Thursday, January 8, 2009

Indian's version of Enron shakes up Bombay exchange

Satyam Computer Services, one of the largest outsourcing companies in India has just reported it has been inflating profits for years, sending its shares down 80% in Bombay trading. This is hardly good news for India's financial system which is already struggling in the wake of the Mumbai (Bombay) Terrorist Attacks and due to the generally bleak economic picture in the global economy.

The Bombay Stock Exchange's Sensitive Index, or Sensex fell a record 52% in 2008. After news broke yesterday the exchange tumbled 7.3% and also sent the Rupee down. The New York Stock Exchange halted trading of shares in Satyam after news, saying it needed to review the situation.

Reuters reports, "Ramalinga Raju, founder and chairman of India's fourth-largest software services exporter, said in a statement that Satyam's profits had been massively inflated over recent years. He added that no other board member was aware of the financial irregularities at the Satyam, which in Sanskrit means "truth."

(click to access the full story from Reuters or Bloomberg)