Of Sucheta Dalal and Two Scoops of Poop

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Sid Harth

May 31, 2000, 3:00:00 AM5/31/00
My fair lady, Sucheta Dalal is doing it again. Brave girl, I say.
Telling the truth is no crime in civilized world but when it comes to a
sewer called India, the best would rather do some serious spin
doctoring, fence mending, prevarication, whitewashing, lying, cheating
and resort to shenanigans.

The brave bunch do not care as the truth, however it hurts cannot be
relegated to the back burners. It ought to be out in the open no matter
who gets their asses fried.

Tehelka dot com took the courage and broadcast those secret
videotapes made surreptitiously by another brave boy, Prabhakar. The
cricket malaise is deep rooted and liars and goddamned liars are trying
to wiggle out of the charges that they were willing participants in
defrauding the game of cricket as well as each others by selectively
remembering and equally forgetting the events, conversations and
conspiracies of the worst kind involving the best of the players,
managers, captains, former players, bit players, corner bettors,
middlemen and top brass.

Shameless Hindus rather talk about Pakistan, Muslims, Christian
missionaries, terrorism if Muslims are involved than talk about their
own mountain of shit lying right in their midst.


Since Sucheta is not taking the credit for the poop-scoops, let me
take you where the action is, a dotcom who dared with their expose on
Satyam scandal.

Under the heading, "Satyam Computer Clarifies," Satyam sottos are
putting a spin on the earlier Tushar Pania story which broke Satyam's
back, so much so that the Dalal Street boys lost some mass from their
midriff, fat bellies, that is. Here we go again:


In our story titled Has Satyam defrauded? We had said that as soon as
they reply, Indiainfoline will incorporate their version. Satyam has
promptly responded to the issues raised. Read on.

Satyam Says:

"We refer to the news item appeared today about our company written by
Tushar Pania. Please find below the clarification for various issues
raised in the article.

In fact Satyam Computer Services Limited has entered into a
relationship with Mr. C. Srinivasa Raju to set up a separate company
Satyam Enterprise Solutions Limited and a shareholders Agreement has
been entered into on 11.4.1996 to give effect to this relationship.
According to which Satyam Computer Services Limited and Mr. C.
Srinivasa Raju will bring in equity in the Ratio of 80:20. Under the
terms of this agreement Satyam Computer Services Limited and Mr. C.
Srinivasa Raju have brought in their respective contributions at
different points of time between February 1998 and December, 1998. The
paid up share capital of Satyam Enterprise Solutions Limited on
31.03.1999 was at Rs. 420 lakhs of which Satyam Computer Services
Limited brought in Rs. 340 lakhs and Mr. C. Srinivasa Raju brought in
Rs. 80.00 lakhs during the said period.

The above statement clarifies that SCSL did not forego its right to
subscribe for additional capital but complied with the terms of the
agreement reached on 11th April, 1996.

With reference to your comment SCSL – Dun and Bradstreet JV where you
have mentioned that it has failed -

We would like to bring it to your notice that D & B Satyam Software is
one of the most successful joint ventures in IT field. However, we had
to sell off our stake in favour of D & B as per the original agreement.
Subsequently, D & B also sold off its shares to Cognizant Corporation.

The comments relating to lack of disclosure - The decision to merge
Satyam Enterprise Solutions Limited has been taken by the Board of
Directors of Satyam Computer Services Limited at the Board Meeting held
on 13.04.1999. Subsequently, the same has been approved by the
shareholders at the Court conducted Extra Ordinary General Meeting held
on 28.05.1999 and it is also approved by the Hon’ble High Court of
Andhra Pradesh on 27.08.1999. Thus, the entire transaction has happened
in a very transparent manner after duly complying with all rules and
regulations. The exchange ratio for the merger has been based on the
valuation done by M/s KPMG. The details of shareholding pattern in SES
was quoted at least by three analysts in their reports (Kotak, CLSA and
Jardine Flemming) about Satyam Computer Services Ltd. The valuation was
done by KPMG using internationally accepted DCF method."


Click here for `Has Satyam defrauded?`

Satyam Computers issued shares to a senior company official at a steep
discount. Has it deprived and defrauded shareholders of SCL? Or did the
company to grow at Internet speed, threw caution to winds?

By Tushar Pania

Has Satyam Computers Limited (SCL), issued shares to a senior company
official at a steep discount and in the process deprived and defrauded
shareholders of SCL? Or did the company, in its bid to grow at Internet
speed, throw caution to winds? The balance sheet of SCL over the last
three years, reveal that the management of SCL has foregone its rights
in favor of the official, C Srinivasa Raju, a director of Satyam
Enterprise Solution Limited (SESL), who benefited by getting shares of
SCL at a huge discount. Senior company officials say that the company,
in its drive to grow fast, overlooked certain important legal
requirements and has committed the faux pas. SCL officials wanted more
time to reply to the queries raised by Indiainfoline. As and when they
do reply, Indiainfoline will incorporate their version.

