Satyam Computer Services chairman B Ramalinga Raju’s admission of fudging the company’s accounts has put Indian IT industry in a delicate situation. The corporate governance in India has become a debatable topic. Satyams brand image was already tarnished as the World Bank has stopped its relation with Satyam
Once the resignation letter was submitted by Ramalinga Raju to the board and the admisson of the that the Satyam's balance sheets was inflated to Rs. 5040 crores inflation in the balance sheet,the Satyam shares has gone a record low of Rs 30. News of the scandal — quickly compared with the collapse of Enron — sent jitters through the Indian stock market, and the benchmark Sensex index fell more than 5 percent. Shares in Satyam fell more than 70 percent.
The damage will not be limited to the technology sector but also on the India Inc.’s credibility, rather than brand India IT. It also hit the stock market, which was already in a bearish face. The scandal raised questions over accounting standards in India as a whole, as observers asked whether similar problems might lie buried elsewhere. The risk premium for Indian companies will rise in investors’ eyes, said Nilesh Jasani, India strategist at Credit Suisse
Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world, handling everything from computer systems to customer service. Clients have included General Electric, General Motors, Nestlé and the United States government. In some cases, Satyam is even responsible for clients’ finances and accounting.
This is a clear blow to the Indian IT dream. Satayam’s scam has become the biggest frauds in recent times. The fate of the employees, freshers, shareholders, FII s, the benefiters of the Byraju foundation are all at Stake.
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