Thoughts on Satyam and tax holidays
Meanwhile, Mr Raju has gone underground. This is also standard practice in India while appropriate legal help is arranged.
It is highly unlikely that no one else knew about this fudging. It is hard to pull off inflating revenue numbers without forgery. Why did the board not not speak up or ask questions ? What about the gyaan-dripping independent directors ? They are paid upwards of Rs 1 Lakh a month for hardly any other work !! The answer might well be cultural. We Indians are trained from childhood to accept ‘elephants in the room’ and ‘turds near the food plate’. We also worship entrepreneurs who hustle. I read atleast three magazines over the weekend which lavished praise on Swan Telecom and Datacom and Unitech for major foreign deals worth billions. Yet, Swan will not win any entrepreneurship awards next year even though they would have earned 10x more money than all other nominees put together. Wink Wink.
What now ?
Satyam unfortunately also has the Upaid litigation that is due later this quarter. So any acquisition would have to factor into account the possibility of losing this case. The 53,000 employees (now even this number may be suspect) are now left in the lurch. Those who possess visas might be offered jobs by other entrepreneurs. A few might be hit hard. You have to feel bad for them because it could not have come at a worse time. A few birds like Tech Mahindra are flying over Satyam trying to pick up specific clients and projects (like Telecom).
So, what did the IT tax holiday give us ? For 25 years we have made it a national priority to make these IT companies cash rich. Come earnings season we are subjected to Udayan and others go on about “Infosys/Wipro/TCS is sitting on a mountain of cash”. This is jarring for a few but most of us will ignore this elephant in the room. What will happen if you load these companies with so much cash far beyond their investment requirements ? We dont even question them when they claim every year that they are going to hire 30,000 employees which can easily be proven to be rubbish.
This IT holiday which was previously in the STPI regime is now simply rebranded as SEZ. Everything is designed to rob the nation of valuable tax rupees. Of course, a large chunk of the goodies will be distributed to all parties by shady gentlemen in the wee hours of the night.
Thats all for now. More after I read and watch the news later tonight.