Satyam's path to disaster

Following is the chronological summary of events which saw IT major Satyam Computer Services, founded in 1987, on its path to disaster:

1. December 16: Satyam gets board's approval for acquisition of Maytas Infrastructure and Maytas Properties for $1.6 billion.

2. December 17: Defers Maytas' acquisition on stiff investor resistance.

3. December 18: Schedules board meet for the proposal of buyback of shares on December 29.

4. December 18: British mobile solution provider Upaid files a law suit against Satyam in a district Court in the US over Maytas deal.

5. December 24: World Bank bans Satyam for 8 years on charges of data-theft.

6. December 25: Satyam objects to World Bank's statements; asks Bank to apologise to the company or face legal action.

7. December 25: Mangalam Srinivasan, non-executive and independent director resigns from board.

8. December 27: Postpones board meeting to January 10, 2009 to consider buyback of shares.

9. December 27: Promoters disclose that their entire holding in Satyam pledged with institutional lenders since 2006.

10. December 28: Two independent directors - Krishna G Palepu, Vinod K Dham - resign from the board.

11. December 29: M Rammohan Rao, another independent director, resigns from board.

12. January 1: Satyam-Upaid case hearing over the Maytas deal in Texas court on January 7.

13. January 2: Promoter holding in Satyam drops to 5.31 per cent from 8.27 per cent after sale of pledged shares by lenders.

14. January 5: Satyam brings up old report by research firm Forrester complimenting company's innovation strategy.

15. January 6: IL&FS Trust company sales 2.45 crore shares of Satyam pledged to institutional investors by the promoters

16. January 6: Raju family holding in Satyam falls to 3.16 per cent after sale of pledged share by lenders

17. January 7: Satyam Chairman Ramalinga Raju sends letter to board tendering his resignation and admitting to fraud in accounting books.

18. January 7: Satyam Managing Director B Rama Raju also resigns.

19. January 7: DSP Merrill Lynch terminated its advisory engagement with company.

(http://us.rediff.com/money/2009/jan/07satyam-path-to-disaster.htm)

Govt rules out bailout package for Satyam

The government on Thursday ruled out any bailout package for crisis-ridden Satyam Computer, but assured to do everything required to save jobs under the framework of its responsibilities.

"This is a decision that the new board of Satyam would take. This government is not going to directly or indirectly subsidise wrong doing and fraud in Satyam," Minister of State for Industry Ashwani Kumar told reporters on the sidelines of a Petrotech-2009 conference.

When asked, is government not in favour of bailout package for Satyam as such, Kumar said that the new Satyam board "... are the ones to decide. The government would try and support within the framework of its responsibilities and do whatever it can to preserve and save jobs and to protect the good name of India in corporate sector".

He said, "The government will try to ensure to the extent possible that the brand equity of the country and Stayam in terms of its intellectual capital is preserved and the jobs are secured to the extent possible".

The minister said, "I do believe that Satyam aberration should not in any way take away from the great success story of India in the IT sector."

Earlier speculation was rife that the government is considering a package of up to Rs 2,000 crore to bail out Satyam Computer. But shortly after the Prime Minister Manmohan Singh's review meeting on Satyam on Tuesday, there was media speculation that government would be considering a financial assistance ranging between Rs 500 crore and Rs 2,000 crore but the PMO office declined to comment on it.

However, Commerce Minister Kamal Nath, who attended PM's review meeting, had said that the government was open to consider a financial package for Satyam Computer.

The official sources had also indicated that the government appointed Satyam board had written a letter to the finance ministry raising concerns about the liquidity crunch in the troubled company.

Satyam has 53,000 employees and needs over Rs 500 crore a month to meet the staff cost. Satyam had plunged into a deep crisis following the founder-chairman B Ramalinga Raju's admission that he fudged the company accounts to the tune of Rs 7,800 crore.

(http://in.news.yahoo.com/48/20090115/1238/tbs-govt-rules-out-bailout-package-for-s.html)

Success tips from world's top management guru

He's the world's most influential living management guru and the first Indian-born to be so honoured.

Which is why, in these troubled economic times, when countries are slipping into recession, companies are going bankrupt, CEOs are taking pay cuts and pink slips are the norm, it makes sense to take Coimbatore Krishnan Prahalad's sage words of advice.

Strategy is about stretching limited resources to fit ambitious aspirations.

Management is a lot of blocking and tackling.

Many companies don't understand yet that outsourcing isn't about exporting jobs. It's about importing innovation.

You have to have faith. You cannot lead if you don't believe.

