ugg chelsea boot s clients are its assets
How should it keep the engine running and what course should it set? Come to think of it, why shouldn’t Satyam just be wound up? Working without any handbook, with every figure and bank balance having to be double checked, the new team has its work cut out.
BT puts together an imaginary briefing of the new directors, by one of them, based on real interactions between E. Kumar Sharma and Satyam insiders.
Business continuity is important. as you know, we were checking out Satyam’s client list and found that Singapore’s Changi airport has a few things running on Satyam’s software. May be not mission critical, may be they can get others to do it, but I’m sure they can’t find a replacement overnight. So we’ve got to reassure clients like Changi that we are still here and they will get all the support they need. Satyam also does complete payroll processing for at least one South East Asian country. It serves about a dozen airlines by maintaining systems that determine pilot rotation and reporting of crew to different flights.
Satyam not on acquisition radar: Capgemini
Good that we are making a list of all the top customers of Satyam and contacting each one individually to confirm that according to our books, this is the order we have from you, this is the work we are doing and this is the payment due from you. As you know, we found that there are some companies for which Satyam is the sole vendor.
So gentlemen, clearly, Satyam’s clients are its assets. Many are absolute marquee names and none of them has so far complained about the quality of our work.
Money, or the lack thereof!
Shocking, you know, that letter Raju wrote to his board on January 7. I mean, here’s a $2 billion company that was assumed to have huge cash reserves plus deposits and receivables and suddenly, nothing! The good news is that we cross checked every account and found that Satyam has around $10 20 million of net cash in the bank.
The bad news is that this is loose change for a company like Satyam. Maybe enough for a few days at the rate it burns cash. With over 50,000 employees on the payroll, we’ve got to ensure that we can pay them at the end of the month. (As BT went to print, it learnt that employees had started getting their pay credited into their accounts.)
Inside the secret world of auditing
All right, that brings us to item 3: How many employees does Satyam really have?
You know, i was shocked when the public prosecutor claimed that Raju had inflated headcount by 13,000 and was skimming the money! This was critical we don’t want to end up paying salaries to people who don’t exist!
But we know now that there does not seem to be any basis for this claim. We did a pretty thorough check using different methods and despite the media reports we can say with a fair degree of confidence that the original figure is more or less true and really there are no fake employees. There may be some aberrations, but certainly nowhere near the figure of 13,000 being talked about.
The numbers are valid. It’s not just the employee numbers there were doubts on all data on receivables, liabilities whether the figures have been understated, overstated, were right or wrong. Or whether the customer names were real or just fictitious names against whom some orders were created.
Bidding process for Satyam likely to begin by March end
That brings us to item 4, which is, how to restore trust.
After the fire fighting steps, our first worry was how to restore trust. a bit unfair but it’s the truth, simply because of the scale of the fraud and that this was done for 5 6 years and you are talking of Rs 6,000 7,000 crore. It seems very difficult for any lay person to believe that there were just three people involved the two Raju brothers and the CFO.
It may be possible that it has all been done very cleverly but a common man will still say: it just can’t be. There must be more people involved. Well, if that’s true, one does not know who to trust within the company.
This is one reason why the board is not finding it easy to completely and fully believe any of the senior managers. But we are just six of us now for this huge multinational, so the current management is being allowed to run the company on the principle of ‘innocent till proven guilty.’ Well, it is also partly because it is fair and partly because there is no choice as one cannot do away with the top management without impacting business continuity.
Satyam getting new contracts: Murty
As you know, we have identified around 300 top customers who account for at least 80 to 85 per cent of the revenues, and by the end of the month (January end) about 60 to 70 per cent of them would have been contacted and will know the actual figures by then.
For this, the board is taking the help of the newly appointed auditors, KPMG and Deloitte, who are also using their international contacts (as some of them are working for these same international clients outside India). All of this is important as payments are made 30 to 60 days after delivery.
Now for the medium and long term future. We are an interim arrangement, and have to look for a CEO and CFO.
The trouble is, we don’t know the mandate for the new CEO, given that one of the strategic options being considered is the acquisition of Satyam by another company. If that happens, the new management will obviously appoint its own CEO.
For the moment, while many people have volunteered to take up the task, the company and the board are not in a position to offer a term or spell out for how long the new CEO and CFO would be needed. Then, we are not clear about the salary package we should offer, and nor can we tell him that he will be protected from legal cases.