Satyam....lessons Learnt

SATYAM FIASCO: AN ENLIGHTENING FOR INDIA.......? Future Shock is a book written by the sociologist and futurologist Alvin Toffler in 1970, a perception of "too much change in too short a period of time". The concept of future shock bears resemblance to the late 20th/early 21st century concept of "the technological singularity", and may have been influenced by Kuhn's concept of a paradigm shift. Toffler argues that society is undergoing an enormous structural change, a revolution from an industrial society to a "super-industrial society". This change will overwhelm people, the accelerated rate of technological and social change leaving them disconnected and suffering from "shattering stress and disorientation" – future shocked. He coined the term information overload. Later “The Third Wave”, a book published in 1980 by Alvin Toffler, followed by “Powershift” in 1990. Toffler's book describes the transition in developed countries from Industrial Age society, which he calls the "Second Wave", to Information Age "Third Wave" society. The transition envisaged.. . * The assault on the nation-state from above would include the rise of powerful nonnational entities: IGO's, multinational corporations, religions with global reach, and even terrorist organizations or cartels. It would include the progressive hemming-in of national economies and of nation-state under a growing network of super-national organizations and affiliations; e.g. the European Union, the North American Union, the newly formed African Union, as well as organizations such as the WTO, NAFTA or International Criminal Court. * The eclipsing of monetary wealth by knowledge and information as the primary determinant of power and its distribution. This was also discussed more fully in the sequel Powershift. * The eclipsing of manufacturing and manufacturing goods by knowledge-production and information-processing as the primary economic activity. * The emergence of various high technologies, such as cloning, global communications networks, nanotechnology, etc. However, these aspects were discussed in greater depth in Future Shock and somewhat deemphasized in the Third Wave. * A transformation of the very character of democracy, itself, from rule-by-periodic polling at the election booth, toward a more direct interaction between the government and its populace. To a large extent, this has already emerged with the rise of the Internet, though it has not yet congealed in the form of a fundamental revision of the constitution of any state. The trend toward on-line voting in the United States, following the election crisis of 2000, may be seen as a first step in this direction. Hence it was essentially, the forecast of the obsolescence of the order of nation-states, and the rise of super-national entities.

ILLS OF GLOBALISATION, MNCs : Globalization today is at a loss to reach any clear verdict on the conditions necessary for sustainable social and economic progress. In a few privileged core capitalist countries and some secondary states, globalization manifests itself as an accelerated mode of capitalism, capable of generating distributable surpluses, albeit increasingly in an highly imbalanced manner Elsewhere, at the fringes and the frontier zones, the imposition of globalizations' structures, processes and social relationships results into the reproduction of socioeconomic systems that are alien and hostile to traditional, indigenous forms of social organization. The conditions for social reproduction amongst traditional societies are increasingly compromised and reduced, as a growing series of impediments hinder and retard sustainable development. While there are many things that statists quarrel about, with as much evidence to support their respective views (that is, none), there is one thing they all agree about. They all agree that freedom of trade - globalization - is a great evil that everyone, especially the poor people of the planet, must be protected against. It has negated the concept of inclusive growth. Hence a call for -WE must support "self-sufficiency". And…Is said.. A time for reflexion. Reflect and think and act.....! Any study would only confirm the obvious Exports from Indian micro, small and medium enterprises (MSMEs) is estimated to have reached a record level of $50 billion during 2006-07, amounting to 40 percent of India's total merchandise exports According to a 2006-07 survey, there are 12.5 million MSMEs in India, providing employment to 30 million people, and contributing around 50 percent of the country's industrial production. The major MSME export products include ready made garments, chemicals and pharmaceuticals, engineering goods, processed foods, leather products, and marine products. The small-scale industries in the country have consistently maintained 1.5-2 percent higher growth rate than the overall industrial growth rate MSMEs are expected to grow at the rate of 13 percent and generate additional 1.3 million jobs per annum during the Plan period 2007-2012,

