Satyam Chairman Resigns
The chairman of Satyam Computer Services, India’s 4th-biggest software services exporter, announced his resignation on Wednesday, triggering a more than 60 percent drop in the company’s share price.
In a statement to the stock exchange, B. Ramalinga Raju said Satyam’s end-September balance sheet had been overstated. He apologised to staff and shareholders and said he was prepared to face the legal consequences.
NIRMAL JAIN, CHAIRMAN AND MANAGING DIRECTOR, INDIA INFOLINE (ON CNBC TV 18):
“I’m not particularly worried about confidence in the Indian economy or corporates in general. We have seen such corporate governance issues arise in all markets, developed as well as developing. But I hope this is one stray case and we do not have similar cases from anywhere else.”
JAYESH SHROFF, FUND MANAGER AT SBI FUNDS MANAGEMENT:
“I think it’s a shocker.”
SANJEEV PATKAR, HEAD OF RESEARCH, DOLAT CAPITAL, MUMBAI:
“Cash balance had been an important element in valuing the stock … and now we’re told this is not there. We expect the stock to crash to one-third of its value at start of the day. I think a buyer for the company will come in, after due diligence, but the price may only be at 50-60 rupees a share.”
“I think whatever has happened is mind-boggling and will have a telling effect on other IT companies and even other companies. Risk taking will reduce. Ability to follow numbers will go down.”
TARUN SISODIA, HEAD OF RESEARCH, ANAND RATHI:
“It’s going to be very, very negative. This was a company which had the most high profile independent director. It had an auditor of significant repute … Despite that, if such an event can occur, then why not other companies? That is going to raise bigger issues.”
“This raises a credibility issue and strict action is needed. One of the top four IT companies has done this. I think from the investors’ point of view, there would be a serious knee-jerk reaction. People might use it as a reason to get out of India.”
SHERIAR IRANI, RESEARCH HEAD, JM FINANCIAL:
“It wasn’t expected. It is an unprecedented development and the magnitude of the situation was not anticipated.”
AVINASH VASHISTHA, CHIEF EXECUTIVE OF CONSULTANCY THOLONS INC:
“This is even worse than we had thought earlier. We definitely knew that its failed takeover bid was not motivated by any fundamental reason, but what has been revealed now is a complete surprise.
“On its own, it’s going to be very difficult for Satyam to clean it up. But now, with the kind of issues that have come out, it will be even more difficult for it to get a merger partner.”
“If a company’s chairman himself says they built fictitious assets, who do you believe here? Not only Satyam, this has put a question mark on the entire corporate governance system in India. Probably he will face a rigid enquiry. Anyway, things are pretty bad.”
V.K. SHARMA, HEAD OF RESEARCH, ANAGRAM STOCK BROKING:
“It reduces confidence (in corporate governance). It’s absolutely wretched.
“There is no option right now (for Satyam). People will leave, clients will walk away. It’s a very, very dire thing that has happened. There will be question marks raised everywhere.”
JIGAR SHAH, SENIOR VICE-PRESIDENT OF KIM ENG SECURITIES:
“I think there is no future for this stock. This case for India is similar to what happened to Enron in the U.S.
It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected.”