Satyam Director resigns - problems galore for PWC

Just a couple of days back, PWC was reconsidering its appointment as auditors for Satyam, well today after Mr. Raju's statements, they can certainly hope to get out as soon as they can.

The letter from Mr. Raju can be viewed here

The restatements include
1) Restating cash from Rs. 5361 to Rs. 5040 crores
2) Writing down accrued interest of Rs. 376 crores
3) Recording liabilities of Rs. 1230 crores
4) Reversal of revenue of Rs. 490 crores

While one can assume that the guaranteed hit to P&L on account of points 2-4 will be in the range of Rs. 2000+ crores, it remains to be seen as to what will be the impact of the overstated cash balance and where lies the offset.

Insiders say that the overstated cash balances were shown to fetch better valuations for Satyam share price which in turn helped them get to pledge their shares to raise money for Maytas.

The restatement impact could have a big bearing on PWC and we wait and wonder how ICAI would react to this. Interestingly E&Y, had in 2007 given Mr. Raju the Entrepreneur of the year award and later bagged the valuation job for Maytas.

At the time of writing this article, Satyam's market cap had eroded by $2Bn dollars in a single day with Mr. Raju virtually holding no stock of his Company.

The position of shares held by Instituitional investors before the news broke out is as under

Sl. No.	Name of the Shareholder	No. of Shares	Shares as % of Total No. of Shares
1	Aberdeen Asset Managers Ltd A/C Aberdeeninternation al India Opportunities Fund ( Mauritius ) Ltd	23,800,000	3.53
2	Fidelity Management & Research Company A/C Fidelity Investment Trust - Fidelity Diversified International- Fund	23,000,000	3.42
3	ICICI Prudential Life Insurance Company Ltd	16,621,682	2.47
4	Lazard Asset Management LLC A/c Lazard Emerging Markets Portfolio	14,490,567	2.15
5	Aberdeen Asset Managers Ltd A/C Aberdeen Global Asia Pacific Fund	10,680,500	1.59
6	Life Insurance Corportion of India	9,959,281	1.48
7	Citigroup Global Markets Mauritius Pvt	8,203,186	1.22
8	JP Morgan Asset Management Europe SARL A/c Flagship Indian Investment Co Maurities Ltd	8,179,448	1.21
9	LIC of India Money Plus	7,941,345	1.18
10	Swiss Finance Corporation Mauritius Ltd	7,515,806	1.12
11	Government of Singapore	7,128,885	1.06
12	Morgan Stanley Mauritius Company Ltd	7,096,342	1.05
	Total	144,617,042	21.47