In the news: Satyam nosedives as Raju admits fraud

Happy New Year to all the readers. I'd taken a week's break and now it's back to the posting board.

Today's airwaves are full of Satyam founder R. Raju's resignation after admitting a massive financial fraud. In a letter to the Board of Directors, Raju explains how there is a huge mistmatch in the actual operating profits and that reflected in the books - apparently inflated profits have been shown for the past several years. In fact, the deal with Maytas (which broke down as we all know) was a last-ditch attempt to bridge the gap with real assets instead of the fictitious ones. What's more none of the board members had an inkling of what was going on.

The consequences: Satyam shares plunged by 80% (!!) after market sentiments understandably turned bearish - the BSE is back at around the 9,500 mark after a good start to the year had seen the sensex rise upwards of 10k again. The Nifty is also down today - by over 7 percent. The Ministry of Corporate Governance will look into the matter along with SEBI, and things don't look bright for either Satyam or its founder. Ram Mynampati, who took over as Interim CEO of the company, has released a statement saying that they will explore all avenues to secure the future of the copmany and he also reaffirmed the company's commitment towards associates, customers and shareholders. We'll have to keep a tab on how this story unfurls.

Weekend Scoop : Satyam Chairman's Shares Mortgaged, Inflation Going Down, RPL Gains

The sensex was obviously closed over the weekend, so we'll just look at some of the financial effects of events earlier in the week.

The Satyam fiasco keeps getting gloomier; apparently Ramalinga Raju had mortgaged his shares (he and his family hold about 8.61% stake in the company) to institutional lenders, who might have sold them already. This has put added pressure on the board of directors, who were already under duress after academician Mangalam Srinivasan, an independent board member, had resigned on Dec 25.

Inflation is down to 6.61%; and with news of a possible reduction in repo rates, reverse repo rates and the CRR by RBI, experts predict that inflation can reach as low as 2% in March next year.

I had mentioned RIL's new venture in Jamnagar - Reliance Petroleum Limited (RPL) gained over 6 percent a day after the refinery started. Although Mukesh Ambani had to deal with the Petroleum Ministy's decision to turn down RPL's request to export LPG, citing that the country still has LPG deficit.

Also, business magnate Vijay Mallya announced that with approximately 500 crores turnover in December, Kingfisher airlines will break-even the losses it had sustained earlier.

In Today's News: Satyam going downhill

Satyam has felt the backlash of its controversial near deal with Maytas. Although the deal has been called off, investors have definitely lost their confidence in the company - resulting in a 14% plunge in the exchange market at the end of trade this Tuesday on the BSE. To add insult to injury, the World Bank debarred the company from doing business with it for eight years, on the charges of data theft. There's also rumours flying about a possible resignation from the Chairman, Ramalinga Raju.

In other news, the Bajaj brothers have finally reached a mutual agreement after six years of dispute. Rahul has agreed to give younger brother Shishir control of Bajaj Hindusthan, with a stake of 32.47% in the company.

Also, Wipro is all set to buy the technological arm of Citigroup Inc., i.e. Citi Technology Services Ltd (Citos). The deal has been reportedly fixed at $127 million - this would be a mutually beneficial acquisition, helping Wipro to get assured business of about half a billion dollars in software services and infrastructure management over the next six years, while Citigroup can focus on core business operations. This is similar to the deal that they had earlier inked with TCS - in Ocotber, TCS had acquired Citigroup Global Services Ltd (CGSL), the backoffice centre of Citigroup, for $505 million.