The govt. has acted. The three very eminent and respected personalities on the board of Satyam, is a huge relief for all those who are connected with Satyam in any which way. Also for the public in general as it is rare to see a government with its lumbering beaurocracy moving so quickly.

But now that the govt. has done its part, it should leave the rest to the Mr. Deepak Parekh and Company and confine its pole to assisting them in getting to the bottom of this fiasco and trying to keep the company running.

The 3 Gentlemen on their part, must make a conscious effort to do the best for the company, not just to do what may look like the best for the company.

Firstly, i feel that the must get in a new management. Then, it must be accepted that serious downsizing is immediately required. Fresh business will definitely not come Satyams way now, and surely they are bound to lose a large part of their business. Therefore, downsizing is a must, if the company is to continue profitably.

It is better to have a systematic and thought out process of employee reduction, whereby those who  are required to continue, are completely assured of their jobs.

P.S. Cartoon in the Free Press Journal today…. Yesterday Andhra… Today Andhera…

A most basic yet very important standard of judging an IT company is the RPE, which is the revenue per employee. This is very much like the standard of judging Telecom companies which is the ARPU, Average revenue per user. It is interesting to note that though the ARPU is widely publicized by the Telecom operators, the RPE is hardly ever spoken about by the IT  giants.

A little very ordinary research on the net  (not dependable mind you) shows me that the RPE of Satyam is very much similar when compared to other companies of repute in the IT space.

Now since Satyam revenues are supposedly grossly overstated, then should not the average revenue per employee also be much higher than its peers?

It only follows that if Satyam's RPE is similar to other companies, and the Satyam revenues are overstated, while actually being much less, then :

a) The employees of Satyam are not really up to the standard, and thus the company never was a good company. (This is not very plausible as the company was surely doing real business with real clients).or

b) The number of employees of Satyam is highly exaggerated. ( This would be very easy to check and would reveal siphoning of funds via expenses and salaries.) or

c) The revenue figures of Satyam are really not inflated. (This again would mean siphoning of funds in light of Mr. Raju's letter) or

d) That the industry itself needs to be looked into.

Besides the RPE similar exercises for Satyams accounts, with reference to Expenses per employee besides and including wages, and also Profit per employee  need to be carried out and compared with the industry peers, in order to reassure people that it is a Satyam specific issue.

This should not take much time and as a result, investors, customers and employees will know fairly well, what the situation is, where they stand and what they need to do.

Many ppl have asked me as to how and why i am connecting the Satyam Fiasco with the terror attacks, as they are different things.

In clarification…. When the terror attack on Mumbai took place, many corporate personalities alongwith other luminaires of  society, expressed their displeasure at the way our government, and its various arms function or rather dont function.  We ordinary citizens also felt that a corporate culture was required with proper disclosures, transparency and accountability.

Thus looking at the way the Satyam incident has mocked the very foundations of transparency and accountability even that last hope seems to have been wrenched away from us.

Yes such things have happened all around the world… but then we didnt expect it here in India. And the disturbing fact of this situation as different from others like WorldComm and Enron is that this was never detected !!! And if the promoter holding in Satyam had been large enough to keep control of the board… it may never have been .

I also dont understand how people are wondering whether the cash was there or not… obviously the cash was there…. Mr. Raju in his letter has admitted to inflating Revenues and Profit.. but he has omitted stating the obvious… that the expenditure too was inflated.

When topline is inflated by such a huge amount, obviously the expenses also have to be… else you will end up with an unrealistically big operating margin naa…..and where did the inflated expenses go????? Take a guess.

Elementary… but do these MBA’s know it?????

The dirty linen is finally out in the open.. at least part of it . The Chairman through his letter to the board, is trying to promote himself as a person who has not made a single rupee out of the knowledge of the real situation of the company, as he has not sold any substantial number of shares in the past 8 years. Maybe. But then what was the object of the deceit?

 The fact remains that in spite of our systems and processes of divulging data to SEBI, the exchanges and to investors, such a situation did arise and then continued for so long.

 And the thoughts uppermost in the minds of investors are  that if a perceived blue chip company can get away with this.. what is happening in the lesser known companies? And how many other companies have such skeletons in their closets? How come even the FII’s and DI’s with their large holdings, highly talented? and exorbitantly paid  staff did nt realise what was happening?

The promoters had thought up a great scheme to take the nonexistent money off the books through purchase of Maytas properties..it was simple really, I think … Maytas would not be paid, or else it would be a book entry  …. .maybe Satyam shares would be issued at a later time, and the nonexistent cash and income would be rubbed off the books, balancing it with the payments to be made.

It was simply nonexistent cash buying non existent assets.

However..it was not to be as the investors thought the cash was real and knew that the asset being bought was nonexistent, and thus thwarted the promoters’ plans.

Just goes to show how  even our company regulatory systems are rooted with corruption and  conspiracy, and yet, we still feel we can do something about the Terror Attacks. We are a nation of optimists!!