Money Control

Published on Wed, Jan 07, 2009 at 11:19
Source : CNBC-TV18

Ramalinga Raju, Chairman of Satyam has resigned from the board, reports CNBC-TV18. In his letter to the board, Raju admitted that the IT major's balance sheet has inflated cash and bank balance of Rs 5,040 crore. "No board member had any knowledge of the real situation. Accrued interest of Rs 376 crore in books is non-existent. Rs 1,230 crore was arranged to Satyam, but was not reflected in the books."

According to Raju, Ram Mynampati will now act as an interim CEO.

Raju said Merrill Lynch could be entrusted to explore merger options and he has asked auditors for restatement of accounts in light of the new facts.








Outraged auditors see action from regulators ahead

Published on Wed, Jan 07, 2009 at 13:34
Source : CNBC-TV18

The Satyam scam has evinced wide-ranging responses from auditors — but mainly one of shock. Shailesh Haribhakti of Haribhakti Group said he was, “absolutely shocked after hearing about the Satyam scam.” Action, he said, will now be taken by regulators at every level.

Dolphy D’Souza, Partner, Ernst & Young, said the size of the fraud was huge and that they will have to look into details. “Auditors will be questioned; the matter cannot be wished away,” he said. D’Souza added there would be huge implications from overseas regulators.

Pankaj Jain, Cousel Member, ICAI said that one should refrain from making any hasty judgments on prima facie details. He said that PriceWaterhouse Cooper may be asked to re-state accounts of Satyam.

Jain added there is nothing like debarment with respect to PriceWaterhouse Coopers as it is not a firm registered in India. He said, "If people are found guilty then their names would be removed as members of the Institute for a specific period of time. There is also now a provision for financial penalties that can be levied on audit firms. This is as per the new CA Act. As you can see, even the Company’s Bill had proposed penalizing auditors in case they are found negligent."

Richard Rekhy of KPMG said such a fraud requires a number of people, not just one person and that it is difficult to point fingers at only one agency. He remarked it has been happening for a number of years, and when management is involved to such an extent it is difficult for auditors who are relying on companies’ confirmation and certification.

Rekhy added that auditors rely a lot on bank confirmation and various other certifications plus some of its audit procedures. "The auditor comes in last in a sense that he relies upon various confirmations, certifications and he also conducts certain audits procedures. So, it would be unfair at this stage to comment with out a proper investigation being carried out," he said.

PricewaterhouseCoopers said, "We have learnt of the disclosures made by Chairman of Satyam and are currently examing the contents of the statement." They further stated that they are not commenting further on this subject due to issues of client confidentiality.




Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds



Total Share Capital 63.25 63.85 64.89 133.44 134.10
Equity Share Capital 63.25 63.85 64.89 133.44 134.10
Share Application Money 0.19 0.45 1.78 7.85 1.83
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 2,517.52 3,153.17 4,268.75 5,648.07 7,221.71
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 2,580.96 3,217.47 4,335.42 5,789.36 7,357.64
Secured Loans 7.30 9.87 12.57 13.79 23.67
Unsecured Loans 0.00 0.00 0.00 0.00 0.00
Total Debt 7.30 9.87 12.57 13.79 23.67
Total Liabilities 2,588.26 3,227.34 4,347.99 5,803.15 7,381.31

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds



Gross Block 847.16 937.70 1,153.16 1,280.40 1,486.53
Less: Accum. Depreciation 597.76 685.41 803.74 930.45 1,062.04
Net Block 249.40 252.29 349.42 349.95 424.49
Capital Work in Progress 22.17 64.68 76.84 290.05 458.63
Investments 74.75 78.48 155.74 201.15 493.80
Inventories 0.00 0.00 0.00 0.00 0.00
Sundry Debtors 592.82 765.17 1,122.81 1,649.86 2,223.41
Cash and Bank Balance 346.20 558.92 1,144.18 593.16 1,143.10
Total Current Assets 939.02 1,324.09 2,266.99 2,243.02 3,366.51
Loans and Advances 187.34 155.06 298.12 394.07 766.04
Fixed Deposits 1,469.16 1,804.38 1,908.15 3,366.66 3,318.58
Total CA, Loans & Advances 2,595.52 3,283.53 4,473.26 6,003.75 7,451.13
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 194.53 262.87 435.71 621.30 896.46
Provisions 159.06 188.77 271.56 420.45 550.28
Total CL & Provisions 353.59 451.64 707.27 1,041.75 1,446.74
Net Current Assets 2,241.93 2,831.89 3,765.99 4,962.00 6,004.39
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 2,588.25 3,227.34 4,347.99 5,803.15 7,381.31
Contingent Liabilities 8.68 38.22 134.45 267.20 623.28
Book Value (Rs) 81.60 100.76 133.57 86.65 109.71


Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths
Income



Sales Turnover 2,541.55 3,464.23 4,634.31 6,228.47 8,137.28
Excise Duty 0.00 0.00 0.00 0.00 0.00
Net Sales 2,541.55 3,464.23 4,634.31 6,228.47 8,137.28
Other Income 78.61 80.96 377.08 180.82 255.43
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Total Income 2,620.16 3,545.19 5,011.39 6,409.29 8,392.71
Expenditure



Raw Materials 0.00 0.00 0.00 0.00 0.00
Power & Fuel Cost 13.43 18.68 26.98 34.68 47.04
Employee Cost 1,338.84 1,999.10 2,702.24 3,692.92 4,964.84
Other Manufacturing Expenses 27.53 41.50 31.23 34.67 36.75
Selling and Admin Expenses 370.73 415.92 544.51 764.67 982.49
Miscellaneous Expenses 97.21 98.77 135.01 171.62 275.85
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 1,847.74 2,573.97 3,439.97 4,698.56 6,306.97

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths
Operating Profit 693.81 890.26 1,194.34 1,529.91 1,830.31
PBDIT 772.42 971.22 1,571.42 1,710.73 2,085.74
Interest 0.75 0.76 2.72 7.61 5.94
PBDT 771.67 970.46 1,568.70 1,703.12 2,079.80
Depreciation 111.62 103.94 122.81 129.89 137.94
Other Written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax 660.05 866.52 1,445.89 1,573.23 1,941.86
Extra-ordinary items 1.90 0.47 0.00 0.00 0.00
PBT (Post Extra-ord Items) 661.95 866.99 1,445.89 1,573.23 1,941.86
Tax 106.15 116.74 206.14 150.00 226.12
Reported Net Profit 555.79 750.26 1,239.75 1,423.23 1,715.74
Total Value Addition 1,847.75 2,573.96 3,439.97 4,698.56 6,306.97
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 126.72 159.63 229.56 231.85 234.89
Corporate Dividend Tax 16.24 20.86 32.02 37.55 39.86
Per share data (annualised)



Shares in issue (lakhs) 3,162.52 3,192.65 3,244.50 6,671.96 6,704.79
Earning Per Share (Rs) 17.57 23.50 38.21 21.33 25.59
Equity Dividend (%) 200.00 250.00 350.00 175.00 175.00
Book Value (Rs) 81.60 100.76 133.57 86.65 109.71

Source : Asian CERC



Further reading

Unravelling The Mystery



0 comments