandal-scarred company from its own resources, relieved Satyam employees of a big worry and reinforced the growing estimate that Ramalinga Raju's claim that the company had Rs 1,100 crore in receivables could be correct.
"He may have been right on that count," said sources familiar with the findings of the inspection of Satyam's books.
The good piece of news came on a day when government betrayed clear signs of wariness over the idea of bailing out the company. Sources stressed that a bailout has to be for an industry as a whole rather than an individual company. "Or else, it will set a bad precedent, encouraging moral hazard," a senior PMO source said.
It was also being realised that a bailout would make the government liable to any damage that arises from the class action suits filed against Satyam in the US.
Members of the reconstituted Satyam board - HDFC chief Deepak Parekh, former NASSCOM head Kiran Karnik and C Achuthan, formerly with Sebi Appellate Tribunal, are likely to apprise the government of their assessment of the company's financial health.
A confident Karnik told TOI on Wednesday, "It is a very viable organisation and it will make profit in a few months."
Karnik acknowledged that finding cash would be a major worry till the accounts had been verified by the company's new auditors KPMG and Deloitte, whose appointment was announced on Wednesday. He also conceded that holding on to clients and workers being eyed by rivals represented a major challenge.
Also Read
→ Satyam’s loss could be TCS’ gain
→ Ramalinga Raju's hasty arrest stalled probe: SEBI
→ Satyam will make profits, but needs working capital: Karnik
→ Fact finders: Satyam ropes in KPMG, Deloitte
→ Rattled Big 4 rush special teams to India
On his part, Karnik also did not seem inclined towards a bailout package from the government. "It will adversely affect the company's reputation," he said, adding that the company would prefer to raise funds from equity holders and banks.
The former NASSCOM chief said the option of splitting Satyam into two ventures was not on the immediate horizon of the board. "We are right now solely focused on the company's revival. The options of merger, sale or splitting the company into two can only be considered in future," he said.
Salaries Paid
economictimes.indiatim...
MUMBAI: Employees at Satyam Computer Services Ltd’s US offices can breathe easy, as the beleaguered company has made arrangements for the January
payroll, which is paid fortnightly.
us.etrade.com/e/t/inve...
Related Quotes
Sym. Price Chg.
SAY Trade
News 0.99 -0.24
3rd UPDATE: India Min: New Satyam Bd Hasn't Asked For Cash
Jan 15, 2009 09:51:50 (ET)
(Recasts, adds minister's comments from press conference, details)
NEW DELHI (Dow Jones)--The new board of Satyam Computer Services Ltd. (SAY) hasn't asked the government for financial help, India's federal corporate affairs minister said Thursday while appointing three new directors for the software exporter.
"The first impression from government-nominated directors about the company is that its operations are sound and, by and large, major customers are willing to remain with the company," Corporate Affairs Minister Prem Chand Gupta told reporters.
He added that the board will decide on the appointment of a new chief executive officer and a chief financial officer for Satyam, which is being probed for accounts fraud.
Gupta was speaking at a press conference to announce the names of Satyam's new directors: Suryakant B. Mainak of Life Insurance Corp.; Confederation of Indian Industry Chief Mentor Tarun Das; and former Institute of Chartered Accountants of India president TN Manoharan.
They join the three other directors - Deepak Parekh, chairman of Housing Development Finance Corporation; Kiran Karnik, former president of information-technology industry body Nasscom; and C. Achutan, a former member of the Securities and Exchange Board of India - who were appointed on Jan. 11.
Earlier Thursday, a senior government official said that the government had not acceded to a request from Satyam's previous board for financial assistance of INR1.50 billion ($30.6 million).
Federal Economic Affairs Secretary Ashok Chawla said that the government had received an e-mail from then-Satyam interim chief executive Ram Mynampati who noted that the company needed assistance to pay health insurance liabilities of its U.S. employees.
"But I have been told that it has been taken care of by the company," said Chawla.
The Times of India had reported Thursday that Satyam had paid employee health insurance premium in the U.S. of about $25 million to $30 million.
"The government at this stage is not looking at any kind of direct assistance or bailout to Satyam. It is not under consideration at the moment," Chawla said.
Co May Pledge Assets
Satyam board member Deepak Parekh, without providing details, told reporters earlier in the day that the company plans to raise money by pledging assets.
He added that Satyam has receivables totaling INR17 billion ($347 million), less than the INR25 billion a senior government official had mentioned earlier this week.
Parekh had said Monday the company will have adequate liquidity if clients maintain payment schedules.
Mynampati, a former Satyam board member, had taken over as interim chief executive after founder B. Ramalinga Raju's disclosures last week that he overstated profits over several years and created a fictitious cash balance of more than $1 billion.
Raju, his brother and co-founder B. Rama Raju, and chief financial officer Srinivas Vadlamani have already been arrested and are being held on complaints of cheating, forgery and breach of trust.
Mynampati was subsequently removed after the government stepped in and disbanded the board and appointed new directors.
The new board Wednesday appointed Deloitte Touche Tohmatsu International and KPMG as interim auditors to assess the company's financial health and restate results.
