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Financial scandal rocks India's sofware giant Satyam
The scandal involving Satyam Computer Services is set to hit the confidence of UAE-based non-resident Indian (NRI) investors who may have been enthusiastic about Indian shares, at a time when the local markets are not performing well, people in the investment business said.
- By Shakir Husain, Staff Reporter
- Published: 23:38 January 7, 2009
Dubai: The scandal involving Satyam Computer Services is set to hit the confidence of UAE-based non-resident Indian (NRI) investors who may have been enthusiastic about Indian shares, at a time when the local markets are not performing well, people in the investment business said.
The head of India's fourth-largest software services exporter, Ramalinga Raju, resigned yesterday, disclosing that profits had been falsely inflated for years and sending its shares tumbling nearly 80 per cent. Chetan Mehra, managing director of Dubai-based private equity firm Halcyon Capital, believes the fraud should serve as "a wake-up call" for people to exercise due diligence before investing in stocks. "In a bull run, investors do not think about these things. They should always look at sound fundamentals and not make reckless investments to make a quick buck," he said.
Satyam shares plummeted 77.69 per cent, or Rs139.15 [Dh11] to Rs39.95 on the Bombay Stock Exchange yesterday. By the close of trade, Satyam's share value slumped to about $550 million [Dh2.08 billion] from around $7 billion last June.
Your comments
Good corporate governance, strict internal controls and regulations like SOX would bring back the lost reliability and transparency in corporate reporting. All listed companies should have qualified internal auditors who report directly to independent directors, who are free of any conflict of interest in the entity. Only then can we say that the system is efficient and controls are effective.
Sachin
Dubai,UAE
Posted: January 08, 2009, 17:43
We must hang our head in shame if such fraud cases continue to occur in a country like India. SEBI must take immediate action to correct the situation, otherwise investors will lose hope in the share market. No investor can go through each and every company's balance sheet before they procure the shares. SEBI should take full control and responsibility for this massive fraud. If SEBI or the Indian government does not take the necessary steps to resolve the problem, the share market may face the consequences.
Noor SK
Sharjah,UAE
Posted: January 08, 2009, 12:12
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