Sambhar Mafia - Cooked To Kill!

English in name, Infrastructure is a shame

2009-03-25T10:39:00.003+08:00

My earlier post on the topic of real estate evoked some response from the aggrieved group via email and it showed more insight into the murky world of real estate. This post is also on a similar topic.

Real estate developers have a penchant for giving fancy names to their new projects. These fancy names may not be in tune with reality. The developers use such creative names to lure buyers and justify the premium pricing. Majority of print ads for new projects show random foreigner images which have no connection to the type of residents which the development would eventually house. The only reason from the developer's viewpoint could be to make the project aspirational. Names like Belvedere, Windermere, Manchester Grand (Coimbatore), Hyde Park and Bougainvilla shows how creative developers are. With more developments offering lifestyle facilities, one wonders how the maintenance of such facilities would be carried out few years down the line. Some of the thoughts mentioned above are echoed by Aruna 'Vishy' Anand (yes, she has a new blog!) as she has discovered most of these first hand by virtue of purchasing an apartment in the much hyped IT Corridor / OMR.

the property was named Sherwood Gardens or Windmere with swans .... in the lake (there is a lake with swans in a 10 km radius ), Greyshott , Bella Tuscany ( in the middle of perungudi town panchyat!) etc etc

They are all described as the ideal habitat for the global resident. A place where you can put up your legs, watch your children grow. dip yourself in the jacuzzi hob nob with equal minded gullible people !!

We narrowed on one Park Rozalia . One World .One place. The ad featured a child running around the place. The kid looked Danish , swedish ... and looked so happy . The features read like a country club. (Link)

Although the Anands purchased an 'English' home in Pallikaranai (an area which was and is still used as a dumping ground by Chennai Corporation), they also bought another property which was more centrally located, and decided to use the City apartment as it is close to their parents home.

The recent meltdown has brought the focus back to affordable homes without the bells and whistles. Most developers are shying away from direct price discounts as they feel that this might enrage existing buyers (who are awaiting completion of the apartment). Hence, developers are doling out freebies like stamp duty waiver, free parking space etc. When it starts pinching more, expect developers to get more realistic.

DLF Faces An Acid Test In Chennai

2009-03-08T10:43:00.002+08:00

DLF is a recent entrant to the Chennai property scene and is facing quite a few headwinds. Sometime ago, there was news that DLF collected about Rs. 5 lakhs Earnest Money Deposit (EMD) from interested buyers even before the project managed to get all the necessary approvals. As the property prices continue their downtrend, buyers who were among the early birds to sign up are pushing DLF to drop the price to be in tune with the falling market. Although DLF has acceded to their request, the buyers feel that the discounts are not sufficient enough. DLF has very little choice other than to give in to the dissenting buyers. If DLF doesn’t cut the price more aggressively, it risks losing willing buyers who wouldn’t mind foregoing the EMD (as worst case) as their potential losses might even surpass that of Rs. 5 lakhs. DLF on its part has assured buyers that it would refund EMD if required as per the terms of the agreement.

Credit is becoming increasingly scarce for corporates and more so for the property sector. The project is about 50% booked and I wouldn’t be surprised if some of the original buyers back out if prices are not slashed. DLF might need more bookings and upfront / progress payment to fund working capital. I feel that the project delays might also be quite disconcerting to buyers as they need to wait longer to get their dream home. Without enough bookings, DLF might not be in position to continue construction at the required pace. Instead of being more aggressive on the pricing front, DLF seems to be concentrating on rewarding agents by offering them more commissions. I really doubt if such incentives can lure the ultimate buyers. If DLF has long-term plans of being a reputed player in the Chennai property market, it needs to make serious amends to appease existing and prospective customers.

Election Overdrive

2009-03-05T22:34:00.004+08:00

Home Minister P Chidambaram seems to be working overtime to retain his Sivagangai Parliamentary seat. Almost every other week, we do see him participating in some function in his constituency. If you observe the news items quite closely you will notice that most of the functions were inauguration of bank branches, extension counters, self-help groups etc. Bank of India, Indian Bank, UCO Bank and State Bank of India are the banks which had recently expanded operations in the constituency.

