Satyam financials detail £1bn in dodgy transactions

Revenues, losses, and lots and lots of notes

Satyam today issued its first results since becoming engulfed in an accounting scandal early last year that almost broke the Indian services firm.

The scandal erupted when B Ramalinga Raju resigned in January 2009, after writing an extraordinary letter to directors admitting inflating profits at the firm by almost a billion pounds over a period of years. The wheels fell off when Satyam's directors refused to green light the takeover of a building firm run by members of Raju's family.

The government stepped in and appointed its own directors to run the company. It also kicked off a wide-ranging investigation that has seen 10 people charged, and oversaw the offloading of the firm to rival Tech Mahindra.

The firm, now know as Mahindra Satyam, hopes the figures will draw a line under the scandal, allowing it for carry on with its restructure. However, the pages of notes to the accounts and its own admission that there are probably misdeeds still to emerge mean public fascination with the scandal is likely to continue.

For the year to March 31, 2010, the services firm reported audited revenues of Rs54.8bn (£772m ), compared to Rs88.126bn the previous year. The "as published" figure for the year to March 31 2008 - ie, before the scandal broke - was Rs84.7bn.

This yielded a net loss of Rs1.3bn this year, down from a Rs81.8bn loss last year. The firm booked an as published profit of Rs16.9bn in 2008.

The figures included exceptional costs of Rs4.2bn in 2010, and Rs79.9bn in 2009, as it struggled with the fallout of Raju's exotic accounting.

Mahindra Satyam's management team hopes to be able to issue quarterly reports in the next few months, showing that it is on top of the company's finances and that it's able to catch up with the company's bigger rivals in India.

However, the pages and pages of notes attached to today's figures are unlikely to dampen industry watchers' fascination with the firm, as they shed more light on how the years-long scam worked.

The investigation so far covers the period from 2002 to 2008. The figures describe both "fictitious entries" in the accounts and "unrecorded" real transactions that never showed up on the books. The "overall impact" of fictitious and unrecorded transactions amounts to Rs67.6bn (£952.8m) in the 2002 to 2008 period. So far.

The company is also dealing with SEC investigations, class action suits and tax demands.

At the same time, the new management admits there may be "other instances of possible diversion that remain undetected".

Documents and computers remain unaccounted for, while others remain in the hands of the investigating authorities, they warn. In addition, the firm ran (runs?) a variety of reporting platforms that did not speak to one another, making reconciliations somewhat difficult. ®

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