The past few days have been terrible for Satyam Computers and B. Ramalinga Raju. The company has been in the news for all wrong reasons first a failed merger of Maytas Properties & Infrastructure into Satyam Computers and the ban by World Bank for Data Theft at Satyam’s Campus.
B. Raju – Scapegoat of Economic downturn & Activism of Corporate Governance: Yes, you read that right. We believe, B. Raju is the victim in the current scenario. If you have read the book, The Polyester Prince – Biography of Dhirubhai Ambani, you will know how to put dirty corporate governance into practice in India.
We feel, B. Raju and his son should have taken a lesson from Anil Ambani on how to merge or transfer successful projects into different companies. B. Raju got the timing wrong as well and is thus a victim today [Imagine would anybody have objected to this deal had it happened in Dec 2007 ?]. Reliance Power IPO Scam was a much bigger issue but everybody including the regulators were mere spectators.These are just few instances. If you look with a magnifying glass, then you will have less than 100 companies in India who are strictly ethical in their corporate practices.
Taking a leaf from Reliance, Satyam should have invested in Maytas’ projects or in SEZ in tranches thus escaping the eyes of Institutional investors. [Recall how Ratan Tata laundered money from Tata Power Company to his Telecom venture resulting in a loss of Rs 250 crore to Tata Power?].
B. Raju – What Should You do Now ?
Reputation knock has been taken. If the Accounting Firm is not your client, disclose its name and clean yours. The only way you can win back shareholders is OUTPERFORM in your core business.
We agree with the following:
Satyam does have poor management practices – justified by World Bank’s Ban. Personally, we have experienced, loss of share certificates in the year 2000 which took the company a long time to rectify by which the Tech Boom Saga was over.
M. Rammohan Rao – ISB Dean should Quit:
M. Rammohan Rao, the Dean of Indian School of Business chaired the board meeting which passed the Satyam + Maytas deal. If the Dean of ISB is involved in such poor corporate practices, what about the students he teaches, recommends and are passing out of the Biz School ? Can we trust the self claimed India’s Prestigious / Best Business School anymore ?
I feel it was a great observation. I too feel Mr.Raju was wrong but no one has bothered to raise voice against Mr.Ambani and Tata, and to some extent Anil Agarwal..
I would say keep up the good work of impartial observations….
Sir, very good post. Hope more ethics come into investors and promoters in India.
Sir, also wanted to ask you about Invest The Happionaire Way? Am hearing lots about this book and have read in lots of places that Jhunjhunwala has suggested all indian investors to read it.
Have you read it?