The Satyam Story

Long before the IT space caught the imagination of the world and Indian IT companies made real hay on the street, I can recollect Satyam Computers in its original avatar. It used to be a stock that languished on the bourses and the grapevine was that you bought shares of Infosys or Wipro but not Satyam because the promoters were suspect. However, to give full credit to the Satyam promoters, this was never proved those days. History is a strange thing. It has a habit of turning full circles. Finally, the events of the last two days have proved what I 'knew' to be always right. the sleight of hand that the Satyam promoters tried to pull off by purporting to into Maytas Properties and Maytas Infrastructures was both brazen as well as shameless. It is also sad because Satyam chose not to do so when they were virtually unknown but when they are known as India's fourth largest IT services company, when they have ADRs on the NYSE, when they have built up a brand that is well-known. It merely shows brazenness and an attitude on behalf of the Satyam promoters that they have risen well above minotiry shareholders' interests. It also shows what greed can do to people. However, it also shows between a 'third world mindset' and a 'first world mindset'. I am really sorry for such stereotyping and being an Indian, I know that this stereotyping might come back to haunt me or hurt me in the future.

There have been a number of Indian companies with very shady accounting practices but when they branched out into the international shores, they made sure that they followed international norms and they made sure that they were beacons of progress. There are a number of Indian companies which have always had very transparent managements and they follow international best practices. You could count Infosys as one of them. The Tata Group is not far behind.

Maytas is Satyam spelled backwards and one of the two Maytas companies is listed while the other is privately held. Both are promoted by sons of the Satyam promoter. The Satyam promoters said that they were investing in these companies as they were sound investments and as they desired to derisk the IT model. This is pure hogwash. If at all, the Satyam management wanted to invest in the infrastructure space, there were a number of established and stellar (as also more profitable) companies both in the infrastructure as well as real estate space which are going abegging and which would have been great investments.

The promoters did not back down immediately in the face of protests from certain majority shareholders. They backed down when they saw that their ADRs on the New York Stock Exchange crashed over 50% and that their wealth had eroded internationally. I am happy they backed off but I wouldn't recommend Satyam stock till there is a change of management or till there is a sufficient period of time, which proves that the present management, if it is not changed, has been able to demonstrate better standards.