The technology eliminated the tyranny of the few over the many.

 

Invest time in languages and intercultural awareness. Focus on becoming part of the global citizenry. In exchange for the opportunity to participate everywhere/ anywhere in the world, you have the obligation to do something productive which will improve the world. Develop a personal mission, a desire to leave personal legacy.

You cannot solve the world's problems in a small company. The goal is not to say that we are going to do it anyway, with or without money. It's a nice, brave thing to say, but very soon you'll be running out of cash.

The negative side of a small company is that there are no dampers. Just because you can make a change quickly, the temptation is to act. Speed is nice to have, but going faster to hell is not how I want to run a company. I want somebody to keep pushing the organisation. I also want somebody to say, 'Let's be thoughtful about getting this done right.'

It is the bamboo that bends in heavy winds that has another day to live. The trees that don't bend get uprooted.

If you do precisely what you're supposed to do, and you're boxed in, then you're going to do that very well. But if pressed to do things that aren't in your normal job description, the challenge can push you to a new level of achievement.

 

If you want new ideas, you have to push yourself into the periphery.

How many senior executives discuss the crucial distinction between competitive strategy at the level of a business and competitive strategy at the level of an entire company?

Especially in troubled times, leaders must behave like emotional and intellectual anchors. You must steady the organisation and have a passionate belief that what you are doing is important.

Leadership is about what you do when the going gets tough� The critical issue is about faith, passion, and, most importantly, authenticity -- so that people know you are not pretending. People can see a sham."

I spend a lot of time talking about what we're doing in terms of strategy. You have to give the same message over and over again.

 

Consumption can and does increase income. Consider health care. If you are legally blind with cataract, you can't work and neither can the family member who cares for you. But if you get access to inexpensive cataract surgery, now you can see and both of you can work. Have you consumed eye surgery or increased the family's earning power? You've done both. It's two sides to the same coin.

In an organisation, one unique person makes a difference, but you need teamwork to make it happen.

In a company like ours, if we want to do something, we can just call a meeting. But in a small company, you have to exercise caution and build your own personal dampers so that you don't act on everything. Sometimes not acting may be smart. But if I get the feeling that everybody's becoming so thoughtful that nobody's doing anything, I want to go and light some fires somewhere.

If you are a good manager, you always worry about your competitors. To take the competitors for granted is a mindset of a closed economy. Nobody in the open market takes anybody lightly.

Leaders do not allow themselves to be weighed down by the difficulties of the present but are focused on the possibilities of the future. Instinct, passion, courage and confidence are the precious ingredients of managing differently. A vision of the future is critical to motivate people to become innovative.

 

Being anchored in reality and taking small steps towards that vision is equally critical. We have to learn to look at the stars and count the grains of sand at the same time.

Any company that cannot imagine the future won't be around to enjoy it.

Managing differently calls for a major revolution in the way we perceive our own roles as managers. The biggest transition that needs to be made is to move away from managing to leading, from administration to entrepreneurship.

Whether it is quality levels, logistics, costs, scale, working capital management, or capital efficiency, there is no room for the second best. Good is not good enough anymore.

If you want to understand how the future is being created, you have to understand how decisions get made, how people allocate resources, how choices get made.

 

Why don't people have economic opportunities? Because there's no information. You don't know what the price of fish is in the next village. The large-company Internet business models, the Internet poor, the new business models -- they're one big circle. They all interact with one another. But we have to make this a business issue.

A commitment to lead in the creation of new opportunities -- an opportunity-led management system -- is critical. Most often, managers change in reaction to a crisis or a problem, not in search of opportunities

People are intelligent enough to know what they are getting and not getting.

The greater the angst of sales and marketing managers over the decision to sell core products to outsiders, the more likely it is that the firm's in-house channels are less efficient than alternate distribution channels

How to distinguish non-core capabilities from core competence? In the broadest terms, a company many have 40 or more primary skills, but only 5-15 core competencies. Senior management has to focus on which competencies are at the centre of their business.

 

Excitement is manifested strategically by employees seeing how their jobs link up with attainment of a goal. The new strategic intent presents a challenge, and engages employees' intellectual energy. Like Ford did in the early 1980s with its quality campaign, managers must make every employee aware that without their help, the company will not regain or increase its competitiveness.

Companies that create the future do more than satisfy customers, they constantly amaze them.

Beyond reengineering a firm, top managers must know how to reengineer their entire industries, a la CNN, Wal-Mart, and Service Corporation International. Pathbreakers all, they recognized their core competencies and developed strategies to reshape industry structures around their competitive competencies.

