“Satyam” - A tale of bitter truth...

The word "Satyam” originates from the Sanskrit language & it means TRUTH. However I think for the ex-CEO Ramalinga Raju ,this was the meaning meant to be kept “just for the records” ,who allegedly cooked the books of India’s leading global IT company (Satyam Computed Services limited) to the tune of at least $1 billion .The incident shocked investors and sparked the talks of stricter regulations. This may be something “new” for the Indian corporate sector but if we look into the global arena , from Enron’s to the Madoffs of the world, there is no end to the greed. Soon after the incident the shares of this IT major were hammered on BSE and NASDAQ. Markets always have a tendency to overreact in such a situation where the unethical actions of certain people are weighing on the entire organization.

What is way forward for Satyam?
The govt has appointed a new board of directors and has given Satyam the much needed lifeline .
The board’s “To Do” list :

:-Appointing a new independent accounting firm to restate the financial position .

:-Appointing more board members and ultimately elect the chairman.

:-Meeting Working capital

:-Enforce effective Oversight & Governance

The board has already appointed a new CEO and the new management is currently weighing different buyout options at the moment.

The actions of the board members /new management in the coming weeks must target restoring the confidence of customers, employees, suppliers and investors.

What are the learning's for the Indian Corporate sector?

IT Governance & Process Efficiency :
The lack of governance , the lack of efficient regulatory process coupled with the insufficient oversight allowed the culprits to manipulate the balance sheets. This really calls for a much enhanced IT Governance and efficient processes which will ensure a robust & transparent organisation .

Test of credibility for regulators:
The govt. in conjunction with SEBI must setup a probe to dig into the matter to find out the bitter truth behind Satyam fiasco and must punish the guilty ones no matter if the person is ex-CEO or a financial auditor for that matter. Based on the findings it should also make the necessary amendments to the financial auditing standards thereby teaching the corporate the necessary lesson out of this entire episode.

At the end of the day people like Raju should understand that company balance sheet is not just the manipulation of numbers but it stands for the hard work which everyone is putting to achieve the economic prosperity and it has to be "earned" not manipulated.We haven’t seen any of Satyam’s clients coming forward and questioning its services which are ultimately responsible for its long term survival. I am not saying that their view about Satyam has not changed but we always need to be optimistic in such situations.

If I were to be the employee of Satyam I would show a full faith in the new management and would co-operate with them to take this IT major to reach new heights.

Ultimately once the new board/new management is back in action and as the Satyam saga unfolds itself I hope Satyam will find a new beginning and proves its true meaning .

Disclaimer:

This is a personal weblog. The opinions expressed here represent my own views/ideas.In addition to this my thoughts and opinions change from time to time.The information published on this site may include inaccuracies and typographical errors and the information may not be up to date.