Satyam finally figures out Raju scam damage: Rs7,855.3 crore

After almost 20 months of probing and deployment of over 100 forensic experts to get to the roots of the scam, Satyam Computer Services has been able to figure out the impact of financial irregularities on its balance sheet — a whopping Rs7,855.3 crore.

According to the restated accounts of the company, the total impact of the financial irregularities in Satyam is more or less in line with what the tainted founder of the company B Ramalinga Raju had said in his January 7, 2009 letter. Raju had confessed that the quantum of the irregularities was about Rs7,100 crore.

The restated accounts, which were disclosed on Wednesday, have quantified the impact of irregularities at about Rs6,242.8 crore up to April 1, 2008 and Rs1,612.5 crore subsequent to that date.

Satyam and Raju landed in trouble after an aborted bid to take over two infrastructure and property companies floated by his sons in December, 2008. Subsequently, Raju had to confess to a fraud committed on the company by fudging the books of the company to show fake revenues, profits and also clients.

Tech Mahindra, which took over Satyam in April 2009, has been working on restating the accounts and projecting the true financial health of the company. “The magnitude and the complexity of the irregularities were to be found out and the process was torturous,” Vineet Nayyar, Satyam’s chairman said while revealing the restated accounts.

The company has restated its accounts for two financial years —-FY09 and FY10. For the year ended March, 2009, Satyam had revenue of about `8,812.6 crore and a net loss of about `8,176.8 crore. It was during this year that the fraud came to light and the company had to witness employee and client attrition, having a direct and negative impact on its top and bottom lines.

For the year ended March, 2010, Satyam had revenue of about Rs5,481 crore and a net loss of about Rs124.6 crore. For both the years, the exceptional items, which included several transactions not related to the IT business, had a significant negative impact on the balance sheet.

The Ebitda margins for FY09 were at about 3.4% before exceptional items and -81.4% after these items. For FY10, the margins after exceptional items were at 1%.

“We had to work on several issues to bring down the unwanted costs. We had to carry out the right sizing both at the infrastructure level and the HR level. The operating and administrative expenses were at Rs2,437.2 crore in FY09 and they were at about Rs1,043 crore in FY10. There was a reduction of about Rs1,400 crore by the end of the year ended March 2010,” CP Gurnani, Satyam’s CEO, said. “We are now in the right direction,” he said.

Satyam is now gearing up to announce the financial performance for the first two quarters of the current financial year during mid-November 2010.