Business Today

Cover story | Feb 8, 2009

How funds are siphoned

It’s perhaps India Inc’s worst-kept secret— promoters siphoning out cash from their companies’ operations. Here’s how they do it. Anand Adhikari goes into the details.

Ripple effect

The Satyam scandal does no favours for the IT services sector and for overall investor sentiment.

Fooling the shareholders

On a number of occasions, we have been told, “Utna hi likhiye jitna mere Rs 7 a copy ki cost mein fit ho sakey.” So, information is rationed, pages trimmed and printing cost strictly controlled.

Struck by scams, stuck with stock

As past financial scandals reveal, small investors get the roughest end of the stick.

The great Satyam robbery

Is the Rs 7,000-crore fraud that B. Ramalinga Raju resorted to an accounting scam—done to prop up valuations of the IT giant—or was the promoter siphoning out money from a fundamentally sound company? E. Kumar Sharma finds out.

On fraud trail

Satyam’s auditors and independent directors failed to catch on to Raju’s scam. Auditors Pavan Kumar Vijay and R. Ramakrishnan, working with BT, show how dodgy numbers were ignored all along. Puja Mehra reports.

The tiger rider

Ramalinga Raju began his entrepreneurial journey in software way back in 1987. He was a meticulous strategist who was fuelled by a burning desire to make it big. He didn’t know where and when to stop. E. Kumar Sharma reports.

Living on the (pl)edge

Few Indian promoters could conjure up a fraud of the magnitude that Ramalinga Raju has. Like Raju, however, a clutch of Indian promoters face a real danger of losing control over their companies, courtesy their pledging gambit. Virendra Verma & Rachna Monga report.

The maze that is Maytas

The Rajus’ fascination with real estate might have strangled the golden goose that was Satyam.

When your boss does you in

The darker part of the cloud of uncertainty over Satyam looms over its 53,000 employees, many of whom are in no mood to throw in the towel.

Confessions of auditors

Three auditors reveal to BT, the dubious nexus between auditors and corporate management.

"With XBRL, you can‚??t hide‚??

We also found a company that has been reporting the same cash flow statement for three years running, word for word, number for number, decimal place for decimal place.

Audit: Elusive independence

Was Ramalinga Raju’s fraud planned to beat audits or were Satyam’s auditors plainly ineffective? Is the auditing system independent and robust enough?

In This Issue

Time for a trim

With job creation at a standstill and job protection being the prime concern, talk of salary hikes sounds out of place. But knowing how well you are paid compared with your peers in other industries will help.

Advantage India

From mining to real estate to stock market, NRIs are keen to invest in India. Can the government seize the moment?

Managing in chaos

Shooting a movie on the streets of Mumbai is the ultimate test for a director. It requires patience, aplomb and an innate ability to deal with random incidents of chaos—all of which Danny Boyle apparently carried out, unruffled and as cool as cucumber.

The biggest fall

The job market sinks as downturn dents business.

Cashing in on insecurity

The Mumbai terror attack opens up a huge market for security products.


There were launches aplenty at CES 2009 in Las Vegas, even as tech and electronics companies figured how to beat the slowdown. Rahul Sachitanand walks through the show.


Hottest young executives

Managers are racking their brains for strategies to beat the slowdown. But hotshots remain hotshots. We present 5th listing of India's young and happening executives.

Editor's Note

From the editor: February 8, 2009

In our cover package for this issue, we not only go into the details of the fraud and explore how and why Satyam Chairman B. Ramalinga Raju turned to the dark side, we also bring under the spotlight the role of auditors and directors. With the help of a few chartered accountants and corporate lawyers, we trawled through Satyam's balance sheets of the past five years to look for the murky trail and understand how the auditors and directors missed the signs of what now seems to be a blatant scam.

Top Mind

A service to remember

What is it? A company called CPP is offering a service to store all your credit card details.

Policy Watch

The risk meter

How vulnerable are different sectors of the economy to global financial crisis?



By the Confederation of Indian Industry (CII), a task force on corporate governance to be headed by former Cabinet Secretary and India’s Ambassador to the US, Naresh Chandra. The task force would look at issues emerging out of the Satyam episode and make its recommendations.


Born to win?

Malcolm Gladwell tries to prove that success and geniushood are hardly innate traits that you acquire at birth.


The best exercise you're not doing

Ever wonder why six-pack abs and bigger arms are considered trophy muscles while legs, quads and calves are hardly, if ever, spoken about at all?


Premji's moment of unease

If reactions to the world bank’s ban on wipro Technologies were starkly different from that to a similar ban on Satyam Computer, the reason was the towering personality of Azim Premji, who has always emphasised the role of ethics in business.


Netting rural India

The Internet is spreading its web rapidly in villages and small towns, finds a study by I-Cube.

Business Today-carma CEO watch

India’s and the world’s most talked-about CEOs in December

Back to the basics

For the life insurance industry, one of the few bright spots in the economy currently, the slowdown has been a good time to refocus its priorities.

Breaking the class barrier

As yet another Blackberry was launched in India, the device is being projected as a convergence tool that can be a laptop-cum-e-mailing device as well as a mobile phone and a MP3 player for Indian consumers.

To be precise

“The auditors will have to be independent. That’s why they are called independent directors. They should not be under the thumb of the management”

Risk goes global

So you thought the only troubles facing you are a liquidity crunch is a slowing economy, a liquidity crunch and unreceptive customers?

India slips in innovation index

Poor literacy rate, bad infrastructure and lack of university-industry interaction has cost India dear in the 2008 Global Innovation Index rankings.