Auditor Begins Work
KPMG Thursday said that it has started working with the new Satyam board.
"The scope of work and the terms of reference are being discussed with a view to their finalization," a KPMG spokesperson told Dow Jones Newswires.
"It is our understanding that the scope of work to be finalized is not reserved for chartered accountants registered with Institute of Chartered Accountants of India (ICAI)," he added.
For several years, Satyam's accounts were audited by Price Waterhouse, which said Wednesday that its reports shouldn't be relied upon.
Minister Gupta said Thursday that the Institute of Chartered Accountants of India is probing the auditor's role in the accounts fraud.
Insider Trading Probe
Gupta told Dow Jones Newswires early Thursday that agencies investigating the case will also look into alleged insider trading by Satyam executives.
Former directors and other executives had sold 258,358 shares in Satyam during the second half of 2008, according to filings submitted to the Bombay Stock Exchange.
Chief Financial Officer Vadlamani sold 92,358 in two separate block deals in September, according to the data.
The price at which these shares were sold wasn't disclosed, but Bloomberg reported that top Satyam officials had sold a combined 267,358 shares worth $1.8 million since July 14.
In the same period, stockholdings by founders in other companies which are part of the BSE's benchmark Sensex didn't change as much.
Investors continued to punish Satyam shares Thursday, with the stock closing down 32.2% at INR20.30 on the BSE. The broader Sensex index fell 3.5%.
Satyam's clients include several Fortune 500 companies, such as General Electric Co., General Motors Corp. and Nissan Motor Co.
-By Mukesh Jagota, Sunil Raghu, Rakesh Kumar and Romit Guha, Dow Jones Newswires; 91-9900181471; romit.guha@dowjones.com
(Abhrajit Gangopadhyay and Gurdev Singh Virk in Mumbai contributed to this report)
(END) Dow Jones Newswires
January 15, 2009 09:51 ET (14:51 GMT)
times-today.blogspot.c.../
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www.bloomberg.com/apps...
Satyam Meets FIFA Officials to Reassure About World Cup Work
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By Tariq Panja
Jan. 15 (Bloomberg) -- Satyam Computer Services Ltd., the Indian software exporter facing fraud allegations, is reassuring soccer’s governing body that the company can continue its role in the 2010 World Cup, a company executive said.
Dilbagh Gill, Satyam’s head of sport, spent two days in Zurich this week with FIFA officials, Sridhar Maturi, who runs sports marketing at Satyam, said in an interview today.
Satyam, which in November was named as the first Indian company to sponsor a World Cup and meant to be FIFA’s official information technology provider until 2014, has lost 89 percent of its market value since founder Ramalinga Raju said Jan. 7 that he’d fabricated $1 billion in cash and assets.
The soccer organization “is monitoring the situation related to Satyam, a company which provides services of technical support to FIFA,” according to a FIFA statement. “At this stage and until we have more information, it is too early for FIFA to make any further comments on the matter.”
Maturi said Satyam’s work for FIFA, which includes devising the operating software for online ticket sales, has been “uninterrupted” by the alleged fraud and the subsequent removal of the company’s board.
“We have shared the developments at our end with FIFA and we will keep them up to date with our work here,” he said.
Satyam is India’s fourth-largest software exporter, with offices in the U.S., the U.K., Brazil and Australia.
“It’s something that’s happened and is unfortunate,” Maturi said. “On the ground level we’ve not been affected, everything is intact.”
Nestle SA, the world’s largest food company and a Satyam client, said this week it is considering alternative solutions to avoid disruption of information technology operations. Telstra Corp., Australia’s largest telephone company, said Satyam’s disclosure will be a factor when it cuts two of its four major information technology suppliers this year.
The Indian company also writes software and manages computer systems for companies such as General Electric Co. and ArcelorMittal, the world’s largest steelmaker.
To contact the reporters on this story: Tariq Panja in London at tpanja@bloomberg.net;
Last Updated: January 15, 2009 10:59 EST
Prem Chand Gupta, India’s corporate affairs minister, said that Satyam Computer Services has not sought financial help from the government as the new board is working on reviving the company. Gupta was speaking to reporters after a cabinet meeting in New Delhi on January 15. (less)
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Sufficient Receivable with Triple Rated Companies.
1,700 CR latest update on Receivables
On Jan 15 09:00 AM Sunty wrote:
> are you simply kidding me..simplesam? The employees joined a private
> co with no explicit backing of the government - if they were so stupendously
> risk-averse they should have settled for smaller salaries and worked
> for India.Gov . When you work for fast flying industry/company and
> are paid above market wages (by India stds) - it is not without taking
> on implicit risk as an employee..again, the employees are not helpless
> babes..they'll fend & find something to move on to..
>
> This bailout thing is a *** virus..I'm amazed at how alll and sundry
> leap to bailout as the only respite or cure from corporate snafus
> and gross mismanagement. If one cannot stomach the level of risk-reward
> ratio, they sh join something safer - and good luck finding it.