The Shocking Satyam Saga….

It was circa November 2007. At that point of time, I was in my first semester of MBA program. The exams were done & dusted with, but we students still had to perform the last rites of the semester. And that was to do a presentation on the various aspects of Financial Accounting.

As a student with an engineering background this was the toughest subject for me. After giving the exam for this subject, I was quite sure that I would definitely flunk the paper & had mentioned the same to many of my friends (they still don’t believe me on this). That’s when I received a ray of hope of passing this paper. It came in the form of this presentation. For the presentation, we had to analyze the balance sheets, P&L accounts & other financial statements of a company given to us by our professor & summarize the performance of the company. As luck would have it, our group was selected to analyze the performance of Satyam.

We, group members worked very hard on the presentation. Right from getting the yearly reports, researching stuff from the net, calculating the various financial ratios, doing a SWOT analysis, preparing the final ppt, rehearsing for the presentation, we did it all. The presentation went just about okay but when I got my marks for this subject, I realized that the professor thought our group was really good. :)

In the last few months, we have been hearing just negative news about Satyam. Right from the ban that the World Bank put on Satyam to the Maytas fracas, everything put the company in a bad light. But nobody in this world would have expected what we got to hear on 7th January, 2008. The promoter of the company, B.Ramlinga Raju confessed of committing a fraud to the tune of Rs. 7000 crores by cooking his organization’s financial statements.

Initially, I did not realize the magnitude of what was revealed. The very first thing that came to my mind was about the presentation that we did on Satyam. I was feeling like a fool for having done a financial analysis on fictional numbers thinking that they were real & then concluding that the company was in superb financial positions to handle any unforeseen troubles in the future. In the SWOT analysis, for the Threats to the organization, we had failed to put Promoter’s misgivings as the biggest threat as well. For all these reasons, I thought we surely owed an apology to all those present in the auditorium for having given them a wrong impression about the company.

Now, when I look at the bigger picture, I realize the extent of damage that Raju’s deeds have done. Not only has he damaged the institution which he built, but he has maligned the name of all Indian companies & IT companies specifically. The IT sector is as it is going through a tough time in these days of recession; this incident has made it even tougher.

I am still unable to think about the rationale behind Raju’s misdeeds. If a company is not able to make substantial profits, then it has to take steps to stem the rot, not by way of inflating one’s financial statements but by taking measures to keep the operating expenses down by going for cost-cutting, etc.

Now that Raju & his cronies have been arrested, I sincerely hope that the truth comes out & these cheaters get what they deserve. I also hope that the Government & Corporate India takes adequate measures to do damage limitation & put the company back on track, not only for its employees, investors, but also to keep India story growing going ahead.