Satyam, meaning the Truth in sanskrit, has become the subject of study of several books, for the wrong reason. Two mostly read books are here. One is written by Shri Kingshuk Nag and the other by a group of writers, Bhupesh Bhandari, Prashant Reddy, Vandana Gombar, Latha Jishnu, Shyamal Mazumdar and Anand Pandey. The title of the first book is "The Duble Life of Ramlinga Raju" and the second is " The Satyam Saga.". The first book is dedicated to “ the thousands of investors who lost thier fortunes in India's biggest financial fraud.” However, the biggest financial fraud has now been taken over by the 2G scam, if the CAG report is to be believed.
The Double Life of Ramlinga Raju
It has nice photographs, particularly a nice photo of Ramlinga Raju seated in his home surrounded by books, more like a professor or a lawyer, rather than an entrepreneur. Satyam was started with 20 employees with a small office in P&T colony, in Secuderabad on 6th June, 1987.The first big customer of Satyam was John Derry, a well known tractor company of Chicago, USA..In total Raju had floated 327 companies, at 12 addresses in Hyderabad, in the names of his near and distant relatives and employees. Satyam Infoway's ADR listing on 19th October, 1999 on the first day of trading was quoted at twice the issue price. In Raju's own admission he started falsifying books of accounts in 2001. His famous letter admitting the same was written in January 7, 2009 after a gap of nine years. 'Maytas', the reason for his ambition and fall is actually what you see, when you write the letters in 'Satyam' in reverse order. Quote from the book " Raju knew that he could neither match Narayana Murthy nor Ajim Premji, as Satyam procured much of its business by quoting cheaper rates. But Andhraites had made him into an icon and he had to live upto his image.There was no way, Satyam could show annual results which were vastly inferrior to those of Infosys or Satyam." In the initial public offering, of Satyam Computers Limited, the Rajus had only 18.78% of equity to themselves, lower by any standard. And this became further lower and lower as the years passed by. In order to trade in his own shares Rajus had floated 5 investment companies, Elem Investments, High Grace Investments, High Sound Investments, Fincity Investments and Veeyes Investments. Before selling his family shares in the market, to avoid market attention, he transferred those shares to some trusted employees of the company, who treated him like God. By depositing money into the Senior citizens' accounts of the family, he avoided tax queries, because no TDS is made from the interest of Senior Citizens. Satyam shares were pledged by him and family to a host of NBFCs in India, and the proceeds went to various Agri companies floated by him and not to Satyam. Clearly, he was loosing interest in the Infotech business, in which he had very little promoter's equity, and was getting interested in infra business, where the return were manifold. Funds from Satyam were used by him to buy 287 properties in major cities of India, none in the name of the company. Of the 760 crores money raised by ADS, only 397 crores, were brought back to India, and the rest were transferred to some unknown accounts, via Bahrain, which the government is still trying to trace. How was he as a businessman? To quote an acquaintance from the book " He was an epitome of good behaviour, he spoke softly and criticised nobody. We used to wonder, how a person so high in life, can be so humble?" He was very hardworking, A workaholic.
Even after all the episodes, Satyam definitely still had enterprise value left in terms of its business pipeline and human resources, so that it was sold to Tech Mahindra at 1756 crore rupees, with overall cost of acquisition, including public offers going to as high as rupees 2889 crores.
Now I should quote from the foreward of the second book. The foreward is written by Mr. Kiran Karnik to highlight some positive side of the developments. " One of the special features of the Satyam story has been the coming together of the government, its various agencies and regulators, the corporate sector and individual professionals. Not only was there co-operation and coherence, but also a great deal of synergy was created." Satyam as a company was at least saved. Besides, the ghost employees, a large number of real employees, had to leave the bench, but those who could stay back, have been doing what Satyam was designed to do, providing high quality IT services, and still making India proud in the field of IT, in its new avatar as Mahindra Satyam.
The Satyam Saga
This book is written in a different style and on a broader canvass. In this book various chapters are written by various authors. If Kingshuk’s book is from the Times of India clan, “The Satyam Saga’ is from the stable of Business Standard. A competition indeed...
From Bhupesh’s writing you get a clear picture of the IT business in India, in just a few lines. “Information Technology is not an easy business, certainly not in India, where most companies offer people-intensive services and very few have their own patented software products. In a way it is like running a commodities business”.
The all pervading nature of what Ramlinga Raju did comes out of the following lines.
“Was it as simple as that? Most of the Satyam units are located in software technology parks in order to avail of tax benefits. Each order there is certified by the Software Technology Park of India, a government body, so as to keep track of business done in the park. Then he got past the banks where the money was shown as deposited and then the government, which was paid income tax……”.
He talks of a survey done by certain experts and points out to the following observations :
“About half of the Indian private firms, of the 370 surveyed report that they regularly evaluate the CEO. One wonders, however, how rigorous these evaluations are, given that zero firms reported that the Board had replaced the CEO. We also asked about the CEO’s succession plan, only 30% had any..”
The book also chronicles various financial scams of independent India starting with Ramkrishna Dalmia ( a dig at TOI, I suppose ). It also covers Haridas Mundra, Dharma Teja, Harsad Mehta, and Ketan Parekh.
The book has also photos of official documents furnished by Satyam to the Auditors.
I am not repeating the other parts of the stories, which you shall find in Kingshuk Nag's book also.
Even after reading cover to cover both the books, one may still wonder, why people with great personality, big image and having philanthrpic values, get into this kind of mud, with full knowledge that we are a democratic country with open society, where no secret can be held on to for the whole life. Not only that, here the goverment servants have a very strong constitutional immunity, and it takes only one honest officer to blemish your entire business or political career, in terms of revealing the truth.