Hyderabad: Shares of Satyam Computer crashed on Wednesday by over 72 per cent to Rs50 from a opening of Rs179.10 on the bourses around 13:00 hrs IST, following the resignation of its founder-chairman B Ramalinga Raju after he admitted to a Rs 40 billion (Rs 4,000 crore) fraud - the largest in India Inc.
Satyam's managing director B Rama Raju also quit, three days before the re-scheduled board meeting in Hyderabad on January 10. The resignations caught the market, investors and analysts by surprise.
While resigning, Ramalinga Raju also admitted to a fraud being committed to the tune of Rs 4,000 crore in the balance sheet of the company.
In a regulatory statement, Raju said the software services firm had fraudulently incorporated a non-existent cash component and inflated the bank balance to reflect Rs 5,040 crore as against Rs 5,361 crore.
"Ramalinga Raju and Rama Raju shall continue in their position till such time the board is expanded and their continuance is to ensure enhancement of the board," the company said.
Ramalinga Raju's resignation is a culmination of the crisis triggered by the management's aborted bid to acquire Maytas Properties and Maytas Infra for Rs 7,920 crore on December 17 after institutional investors revolted against the controversial deal.
Satyam also informed the stock exchanges that the company had terminated the services of global financial advisory firm DSP Merrill Lynch, which was engaged to advise the board at the reconvened meeting on January 10.
The Maytas' deal fiasco also led to the exit of four independent directors from the board in succession over the last weeks.
Global technology research firm Forrester Research sounded its clients Dec 31 that the beleaguered company was heading for a major shakeout or a possible takeover as a consequence of its management's bid to diversify from core IT business into realty sector by dipping into cash reserves of Rs 5,300 crore.
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