I went on a vacation for 2 weeks at the fag end of 2008. I went believing that the most dreaded year of my adult life has come to an end. I also went with theÂ hope that I will have my job when I come back. One of my assumption is turning out to be false and the other luckily is true. As it is turning out, 2009 could be the dreaded year and I still have my job.
Thought it is good to be back, it is not a happy feeling to write or type any of the words. There is anger, frustration and pain as I type this. Most importantly I am sick of the ‘Breaking News’. But, life is too short for all these things. I decided to be happy and see the brighter side of it.
I am referring to the Satyam episode. I am refraining from using words like scam or scandal because those words are already being used by the TV channels, eminent personalities like Mohandas Pai and the rest of India Inc.
I have blogged about the Maytas deal and why it did not make any sense. It never did until today. Now it makes perfect sense. Credit should be given to Ramalinga Raju for being adventurous.
Maytas Properties and Maytas Infra was valued at $1.6 billion. That is the exact amount of money which was missing from Satyam’s books. The admitted amount so far is close to 7000 crore rupees. The inflation was done largely by financial gymnastics.
Since there is no cash on Satyam’s books and since Maytas would not mind being acquired for free it all made perfect sense. The story would have ended happily if it wasn’t for the investors. Investors reacted sharply to the deal. Satyam pulled out. Look what the investors got now.
What would have happened if Satyam went ahead with the deal? Sure the investors would be pissed off. Some of the clients mightÂ have stopped outsourcing to Satyam. But that would have been minor when compared to what is happening now. I am not sure about other ramifications but nothing could have been this catastrophic.
Since that did not happen Raju has no choice but to write a confession letter.
I am not supporting Raju neither am I ignorant to the repercussions of this episode. I completely understand that this is a criminal offence. Having said that, something of this magnitude has happened in the past, is happening now and will happen in the future.
Countries like US has learned from the mistakes and are experimenting with tougher regulations. I suggest the same thing for India too. The hysteria is more a cultural thing. Just ask any US guy and he would say that this is all too common.
According to me, Ramalinga Raju has committed two mistakes and have done one good thing.
Two mistakes :
- By inflating the profits over many years. This is all too obvious.
- By pulling out of the Maytas deal : It would have been a better ending to the story has Satyam went ahead and bought Maytas – ignoring investors. That would have been a different story.
One good thing :
- Coming out and admitting the fraud in public instead of resorting to some other gymnastics. Not a whole lot of people realize the importance of this. The whole media is acting like it has discovered something in its sting operations. But please give yourself and everyone else a break.
India Inc should stop blaming Satyam and start looking into their books.
Suggestion to Raju : When you are riding a tiger you should get down and run for your life. “Run Raju Run”
PS : India Inc’s image will not be tarnished because of this.