[Assam] Bus wk: Hyderabad discounts demanded - Satyam fame

Fri Feb 6 15:56:16 PST 2009

C-da,

It seems there is corruption and Hyderabad is still growing up - but then Mumbai is where mafia rules, anti-non-Marathi slogans are raised. Hyderbadis seem to be on the move thanks to education -- unlike Bihar.
a video clip from a Telugu movie Yuva - social reform by youth 
http://www.youtube.com/watch?v=oZg3tZeWMPs

Umesh 

--- On Fri, 6/2/09, Chan Mahanta <cmahanta at charter.net> wrote:
From: Chan Mahanta <cmahanta at charter.net>
Subject: Re: [Assam] Bus wk: Hyderabad discounts demanded - Satyam fame
To: umesh.sh05 at post.harvard.edu, "A Mailing list for people interested in Assam from around the world" <assam at assamnet.org>
Date: Friday, 6 February, 2009, 3:25 PM

>  But Satyam was also among the city's leading
>lights, and Hyderabad today is rife with tales of murky land dealings,
>companies that cook their books, and owners who siphon off cash.

*** So the claim that Satyam was just an 
one-of-a-kind, an  exception , is  not based on 
reality, just a wishful claim perhaps?

At 12:14 PM -0800 2/6/09, umesh sharma wrote:
>Someone commented that Hyderabad is South Indian 
>counterpart in corruption to Bihar. Is that 
>correct - as KPMG notes.Umesh
>
>
>--------------------------------
>
>
>Satyam Scandal Takes Toll on Hyderabad
>
>
>
>Bangalore's rival city for Indian IT outsourcing 
>is under the microscope in the wake of last 
>month's fraud revelations at Satyam
>
>
>By
>Manjeet 
>Kripalanihttp://www.businessweek.com/globalbiz/content/feb2009/gb2009026_906652.htm?chan=top+news_top+news+index+-+temp_global+business
>
>
>
>The collapse of Satyam Computer Services (SAY)
>on Jan. 7 touched off a flurry of anxious investor conference calls set
>up by bankers and analysts. Rajeev Chandrasekhar, a member of
>Parliament and president of the Federation of Indian Chambers of
>Commerce & Industry, sat in on one-and was startled by what he
>heard. How, asked one foreign investor, does one spot the next Satyam?
>
>
>In particular, the callers homed in on the 
>similarities between Satyam and other companies
>based in its hometown of Hyderabad. Like Satyam, many of these outfits
>are managed by their founders, enjoy strong links to local politicians,
>and have built up big land holdings-even when their core businesses
>have nothing to do with real estate or development. "There is a lot of
>pressure on Hyderabad companies to prove they are not like Satyam,"
>says Chandrasekhar.
>
>Effect on Stock Prices
>It has been a dramatic fall from grace for Hyderabad, the southern
>Indian city that had emerged as a viable competitor to Bangalore as the
>public face of the new India. Giants such as 
>Microsoft (MSFT), Dell (DELL), Oracle (ORCL), 
>and Google (GOOG)
>have opened offices there. But Satyam was also among the city's leading
>lights, and Hyderabad today is rife with tales of murky land dealings,
>companies that cook their books, and owners who siphon off cash.
>
>Now investors are talking about a "Hyderabad discount" for
companies
>based there. Even before the scandal, Satyam's stock typically had
>about two-thirds the price-earnings ratio of market leaders such as
>Infosys Technologies (INFY) and Wipro (WIT). The 
>reason: Satyam did relatively simple work, and 
>investors fretted about Chairman Ramalinga 
>Raju's political connections.
>
>
>Satyam's fall seemed to validate those latent fears. Since Jan. 7 stock
>prices for the top 50 listed companies from Hyderabad, mostly managed
>by their founders, have fallen by an average of 23% (not including
>Satyam's near-total collapse), vs. an 11% fall for the Bombay Stock
>Exchange's benchmark index. In contrast, the top 50 companies in
>Bangalore have fallen by 14%. "Hyderabad developed as a low-cost
option
>to Bangalore," says Ravi Raheja, chief executive 
>of Mumbai developer K. Raheja & Sons, which has 
>built offices for many tech companies in 
>Hyderabad. "Now we are back to square one."
>
>A Different Path to Growth
>
>Some blame history for Hyderabad's problems. As recently as the late
>1940s the region was feudal and largely poor, with little industry and
>virtually no middle class, though many farmers had extensive land
>holdings. When Hyderabad became the capital of Andhra Pradesh state in
>1956, the rich farmers got into the construction business. Major