End of the tunnel?

There’ll be more pain before the realty sector’s woes wane, says a DTZ report.

Numbers of note

Rs 1,70,000 crore: This is the value of investment projects that have been shelved due to economic slowdown in India, according to CMIE.

‚??More scholarships for students‚??

In Delhi for the launch of the Manmohan Singh Undergraduate Scholarship Programme, University of Cambridge Vice Chancellor Alison Richard tells Tejeesh N.S. Behl that the university is increasing scholarship sops for Indian students.

Instan tip

The fortnight’s burning question.
Was Wipro right in hiding the World Bank ban for two years?

Why banks won‚??t lend

Despite monetary easing, banks are still unwilling to lend. Or are companies reluctant to borrow?


Flying high

Air Asia’s Tony Fernandes has blanketed much of Asia with his low-cost airline. Policy environment willing, he could shake-up the aviation industry in India, too.

Crisis of consumption

A status check on the US economy to know how close the world’s strongest economic engine is to a re-start.

China's worst hour?

China’s runaway growth is losing steam. Business Today excerpts a recent review of the Chinese economy published in NCAER’s monthly newsletter Macrotrack to highlight how bad the slowdown really is and how it impacts India.


Fooling the shareholders

On a number of occasions, we have been told, “Utna hi likhiye jitna mere Rs 7 a copy ki cost mein fit ho sakey.” So, information is rationed, pages trimmed and printing cost strictly controlled.

"With XBRL, you can‚??t hide‚??

We also found a company that has been reporting the same cash flow statement for three years running, word for word, number for number, decimal place for decimal place.


Good, better, best!

The cover (The Best Companies To Work for in India, BT, January 25) was very well researched. Microsoft India topped the list for the second consecutive year, and rightly so. I’m sure the company will be able to meet the challenges, especially the ones related to HR.


Slowdown swing

Corporates put slowdown uncertainties aside to come out in strength for a rousing start to the Bangalore round of the Business Today-Honda Pro-Am of Champions.

60 minutes

India punches above its weight: Andrew Moss

The Group Chief Executive and a board director of insurer Aviva Plc believes that the global financial crisis positions the insurance firms rather well.

BT More

Amrita Rao, 20s

Each month, we ask a beautiful woman about men, sex and relationships. This month, it’s Amrita Rao, model and now actress. She’s currently single and lives in Mumbai.

The pink of health

All you need to know about the Cosmo.

Don't forget your liver

Try not to be swayed by medical reports. Wine’s a great drink to have, especially with a woman. You’ll not make an ass of yourself as you might after a whisky too many.

Hops in house

When India’s first ever microbrewery opened up for business, Bibek Bhattacharya was first in line.

Metro watch

The restaurants you need to know about. This month, we do Japanese in Gurgaon, chicken and mash in Bandra and royal kebabs in Bangalore. Tuck in!

Spring loaded

Downturn, what downturn? Sanjay Kapoor, the managing director of genesis luxury, is in high spirits. Just make sure there’s a gym nearby.

Workout wonders

This new wave of home gyms do away with the old excuses for not working out.

The Jeev show

Short dresses, long-tanned legs, high heels and Prada shades mingled with crusty footwear, dhotis, kurtas and turbans. The smooth and sassy with the rough and earthy.

Baroque roll

Complex beats? Multi-part harmonies? Lush strings? Unforgettable melodies? Sounds like Baroque Pop!

Beauty and loneliness

Hong Kong’s acclaimed auteur Wong Kar-Wai is a master of great technical virtuosity. A box-set of his films now available in India.

Screen giants

As television screens get bigger and bigger, they appeal only to airports and crazy people. And that’s a good thing.

The box set

Five Wongs make a right with this latest box set. Here is what’s in store

A manageable monster

The Mercedes SL 63 AMG is brutally fast, offensively expensive, but surprisingly easy to drive.

Launch pad

What's new in your world

February 2009

What’s new and what’s happening this month

My stuff

It’s luxury brands all the way for Sanjay Sharma, Country Manager, Crystallized Swarovski Elements.

Sounds like you know about‚?¶ Sushi

Don’t know your maki from your sashimi? Don’t worry, you can always bluff it.

Get the party started!

From celebrity DJs, to Bollywood A-listers, here’s what you need to throw that dream party.

Letter from the Editor

Was it Oscar Wilde or John Abraham who said “the only way to survive life in an Indian metro is to escape now and again. And again and again”? Whomever it was, he was spot on. At times like these, we need to preserve our sanity.

Weekends with the wall

When it comes to kicking back for the weekend, it’s all about understatement not extravagance for Rahul Dravid.

Paint It black

There’s something inherently powerful about the colour of the season.

Knit picks

If it’s winter, then it has to be knitwear. Six great styles

Coffee buzz

Wake up in Coorg and get intoxicated by nature.

The Capella constellation

No weekend destination story would be complete without Goa, but there’s more to Goa than just beach. Deepti Datt heads into the forests to a super-exclusive but homely B&B favoured by movie stars and celebrities. Just watch out for the monkeys.

Ssh peaceful

We start our weekend breaks package in the North of India, in the nation’s favourite destination state, Rajasthan. The Amanbagh Resort is only five hours from Delhi, and it provides a luxury experience like no other. What’s more, it’s offering a 40 per cent discount to Indian nationals. Sanjiv Bhattacharya experiences the magic.

Pack it up!

Travel in style with these holiday essentials.