The Secret Diary of Narayana Murthy

Forget David Copperfield and Criss Angel. The world’s best illusionist has been living in India all along. Our very own Ramalinga Raju. A 5-page letter, and 7,000 crores of shareholder wealth disappears overnight. Try topping that. Of course, we are all astonished. But shouldn’t industry insiders have suspected something? Take Narayana Murthy. Over the years, he made several entries in his personal diary about Satyam and Ramalinga Raju that, on hindsight, indicate that something was up. Some select passages that are of interest:

Note: In his diary, Narayana Murthy refers to Ramalinga Raju by his pet name ‘Rama’.

January 3rd, 2002: At the Nasscom Leadership Forum
…. bunch of clichés. Talk then turned to Enron. Azim confessed to be being shocked by the whole affair. I was too. We all agreed that this was NOT an isolated case of mis-governance. Foreign investors need to be wary of American companies going forward. Surprisingly, Rama opined that competitive pressures can push CEO’s into a corner. He then muttered something about Kenneth Lay piggybacking on an Orangutan and not knowing how to get off without finding a banana to distract it. He was despicably drunk. He then started laughing so hard that he almost fell off his chair. ‘Why on earth would anyone go to the trouble of creating a bunch of offshore entities merely to hide ones losses?’ he asked us, still breathing hard. I agreed with him. It was utterly unethical and Enron would have been well served to come clean a lot earlier. Rama went into one of his laughing fits again. What about the shareholders, Azim pointed out. Rama continued, rather cynically, that shareholders were leeches who don’t do any of the work but boss you around just because they loaned some money. I ignored him for the rest of the day. Besides, my presentation on ‘The IT boom in India – Myth or Reality?” was up next…..

May 14th, 2004
The NDA lost the elections comprehensively. I did predict as much to Sudha. Why choose to highlight the success in the IT sector when the rest of India is plunged in darkness? In fact, I am worried about our Earnings Announcement next week. Uncertain global economic conditions are forcing clients to reduce spending on technology in the short term. Expectedly, it has led to a decline on several key operational metrics at Infosys. I hope investors appreciate the fact that Infosys cannot sustain its growth rate of 30% Y-o-Y regardless of market conditions. Satyam is also announcing its results this week, which makes it worse. They never post anything less than 40%. My admiration for Rama continues to grow with each passing day. He handles pressure like a seasoned campaigner. If I am to be the President someday, I need to manipulate politicians as skillfully as he does. Rama practically has Chandrababu Naidu eating out his hand. How I wish I could throw away this balance sheet and take an empty piece of paper and fill it with the numbers I want to see. If Satyam posts 40% growth, we’ll declare 45%. Maybe I’ll round it off to 50%. If only life were that simple.

January 10th, 2005
….I should drop off a congratulatory note to Rama about his son launching Maytas Properties, Inc. Looks like a promising venture. ‘Maytas’ is Satyam in reverse apparently. If Satyam means Truth, what does that say about Maytas? Should remember to include this witty observation in my note.

June 3rd, 2006
This is getting annoying. Nandan tells me that we lost another project to Satyam. Big fish. General Electric. Our quote was a reasonable 120 Crores. We had no chance though. Satyam offered to do it for 25,000 rupees. I wonder how Rama pulls this off. His team consistently underbids for projects and snatches Tier-1 clients from under our noses. Satyam employs half the number of people we do but operates on an enviable 25% margin. Truly remarkable productivity. Maybe we are not working hard enough. Our assets walk out of the door each evening and we have to make sure that they come back the next morning. I know that. It was my quote. But it’s a lot easier to have them in their seats next morning if they don’t leave overnight. I’ll call up Nandan tomorrow and ask him to announce revised working hours at Infosys. We have to beat Satyam at its own game.

April 8th, 2007
Today was a disaster. Instead of focusing on Kalam’s speech endorsing my Presidential credentials, the instrumental version of Jana Gana Mana we played snowballed into a controversy. If I know anything about this country at all, the media will be baying for my blood unless I apologize within 24 hours.