Rebuild leadership before you need to.

Business must start with the assumption that consumers don't want to apply the same amount of effort to construct all their experiences. Today, I will take whatever coffee I'm given -- but on another occasion, I might be more particular.

 

Management must be performance oriented. Meritocracy, stretch targets, clear measurements and rewards based on contribution are the keys to a high performance culture.

We have company think, not consumer think. What we make is not what they want.

People shift their priorities, where they want to customise, where they want to invest their energy and expertise.

If you build systems for total participation and co-creation, buying off-the-shelf is a sub-set and is also possible. If you only build a system for what's available and what you make, then people cannot co-create.

Over time successful business recipes become dull -- your success leads to business structures that may become dysfunctional. What we need to ask ourselves is -- is there a different way?

 

To be extraordinarily sensitive and concerned about key competitors, especially those who have more experience and technology capabilities, is not a wise thing to do. I think we have to distinguish between being respectful and being concerned about competitors.

At headquarters, managers are focused on the markets already being served, not the potential markets of the future. When this happens, the company is hostage to existing markets, even though it may possess highly-evolved core competencies which can be leveraged for the future.

By creating a mismatch between aspirations (more) and resources (less) you create entrepreneurship. Entrepreneurs leverage resources and change the business model to get more, for fewer resources. So the task for us is, how to create aspirations that rest outside the current resource base

You have to have faith: otherwise, every time there's a minor problem in the implementation, you'll change direction. Just because you are going north, doesn't mean it's going to go in a straight line.

Start with clear specifications and a clear idea of gaps by auditing your own internal structure. Then create small internal experiments to move one step at a time rather than turning everything upside down.

 

Consumers did not have much share of voice. Now they do. There is a fundamental transition that is taking place -- from a firm-centric society to a consumer-centric society.

Creating a new market is key... not to create new needs for these consumers, but to find new ways to sell the same products and services in an innovative way

It's a question of taking a lot of small steps: don't try to eat the elephant in one big bite.

The social architecture -- the mindset of managers -- must change. You cannot procrastinate. People must be empowered to act. Real time action requires a managerial mind-set. It also requires distributed leadership -- a shared agenda commonly understood, but access to information at very distributed levels.

Everyone should act in a way that's consistent with the broad philosophy of the company, so you enhance your brand, you enhance the experience of consumers.

 

(from http://specials.rediff.com/money/2009/jan/15slide1-success-strategies-from-worlds-top-management-guru.htm)

Telecom giant Nortel granted bankruptcy protection

(http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090114/Nortel_board_090114/20090114?hub=CTVNewsAt11)

Nortel Networks Corp. has been granted protection by an Ontario Superior Court judge from its creditors under the Companies' Creditors Arrangement Act.

A lawyer for Nortel said in court that the bankruptcy protection was necessary because the company was quickly burning through its cash reserves.

Nortel has also filed for Chapter 11 bankruptcy protection in the United States, the company announced Wednesday. It is expected to file for protection in Europe in the near future.

The move comes just one day before the telecom firm was due to repay a $107-million interest debt on bonds, which would have amounted to about 10 per cent of the company's North American cash reserves.

But the company is vowing to stay alive as a smaller operation, by ridding itself of non-core businesses and restructuring itself to deal with the North American recession.

The moves mean more jobs will likely be shed from its 30,000 global workforce. The filing also will affect the company's sponsorships, but Nortel says it remains committed to sponsoring the 2010 Winter Olympics in Vancouver.

Nortel is also a major sponsor for the 2012 Summer Olympics in London.

Once Canada's most valuable company, Nortel stocks traded as high as $124.50 a share during the tech boom in 2000.

On Wednesday, it had dropped 24.5 cents to close at 12 cents on the TSX, off from a 52-week high of $14.  

"People who are close to the situation are saying to us that although there is a great deal of equity in the company the possibility of it staying together as the Nortel Networks we knew is fairly slim," BNN's Michael Kane reported Wednesday.

"We're likely going to see it sold off in bits and pieces."

Ian Lee, director of the MBA program at Carleton University's Sprott School of Business, told CTV Newsnet that he doesn't think investors are going to see a return from Nortel.

"I think you can them as wallpaper in your rec room," Lee said, referring to Nortel stock certificates. "I don't mean to be flippant but I don't think the investors are going to see a return."

While many on Bay St. are not confident for a Nortel revival, the company's CEO remains bullish on its prospects.

"There are very significant changes happening in a very large industry, we refer to this as the world of hyper-connectivity," Nortel CEO Mike Zafirovski said. "I believe we are very well positioned to do very well to profit from those significant changes in the marketplace."

