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A tale of two Rajus haunts India Inc

business Updated: Jan 08, 2009 15:05 IST

A tale of two Rajus has surfaced to haunt India Inc and the stock markets, which tanked by seven per cent eroding shareholders wealth by Rs 2.5 lakh crore on Wednesday following a confessional statement by Satyam's Ramalinga Raju that he had manipulated the accounts of the IT major.

On of the Rajus, Chairman of non-banking finance company Nagarjuna Finance, K S Raju, was arrested for defaulting on repayments of public deposits worth around Rs 100 crore.

More businessmen, including a renowned investment banker Nimesh Kampani, are likely to be arrested in the Nagarjuna case.

Kampani was independent director on the Board of Nagarjuna Finance about a decade ago. He was among the many senior functionaries of the company, who may be arrested.

The common factors between the companies -- Nagarjuna and Satyam -- are that both are run by Rajus, are based in Hyderabad and have created problems for the corporate world.

As the Satyam story unfolded, several independent directors, including Dean of the prestigious Indian School of Business, again based in Hyderbad, M Rammohan Rao, resigned.

In wake of the problem, Rao also quit the panel for selection of the Reserve Bank deputy governor.

Satyam founder and chairman B Ramalinga Raju on Wednesday confessed to about a Rs 7,800-crore fraud in the company.

After Raju's confession, the Bombay Stock Exchange Sensex plunged by 749 points to close at 9,586 points on Wednesday.

Satyam shares fell by 78 per cent, closing at Rs 39.95, eroding company's market capitalisation by Rs 10,000 crore.