Union home minister P Chidambaram needs to woo nearly two lakh voters in Alangudi in Pudukottai district and more than a lakh of voters in Maanamadurai, previously in Ramanathapuram constituency. Chidambaram has inaugurated several bank branches in this rural segment, frequently touring his turf and interacting with a wide cross-section of the electorate. The high-profile MP has already begun organising workers' meetings to prepare them to build a fresh voter base for him in these regions. (Link)

Any layman can easily interpret that the erstwhile FM is trying to use his powerful office to influence Public Sector Banks to go on an expansion drive in this particular constituency. Since PC is participating in the event, the Bank Chairmen make it a point to take part in the launch events. Given the location of this district, it probably takes 2-3 days time of such Bank Chairmen (who are usually based in Mumbai / Kolkata as the case maybe). I’m not sure whether it makes sense for such Chairmen to even grace the occasion as this new branch (having a strength of about 2 – 10 people) could be quite insignificant in the whole scheme of things. The Banks also take out huge full page ads in national and regional dailies to announce the branch inauguration. This is again a big drain on the bank's resources. Let’s see if PC’s attempts to increase his image work to his favour in the elections. I’m also curious to see if PC’s son Karti gets a ticket to contest the Lok Sabha Polls.

All In The Family

2009-02-06T17:06:00.002+08:00

(Courtesy: Dinamani)

Azhagiri's Fancy Dress

2009-01-30T16:09:00.006+08:00

30th Jan happens to be MK Azhagiri's birthday and it would have hit you in the eye if you had opened any Tamil newspaper today. Even Dinamalar (Madurai Edition), which is not viewed as close to the DMK has multiple pages of ads given by the udanpirappugal.

Where else could one see such quotes as Aatral Arasae, Pandiya Nedunchezhiyanae, Raja Raja Chozhanae, Hat Trick Nayakanae, Kaviya Thalaivanae, Kalachuvadae, Obama of India, Kutti Kalaingarae, Thirumangalathai vendredutha Thiruvae, et al, as the list continues.

Earlier, Azhagiri was hailed as Anjanenjan Azhagiriyae, but the ‘n’ has been replaced with ‘r’ changing into Anjanenjar Azhagiriye, because calling anyone as anjanenjan is derogatory.

One hoarding in Nagercoil portrayed him in police uniform; however, the most intriguing one was his portrayal as ‘Hitler, who overcomes challenges’ that has baffled many in the city. But, whether it was an eponymous error or ignorance about Adolph Hitler on the designer’s part remains unclear. (Link)

Mama, Mamool & Blackberry

2009-01-30T15:14:00.004+08:00

In a first of its kind move in India, the Kerala government is handing over Blackberry phones to traffic police so that offenders can be booked on the spot and RTO records can also be retrieved instantly.

Traffic offenders here have to be doubly careful from now as the city traffic police, perhaps for the first time in the country, are armed with Blackberry mobiles, especially designed to track down vehicle details from Regional Transport Office database in a jiffy.

Under the pilot project launched by Kerala Government, complete information about the vehicle and its owner could be instantly accessed by policemen using Blackberry mobile phones, which hitherto remained a proud possession of the elite class, especially top company executives. (Link)

I'm not sure whether the cops would welcome such a high-tech move. The traffic police team needs to be trained in using the Blackberry so that they can make full use of it. Otherwise, there is a risk that the handheld device might become a show-off object. The traffic police normally uses the threat of booking an offence to extract 'mamool' from the public. Will the Blackberry result in lesser bribes and increased productivity? Time only can tell.

Dhoni Machan

2009-01-27T11:00:00.002+08:00

Dhoni & his language woes:

His language woes have not been limited to just trips abroad, Dhoni had similar problems while playing for Chennai Super Kings during the Indian Premier League (IPL).

"I played for Chennai but didn't know any Tamil. But people there thought that since I was part of the team, I had learnt it. So I just picked up a few words and for one and a half months that I played there, I relied on those to break the language barrier," he said. (Link)

Hope Dhoni can speak better Tamil during the next IPL season.

Wise Chancellor?

2009-01-26T15:52:00.003+08:00

RT Sabapathy Mohan, Vice Chancellor of Manonmaniam Sundaranar University is no stranger to controversy. He owes his post to his allegiance to the DMK and time and again, the man tries to promote the party in his official capacity. Few months ago, Sabapathy Mohan used University funds to congratulate the CM on some achievement and now he has been caught in yet another controversy. The VC was a Chief Guest at a sports event and he seems to have gone out of the way to promote the DMK.

