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Satyam plunges for 2nd day, losing nearly US$2.2b
By Andrea Tan |
January 10, 2009, Saturday
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Print Edition
Print Edition
SATYAM Computer Services Ltd plunged yesterday for a second day in Mumbai trading on concern it may run out of money after Chairman Ramalinga Raju said he falsified the accounts and quit.
Satyam dropped as much as 84 percent, adding to a 78-percent tumble on Wednesday after Raju said he inflated earnings and assets by US$1 billion. The Bombay Stock Exchange's Sensitive Index fell 1.7 percent yesterday. India's fourth-largest provider of software services risks losing clients after interim Chief Executive Officer Ram Mynampati said he can't be sure the company has enough cash for this month. The scandal, whose scope is being likened to the 2001 bankruptcy of Enron Corp, has shaken investor confidence in India's companies and prompted government and regulatory probes, Bloomberg News said.
"It's as big and as shocking as Enron," said Dharmesh Mehta, head of broking at Mumbai-based Enam Securities Pvt, whose clients own shares of Indian software makers. "The key is how fast can we find out the facts and truth to Satyam."
Satyam's false accounting needs an urgent probe to ensure it's not repeated, M. Damodaran, former chairman of the Securities and Exchange Board of India, said on Thursday.
Mynampati said on Thursday he was unaware of the false accounting that may force Satyam to restate earnings as he relied on audited statements. The local unit of PricewaterhouseCoopers LLP said in a statement that Satyam's accounts were supported by "appropriate audit evidence."
Satyam slid 42 percent to 23.5 rupees as of 2:53pm in Mumbai, after falling to as low as 6.3 rupees. The two-day plunge has wiped out almost 105 billion rupees (US$2.2 billion) of the Indian software-maker's market value.
The Indian stock market was closed for a holiday on Thursday.
"With no cash on the balance sheet and significant risk of clients pulling out, the new management will have a huge task" to revive the company, Aniruddha Bhosale, an analyst at Deutsche Bank AG in Mumbai, wrote in a report on Thursday. "We have serious concerns about the ability of the new management to keep the company at par with peers."
Satyam is in danger of losing clients to larger rivals Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd, analysts said.
Satyam's "crisis should benefit the big three," analysts at Macquarie Group Ltd in Mumbai wrote in a report yesterday.
Satyam dropped as much as 84 percent, adding to a 78-percent tumble on Wednesday after Raju said he inflated earnings and assets by US$1 billion. The Bombay Stock Exchange's Sensitive Index fell 1.7 percent yesterday. India's fourth-largest provider of software services risks losing clients after interim Chief Executive Officer Ram Mynampati said he can't be sure the company has enough cash for this month. The scandal, whose scope is being likened to the 2001 bankruptcy of Enron Corp, has shaken investor confidence in India's companies and prompted government and regulatory probes, Bloomberg News said.
"It's as big and as shocking as Enron," said Dharmesh Mehta, head of broking at Mumbai-based Enam Securities Pvt, whose clients own shares of Indian software makers. "The key is how fast can we find out the facts and truth to Satyam."
Satyam's false accounting needs an urgent probe to ensure it's not repeated, M. Damodaran, former chairman of the Securities and Exchange Board of India, said on Thursday.
Mynampati said on Thursday he was unaware of the false accounting that may force Satyam to restate earnings as he relied on audited statements. The local unit of PricewaterhouseCoopers LLP said in a statement that Satyam's accounts were supported by "appropriate audit evidence."
Satyam slid 42 percent to 23.5 rupees as of 2:53pm in Mumbai, after falling to as low as 6.3 rupees. The two-day plunge has wiped out almost 105 billion rupees (US$2.2 billion) of the Indian software-maker's market value.
The Indian stock market was closed for a holiday on Thursday.
"With no cash on the balance sheet and significant risk of clients pulling out, the new management will have a huge task" to revive the company, Aniruddha Bhosale, an analyst at Deutsche Bank AG in Mumbai, wrote in a report on Thursday. "We have serious concerns about the ability of the new management to keep the company at par with peers."
Satyam is in danger of losing clients to larger rivals Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd, analysts said.
Satyam's "crisis should benefit the big three," analysts at Macquarie Group Ltd in Mumbai wrote in a report yesterday.
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