The CEO of Satyam, an India-based solution provider that is strong in ERP and package implementation segment, has resigned, reportedly admitting that his company had reported inflated profits for years. The news brought the company's shares down nearly 80 percent.
Ramalinga Raju, founder and chairman of India's fourth-largest software services exporter, tendered a letter of resignation to Satyam's board of directors earlier Wednesday, detailing financial irregularities, according to the company. A press conference is expected within 24 hours.
In Raju's letter , the former executive writes, "The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years [sic] (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew significantly."
Raju noted also that neither he nor the managing director took any money from the company as a result of the inflated profits, and said none of the company directors knew about the misstated figures.
In a statement, Ram Mynampati, interim CEO, said: "We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation."
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