Friday, January 9, 2009

Govt. Disbands Satyam Board

The Government of India invoked various acts today and formally disbanded the board of scam-shaken Satyam Computer Services Ltd. (SAY). The board meeting scheduled for tomorrow has been canceled and the Government is expected to appoint 10 new board members to steer the company forward.

Very little remains ahead, however. The financial position of the company is terrible. It's market capitalisation has shrunk from $7 bn six months ago to just under $200 mn today. Eventually, the company might have to seel itself off either whole or in parts. 

Satyam's employees also seem a worried lot. According to various Job firms in Bangalore, over 7,000 CV's from Satymaites have been received. However, the chances of them finding a job in the current financial situation seems thin. Furthermore, Satyam will probably be unable to pay its employees' salaries for the next two months. The company's real operating margin was shown to be just 3% (it was originally reported to be 20%), which means that the company has made an overall loss. That means that it has been borrowing just to pay salaries, making it unviable

Raju Arrested
NDTV Profit reports that former Chairman of Satyam B Ramalinga Raju and his brother have been arrested and taken into CID custody for interrogation in Hyderabad. The arrests took place around 9:30 PM. Legal experts say that he could probably remain in custody for at least 14 days, and could face prison for at least 10 years. 

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