India's Enron: Satyam in crisis as India vows to end company fraud

HYDERABAD, India (Reuters) - India's Satyam Computer faces a crisis of "unimaginable proportions," its interim chief executive said a day after the chairman revealed profits had been falsely inflated for years.

Chairman Ramalinga Raju resigned on Wednesday in India's biggest corporate scandal in memory, after saying that about $1 billion, or 94 percent of the cash and bank balances on the company's books at end-September did not exist. The company's shares plunged nearly 80 percent.

The scandal, which some analysts dubbed "India's Enron" after the collapsed U.S. energy firm, has cast a cloud over foreign investment in Asia's third-largest economy and over its once-booming outsourcing sector.

It may also increase investors' nervousness about weak corporate governance and oversight in emerging markets, which are reeling from the global financial crisis.

Interim CEO Ram Mynampati said on Thursday that Satyam, India's fourth-largest software company, had contacted its top 100 customers, who account for almost 80 percent of revenue, and had received expressions of support.

Satyam specializes in business software and back-office services for clients such as General Electric and Nestle.

http://www.reuters.com/article/topNews/idUSTRE50616H20090108