Falling sensex, a change that you see on an everyday basis. Graph showing a drop on regular basis points out the fact that something is not right. A drop of more than 60% in a span of less than 1 year is a talk on everybody’s lips. And a sensex touching new bottoms everyday is definitely a point of concern. A point to which visualizes the fall of the economy and bubble burst owing to the Real Estate.
Coming to certain stability about 2 month back was a sigh of relief for the economy, although the stability point was a quite low from what was regular with the market but still a hope from continuous downfall was what could be seen. Then suddenly from somewhere news started coming up, with the Indian IT Giant Satyam in the news headlines.
One of the major downfalls of IT in India, will be brought about by failing on the ethical issues brought about by the major IT giants such as Satyam and Wipro.
Satyam started with failing Satyam-Maytas deal with people realizing that the Pricing of Maytas is too inflated and it will ruin the giant underlined and the money of the investors is being wasted. But that no longer seems to be a big problem, the bigger problem was the accounts which were being faltered with year after year. It was a burden of the past that they could no longer carry and shedding it was their only option, they tried to hide it by the above said deal but had to come out in the open, when they couldn’t do so. This brought about the fall of the IT giant and its share price fell by about 95%. This not just became a shame on Satyam but also on the operations of the Indian IT industry.
Another cherry on the top was placed by Wipro, the third largest IT exporter in India, with the declaration that it has been banned by the World Bank from bidding its contracts till 2011 because the company had offered shares to the bank’s employees during its US IPO on 2000 which the bank termed as “improper benefits”. Later on, Wipro registered just a profit of 16% this annum and such an image brought about fall in Wipro shares by 17% and fall in sensex again by more than 10%.
Another major impact on the Indian IT industry could be seen by the development of IT in other countries in SEA (South-East Asian Countries). This impact came about by the fact that, pay hikes registered in India has been more than 30% for the past few process, rising land prices in Indian and SEZ benefits to end by 2012 are the major facts why the new companies are no longer interested to come to this country and with the two of the factors combined, we can even see some of the companies moving out of this place.
This became one of the major fears of the Indian Government as what brought about the huge growth in the last decade but may also bring about a huge fall. Not just this, India will be left with a blemish which will stay for times to come and then it will not just be called a “land of the snake charmers”.
The Fiasco started from the time when the .dotCom bubble bursted around the oncoming of this century and Satyam acquired a company IndiaWorld which was overpriced and the Satyam had to fudge with the Account books to show it in good health and thus show Satyam’s action to be still a trustable one.
Since that year in 2000, this kept on happening year on year with the display of false pricing of land by overpricing it to an extent which could cover their fake data year on year until last month when Satyam tried to finish it for once and for all.
For clearing the fudged books, what a company like Satyam could think of was to acquire another company which could be evaluated at the same level of the frauds and they don’t have to pay a thing. But who possible give them his company without taking any money of the evaluation as huge as 7000 crores. It could be nothing more than a home firm started just for the same purpose and it was named as nothing else the inverse of the name Satyam i.e. Satyam spelled backwards and it makes Maytas.
But if everything could have gone as planned, I wouldn’t have been writing this and it actually didn’t. To cover the 7000 crore gap in their accounts, they had to inflate the evaluation of the Maytas to the same which didn’t feel right to the Board of Members of the Satyam and other major share holders. This somehow brought the whole plan of the Satyam on the front and the brought the great fall of the India’s one of the major IT industries leaving behind 50,000 employees stranded nowhere and their families.
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