Rajus' land bank could be much bigger

Farfetched but true. The greed for land is has sunk a solid cash cow business built on cheap labor, dollar arbitrage and government subsidies. Along with Raju, there will be hundreds and thousands of mini Raju's who will be crushed under the weight of this collapse. In one stroke Ramalinga Raju has setback the development of Hyderabad and AP by atleast half a decade. There is no need for Telangana for now as the crown itself has crumbled.

If 6800 acres is put on the market to liquidate what will be net asset value of this illiquid asset. I think the figure is much more then 6800 acres. Satyam has land in Nagpur close to Mihan and those bozos there propped up the prices by quoting Raheja, Satyam and Infosys.In all my dreams I could never think that the end game for the real estate bubble would be the largest corporate fraud in Indian history.

I always thought the US slowdown will affect jobs, liquidity concerns etc. just like it happened in the US. Raju has created a script which will beat the slumdog millionaire several times over. Maybe he should write his memoirs and make a film on it. I'm sure he will regain his riches if that happens. A Satyameve Raju should be a good title.

It is mind boggling thinking about the hobsons choices which are presented to the Satyam employees.All the moronic newschannels and papers have yet to digest the scope of this scandal and the effect it has on employees whether in India or abroad. There is a satyam blog which is trying to bravely counter all the negative news. Unfortunately the kids don't realize that business leaders of GE/Nestle and others are cut-throat competitors. If they don't think twice in axing their own employees what chance do they have to keep contractors when the company which employs is close to bankruptcy, and will soon have few thousand lawyers crawling all over them. A simple question to ask is "Knowing what you know about Satyam today would you do business with them ?". If you answer yes for whatever reason, you are destined to be a sucker for life.

The Indian political establishment is also making some weak attempts so appear that they are working towards fixing the problem. As with politics they are looking for the problem to vanish and let some other issue take over the media. Unfortunately in this case the US shareholders will get their pound of flesh. Corrupt Indian politicians let Union carbide get away by sacrificing the lives of thousands of Indians. In a country where lives are much valued and law followed, the US lawyers will make sure the misdeeds are punished and the company assets are distributed to their shareholders. If the Indian govt. cannot assure the FII's, safety of their Investments, expect the Sensex to go back to 2003 levels. No more free lunches for anyone. The destruction of money here is of gigantic proportions.

If someone doubt's my analysis, just google for Filipino BPO companies which are touting itself as an attractive outsourcing destination for BPOs due to their ethical business practices. If the government fails to act swiftly, book offenders and liquidate Satyam quickly, one can be rest assured that dark days are ahead.


Let the scavenging begin.

DNA reports
Hyderabad: B Ramalinga Raju has claimed that Maytas Properties had a land bank of 6,800 acres, sources said it could be more than that, considering the properties the family had acquired in other countries.

The uncertainty about the actual amount of land held comes from the fact that most of the property was either handled through a general power of attorney (GPA) or held in somebody else's name.

While Teja Raju was completely in charge of Maytas Infra, a listed entity, Rama Raju, Jr, was handling Maytas Properties, a family-owned, closely-held entity. It is in the family-owned business that the Rajus had built the land bank.

Sources said that the family was acquiring land along with the immediate relative of a top politician in the statehoping that the politician would get a project to the area, or at least a good buyer for the property. "There are many such properties lying with the family which do not have any immediate market unless something major happens at the location," a source said.

However, the real estate market crashed in the last eight months, locking up the assets of the Rajus. The market is unlikely to see any upswing in the near future. "Even if you take the land bank of 6,800 acres, it means at least Rs 4,000-5,000 crore is locked up. Though Ramalinga Raju is a stakeholder in both Maytas Infra and Maytas Properties, it is his sons who are handling the affairs of both the companies," the source explained.

Livemint reports

UK investment bank Noble sees more Satyams in the pipeline

Noble Group was “disappointed but not surprised” by the Satyam development

Mumbai: A day after the Satyam Computer Services Ltd scandal broke, UK-based independent investment bank Noble Group released a report that points to widespread accounting lapses across the broad index of 500 Indian companies listed on Asia’s oldest bourse, the Bombay Stock Exchange (BSE), and warns of “more Satyams in the pipeline”.

Cheat code: Satyam Computer Services headquarters in Hyderabad. Mahesh Kumar A. / AP

The report suggests that as many as one-fifth of these companies have accounting issues. Noble Group was “disappointed but not surprised” by the Satyam development.

“Our experiences over the past few months...suggest that manipulative accounting and aggressive promoter practices are more common in India than is generally believed to be the case,” the report says.

The group’s analysis shows at least five types of accounting malpractices exist across BSE 500 firms—among them, recording revenue ahead of time, booking “fictitious” sales, expense manipulation and cash manipulation.

At least 30 companies, the report says, recognize revenue at the time of sales. This, it says, is disclosed by worsening cash flow from operating activities despite a rise in earnings before interest, taxes, depreciation and amortization, or Ebitda, a widely used measure of profitability.

At least 60 firms on the index, the report says, seem to have booked sales that might actually have come from investment income or other income.

Also, reducing depreciation rates to push expenses to a later period is noticed in at least 10 companies. And at least 15 firms have handed out the bulk of their loans and advances to companies in which their directors have an interest.

“Pump and dump” and “blab and grab” are among the more popular ways that promoters use to push their stock up, according to the report. In the former, the promoter “pumps” up the stock to generate liquidity, follows it up with announcements that send the price up and then “dumps” the holdings.

In the latter, the promoter announces a new venture, even when it has nothing to do with the company’s main business. This infuses fresh funds, which the promoter “grabs”, but then sells his/her own holdings. The new venture is then conveniently postponed, sending the stock price down.

A third method promoters use is to simply siphon off funds during bear markets, when the pressure to show strong earnings is less. The most common method, the report says, is to inflate “other expenses” or “sales and distribution expenses”, or even “miscellaneous expenses”. In bear markets, the report says, such expenses rose by almost 25% (as a percentage of operating expenses).

The problem exists on three fronts: lax accounting rules, weak market regulation and corporate corruption.

In the first category, the report says, there is a lack of restrictions on auditors to do consulting work for the firms they audit.

Second, the Indian market does not seem to place restrictions on how quickly after the year-end a firm has to publish its annual report, which deprives investors of a timely look at the true state of affairs. The report also castigates market regulators that are driven more by political decisions.

And the third fault-line lies, the report says, with the promoters, whose powers are largely unchecked by directors, auditors or regulators.

Still, in the face of all the doom and gloom surrounding Satyam, the report says this is the best time to invest in India, as the markets are unprecedentedly cheap, noting that such scandals do not appear to have an overall bearing on market direction.

Investors must do three basic things before they open their wallets—primary data checks on management, forensic financial analysis and in-depth interviews with management.