Every one know what happen today in Indian business history, this is a day show that how small investor are not safe. Everyone in the India IT space has been closely following the satyam fiasco. Its been written about in most newspapers. But what has taken the IT space by storm today is the resignation letter that has Ramalinga Raju, Chairman of SATYAM Computer Services Ltd. (one of the top 5 INDIAN IT companies) admitting to forging revenue numbers and having an inflated balance sheet of over 5000 crores. This is as bad as news can get in these times for corporate India.
Raju resigned from the Satyam board today (Jan. 07th, 2009). He wrote a letter to the Satyam board admitting that the IT major’s balance sheet has an inflated cash and bank balance of Rs 5,040 crore. The balance sheet has inflated accrued interest of Rs 376 crore in books is non-existent. Rs 1,230 crore was arranged to Satyam, which is not reflected in books. The Satyam scam is the biggest one after Harshad Mehta and Ketan Parekh.
Main things written in raju resignation later.
a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore refglected in the books)
b) An accured interest of Rs 376 crore which is non-existent
c) An understated liability of Rs 1,230 crore on account of funds arranged by me
d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books)
This news has hammered the stock a lot, which touched a new 52-week low of 30.80. It has seen a drop of 77.51% to Rs 40.25, at close.
How can you expect auditors to be fair when they are paid by people who are to be audited. Dismiss all Senior functionaries who misrepresented accounts and penalise with punitive costs and damages.. Why should small investors pay for these fraudulent working group.
PWC was one of the auditors in this case… IL&FS sold 24.5 million shares yesterday @ 180 and today the fraud was out in open and the price was @ 30.80… So who lost? only the small investor.
Can somebody explain why IL&FS sold 24.5 million shares yesterday?
Guys small investor are not safe in stock market at this level, all in politicians running for making money in stock market.
Lets hope this doesn’t worsen the slowdown in India.
Read treading rules before investing.
Suggested reading
- How to save petrol
- Post Office FD v/s Mutual Fund
- Should you invest at this level
- Advantage of financial planing
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