By siliconindia news bureau
Friday,18 December 2009,
Bangalore: Although India has a good crisis management system, there should be an early warning system embedded in the financial arena to prevent the frauds - lessons learnt from the Satyam saga. "It is perhaps the only company in corporate history to come out of such a major fraud. The Satyam saga has nearly a dozen lessons for Indian industry and for the world. Little wonder, Harvard Business School is now doing a case study on it. India can now offer a unique vertical globally - crisis management," Shardul S Shroff, Managing Partner of Amarchand Mangaldas Shroff told Economic Times.
What emerged out of it was a unique story of how a company with a $1.8-billion hole in its balance sheet was turned around in 100 days. Of how the country's entire regulatory mechanism was harnessed and tweaked to achieve it. How Satyam employees and even its competitors like Wipro, Infy and TCS helped it? The role of invited directors came into question. This has also led to a new voluntary code of corporate governance to be adopted on December 21. Depending on its success, the code will be made mandatory.
Individuals at Satyam were scanned to gather data from 2002 to 2009. It yielded some two terabytes of information! No warehouse in India could store it. So all information had to be sent to the UK where accounting firms could hire locations for its storage. An army of 80 people scanned every single entry. The idea was to detect a pattern, which was finally traced right back to the Chairman's office.
Another little known fact was that eight different means were adopted to check falsification of Satyam 53,000 employee base, like employee bonds, mails and mail IDs. With barely Rs. 100 crore left in balance, against a January wage bill of Rs. 400 crore, the new directors and the Satyam employees worked their hearts out to generate Rs. 700-900 crore in receivables, including future ones. All this in a situation, where 300-600 of its core, trained staff were resigning every week! "Satyam's competitors, Wipro, Infy and TCS, too chipped in, when they decided against poaching Satyam staff," added Shroff.
"The lesson here is to set temporary, short-term goals when faced with a crisis in people, contracts and cash," said Shroff. Companies also need to establish trust.
