Mar 15, 2009 (LBO) – India’s Satyam collapsed due to the company pouring millions of dollars into undisclosed real estate assets that delivered inflated profits, but crashed soon after the property bubble burst, a visiting financial expert said.
On January 09, 2009, the Bombay stocks plunged more than seven percent when Ramalinga Raju, chairman of India’s largest Business Process Outsourcing (BPO) firm Satyam Computer Services Limited told the Indian exchange it had squandered 1.5 billion dollars in the past seven years.
“This was a company that won a global award for corporate governance,” said Ravi Raman, the chief risk officer of Butterfield Fulcrum of India.
“You can’t have 1.5 billion dollars of inflated assets in a company whose annual revenue is about 2.5 billion dollars.”
Satyam when translated from Tamil, one of the oldest languages in the world, means truthful.
Experts said Satyam which began as an Information Technology (IT) company specializing in BPO services, diversified and invested heavily on India’s red hot property sector.
Raman said Satyam had acquired several acres of property in Hyderabad to secure future company earnings expectations. The property business was yielding 3