THE SATYAM FIASCO..: WHILE IT IS TERMED AS “an event of horrifying magnitude“, “deliberate“. Infosys chief mentor N.R. Narayana Murthy said, the incident was shocking, painful and a good reminder to other companies in the sector Deceitful CEOs - Compared to the financial collapse in US (AIG, Lehman, etc) and the false information given by so many CEOs right from Enron, the Satyam episode is very small. Looks like whole world is full of lying CEOs BUT,.... IS it a “one-off” CASE…? ......................... .........a short reprieve from the storm the fraud has unleashed. Have you forgotten the worldcom, enron and the recent siemens 1 billion fines for alleged bribery? This Tsunami is of the worst kind for Indian economy which otherwise could have escaped the financial melt down with minimum pain. Western business media is likely to paint the whole of Indian economy with Satyam kind of scandals unless the government takes steps to stop such an attack This debacle has come at the worst of times for India. But it is a small wonder that Indian economic system is capable of punishing wrong doers like Satyam, corporate in India would be hiding a load of skeletons in their cupboards. They also keep the regulators ‘happy’ in order to overlook such shady dealings or books ...........The people have started thinking... “If I want to cheat handful of people, I become a conman. If I want to cheat on large scale, I form a company”. “Do you remember the carrot and stick rule of govt? Huh? The people get beaten with the stick, and the Fortune 500/Wall Street, get the carrots”. Educated fraudsters like Mr.Raju herding some of the best minds (waiting to be molded) of my beloved country! ith the world economy in a tailspin , caused by the US subprime crisis, and growth in India slowing,the largest corporate fraud in Indian history this crisis to the one of Indian software industries titans could have devastating impact on the Indian economy. “It (Satyam’s case) throws a big question on real corporate governance standards in India. There are going to be long-term ramifications,”....widens.. could be far larger than what has been admitted b Billions of investor wealth vanished into thin air. Dream of shareholders foreclosed. Lifetime savings entrusted in the shares of a mega corporate all vaporised. Tens of thousands of once-proud employees now cover their faces, trying to grope with the reality

of heavy EMIs and expenses. All for the naked greed of one man. Lets ensure if the money actually did exist and was siphoned off to some account in Bermudas. WHO WINS? ... I GUESS TRUTH. LATE BUT IT SURE DID EMERGE OUT. ....”Just like Regulators here and AIG, Lehman and other now belly-up firms in USA, companies like Satyam and Indian regulators jumped on captilist bandwagon. Assuming un-checked market will police itself. as of who loses in this event, I see the employees and investors and the common stakeholders badly bruised”........... One worry now is the fallout from the Satyam scandal will damage the rest of the Indian tech services industry. On a blog, Steve Hamm writes “this industry has spent 20 years building up credibility with Western clients, but this disaster will make many U.S. and European clients rethink their reliance on Indian outsourcing.” Might that create an opportunity for India’s rivals in the outsourcing game? Smaller IT services companies in Asian countries like China and the Philippines have long argued that they are well positioned to grab outsourcing business from Western clients concerned about putting too much work into India. But equally true is ...”Every country has its share of Enrons, Fannie Maes, Merril Lynchs, etc. It would be stupid to label the whole industry with the exceptions”.

Sometimes we think of outsourcing as inevitable. But, the scandal could easily flip that balance and lead them to nix the outsourcing idea as too dangerous. Barack Obama during the campaign talked about the need to encourage companies to keep jobs at home. The Satyam scandal might be just the thing to prompt U.S. executives to give that idea some more thought. Another indication of a future happening... Not distant.................!.although seem US has Wishfull thinking.... IF THAT IS THE CASE, U S WITH SO MANY CORPORATE SCANDALS, SPOOKY CREDIT CRUNCH, BANKRUPCY, TOXIC ASSETS ETC. ETC. ARE NOT FIT TO DO BUSINESS WITH ANY COUNTRY.

Every country has its share of Enrons, Fannie Maes, Merril Lynchs, etc. n Satyam case..Atleast the man honestly admitted his follies. (for whatever reasons). How many scandals go unnoticed every year? Dozens! And what is the mortgage meltdown in any case?.............. It is nothing but a conveniently vieled scam.

It's not an isolated incident, has strong precedents, and emanates from the denying of the obvious, that small is beautiful and faithful. The Growth of capital intensive industry, emulated the Dominant Logic spread through Socialisation ( the elite Club) that only their thinking is right...,obsessed with disruptive business models have paved the way for imbalanced growth and globalisations ills are visible and posing a threat to the Sovereignty of the Nations as they become subservient and mean and aid to satisfy their greed, at the cost of Humanity , environment ,and a condemnable License.. Have made the Global political dispensations aggressively currupt ( only India has $1450b in Swiss bank, lying unproductive, with First rank, a shameful status, the source is Big Corporates and The Political Lords.. Defacto it belongs to the Indian mass- largely deprived and soaked in misries and hunger).) The testimony.....The sovereign better govt control were insulated largely, from meltdown..In 1990, However, later... . The World Bank and the Narasimham Committee report( the World Bank through a confidential report, India: Financial Sector Report: Consolidation of the Financial System, which was dittoed almost in full by the report of the Committee on the Financial System (June 1991), headed by M. Narasimham ) charted a course eliminating any measure of Government direction of finance to productive activities starved of capital, to social welfare needs, and to backward regions. Instead the financial sector would be free to concentrate on high-profit (and high-risk) activities such as speculation and consumer lending, and to ready itself for takeover by foreign capital. Although, for fear of the social consequences, the Government was unable to implement these measures in full, it moved steadily in that direction. One consequence of this direction was a series of massive bank frauds and scandals starring Harshad Mehta, Ketan Parekh, MS Shoes, C.R. Bhansali and others................. Another was the massive shift of bank finance away from productive activities such as agriculture and small scale industry, hence contributed to the plight of small and informal sector: surviving in spite of crunch. .Finance Divorced from Production Whereas the large firms and better-off individuals have access to finance from banks and financial institutions, the bulk of India's productive sector comprising agriculture and small-scale industry is shut out of bank finance,). Agriculture and small-scale industry have to depend on the `informal financial sector'. The overwhelming bulk of 'indirect finance to agriculture' is actually the Rural Infrastructure Development Fund, which is not lent to peasants at all, but to state governments. mall scale industry too starved of finance Small-scale industries, which account for 40 per cent of value added in manufacturing, too have been starved of credit. The sectors

