Reality Check India

Swaminomics gets 100 fanboy points

Posted in Uncategorized by realitycheck on January 11, 2009

 Swaminathan Anklesaria Aiyer  on Times Now begged Infosys chief to assume the Kalki avatar to rescue the corporate world from moral depravity. That exchange was the funniest thing I have seen in a while. Murthy himself squirmed in his seat and evaded the question.

Now, Mr Aiyer has an article in the Times of India titled “Murthy should rescue Satyam

But Murthy retired as CEO of Infosys many years ago, and is now its mentor and ambassador at large. That is an important and valuable role. But rescuing Satyam would be a bigger and more fruitful role.

This is absurd. There is no difference between the work undertaken by either Satyam or Infosys. They fight a billing rate war for each major contract. You ask Murthy to sit on board Satyam, he will simply fax a list of clients, the headcount requirements for each, the billing rates to Bangalore and improve his own bench utilization. Even a child knows that you cannot have the same person on the board of two competitors.  I guess Mr Aiyer is a fan high on Murthy weed.

Is this a case of the media eating its own poop and then eating its own poop-food-poop ad-infinitum ? Absolutely.

I understand if people run fan clubs and have blind faith in their gods.  Mr Aiyer gets 95 points for his devotion.  He would have got 100 points if he wanted Murthy to take over the country like other news anchors.

Talking about fans, I must confess to following  recently with some interest Professor Arindam Chaudhury. Yes the Management Guru, The Economist and The Philosopher.  Why ? It is mostly because I dig his opinions in The Sunday Indian (Indias Greatest News Magazine is its tagline. How very cool). He is someone who has not made peace with the corrupt system.  Yet, he is an entrepreneur. Beat that.

So there, I too am a fan of someone.  Still, I wont go around worshipping him or asking him to take over Satyam (May not even be a bad idea).

———

To conclude, here is something Mr Aiyer and Mr Murthy dont want you to talk about.

Is the never ending tax holiday on IT services making it easy to cook books ?

Satyam could inflate profits at will because it didn’t have to pay IT on its export income. Other exporters may try similar models of creative accounting due to similar patterns of tax exemption. It’s also likely to happen in other industries with tax breaks.

It’s more common to deflate profits and siphon cash off. In businesses where the cash component is inherently large, PEs could hit the floor. For example, liquor, aviation, FMCG, retail, are all cash-businesses with a large proportion of revenues accruing in cash transactions. That gives managements the incentive to develop cosy relationships with the IT and excise departments and conceal cash revenues. Inflating profits is less likely in such businesses where taxes are payable on profits.

Source : Devangshu Datta in Business Standard

What we need on the board are people who are not in the tax-free-mountain-of-cash game.

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2 Responses

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  1. Barbarindian said, on January 11, 2009 at 5:18 am

    Can the Government forcibly take over a company and appoint directors? Just wondering about the corporate laws in India.

    With the government entering the frame and the room for pilferage plugged, there was a real opportunity to get associated with the widely observed turnaround story: a strong incentive.

    The chief secretary of Andhra Pradesh backed up the state’s claim by arguing that the future of the company will be of special concern for the state once used as the advertisement for its IT prowess. A senior official in the chief minister’s office said that as the company is based in Hyderabad and a large number of investors and employees are from the state, the government needs to have a say in the management.

    Not sure one can agree with that. Unless Satyam is made a BIFR case.

    Shouldn’t the stock holders be asked to vote? Of course the Government can and should initiate inquiry into the fraud.

    The opportunities for the Government is tremendous – finally a well known IT company run by Government. Immense scope for doing social justice. As BIFR case the new entity will not need to make profits.

  2. Anony said, on January 12, 2009 at 7:42 am

    You may need to do a bit of digging up on Arindam Chaudary and IIPM before forming an opinion on the pony-tailed dude.


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