The girls of the winning team were flashing a ‘V’ sign, indicating victory and this seemed to remind the Vice-Chancellor of the two leaf sign of the AIADMK. He suddenly took everyone by surprise when he caught hold of the wrists of one of the players, unfolding the remaining fingers like that of the DMK’s symbol, the rising sun. The incident shocked the woman coach of the team, Balvinder Gour, who was seen trying to stop the Vice Chancellor. Since the players were not aware of Tamil Nadu politics, they too were taken aback by the Vice-Chancellor’s odd behaviour. (Source - New Indian Express)

The same VC was invited to attend a Tamil-related event in Singapore last year and I came to know that the man spoke mostly about the DMK. A man holding the office of a Vice Chancellor needs to maintain certain basic decorum and having such people at the top would only bring disrepute to the state and the university.

Corporate Reputation Management In Focus

2009-01-23T20:43:00.003+08:00

Rumours about accounting fraud at Educomp have prompted the company to use Google contextual ads to direct people to their company website and giving their version of the story. The ad states that a "Point-by-Point rebuttal on allegations" is available at their corporate website.

I'm not sure why Wipro and ICICI didn't use such a medium when their companies were facing negative publicity. Most of them continue to use full page newspaper ads to dispel rumours.

IT major Wipro was in the news when it emerged that World Bank had banned them for alloting shares to some World Bank employees. If Wipro made no mistake, then why didn't they disclose the ban and defend their move when they received the ban notification from World Bank. If they had done so, they need not have embarked on the firefighting exercise to explain their stand.

And, both hid the fact that all this had happened till the Bank chose to reveal it. If they had nothing to hide, and felt they were being wronged, why didn’t they make an issue of it? This is the question any normal being will have on reading about it all, and the fact is that all the immense wordage put out by the two firms, including a lofty internal mail to his lakh-odd employees by Wipro’s legendary chairman, Azim Premji, doesn’t address this crucial point. (Link)

Business Journalist Govindraj Ethiraj explains this issue in more detail in this Business Standard article:

So what was Wipro doling out, bribe or speed money? I would assume that like any restricted offering, which is what a Directed Share Programme ought to be, the upside was in the fact that some people could get hold of the shares as against others who did not. The price is incidental. Somewhat like getting a well-priced IPO stock in India in the primary market, with the expectation it will zoom on listing or thereabouts.

So maybe it was closer to speed money. Handing out a favourable allotment in a share offer because a good relationship will help the company in the long term. And what better way to do it than to make your customers a part of the shareholder family? Except that World Bank employees are not customers — the Bank is and it’s what I would call a governmental organisation. Nor are they the equivalent of customs officials who can hold up cargo. But then that’s the point, the fine line only gets finer. (Link)

சன் (பிக்சர்ஸ்) செய்திகள்

2009-01-22T23:07:00.003+08:00

பீதிக்கும் பரபரப்புக்கும் பெயர்போன சன் செய்திகளில் நடுநிலையை எதிர்பார்ப்பது கொஞ்சம் அதிகம்தான். சன் தொலைக்காட்சி நிறுவனம் திரைப்படத் தயாரிப்பில் இறங்கியதிலிருந்து தங்கள் திரைப்படம் சம்பந்தப்பட்ட உருப்படாத செய்திகள் தலைப்புச் செய்திகளில் இடம் பெறுவது வழக்கமாகியுள்ளது. காதலில் விழுந்தேனில் ஆரம்பித்த தலைவலி படிக்காதவன் வரை தொடர்கிறது.

இன்றைய தலைப்புச் செய்திகளில் சுள்ளான் தனுஷ் படிக்காதவன் திரைபடத்தை திரையரங்குகளில் ரசிகர்களுடன் கண்டு கழித்தார் எனும் செய்தி தலைப்புச் செய்தியாக இடம்பெற்றுள்ளது. வெளிநாட்டு உள்நாட்டு அரசியல் செய்திகளை விட படிக்காதவன் செய்தி முக்கியத்துவம் வாய்ந்தது எப்படி என்று சற்றும் புரியவில்லை. தங்கள் தொலைக்காட்சி நிறுவனத்தின் பலத்தை கொண்டு சுமாரான படத்தைக் கூட வெற்றிப் படமாக மாற்றுவதே தங்கள் குறிக்கோளாக கொண்டுள்ளனர் மாறன் சகோதரர்கள். இந்தப் போக்கு "Editorial Integrity"-யை தொழில் வெற்றிக்காக விட்டுக்கொடுப்பதாகும். விளம்பரதாரர்களுக்கு சாதகமாக செய்திகள் எழுதுவது ஒன்றும் புதிதல்ல. வடக்கில் Times of India போன்ற நிறுவனங்கள் இதை காலம் காலமாக கடைப்பிடித்து வருகிறார்கள். இதுமட்டுமல்லாது, சிறந்த பத்து பாடல்கள் & சிறந்த பத்து திரைப்படங்கள் ஆகிய நிகழ்ச்சிகளிலும் தங்கள் சொந்த தயாரிப்பு படங்களுக்கே முன்னுரிமை தரப்படுகிறது.