The saga of how 800,000 shares of SCL changed on April 1, 1999 at Rs10
per shares (against the market price of Rs1,700) is two years old. The
facts of the case are as follows: SCL merged three subsidiaries Satyam
Enterprise Solution Limited (SESL), Satyam Renaissance Consulting
Limited (SRCL) and Satyam Spark Solutions Limited (SSSL) effective
April 1, 1999. However, few months before the merger, SESL issued
rights at par. SCL was holding 96.77% in SESL which post-rights, fell
to 80.95%. SESL's equity increased from Rs31mn to Rs41.2mn. SCL,
however, picked up only 400,000 of the 1.2mn shares offered on rights
basis. The remaining 800,000 shares were allotted to C Srinivasa Raju,
a director of SESL.

On April 1, 1999, SESL was merged with SCL and Srinivasa Raju was
allotted 800,000 shares of SCL. When contacted, Srinivasa Raju claimed
that he started the company SESL and invited Satyam to be a partner. He
said, "It was not a rights issue, since initially, I did not have
sufficient funds, the money was invested by SCL and I picked up the
equity at a later stage (time of rights)." However, the fact remains
that the rights issue was held six months before the three companies
were merged.

Srinivasa Raju, who is co-brother of B. Ramalinga Raju, chairman of SCL
is a NRI and rated as one of the finest IT professionals in the
country. He came to India to head SCL-Dun & Bradstreet joint venture,
which failed. Once the JV was disbanded, Srinivasa Raju started SESL
with all the funds that he had brought back from the US. "When we
started our work in the area of ERP and telecom software, we were the
pioneers in India. No one was even aware of these areas and all I can
say is, we were lucky to be in the right business and at the right
time." He also recalls, how internally, the division was not even
recognized and no sufficient infrastructure was provided to set up the

So what prompted SCL to merge a small company like SESL ( total income
stood at Rs381.4mn and net profit at Rs70.5mn on an equity base of
Rs42mn) with SCL ( total income was Rs3.78bn and net profit Rs359.4mn
on an equity base of Rs260.2mn)? Srinivasa Raju points out, "SCL was
perceived to be a Y2K company (with 30% of its revenue coming from Y2K
related work) and everyone, from employees to stock market, was anxious
about the company's future."

SESL provided end to end IT solution in the area of operations support
systems, business support systems and decision support systems. The
company was involved in implementing billing and customer care
solutions for telecom companies, besides it had also developed strong
business relationship with BaaN and SAP to provide ERP solutions.

The reason for merging SCL with SESL was to make SCL a full-fledged
computer services company. "Neither I, nor the employees of SESL were
happy with the merger. The merger was thrust upon us," Srinivasa Raju
told Indiainfoline. Srinivasa Raju was in the US when the decision to
merge SESL with SCL was taken. He was called to India on April 11th and
the SCL board met on April 13th to discuss the merger, where KPMG was
appointed to undertake the valuation exercise. KPMG, valued SESL at
Rs800mn and suggested a ratio of 1:1, keeping in mind SESL's future
growth prospects and profitability. However, keeping in view the equity
method of valuation, the ratio seems to favor SESL. SCL's EPS was Rs28
and its book value Rs64.15 while SESL's EPS was Rs16.78 and book value

But, SESL was a fast growing company and continues to be so. In the
current financial year, SESL's business is expected to contribute 25%
to SCL's top and bottom-line up from 14% in 1999-2000. SESL is expected
to grow at 150% in the current year as compared to SCL, which will grow
at 50%. Thus, merging SESL made imminent sense. But the rationale for
the merger ratio is not clear. But SCL's acquisition of Indiaworld at a
staggering price of RS5bn too did not make sense. The merger ratio was
worked out keeping in mind the future growth potential of SESL and its
contribution to SCL. "When SESL was merged with SCL it contributed 13%
to SCL, but we were allotted only 7% equity of SCL, so I think that we
did not get a fair valuation, but we accepted it," says Raju. Besides
compared to SCL, which had a debt of Rs3bn, half the size of its
turnover SESL was a debt free company and also was highly profitable as
compared to SCL. Also, the growth in SCL's employee strength (from 1100
to 2500) in the current year will entirely be in SESL's area of

Prior to the merger, Srinivasa Raju was planning to take SESL public
due to its high profitability and expected growth. Questions raised by
analysts as to why SCL concentrated on Y2K related work whereas the
high growth businesses were kept in the subsidiary also prompted the
management to consider this decision. Thus the allotment of 800,000
shares to Srinivasa Raju may have been just compensation to Raju, but
the lack of sufficient disclosure by SCL in its balance sheet raises
doubts. In an era of corporate governance and transparency, the company
did not provide shareholders with relevant information


Satyam Infoways are in big trouble. Maybe, it is a poetic justice as
I found them hobnobbig with the known RSS terrorists such as Vinay
Kumar Reddy, et al. They shut their free discussion Board promptly,
which is how I am going to shut these shit shoveling demented dogs'
various overt and covert operations in the United States of America.

Sid Harth..."Ya Brahmin computer coolies, I promised you some
excitement, I am enjoying the game, are you feces fascists having fun
or what?"



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