| TRUE LIES (What Raju owned up to) |
| * Inflated cash and bank balances of Rs 5,040 crore |
| * Non-existent accrued interest of Rs 376 crore |
| * Understated liabilities of Rs 1,230 crore on account of funds arranged by Raju |
| * Overstated debtor position of Rs 490 crore |
| * Q2 '08-09 profit stated as Rs 2,700 crore and operating margin of 24% revenues. Actuals: Rs 2,112 crore profit and 3% of revenues |
| * Profits inflated over "last several years"; attained unmanageable levels as company grew |
| * Aborted Maytas deal was "an attempt to fill the fictitious assets with real o |
Pw faces ICAI Probe
Q: How did the company have only 3% operating margin?
A: We are confronted with this situation for less than 36 hours ago. Most of us are not able to answer such questions. We need to verify the veracity of the statements. What we can say is that we have a good business. We have good visibility on the business we manage and their profitability. None of us have information beyond our groups at this time. We will be in a position to do so after we finish the process.
Q: How is the company functioning without board members? What happens to Price Waterhouse?
A: To correct you I (Ram Mynampati) am a board member and we have two other directors. So the company can function.When we review info in board meetings, we are presented by audited numbers. We have not yet verified Price Waterhouse's process. We have not been in contact with Price Waterhouse, but we will be.
Q: What is your working capital policy? What is your whistleblower policy?
A: We have taken care of salaries for December. We have some outstanding payments due to vendors. The liquidity position is not encouraging. We are looking at options to improve liquidity. CFO Strinivas Vadlamani has resigned but we have not approved it yet. There are a few CAs playing various roles and they have come together to assess the situation. Nobody has been identified to replace the CFO.
Q: What news of chairman and MD?
A: Many senior leaders had a conference call with chairman and MD within half an hour of receiving the letter. They have assured us support. We have not needed them yet; what we need is the CFO's assistance.
Q: What about liquidity?
A: We have verified the balance sheet figures such as receivables. On liquidity we need some assistance for business continuity. Cash on hand is not very encouraging.
Q: Service delivery?
A: We are ensuring that delivery of services happens. Forex for travel etc is taken care of.
Q: Do you anticipate any threat from any major shareholder? The issue is taking a political stance, do you have apprehension?
A: We have to deal with regulators in a transparent fashion. We (senior leaders) do not need to do this for financial reason; we are doing it for emotional reasons.
Q: Why did you not tell us the CFO quit earlier?
A: The resignation has reached today and it has not been accepted. Also, every one of us has a notice period and he will be back in office next week. We are in touch with him.
Satyam today is completely different than what it was yesterday. We are driven today by the stakeholders' interests.
On timing of the press releases
We have a crisis on our hand. We are doing everything we can to deal with the situation expeditiously. We are trying to cope with it in the best way possible.
Q: Are you looking for buyers?
A: We are exploring the option to induct new members, diluting equity and looking at a strategic investor. We need to transition. It can mean that we recast ourselves in a different model. We have to align income and expenses. We will have to operate differently. We need a new investment banker quickly.
Q: Where is Raju?
A: I am assuming he is in Hyderabad, but I do not know.
Q: You did take questions in conferences in the past along with Vadlamani. Why are you not able to answer on margins?
A: If you can recall, the only answers i had on margins was how to improve them.
Q: Regarding your whistleblower policy, irregularities were noticed earlier but not reported...
A: Can you be more specific? Can you site some instances? I cannot recall any.
Q: Who will be the new CFO?
A: There are many individuals who are capable in the orgn or bring external help, which will be decided by the board.
Q: How will you restore shareholder confidence?
A: I appeal to you to understand that the issue we are dealing with is huge. I have not dealt with anything like this in life. We will bring transparency for all stakeholders. But I reiterate I do not know what has happened.
Q: Will you restate results?
A: We have to announce Q3 results by the end of this month, and we will need to assess whether we need to restate. We are a highly matrixed orgn. The central processing office is the one that compiles the corporate results. We are all managing our business verticals.
Q: Why has Raju not signed the letter?
A: Well, that letter was sent from his email to us.
Q: How did board give permission to buy Maytas cos as you have no money?
A: There are decisions made in board on the basis of data available. We take this data on face value. I do not want to make any more comments.
Q: Why don't you file a police complaint against Raju?
A: We need to look at the reality of Raju's statement first before coming to any conclusion.
A: At the end of September it was 53,000 and there would be attrition by 2,000 and no new recruitment has happened this quarter.
Q: Do you know if you have the money to last through January?
Today I do not know.
The Institute of Chartered Accountants of India (ICAI) has initiated investigation into the role played by Price Waterhouse — the statutory auditor for the Hyderabad-based software services firm Satyam Computer Services — on a 'suo motto' basis ie based on information available in the public domain. The institute, which regulates the chartered accounting profession in India, has powers to revoke the practicing licence of its members in addition to a maximum fine of Rs 5 lakh. "It is a very serious issue and we are examining it on a high priority and strict action would be taken against auditors if found guilty," said ICAI President Ved Jain. If found guilty of professional misconduct, the auditors stand to lose their practice licences," he added.
Satyam Press Conference (8/1/2008)
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