Ramalinga Raju resigns from Satyam board

In an announcement sent to the stock exchanges, Satyam Computer Services said Chairman B Ramalinga Raju has resigned from the board.

In a letter to the board of directors, Raju also admitted that the company's balance sheet was inflated to Rs 5,361 crore at the end of September 2008 against the actual Rs 5,040 crore. There was also an accrued interest receipt of Rs 376 crore, which was non-existent. The balance sheet also had an understated liability of Rs 1,230 crore on account of funds arranged by Raju. The debtors position was also overstated by Rs 490 crore to Rs 2,651 crore.

Raju also admitted that the September 2008 results were overstated at Rs 2,700 crore with an operating margin of Rs 649 crore. Raju said the actual numbers were Rs 2,112 crore and the operating margin was much lower at Rs 61 crore. This resulted in an artificial cash balance of Rs 588 crore. Raju also admitted that Satyam's profits were inflated over several years. He said that what started as a marginal gap between actual operating profit and the reported figures has attained unmanageable proportions as the size of the company grew, and every attempt to eliminate the gap failed. He added, "It was like riding a tiger, not knowing how to get off without being eaten." The Maytas deal was the last attempt to fill the fictitious assets with real ones.

Raju also said Rs 1,230 crore was arranged to Satyam, which is not reflected in its books, to keep Satyam's operations running. For this the promoter had to pledge the promoter shares and raising funds from other sources. Raju apologised to Satyam employees and stakeholders for the current situation. Raju will continue in his position till the board is expanded in the next few days.

Following which, the stock has taken a hard knock and plunged over 50 per cent to a low of Rs 84. The stock had touched an intra-day high of Rs 189 today. As of 1155 hrs, the stock is now trading at Rs 87 - down 51.5 per cent - on hefty volumes of around 2.62 crore shares on the BSE.

SATYAM COMP STOCK PRICE 30.70