மேலும் பல படங்களை தயாரிக்கும் சன் நிறுவனம் தங்கள் செய்தித்தாள், பண்பலை மற்றும் தொலைக்காட்சி மூலம் மக்களை முட்டாள் ஆக்கி படத்தை ஓட வைக்க சகல முயர்ச்சிகளிலும் ஈடுபடும். பாராளுமன்றத் தேர்தல் வரவிருக்கும் இவ்வேளையில், சன் செய்திகளை விட அதிக பொழுதுபோக்கு தரக்கூடிய ஒரு நிகழ்ச்சி கிடையாது.

Top Cop Takes To Blogging

2009-01-22T20:55:00.001+08:00

Former Chennai Police Commissioner and current DIG of Prisons Nataraj has started a blog to reach out to the public. Nataraj definitely knows how to engage with the people and his personal website is also testimony to that. I'm sure this blog is going to attract attention as word spreads around.

Stating that he enjoyed receiving emails and comments on his blog, Nataraj pointed out that students aspiring to enter the civil services had sought his guidance. "A few others asked me to clarify some of the complicated cases. They are sending me emails and contacting me on my mobile to ask queries. I spend at least 15 to 20 minutes a day to update my blog and expect it to turn out to be a discussion forum," he said. (Link)

Profiting From The Crisis

2009-01-19T00:26:00.003+08:00

Search for Satyam on Google and the Sponsored Link is one by IT Consultants Everest Research Institute offering a research report titled - "Satyam Crisis Analysis".

Related Article: PTI report dated 21st Jan delves more into the above topic and details the contents of the Everest Research report.

One More Indian Fraudster Arrested

2009-01-14T00:04:00.004+08:00

It's the season for dubious businessmen to face reality. The man who shot to fame selling electronics (mostly TVs and Hi-Fis) at dirt cheap prices in the 90s is the latest Indian businessman to end up behind bars. Kabir Mulchandani has been arrested in Dubai for duping customers in real estate transactions. Back in the 90s, Kabir ran a firm called Baron International and sold cheap electronics products under brands like Akai, Aiwa and TCL. The TVs used to be priced around Rs 10K when most other brands used to cost upwards of Rs 20K. Kabir also made a name for himself bundling the different products and offering unbelievable exchange offers. The fact that he couldn't run a brand for more than 2 years, probably hinted that his model was not sustainable. Since the brands didn't last long, he lost the consumers' trust since people had concerns about after sales service and repairs. It looks like Kabir's family had moved to the Middle East after running up huge debts in India.

Scores of investors have been allegedly defrauded of over US$ 100 million by Mulchandani, chairman of `Dynasty Zarooni'. At least 10 members of an `investment club,' which last year promised huge profits from the company's preferential access to real estate deals, have lodged complaints against Mulchandani, his Emirati business partner, Hilal Al Zarooni, their joint venture `Dynasty Zarooni' and two other employees.

Investors say Mulchandani in March received subscription fees of US$ 81,697 (Rs 40 lakh) a month from 12 members. He promised them returns of US$ 272,242 (Rs 1.3 crore) a month after six months, or US$ 1,633,453 (Rs 8 crore) in September. Zarooni is reported to have denied any participation in, or knowledge of, a fraudulent scheme. "One hundred per cent I deny this, there is nothing illegal whatsoever,'' he said. (Link)

More Troubles For Pyramid Saimira

2009-01-13T23:24:00.002+08:00

The impact of the credit crunch couldn't be more pronounced. After recent disclosures about the pledging of promoter shares in Satyam, it has now emerged that Pyramid Saimira's promoter has also pledged his shares to financial institutions. Since PS Saminathan couldn't meet margin calls, the institutions have been selling his shares in the open market.

Pyramid was in the thick of the action because of the poor response for Kuselan and also because of the abandoned Marmayogi project.

Theatre chain operator Pyramid Saimira Theatre Ltd clarified on Tuesday that some financial institutions, with whom promoters had pledged their stake, sold 6 percent in the firm between October and December.

The company clarified that it was facing a liquidity crunch and then suffered losses in a mega-budget film, 'Kuselan,' prompting the promoters to pledge some shares to raise funds.

Kuselan, a Tamil film which was also re-made in Telugu, was released in August 2008 and fared miserably on the box office.