In an earlier press release Zafirovski called the bankruptcy filing "imperative" for the company's survival.

"Nortel must be put on a sound financial footing once and for all," Zafirovski said in a press release.

"These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be."

The company's board of directors reportedly met in Toronto Tuesday to discuss the decision.

In Wednesday's press release, Nortel said day-to-day operations are expected to continue without interruption.

"The global financial crisis and recession have compounded Nortel's financial challenges and directly impacted its ability to complete this transformation," said the press release. "Nortel is taking this action now, with a $2.4 billion cash position, to preserve its liquidity and fund operations during the restructuring process."

Political reaction

In Ottawa, Industry Minister Tony Clement said the federal government was willing to provide financing to assist during the company's restructuring phase.

"The government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada," Clement said in a statement.

"EDC has agreed to provide up to $30 million in short-term financing through its existing bonding facility and is open to discussing with Nortel post-filing financing in conjunction with other financial institutions."

Meanwhile, Ontario Premier Dalton McGuinty said the province has $2 billion available in various programs to help struggling companies. However, he said Nortel hasn't applied for any money yet.

"We'll see how things shake out in the end and what it means specifically for jobs in Ontario," McGuinty said Wednesday.

"I remain hopeful that Nortel will experience ultimately a renaissance of some kind and that will be of benefit to the Ontario economy and to Ontario workers."

After the telecom bubble burst, the company failed to re-establish itself and was plagued by accounting scandals and weakening demand.

"It has been a changing landscape that Nortel has been unable to adjust to," Kane said.

Still, Peter A. Chapman, of Bankruptcy Creditors' Service Inc. in Pennsylvania, said Nortel could survive despite Wednesday's move.

"There's every indication at this early juncture that Nortel will survive, confirm Chapter 11 and CCAA plans, and successfully emerge from its restructuring," he said in an email to The Canadian Press.

"The Chapter 11 and CCAA proceedings will provide Nortel with the ability to sell useless assets, walk away from every bad business deal, improve its operations and operating margins, and knock its $11 billion debt load down to a reasonable level."

Nortel employs about 32,000 people around the world, including several thousand in Ottawa and Toronto.

Chapman said shareholders will likely lose whatever money they had invested in the company.

Drop a dress size in two weeks

Corinne, a vivacious 23-year-old from Delhi is getting formally engaged in two weeks, with her marriage following in another two months. But what happened today has left her sweating bullets!

She was trying on her engagement outfit, when she got the fright of her life. The buttons on her blouse were peeping open and worse yet, the bottom one had popped out when she bent over.

Lately, she has been careless with her eating, and has not been working out as often as she would like to; but hey, she's young and active. Where the heck did these inches come from?

Two weeks will be here in a flash and two quick months later the wedding will soon follow. Corinne calls up her best friend Sonali, who tells her to go on an extreme diet of fruit one day and vegetables the next, for two weeks straight. Her sister Jasmine tells her to take the same fat-busting pills she regularly takes to lose weight before special events. She can shed nearly 10 kgs in two weeks -- perfect for the engagement party!

Corinne knows stress, overeating and lack of exercise and sleep have done her in. How on earth will she look slim, radiant, and glowing if she goes on an extreme diet or takes those awful diet pills? But then again, her engagement is a once-in-a-lifetime event.

Do you find yourself sailing in Corinne's boat, on the wrong side of unexpected weight gain?

Irrespective of whether you're a man or a woman, here are a few healthy quick-fix suggestions -- the first three are compulsory and the others you need to embrace wholeheartedly. They will not only help you lose weight in two weeks, but can be uses as a jumpstart effort to look great from this day onwards, for better or worse, till death do you part.

Watch and cut back on portion sizes -- Eat 5-6 small, low-calorie meals a day, but ensure they are balanced nutritionally. Never take second helpings, and drink plenty of water. 

Exercise 45-60 minutes every day -- Dance, skip, take the stairs, just keep moving.

Eat a good and light breakfast every day and never skip a meal -- Carry a fruit and 6-8 nuts with freshly-cut veggies to chomp on. No cold coffees, fruit milk shakes and juices.

Lunches must include small salads with no oil -- Have lemon juice dressings, low-fat yoghurt, dal and chapati or grilled meats at every meal. No spicy curries, heavy biryanis, restaurant soups, breads and definitely no desserts.

