Says profit was inflated
B Ramalinga Raju, chairman of Satyam Computer Services Ltd, resigned on Wednesday, making startling revelations that profits had been inflated over the past years. Soon after the announcement, the company also announced resignation of its managing director B Rama Raju.
The company has been mired in controversy after it announced a bid to acquire Maytas Infra and Maytas Properties, owned and run by Ramalinga Raju's sons.
In his letter to the Bombay Stock Exchange, Ramalinga Raju has said that the Balance Sheet carries as of September 30, 2008 an Inflated (non-existent) cash and bank balances of 50.40 billion rupees ($1.04 billion) (as against 53.61 billion reflected in the books).
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The letter says that there is also an accrued interest of 3.76 billion rupees which is non-existent. "There is an understated liability of 12.30 billion rupees on account of funds arranged by me," he said.
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He claimed that the aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones.
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He further says: "Neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results."
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After the announcement, the Satyam shares nosedived to Rs 83 per share, nearly 54 percent down.
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