As the current period is the peak season in south India for film release and confirmations, the firm hopes its locked-in money will be released, easing the cash crunch. (Link)

I expect more troubles for Pyramid Saimira as they have been hit badly on both the business and financial front. Other issues relating to the SEBI letter and promoter's fight have cast a bad light on them. Cancellation of Marmayogi and sudden termination of Simran Thirai have not helped them either. I wouldn't be surprised if they go bust in the near future.

Does Your Name Need Cosmetic Changes?

2009-01-12T15:34:00.002+08:00

Altering names because of numerology is nothing new. The interesting trend over the recent years is the type of changes which people make to their names. It's pretty common to come across additions like a and e. Some of the examples are Raadhikaa Sarathkumar, T R Baalu and S Ve Shekher. A popular film comedian who makes fun of social evils also patronizes numerology and prefers to use Vivekh.

One normally notices such changes to individual names in the field of politics, film industry and business. It's surprising to see even listed companies adopting numerology. The case in point here is Karur K.C.P Packkagings Ltd. The man behind this company is called K C Pallanishamy. The company Chairman might have probably got a bulk discount from the astrologer for changing his name and the company name.

Actor Jeeva is now Jiiva. I wonder whether the actor's fortunes have changed after the import of 2 i's. Another name which caught my eye is TN Congress President KV Thankgabaalu who has added the letters k and a to his name. Few other names which attracted attention are Gangai Amaren, Premgi Amaren and Rajhesh Vaidhya.

One of the strangest uses of numerology that I have come across is that of Sathyajyothi Films Thyagarajan. The man uses a dot before his first initial and his name reads .T.G Thyagarajan.

To the best of my knowledge, it looks like the people mentioned above have used numerology to revitalize their names and careers. If there is any factual inaccuracy in the above, do bring it to my attention so that I can make amends.

Do respond on some of the unusual 'numerological' names that you have come across. Please ignore Pondicherry names (like Coomarasamy) which are real names and are not connected with numerology. I am also interested in knowing whether the people who have changed their names have really attained success post the name change.

Satyam's Ten Point Plan To Boost Employee Confidence

2009-01-09T02:43:00.004+08:00

Satyam has unveiled a rescue package for its associates, the terms of which are detailed below. Like Satyam's notional cash pile, here is a fictional story on how Satyam can encounter this crisis and restore confidence of the Associates.

1. Satyam will launch Satyam-PWC Centre of Creative Accounting & Management (SCAM)

This Centre will be headed by Srinivas Vadlamani. Satyam Associates can enrol in this SCAM and develop their creative accounting skills. SCAM will impart best practises by benchmarking with other world class firms like Enron and Worldcom. People who know US-GAAP and other accounting standards need not apply as you are over qualified. Your skills will be put to full use during quarter close and year-end. Placement is assured in one of the Satyam group companies like Maytas, Samtay, Tamasy, Tasmay etc.

2. Satyam-ISB Centre for Corporate Misgovernance (SICC)

Under the stewardship of M Rammohan Rao, Satyam will establish this centre to groom the next generation of Directors who can fill the Board positions in Satyam group and also aspire for similar position in many other tainted companies in India. We will also teach you how to draft your own resignation letter before resigning from the board.

3. All associates will be offered a chance to throw shoes at Ramalinga Raju like what happened to Bush recently.

4. All Associates will be given stock under the Employee Shock Option Plan (E-Shock). Before future confessions, Ramalinga Raju will update the E-Shock holders in advance so that they can sell their shares before the stock crashes.

5. All Associates will be provided company Memorabilia like T-shirts, caps, key chains, coffee mugs etc. to be sold on Ebay. The right moment to sell these items would be around the time we announce our bankruptcy.

6. Employees who nod their heads well will be appointed to the Board and will be paid Rs. 12 Lakhs per annum. The best such nodder will be paid upto Rs. 1 crore per annum. Such directors need to maintain silence at the Board meetings. The only word they are allowed to say is YES. Although you will be called independent directors, you'll have to depend on Raju & Co. for everything.

7. Life long supply of Hyderabad Biriyani to tide over the crisis. All associates will get Free tickets to FIFA world cup 2010 & 2014 for which Satyam is the co-sponsor.

Satyam is also contemplating the acquisition of Tamilnadu government-owned TASMAC as the name closely resembles the names of Satyam and Maytas. If this deal goes through, you'll be assured of free supply of liquor. We have engaged the services of domestic investment bank JP Murugan to assist us in this strategic acquisition.

