Friday, January 09, 2009

Satyam, TOI and The Hindu

The recent corporate shock wave everywhere must be Satyam.

Personally, I feel sorry for Raju. It was a mistake, but it appears to be a chain out of which there was no exit. His letter to the board appeared heartfelt and as he simply put it - he was riding a tiger. The amount of turmoil he must have gone through in the past months must have been incredible - but the repercussions are inevitable. One high point in his letter, which no news coverage pointed out, was that he gave a clean chit to every other board member and owned up to everything. No attempt to take down others with him. A few days back, a close friend of mine and I were talking. He had recently quit his previous company and joined Satyam! We were discussing on how Raju was expecting to pull off the Maytas deal (8% stake, $1bn in cash and company was his sons'). At that point, *no one* (analysts, "experts") was able to see through any fishiness in the scenario. It was only perceived as foolish judgement. Anyway, right now, I feel most sorry for the shareholders. In a matter of few days, they have seen the script tumbling down by ~80%. Employees are next. While we can safely assume most of them would be placed elsewhere, the interim turmoil is another aspect to consider.

Where things get hazy are that, given the level of cover up, how no one within the board was able to see through? (I am not trying to play the devil's advocate). Especially, the point on the OM (quoted OM of 24% vs actual OM of 3%)? As NRN pointed out, the auditors who passed this will also be made accountable shortly. Somethings aren't still making sense - an OM of 3% looks like an impossibility in Indian IT standards (consider - CTS 17%, Infy 28%, TCS 25% and so on). We will need to see what else is uncovered.

One final question - is it morally (not legally) wrong to invest in Satyam's stocks now? Everything is out in the open - the script has tumbled by ~80% to as low as 30% and Raju has himself gone out and the corporate is going to be revamped.

Regarding TOI / Hindu - ever since TOI was out in Chennai, we were buying both. I was able to contrast their reporting style. TOI is more gossipy (I am not referring to falsification, but they like drama!). The Hindu is more matter-of-fact and they keep opinions to a minimum. TOI presentation style is excellent - for any issue, it is traced back in a vivid manner to give a complete picture to the reader. But the benchmark of objectivity will always be "The Hindu". I recall a few years back, where there was a protest against the paper (politically driven). They reported it matter-of-factedly without an iota of prejudice or opinion. I was awestruck! I could see that again in context of Satyam. TOI reported "Satyam, a 7000 cr lie" and The Hindu reported "Satyam's chief admits to fraud, quits". Inside, TOI spiced it up saying "Satyam's asatyam"! TOI is more interesting to read, but "The Hindu", as far as what I have seen, is the benchmark on objectivity!

3 comments:

Anonymous said...

Raju is a Gentleman. Definetely these kinds of fudgings are possible at top levels and the Chartered accountants are the main culprits. The MBAs are also responsible for guiding the top man to do these kinds of attrocius things. Satyam has gone. Next who will "RELY". Now people will understand what is happenning in the other BIG companies!!

Deepak said...

If the CEO doesn't say no, who will? Your argument will not work.

Anonymous said...

Raju is a Gentleman. Definetely these kinds of fudgings are possible at top levels and the Chartered accountants are the main culprits. The MBAs are also responsible for guiding the top man to do these kinds of attrocius things. Satyam has gone. Next who will "RELY". Now people will understand what is happenning in the other BIG companies!!

 
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