July 25th, 2007
Pratibha Patil was sworn in today. Maybe I should just forget about the Presidency and focus on my speaking assignments and charities. Sudha reminded me about the shining example in my own sector, Ramalinga Raju. Here is someone whose company has been growing remarkably in the last decade – share value, market cap, revenues etc. And contrary to expectations, he has been steadily divesting his stake in the firm and donating the proceeds to charity. Last time I checked the shareholding pattern, his equity in Satyam was down to 8%, compared with 25% in 2001. Rama assures me that every single paisa went to charity. Not a single family member or friend got any of it. He runs one of the most promising companies in India, with sound fundamentals, and yet his commitment to the poor outweighs everything else. Clearly, he knows something the rest of us don’t. Namely, that money isn’t everything in life. Such selflessness in this day and age is rare indeed. Wish there were more like him.

November 22nd, 2007
Earlier today, I rang up Rama to congratulate him on winning the E & Y Entrepreneur of the Year award. Rama said he was flattered to be the recipient of an award that I had previously won in 2003. Now it was my turn to be flattered. He then asked me to hang on for 5 minutes, since the auditing team from PwC had dropped by. I understood and offered to call him back tomorrow. These audits can be brutal. But he put me on hold and as promised, he was done in 5 minutes. I asked him jokingly if he just handed them a prepared version of the statements. There was complete silence for 10 seconds before he spoke again. Rama indicated that he did not find it funny. Productivity and efficiency are the cornerstones around which Satyam was built, he barked. He also pointed out his internal audit team had received the “Recognition of Commitment Award” from The Institute of Internal Auditors, (USA) last year. Of course, I knew that. He did not have to get all defensive over a harmless quip. I reminded him that I had called him about an award in the first place. I concluded the call by saying that the future of the IT sector was in safe hands.

December 12th, 2008
…. After lunch, I belatedly called up Rama to congratulate him on Satyam winning the ‘Golden Peacock’ award for Corporate Governance. He conceded that it was long overdue. The award, not my call. More importantly, he was looking forward to throwing this at the World Bank’s face. He confessed that he had taken the bribery charges personally and couldn’t sleep at night thinking about it. I conveyed my sympathies. It’s the likes of Bernie Madoff who give the rest of us a bad name, I offered. Rama joked about this decade turning into an elaborate tribute to Charles Ponzi. I mentioned Enron and WorldCom. Rama was adamant that Madoff was much more serious. The scale of the fraud was so much bigger. 50 billion dollars! For decades!! A single man hoodwinking the system for decades, he re-iterated. I had to stop him since I detected a touch of admiration in his voice. Hundreds of investors, including Pension Funds, had lost their all money, I retorted. Rama mumbled something about how Bernie Madoff was stuck riding an Iberian Ox and couldn’t get off without the animal chewing up his beard. I hung up the phone.

December 18th, 2008
……An equally rough two days for Rama. The markets did not take the news of his planned acquisition of the Maytas firms well. To a layman, it does look like an unrelated diversification. But Maytas Properties has been doing stellar business. It recently secured the Hyderabad Metro deal for a whopping 12,000 crores. And as one would expect, the losing parties are crying foul about bribery and land scams involving the state government. Can drive anyone to despair. Besides, my good friend Rammohan Rao chaired the Board meeting where they decided to go ahead with the proposed takeover. I suppose the Dean of ISB is a complete moron? That seems to be the implication. What about corruption? I am sure there will be sections of the media accusing him of colluding with Rama. The bottomline – the Dean of India’s premier MBA institute is a complete moron and corrupt. Will that make everybody happy? Or would he have to resign? It just gets sadder with every passing day in this country. The least they can do is give entrepreneurs the freedom to do what they do best.

December 31st, 2008
Unsettling developments over the last 2 weeks. Maybe the Dean of ISB is a complete moron. And possibly, corrupt. But I can still see some merit in the deal. Why let 5,000 crores of cash reserves idle in the bank? Why do shareholders want Rama to pretend that the amount is non-existent and lay off it? It’s like riding a tortoise and expecting it to go faster without twisting the tail. If you have extra cash, then make optimum use of it. In any case, hope things turn for the better in 2009. Not just for Rama, but all of us. May God be with us all.



  1. Nice. If I may….

    December 25, 2008
    I just found out what a miserly old man I am. I underpay not only my employees but also partners, suppliers etc. I heard that Rama pays his auditors three times what I pay mine ( In these difficult times, while other companies are busy trying to prune expenditure and keep more cash in hand, here is a man who is using his cash balance and spending more than required. Kudos to Rama and his company.


    1. @ V : Its pretty clear that PwC had some part in all of this. As much as he would like us all to believe it, there is no way RR pulled this trick off on his own. Enron led to Arthur Andersen getting disbanded. Are we looking at a similar fate for PwC?


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s