The Satyam episode.......

Tuesday, January 20, 2009

After Ramalinga Raju resigned from Satyam computer Ltd Board. There are discussion about a Govt Bail out and even one of the Minister in the present Central govt even hinted about a possible "Bail out". But, I believe this is little immature..

For the new board/Govt its not going to be easy task, it would be inviting more troubles for the following reasons.

i) Apart from public shares, Satyam has ADR ( US funds) and most of the time the top management/new directors/Govt will spending the time and money in US courts to protect themself.

ii) Good to have board, but more importantly clear & correct financial statements should be made public within few weeks. This will show whether company or 'viable' or is it in the category of 'Lehman brothers'.

iii) India govt should decide whether it has to be capitalistic or communist. It can't be both, if the approach is to be capitalistic, then like 'enron' it should be allowed to die naturally.

iv) Lastly but not the least, Satyam had recruited in large number of resources without any plans(THIS MIGHT BE EVEN BE APPLICABLE TO SOME OF THE OTHER INDIAN SOFTWARE COMPANIES AS WELL) and this is a a big overhead, particularly when even a single quarter is Bad. For example to keep the Satyam going requires about Rs 600 crores(53,000 employee) per month. Hence ideally assets of Satyam should sold and all the stakeholdersbe compensated including the employees.

This list might not be exhaustive and hence ideally other 'Tax payer' money should not be used for bailing out Satyam....

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