Info-tech

RIP Satyam Computer Services

K. V. Kurmanath Hyderabad | Updated on November 23, 2017

BL26_P7_SATYAM1

Satyam may be dead, but not the truth.

Satyam Computer Services, as the Indian IT industry had known for 25 years , is history now. About 40,000 people working for it, huge assets it owns and the businesses it does — all are transferred to Tech Mahindra, which had bought it four years ago.

Satyam, founded by B. Ramalinga Raju, will definitely have a chapter in the history of Indian IT industry. Part of the Big Four for many years, Satyam was synonymous with IT in the late ’90s and till the scam broke out. Ramalinga Raju’s stature was such that he was invited to talk at an event when Bill Clinton, the then US President, visited Hyderabad in 2000. People would point out with pride that someone in the family worked for Satyam. Raju was an icon for the youth in this part of the world.

But the dark side of Raju began to loom. He gradually withdrew Satyam stock, pledging it to raise funds to invest in the real estate sector, which was just beginning to bloom, early last decade. His firms began to bid for and build projects. With the real estate bubble bursting a few years later, Raju’s parallel empire crumbled, forcing him to doctor board decisions to buy two Maytas firms.

He had also allegedly begun to fudge numbers, doctoring invoices and making up the turnover numbers. He claimed that he did it to keep the company in the League of Four. ‘Riding the tiger’, he went on to borrow money to keep the show running.

Unable to get off the tiger or ride it further, Raju spilled the beans on January 7, 2009, confessing he fudged the books and deceived all.

Apart from almost destroying his company, his misdeeds brought disrepute to the country. The reputation of India as a global hub of IT outsourcing took a severe beating. The confidence of multi-national financial institutions that had invested in Indian IT firms took a beating. It also raised doubts over the levels of corporate governance.

Satyam’s debacle cast doubts over the ability of the Indian IT industry to manage corporate affairs in a professional manner.

However, it helped the country in a way. The government has made it mandatory for promoters to strictly report any pledging of shares. The Ministry of Corporate Affairs has established a warning system whose results are yet to be seen. The Satyam debacle also proved that it is possible for the government to resuscitate life into a crumbling company.

Satyam is dead. Long live satyam (truth). It will continue to remind us to be vigilant over wily promoters and corporate fraudsters. A saga of twists and turns ended on a positive note for Satyamites, investors, the Mahindras and the country as a whole.

kurmanath.kanchi@thehindu.co.in

Published on June 25, 2013

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