Satyam goes down

Well, first the data you need. Rs 7136 crores addded to books with no accompanying transactions. Just extra revenues and extra profits from these non existent revenues; a non existent personal loan of Rs 1236 crores and non existent cash of Rs 5000 crores on assets. Added revenues of 588 cr in Sep Qtr which could not withstand preliminary due diligence. And to quote the Ramu Raju of the piece, no one knew about it. A plain shame.

None the less, though industry experts come out with Satyam is not representative of India, that is just not true. This is happening everywhere, just a blind eye to the Financials that compromises the best of analysts and market-makers. Criminal concerted planned breakdown of a global systemic disease that is keeping our hopes live for the next corner. Reform that is inordinately delayed and hanging a damocles sword over working professionals.

Satyam’s cash value would now be more like $250 m for just the real estate and the employee roster. And $255m in secured loans. and the liabilities are not going to be transferred to the client roster. At least I would not recommend it. CLSA’s valuation of post diligence breakdown at 600 m seems way off the mark. JPM and Credit Suisse reactions are better. The markets have reacted worse than expected. For stocks outside Satyam, huge falls raise questionsof faith that are representative of the lack of faith that pulls India down.

And when the totem poles of reform like ICICI Bank or institutions like Fidelity cannot do even a semblance of due diligence before investing it is really a question mark on corporate governance at these institutions. And KPMGs and E&Ys and the other Top 20 auditors who have failed once in 2000 and once again in 2008. A shame!

An undue prolongation of the shame that is evident at Enron, GM Ford and now Satyam and a few more. Atleast we have the processes and the structure to discover them and withstand them. I doubt a China and a Russia have even a remote modicum of the process and the regulation. I doubt if the servicing It companies and the users that are even Whistleblowers are doing even remotely enough to make this world a livable one. Nonetheless, one step at a time we will get there.

BAC and Citi also have agreed to cut executive bonuses. It’s a good start to 2009.


About zyakaira

Investment Banker, 40s, Bangalore This Biopic and this web recreates how one point of view, one person can impact a tremendous economic engine that the world thrives and mis-thrives on. This one has the knowledge and the civil sense , the art of conversation and some good writing to mentor others as powerful and help global managers develop and fine tune their approach on US markets, China, India and the world. Read on here, and let me know what you need. It can be a race for TRPs, a race for new markets and a race to do what is right. I have the pulse of the crisis, the recovery and the market direction and can help you build and refine your strategy as i have helped thousands of managers and multiple global corporations. Of course, it’s more fun if you talk to me. I am in favor of leading this moving of the economic crisis and will partner with you in a soft and subtle way, just the way we both ride to the top. But you can write with us, opine and just reply with aplomb and shine on Twitter , 4 square , Facebook and any other social “choupal” of choice via zyaadakairaada Profile & Portfolio - SocialPicks Different flavours at:

Posted on January 7, 2009, in Bank Stocks, Financial Markets, GDOW, India and tagged , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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