Jan. 7 (Bloomberg) -- Satyam Computer Services Ltd. Chairman Ramalinga Raju resigned after saying he falsified accounts and assets, sending shares of the Indian software services provider to a record decline.
Raju, 53, unsuccessfully tried to sell two companies to Satyam last month in a final attempt to plug 50.4 billion rupees ($1.04 billion) of âfictitious assetsâ on the companyâs balance sheet, Hyderabad-based Satyam said in a statement today. Profits from the main business have been inflated âover a period of last several years,â Raju said in a letter to the board.
âNon-Existentâ
Of the reported cash and bank balances of 53.61 billion rupees on Sept. 30, 50.4 billion rupees was non-existent, Raju said in the letter sent to the Bombay Stock Exchange.
Operating margin at Satyam, Indiaâs fourth-largest software exporter, in the quarter ended Sept. 30 was 3 percent of revenue, instead of the reported 24 percent, Raju said in the letter. The companyâs revenue was 21 billion rupees, 22 percent less than the inflated figure of 27 billion rupees that had been reported.
Raju arranged 12.3 billion rupees âto keep operations goingâ at Satyam over the last two years by pledging the foundersâ shares and raising funds from other sources, he said.
âWhat started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years,â Raju said. âIt was like riding a tiger, not knowing how to get off without being eaten.â
âEasy Targetâ
The foundersâ concern was that a poor performance, combined with the fact they held a small stake in the company, would make Satyam an easy target for a takeover, exposing the inflated figures, he said.
Satyam yesterday denied a report that the company received a merger offer from Tech Mahindra Ltd., an Indian software-services provider controlled by Mahindra & Mahindra Ltd. and partly owned by BT Group Plc.
Tech Mahindra termed the report of a proposed all-stock merger as âspeculative.â