8. For Satyam Associates who are dis-associated (laid off), you'll be offered agricultural land under the possession of Maytas so that you can be self-associated (Self-Employed). Some of the land documents might be forged and Satyam, Maytas or the Raju family will not take any responsibility for the genuineness or otherwise of these land documents.

8. Satyam will float a new website called www.SatyamCVs.com where employees can apply for outside jobs. Instead of the associates posting their CVs on other third party websites like Naukri and Monster, associates can now post their CVs directly on this site. This site will only accept CVs from Satyam associates. The front page of this site will contain a ticker showing the number of CVs in the site. This will give an assurance to the outside world that we do have the 53000 employees stated in our financial reports. Our interim CEO Ram Mynampati just inaugurated this job site by uploading his CV. Our HR team will be able to assist if you have any queries or doubts about this site. While showing projects that you have worked on, you are free to choose from any of the 500 Fortune 500 companies as our audited accounts shows that all of them are our customers. Please accomodate if the site is slow as we are experiencing huge traffic on this site. Even our HR people (who are normally quite free) are very busy updating their CV's on this site.

9. All our candidates for whom we have offered campus placements are required to report to work immediately. They will be accomodated in the new shiny benches bought for this purpose. These benches are located outside the office building. We felt this is best way out as we have decided to switch off the Air-conditioning inside the premises to cut costs. All the new joinees should come with a Cash deposit (in lieu of the bond) of Rs. 2 lakhs each. Satyam intends to use this money to tide over the working capital crisis. Once you come onboard, we will try to send you on onsite project where you can recover your Rs. 2 lakh deposit within a short period.

10. Since some of our cheques are bouncing, we will now be handing over the salaries in cash instead of cheques. Associates are required to count and verify the genuineness of the cash before leaving the office premises. No future claims will be entertained.

Satyam CFO's Answer On Cash Balance

2009-01-08T17:25:00.003+08:00

This is how Satyam's CFO Srinivas Vadlamani answered when an analyst asked about the unusually high cash balance. The transcript of the Oct 2008 (Q2) analyst call is difficult to download from Satyam website. I have managed to pick up the transcript from another site. The CFO's creativity has been put to test here. The answering tone from the last paragraph proves that Srinivas Vadlamani made up the reply.

Kawaljeet Saluja – Kotak Equities

Hi, my question are for, Srinivas. Srinivas any specific reasons why you have $500 million parked in current accounts which does not yield any interest.

V. Srinivas

No that is basically, as of the quarter ending, but subsequent to that the amount goes to the deposit accounts; majority of its in deposits now.

Kawaljeet Saluja – Kotak Equities

But Srinivas if I look at deposit account for the last 4 quarters that number has remained absolutely flat and most of the incremental cash flows have been parked in current accounts and this is not something is this quarter trend. Would you highlight the reasons for it?

V. Srinivas

No basically what will happen is this amount will be basically in different countries and then we will be bringing them to India based on the needs. Basically some of them are in overnight deposits and all that. So now, we have kind of placed them into normal term deposits. So next quarter onwards, we will see that as part of the deposits.

Related Read: ET article titled "How one analyst almost nailed Satyam" dated 10th Jan

Accused #2 in Satyam Fraud: Srinivas Vadlamani

2009-01-08T14:31:00.003+08:00

Although Ramalinga Raju has absolved his entire senior management of any wrongdoings, it is common knowledge that a financial crime of such magnitude could not have been committed without the knowledge of the bean counters. The person in focus here is Srinivas Vadlamani, the Chief 'Fraud' Officer of Satyam. Willingly or unwillingly, Srinivas has been party to the accounting irregularities at Satyam. Ramalinga Raju is lying when he says that his CFO and other top management were not involved. Given where things stand, Srinivas should have either been sacked or he should have resigned on his own. The more time he is given to remain in Satyam, he could cover up or hide some of the irregularities to protect himself or some of the other executives. Alteast the interim CEO Ram Mynampati should have mentioned that he is appointing a new interim CFO to assist him. The CFO has lost the trust to continue in his current role and nobody (including the ineffective Board) seems to be bothered about throwing Srinivas out.

Update: Interim CEO Ram Mynampati informs during the press conference that CFO Srinivas Vadlamani has not been in office for the past week. Srinivas has sent in his resignation today and the Board is yet to act on it.