Keep only healthy snacks at home -- Good examples are fruit and sliced vegetables such as carrots and cucumber. Try bean salads, bhuna chana, raisins with a couple of almonds, lentil sprouts, a small cup of skimmed milk or fat-free yoghurt. No namkeens, cream biscuits, pakoras, samosas, kebabs etc.

Ask your partner to help -- Eat in rather than eating out. The chances of overeating or eating unhealthy, fatty foods are higher when you eat out. Go dancing after dinner and let those calories burn off, sweat out the fat and feel aglow with the flowing endorphins.

Avoid all alcohol, it's where those calories creep in -- A rum and cola here and a 'lite' beer there add up fast, so drink water instead. It hydrates you without the additional calories. Alcohol adds an easy 100-150 calories per serving. Ditto for sodas, juices and cocktails. Add a slice of lemon to water if you crave some flavour.

Skip prepared desserts -- Instead, enjoy ripe fruit dripping with juices, they make for a luscious dessert that you can share with your partner.

Get a good night's rest -- Your body rejuvenates itself when you sleep like a baby. Lack of sleep increases stress and decreases your ability to discriminate -- perfect scenarios for emotional overeating. Get adequate rest and if you find yourself in an emotional and stressful situation with your family or work (which you and I both know happen from time to time), get onto a phone and talk it over with friends, instead of turning to food for comfort.

Remind yourself, you are worth every calorie and every inch dropped.

Dropping a dress size means different things to different people. Some may need to drop 2-4 kgs, while others may need to lose 6-7 kgs before they see a difference. But usually, inches decrease before weight does.

Eating 500 fewer calories a day and exercising to burn another 350-400 calories a day should sensibly work out to not only losing 2.5 kgs in two weeks but also losing some unnecessary flab and bulk.

(http://us.rediff.com/getahead/2009/jan/12drop-a-dress-size-in-two-weeks.htm)

Wipro did nothing wrong

Hours after World Bank made public that Wipro has been debarred from doing any business with the global lender, the company's chairman Azim Premji wrote to its over 100,000 employees saying that the company had not done anything unethical.

 

Denying charges levelled by the World Bank that Wipro provided improper benefits to the bank staff, Premji said, "Let me reaffirm that Wipro was right from a legal as well as ethical standpoint. We believe what we did what was right and we did it in the right manner."

 

World Bank bars Wipro, Megasoft, 3 others

 

The company, in 2000, had provided World Bank staff option to purchase its American Depository Shares at IPO price through a Directed Share Programme. However, the World Bank in June 2007 determined that this was a conflict of interest.

 

In an internal communication to the company's employees, Premji said, "We have always prided ourselves for setting the highest standards of business ethics in our dealings with all our stakeholders. We have built a strong culture which upholds compliance in letter and spirit. The approach was no different in this instance also."

 

The World Bank deemed the IT firm ineligible to bid for direct contracts from it for the period 2007-2011. The World Bank also named other companies that were barred from doing business it in a list made public on Monday.

 

Premji further explained that all participants in the Direct Share Programme signed a conflict of interest statement that their purchase did not violate any ethics or conflict of interest policies of their company.

 

Though the company maintained yesterday that the announcement will not have any impact on its revenues, its stock took a beating at the BSE on Monday. It, however, was trading 4.5 per cent up at Rs 237.6 on the BSE on Tuesday.

 

(http://us.rediff.com/money/2009/jan/13satyam-wipro-did-nothing-wrong-premji.htm)

Toyota refuses to lay off workers

Toyota is struggling to sell trucks and SUVs like everyone else, but unlike the competition, no full-time workers from stalled factories are getting laid off. The 4,500 workers at idled plants are instead bettering themselves through education by taking classes on safety, diversity, and Toyota history. They're also doing community service while on the clock and even some gardening. The workers will be learning how to work faster and smarter during the down time, and are even being shifted to busier plants on a temporary basis to help plants that are working beyond capacity to keep up with demand.

 

Toyota's plan to keep its workers busy at all costs isn't cheap, as about $50 million is being spent to keep workers busy with training programs. Of course, you can't please everyone and the plan isn't sitting well with all of Toyota's workforce, as workers at running factories don't like the fact that laid off workers are getting a leg up on training. A more skilled plant could have an advantage over others in getting earmarked for future products, so unaffected workers also want the extra training.

 

While expensive and a bit of a logistics nightmare, Toyota's plan is a good one if you can afford it. It should help create a more loyal, better trained workforce that also forges ties with the surrounding community. We bet Toyota hopes it will prevent any talk of unionizing, as well. And with Toyota's record profits over the past few years, $50 million is a drop in the corporate bucket.