>infrastructure projects were launched and local companies with little
>experience-but strong political ties-emerged to win government
>contracts.
>
>Neighboring Bangalore, in contrast, was a military station during
>the British Raj, so it was apolitical, well run, and orderly, known for
>its pleasant climate and lush gardens. In 1947 newly independent India
>made it a center of scientific and industrial research and built major
>universities there.
>
>
>The city's IT industry was born from those institutions, independent of
>political ties. "Bangalore has deep professional roots," says
Mohandas
>Pai, director at Infosys, the city's leading IT player.
>
>A young chief minister of Andhra Pradesh, Chandrababu Naidu,
>concluded that information technology was the key to changing the
>destiny of his impoverished state. By 2000, Naidu had dubbed his new
>vision "Cyberabad," and placed his hopes in tech entrepreneurs
such as
>Raju. Farmers-turned-builders got fat state contracts to build highways
>and develop IT parks. In two years, Hyderabad was in full competition
>with Bangalore for the IT and biotech pie. As Bangalore choked on its
>own growth, companies gratefully shifted to Hyderabad.
>
>
>One of those was Alliance Global Services,
>a $50 million provider of software services based near Philadelphia.
>Unable to find affordable talent in Bangalore, it moved its 40-man
>operation to Hyderabad, where it now has 300 employees. Though the
>company intends to stay in Hyderabad, in the wake of the Satyam scandal
>Alliance is worried about its reputation. Alliance Chief Executive John
>Castleman says that while U.S. customers may not be aware of the
>location of the Indian companies they hire, "maybe they should be,
>given the potential for local politics to play a role in corporate
>governance in India."
>
>"Crony Capitalism"
>
>Hyderabad's dodgy reputation extends to its 
>professional class. Accounting firm KPMG
>runs a busy practice in India that helps companies spot fake degrees
>and exaggerations of job experience. While Hyderabad isn't alone in
>this sort of activity, it's the embellished-résumé capital of India,
>says Garuav Taneja, who runs the KPMG operation. In the city's Ameerpet
>neighborhood, a fresh college grad with no experience can better his
>job prospects with a $200 set of fake documents. "It's a highly
>lucrative and openly run business in Hyderabad," says Taneja.
>
>Some in Andhra Pradesh are trying to change the system. EAS Sarma, a
>former top economist in the Finance Ministry in New Delhi, now lives
>near Hyderabad. He's battling to reverse Satyam's December purchase
of
>50 acres of state property along an endangered coastline. Satyam bought
>the land for what Sarma says was just 10% of its market value,
>resulting in a loss of at least $52 million for the state. He is also
>demanding details of property sales to 14 Hyderabad companies that he
>says are closely connected to the state government. "It's crony
>capitalism," Sarma says. "Giving away cheap land is not promoting
>industrialization; creating a corruption-free environment and
>simplified procedures is." A government spokesman declined to comment
>on the matter.
>
>The biggest beneficiary of Hyderabad's distress may be its rival to
>the south. Infrastructure bottlenecks in Bangalore have been a boon for
>Hyderabad in recent years. But now, Bangalore is in the process of
>building new roads and even a subway. And to ensure transparency, the
>government is providing citizens a quarterly update on the progress of
>development projects. "Here, business and political interests
don't
>converge," says Manish Sabbarwal, who runs TeamLease, India's
largest
>temp agency, based in the city. In Bangalore, "they occupy powerful
but
>separate and parallel universes."
>
>
>Umesh Sharma
>
>
>
>Washington D.C.
>
>
>
>1-202-215-4328 [Cell]
>
>
>
>Ed.M. - International Education Policy
>
>Harvard Graduate School of Education,
>
>Harvard University,
>
>Class of 2005
>
>
>
>http://www.uknow.gse.harvard.edu/index.html (Edu info)
>
>
>
>http://hbswk.hbs.edu/ (Management Info)
>
>
>
>
>
>
>
>
>
>www.gse.harvard.edu/iep  (where the above 2 are used )
>
>http://harvardscience.harvard.edu/
>
>
>
>
>
>
>
>http://jaipurschool.bihu.in/
>
>
>      
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