The Hindu

HYDERABAD, Jan 8: Chairman of Satyam Computer Services B. Ramalinga Raju described his situation as: “It was like riding a tiger, not knowing how to get off without being eaten,” while referring to the widening gap between the real and artificial numbers in the company’s books.

In his resignation letter to the board of directors of the company, Mr. Raju rued: “I am now prepared to subject myself to the laws of land and face consequences thereof.”

What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. Referring to the gap in balance sheets, he said the differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations, thereby significantly increasing the costs.

The results announced at the end of the second quarter of the current fiscal were all artificial, by his own admission. The company reported a revenue of Rs. 2,700 crore and an operating margin of Rs. 649 crore (24 per cent of revenues) as against the actual revenues of Rs. 2,112 crore and an actual operating margin of Rs. 61 crore (3 per cent of revenues). This resulted in artificial cash and bank balances going up by Rs. 588 crore in the second quarter alone.

Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged shares by the lenders on account of margin triggers. Urging the board to hold together and seek former Cabinet Secretary T. R. Prasad, an independent member of the board, to mobilise support from the Government, Mr. Raju said: “Under the circumstances, I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded.