Satyam Computers may be removed from the Sensex and Nifty following the revelation of manipulation in the company’s accounts, analysts said. Rajiv Mehta, senior analyst with India Infoline, a large brokerage house said his firm has immediately stopped covering Satyam and many other brokerage houses are also expected to do the same. There will not be any investor interest in the company anyway. The company may be removed from sensex and nifty, he said.
With the fall in its stock prices, Satyam has lost its weightage in the sensex considerably over the recent past and currently has weightage of only 1.56 as of Tuesday. While in nifty, the weightage is only 0.63 per cent.
Satyam Computer Chairman B Ramalinga Raju can face seven years’ imprisonment in addition to monetary penalties for forging accounts, breach of trust and misappropriating funds.
” Raju can be charged under various sections of the Indian Penal Code for falsification of accounts, cheating and breach of trust. These offences attract a maximum penalty of seven years,” said a senior partner of law firm Titus and Company, Diljeet Titus.
Expressing a similar opinion, senior Supreme Court advocate C A Sundaram said, “If the admissions made by Raju in his resignation letter are true, it is a very serious matter. It would be violation of the SEBI Company Law and the IPC”.
Another senior advocate and corporate law practitioner U K Chaudhary said the Satyam chief could be imprisoned for seven years under various provisions of company law. “Under section 628 of the Companies Act, which deals with misrepresentation of accounts, he could be punished for a maximum of 2 years along with penalty. However, the punishment term could be extended to seven years for producing false affidavits and other documents,” he said.
In addition to Raju, Titus said “action should also be taken against Chief Financial Officers, Finance Managers, and Legal and Tax Advisors for their complicity in this episode”.
Suggesting that the CBI should get into the case, he said if appropriate action is not taken, the Satyam fiasco would “make a mockery of the Indian enforcement mechanism”.