Satyam's Books Were Fudged, Raju Resigns

2009-01-07T16:47:00.002+08:00

After the aborted Maytas deal, questions were raised about the future of Satyam and its current management and there were lot of rumours in the Indian media about the likely candidates who might acquire / merge with Satyam. In what can be termed as a dramatic turnaround, Satyam's chairman Ramalinga Raju has resigned after admitting some serious irregularities in its books. Among the frauds are some time tested tricks like inflating sales, inflating profits and understating liabilities. The inflated profits led to the huge pile of 'fictitious' cash in the balance sheet. This 'cash' was the one which was to be used for the proposed Maytas acquisition. The unusually large amount of cash (that too lying in their Current Account) on Satyam's balance sheet had raised some concerns earlier. Satyam management never did anything to allay these fears. It looks like the worst has come true.

Satyam Computer Services' decision to keep large amounts of excess cash in current accounts which do not yield interest income is raising eyebrows and prompting questions about why it has been growing the hoard of idle surplus money.

As speculation increases about the amount of available cash that is being shown in the books of India's fourth largest software exporter, at least one major brokerage firms saying it has concerns about cash utilisation at the Satyam, describing it as "baffling." (Link)

The full text of Ramalinga Raju's letter to the Board is available on Livemint site.

He said that the balance sheet has inflated cash & bank balance of Rs 5040 crore. No board member had any knowledge of the real situation as against books. The balance sheet was inflated and accrued interest of Rs 376 crore in the books is non-existent.

He further writes in the letter that Rs 1230 crore was arranged to Satyam, which is not reflected in books.

Raju in his letter further said that the Q2FY09 reported revenues of Rs 2700 crore Vs actual revenue of Rs 2112 crore. The Q2FY09 operating margin reported was Rs 649 crore against Rs 61 crore. The Q2FY09 numbers had Rs 588 crore of artificial cash in books.

He said that he is prepared to subject himself to law of the land and face the consequences. The account manipulation started several years ago. An attempt to eliminate the manipulation was failed, he added. (Link)

Although corporate frauds and accounting irregularities have come to light in the west (Enron), this is one of the biggest of its kind in India. If a company of the scale and repute like Satyam indulges in such activities, there may be numerous other smaller frauds happening in the small and medium sized listed companies which may never be unearthed.

Normally, the first one to face the flak in such a circumstance would be the auditors. We saw it in Enron where Arthur Andersen was in the spotlight. Similarly, PriceWaterhouse Coopers (PWC) would have to face the heat over their involvement in this whole issue.

Raju's excuse that the accounts were fudged and profits were overstated to project that thecompany was financially stable and to ward off any takeover attempt because of the negligible promoter stake is simply unacceptable. It is like saying that I copied in the exam to avoid being scolded by my parents and teachers.

Satyam's future looks bleak in its current form. DSP Merrill Lynch, which was appointed to look at strategic options has also backed out. There is also the risk that lot of the contract renewals might not come through because of the credibility issue. In this economic climate, taking over a company with over 50,000 people is not an easy task. The buyer needs to work with a lot of unknowns and it is going to be a fire sale.

If all this drama had not happened, Maytas acquisition might have gone through and that might actually have benefited the shareholders as real assets were to be infused by parting with the fictitious cash.

How soon can we expect Ramalinga Raju to be arrested?

Wisdom Of The Crowds?

2009-01-06T17:06:00.002+08:00

Singapore's Tamil FM channel (Oli 96.8 FM) has chosen Kangal Irandal from Subramaniapuram as its Song of Year 2008. The annual ranking of Top 100 Tamil film songs is based on a public voting of the selected songs and it has sprung up a few surprises. The first song deserves its place. Similarly 6 songs from Vaaranam Aayiram figure in the Top 15 songs and this was also expected since this album was widely acknowledged as the best album of the year.

While I don't know how many people really participate in this voting, I have a feeling that even a small swing can push a song up or down. I was quite surprised to see 3 songs from Kuruvi making it to the Top 10. I really doubt whether Kuruvi deserves a place in the Top 10 list. The only song worthy of it is Thaen Thaen. If one were to look at the reasons behind Kuruvi's superior performance, one could be the general popularity of actor Vijay among Singapore locals and the other could be the lack of genuine public support for other well deserving songs. How else can I explain when I see a pretty average song like Mozha Mozhannu Yamma Yamma from Kuruvi at #16 while there are much better songs which make up the bottom of the list.

