“Wipro strongly condemns any attempt to mislead stakeholders. Global standards of corporate transparency are very high and we are confident that this is an isolated case and not representative of the IT industry. We think a detailed investigation of this incident is urgently called for and needs to be undertaken by the authorities without delay.”
Industry lobby group Confederation of Indian Industry (CII) said in a statement on Wednesday that Satyam development underscores the “need to immediately examine the loopholes in regulation, accounting, audit and governance that allowed such lapses to occur and address them with urgency.”
CII maintained that “it would be inappropriate for this to be the basis of questioning of general governance standards in other companies.”
Sector-wide pain
Still, some experts and analysts said the Satyam incident would hurt other Indian companies, especially those in the software and back office services space.
“If a company’s chairman himself says they built fictitious assets, who do you believe here? Not only Satyam, this has put a question mark on the entire corporate governance system in India,” said R.K. Gupta, managing director of the New Delhi-based Taurus Asset Management.
Avinash Vashista, chief executive of Tholons Inc., an offshore advisory firm, said that he was surprised by the extent of revelations.
“The extend of fraud...will have a big impact on the IT Indian industry,” he said. “The only way to manage this thing is for Sebi, Nasscom, investors of Satyam and work together to merge it with a large IT firm; that needs to happen.”
Satyam employees Mint spoke to said they were “completely shocked” and “felt insecure” abut their jobs. “We have received communication from the new chief executive, asking for our commitment to reach out to customers and regain their confidence and trust in the company,” said an employee who asked not to be named.
“We are hoping that a new management will be able to revive the company,” another employee said.
lison.j@livemint.com
Graphics by Ahmed Raza Khan / Mint