that need cheap credit to expand productive activities get none, while those which are in a position to flourish on market manipulation and speculative activities can merely take advantage of interest rate reductions to boost their profits.. The shifting focus of finance is also reflected in the changing distribution of Scheduled Commercial Banks' offices. Between 1991 and 2003 the number of rural bank branches fell by 2,771; whereas metropolitan branches grew by 3,812. More worse is the fact, Capitalists who are already saddled with excess capacity don’t borrow money, even if the price of capital (i.e. the rate of interest) falls to very low levels. Moreover, a fall in the price of labour (the general level of wages), far from making investment more attractive to capitalists, reduces aggregate demand, which makes investment less attractive, dragging the economy down further. All this would suggest that in the present era the underlying tendency of capitalist economies is towards stagnation and failure to realize productive potential. It Is but A Crime Against Humanity

THE SOLUTION: “We understand that in this world of rapid globalization we have seen a lot of changes in terms of economic development. Some firms go bankrupt, and some excel rapidly and make a lot of profit. For those who are lost in this fierce competition, we understand that some inefficient firms will have to be phased out, and newcomers will come with new technology”. .......... How true......! .... But the Crude fact is that.......... according to a serious and caution Report, the accounts of more than half of 500 Fortune Companies are cooked up violently , and are on the verge of disaster. The Common methodology is the same as Satyam’s- unreal turnovers, the capitalisation of revenue outgo, unsubstantiated current and fixed assets, suppressing the liabilities particularly the contingent one. Bogus and exaggerated HR data and profiles are built up in connivance through the Cartel of best names in their respective field, and academicians that were available for heavy price tags , to the common detrimental of the Society and stakeholders and the State. One cannot become prosperous without help from our friends ( read cartel) and they are assisted by Bourses and financial and capital market professional mesmerized through the showing of the rampant triumph ( short lived it was... ) Of the much touted virtual economy, a heinous tool employed for transfer of wealth form middle and Low strata to the Big- Satyam like.. (THE HEINOUS GLOBAL ALLIANCE)

But AS THE WAY IS SHOWN BY CHINA, Multinational corporations (MNCs) entering and operating in China have been significantly changing their dominant strategies over the past two decades to cope with China's shifting competitive and regulatory environments. The new strategies have resulted in a status shift such that MNCs are no longer merely “foreign investors”; they have become “strategic insiders” who view their large-scale China operations as key to their overall corporate success. It enjoins the shifting dominant strategies MNCs use to deal with changing environmental landscapes, including shifts from parent to national integration, from production relocation to value chain localization, from competence transfer to competence building, from competition to coo petition, from repetition to adaptive diversification and from alliance building to restructuring. Principles of Peaceful Coexistence, China’ policy of state sovereignty and security, the principles of mutual respect for territorial integrity and sovereignty, mutual noninterference in each other's internal affairs and that of equality and mutual benefit. The POLICY MUST PROVIDE an “ framework [to] encourage international support for [the Nation’s domestic policies, [which] thus promotes its own security and legitimacy in the international system, and thus, an adjustment with the fact that - The Role of Small and Medium Enterprises has remained most significant and imminent in providing an idealistic developmental framework- an iconic “ Gandhian Engineering” in Letter and Spirit, using lesser inputs, labour intensive, but delivering at sustainable yet lower cost and to the more, contributing extensively to the National Exchequer, despite the odds of waning reservation, protection and availability of cheap finance at competitive rates ( available to the Big Shots through the Channels of FDI, and FII, ECB and other financial innovations) and still insulating the National Economy from the disasters and need to bail them out at an unprecedented scale at the cost to the Nation ( unlike the case of Big Ones), yet operating in an enviable ethical environment and contributing to the enshrined principle of Trusteeship , the simplistic version of otherwise new, academic and management jugglery- Corporate Social responsibility.. Finally in view of the Current Fiasco posed by Satyam , and the upheaval it has caused, all right thinking stakeholders must come out strongly to save and promote , the otherwise ill treated, deprived and denigrated sector- The Small and Medium one, a Truthful and National duty, at this crucial.. , and... stating the obvious, and connotative impetus .

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