Seeking Foreign Accreditation

2009-01-05T22:18:00.001+08:00

Ramachandra Guha on the general craze for seeking an overseas stamp of approval and also about Sri Sri Ravishankar:

I recently wrote a piece in a Delhi magazine about a Bangalore-based holy man lobbying for the Nobel Peace Prize. Among the mails I received was one which enclosed, as proof of the holy man’s holiness, the English translation of an article in an obscure Finnish weekly which praised him and his works. My article had made it plain that I too counted Bangalore as my home town and place of residence. Why then did the correspondent suppose that I would place the verdict of a Finnish magazine above the evidence of my own eyes? (Link)

Caught On Camera

2009-01-05T22:06:00.003+08:00

ADMK has released video footage of MK Stalin handing over cash to voters in Thirumangalam. If it can be established that this is indeed genuine video taken during the past few days, it could be a major setback to the DMK's plan to win the keenly-watched Thirumangalam by-election.

Tamil Nadu Local Administration Minister and Dravida Munnettra Kazhagam (DMK) leader MK Stalin has allegedly been caught on tape distributing money to voters ahead of by-elections in Tirumangalam.

The video shows Stalin distributing money but the DMK denied it claiming the recording is not recent or from Tirumangalam but a party function.

However, AIADMK maintained that DMK has been involved in bribing voters. (Link)

Update:

The Election Commission springs into action while Stalin maintains that he is innocent.

Taking a serious view of an incident covered by the print and electronic media of distribution of money by M.K. Stalin, Tamil Nadu Local Administration Minister, and some supporters of the Dravida Munnetra Kazhagam in Thirumangalam on January 3, the Election Commission has ordered the registration of a case against him.

Reacting to the allegation that he distributed money for soliciting votes, Mr. Stalin said: “It was a gift to a new- born baby… we have evidence to prove this point.” (Link)

Watchout for Kanimozhi in 2009

2009-01-02T11:34:00.001+08:00

BusinessWorld magazine has featured Kanimozhi as one of the persons to watch out for in 2009. While she might get a party ticket to contest the Lok Sabha elections, the strong anti-incumbency wave in the state might pose a problem to DMK's hopes. I still feel Kanimozhi has to play second fiddle to Azhagiri and Stalin. Till then, she has to be content organizing stuff like Chennai Sangamam.

Absent from most Delhi page 3 parties and political high teas, Kanimozhi is fond of asserting that she does not need to win every little battle to be a successful politician. Read that to mean she is being smart enough to want to stay away from petty party politics. “I am here (in Delhi) not to push them (senior DMK leaders) or sideline anybody,” she says. “I look up to them for guidance.”

But Kanimozhi may not be able to stay away from the limelight for long. Despite her vehemently denying she harbours any ambitions of occupying a ministerial berth at the Centre, party and political compulsions look certain to bestow the same on her in 2009. (Link)

MK on Freebies: Everybody does it

2009-01-02T11:25:00.002+08:00

This is what MK had to say when he launched the free Pongal scheme:

Stating that the media also ridiculed his government on the freebies through publication of caricatures and editorials, he wanted to know what was wrong in giving these gifts to the poor and the needy as the media groups also indulged in distribution of free supplements along with the main issue to the readers as a regular feature. “People and political parties also organised annadhanams in temples to feed the poor on important occasions like birthdays. Why there was no criticism on all these things,’’ he asked. (Link)

The only difference between government doling out freebies and the press is that the government engages in such publicity stunts by spending taxpayer money to capture votebanks while newspapers and magazines give free gifts and supplements out of their own money to increase readership and subscriptions. While the media owners are not answerable to the general public for giving such freebies, the government needs to justify whether such free schemes (especially the free TV) really make sense.

Arasi and Anni battle it out in Thirumangalam

2008-12-30T07:20:00.001+08:00

For both Radhika Sarathkumar and Premalatha Vijayakanth, it is more than a mere whistle-stop tour to draw voters towards their parties – the All India Samathuva Makkal Katchi (AISMK) and Desiya Murpokku Dravida Kazhagam (DMDK) – headed by their star husbands.

Clad in their best and bright traditional attire, they became instant hits when they hit the dusty roads of Tirumangalam. Radhika and Premalatha, the star performers, held the women in rapt attention. Each in their individual style vividly symbolised the contrasting approach to campaigning. While Radhika became Selvi, her lead role in the mega serial Arasi, Premalatha was ‘anni’ (brother’s wife) to her husband’s fans. Both seemed to relish their roles.

Arasi was the topic of discussion among the wide-eyed women. “What will happen to Arasi? Will the mother and daughter unite?” These questions nagged Radhika wherever she went. Even men were inquisitive to know about Arasi’s fate in the TV serial. ‘See the serial to know the answer,’ she would reply patiently and then move on, clad in a traditional saree. (Link)

Radhika might be crowd puller, but it would be difficult to convert her on screen charisma into votes. Not sure what sort of an impact Vijayakanth's wife can create.