Sat yamraj u
Perhaps no one noticed it! Satyam + Raju = Satyamraju. Everyone failed to see the 'yamraj' nestled comfortably in such a juxtaposition.
B. Ramalinga Raju chairman and founder and brother Rama Raju, Managing Director of Satyam Computer Services have pulled out the most brazen fraud in corporate India's history. Raju should write a book "7 habits of highly corrupt people" and "How to manipulate financial statements". Crossword bestseller within hours of hitting the racks. It can usurp Nilekani's 'Imagining India' hands down.
Financial statements (for the uninitiated.. dont worry I am no expert either) are very difficult to understand in the first place. Cooking them with ample flavouring of condiments for a company of the size of Satyam deserves a corporate misgovernance award. Doing that repeatedly year after year deserves Padma Durbhushan. While it's early days to understand the repercussions of this 5000 crore deception, I engaged myself with Nilesh to figure out the fundamentals of this book cooking. This is what, we surmise, was Raju's game plan.
Background: After multiple quarters of bloating numbers, the cooking has attained unsustainable proportions. Or someone has unearthed the chicanery and confronted Raju. He decides to act fast
Act 1: Cleaning up Satyam books. He decides to convert his fictitious assets into real assets by a wonderful stratagem. "I will reduce the fictitious cash on Satyam's balance sheet by buying out my sons companies Maytas Properties and Maytas Infrastructure", Raju thinks. "This way cash will come down to reflect the actual levels and assets will go up by the same number. All other line items in the P&L and Cash Flow Statements accordingly adjusted to reflect this transaction. Satyam balance sheet cleaned", he grins at himself. Pleased he selects the song "Raju ban gaya gentleman" from his IPod.
Act 2: "Hmmm.. now the mess has been transferred to Maytas books", a frown breaks on Raju's forehead. "Ok this is what should be done to clean that mess". "The cash in Maytas book will increase by the amount it went down in Satyam book due to the buy out. Careful, boy, this inflated no. is again fictitious, so you need to tweak other line items to adjust for this swell. Umm let's me see what I can fudge". Raju carefully studies Maytas balance sheet. "Eureka! he exclaims" (Archimedes turns in his grave). "What needs to be done is", he speaks in a drawl "the creditors number can be appropriately inflated on the liabilities side to balance this swell on the asset side. Revenues would need to be jacked up in the P&L (we can tell those investors credit sales have gone up or something). Then slowly, perhaps after a few quarters we can clean up the mess by filling the fictitious cash by actual cash either by Maytas increasing CFO (though I doubt my son's ability, idiot) or by selling Satyam stake to some PE/FII/DII bumpkin at premium.
The curtain falls. As the light dims, we can see Raju strumming his imaginary guitar and head banging on the song "Money for nothing" by Dire Straits.
Thunderous applause by the Raju family.
B. Ramalinga Raju chairman and founder and brother Rama Raju, Managing Director of Satyam Computer Services have pulled out the most brazen fraud in corporate India's history. Raju should write a book "7 habits of highly corrupt people" and "How to manipulate financial statements". Crossword bestseller within hours of hitting the racks. It can usurp Nilekani's 'Imagining India' hands down.
Financial statements (for the uninitiated.. dont worry I am no expert either) are very difficult to understand in the first place. Cooking them with ample flavouring of condiments for a company of the size of Satyam deserves a corporate misgovernance award. Doing that repeatedly year after year deserves Padma Durbhushan. While it's early days to understand the repercussions of this 5000 crore deception, I engaged myself with Nilesh to figure out the fundamentals of this book cooking. This is what, we surmise, was Raju's game plan.
Background: After multiple quarters of bloating numbers, the cooking has attained unsustainable proportions. Or someone has unearthed the chicanery and confronted Raju. He decides to act fast
Act 1: Cleaning up Satyam books. He decides to convert his fictitious assets into real assets by a wonderful stratagem. "I will reduce the fictitious cash on Satyam's balance sheet by buying out my sons companies Maytas Properties and Maytas Infrastructure", Raju thinks. "This way cash will come down to reflect the actual levels and assets will go up by the same number. All other line items in the P&L and Cash Flow Statements accordingly adjusted to reflect this transaction. Satyam balance sheet cleaned", he grins at himself. Pleased he selects the song "Raju ban gaya gentleman" from his IPod.
Act 2: "Hmmm.. now the mess has been transferred to Maytas books", a frown breaks on Raju's forehead. "Ok this is what should be done to clean that mess". "The cash in Maytas book will increase by the amount it went down in Satyam book due to the buy out. Careful, boy, this inflated no. is again fictitious, so you need to tweak other line items to adjust for this swell. Umm let's me see what I can fudge". Raju carefully studies Maytas balance sheet. "Eureka! he exclaims" (Archimedes turns in his grave). "What needs to be done is", he speaks in a drawl "the creditors number can be appropriately inflated on the liabilities side to balance this swell on the asset side. Revenues would need to be jacked up in the P&L (we can tell those investors credit sales have gone up or something). Then slowly, perhaps after a few quarters we can clean up the mess by filling the fictitious cash by actual cash either by Maytas increasing CFO (though I doubt my son's ability, idiot) or by selling Satyam stake to some PE/FII/DII bumpkin at premium.
The curtain falls. As the light dims, we can see Raju strumming his imaginary guitar and head banging on the song "Money for nothing" by Dire Straits.
Thunderous applause by the Raju family.
Labels: Corporate India, Satyam, Scam