Satyam Computer “Ramalinga Raju” Biography
Born: September 16, 1954
B. Ramalinga Raju founded Satyam Computer Services in 1987 and has been instrumental in developing Satyam into one of the top Indian IT services company. Mr. Raju served as the Chief Executive Officer of Samrat Spinners Limited, a spinning mill until 1995. Mr. Raju has been Chairman of Board of Directors of Satyam Computer Services Ltd., since 1995. Mr. Raju serves as Chairman of Nipuna Services Limited. He served as Chairman of Intelligroup Inc. Mr. Raju was Co-founder …
Education:
MBA
Ohio University-Athens
Business:
Harvard Business School
Ohio University-Athens
Sify Technologies Limited
Ohio State University
Intelligroup Inc.
National Association of Software and Service Companies
Satyam BPO Limited
Achievement:
Founder and Chairman of Satyam Computer Services Ltd; Chosen as Ernst & Young Entrepreneur of the Year for Services in 1999 Ramalinga Raju is one of the pioneers of the Information Technology industry in India. He is the founder and Chairman of Satyam Computer Services Ltd.
Ramalinga Raju was born on September 16, 1954 in a family of farmers. He did his B. Com from Ramalinga RajuAndhra Loyola College at Vijayawada and subsequently did his MBA from Ohio University, USA. Ramalinga Raju had a stint at Harvard too. He attended the Owner / President course at Harvard.
After returning to India in 1977, Ramalinga Raju moved away from the traditional agriculture business and set up a spinning and weaving mill named Sri Satyam. . Thereafter he shifted to the real estate business and started a construction company called Satyam Constructions. In 1987, Ramalinga Raju founded Satyam Computer Services along with one of his brothers-in-law, DVS Raju. The company went public in 1992. With the launch of Satyam Infoway (Sify) Satyam became one of the first to enter Indian internet service market. Today, Satyam has a global presence and serves 44 Fortune 500 and over 390 multinational corporations.
Ramalinga Raju has won several awards and honors. These include Ernst & Young Entrepreneur of the Year for Services in 1999, Dataquest IT Man of the Year in 2000, and CNBC’s Asian Business Leader - Corporate Citizen of the Year award in 2002.
Resign letter:
Dear Board Members,
It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following
facts to your notice:
1. The balance sheet carries as of September 30, 2008
a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore refglected in the books)
b) An accured interest of Rs 376 crore which is non-existent
c) An understated liability of Rs 1,230 crore on account of funds arranged by me
d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books)
2. For the September quarter (Q2) we 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 revenue). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone.
The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginalgap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew significantly (annualized revenue run rate of Rs 11,276 crore in the September quarter, 2008 and official reserves of Rs 8.392 crore). 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.
Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas payments can be delayed. But that was not to be. What followed in the last several days is common knowledge.
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