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The fall and rise and fall of the Rajus

business Updated: Apr 14, 2009 22:35 IST

Hindustan Times
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It was sometime in the 1940s. A court in British-ruled Madras Presidency declared an enterprising farmer from Bhimavaram, Andhra Pradesh, as “insolvent petitioner” after he went bankrupt trying to set up a sugar mill. That man was the grandfather of B. Ramalinga Raju — an icon of new India until a multi-crore fraud at his Satyam Computer Services came to light in January.

Now that the scam-hit company is being taken over by Tech Mahindra, it’s a matter of time before its name changes.

The imminent death of brand Satyam is as much a third-generation failure for Raju’s family as is a blow to the aspirations of his community of hardworking, prosperous farmers from the Godavari delta.

Raju’s father, Satya Narayan Raju after whom the software giant was named, returned to farming when the family’s gamble with sugar business failed. He sold all but his homestead land in Garagapura village and bought a few hectares in Matlam, an island surrounded by brackish water that made its land less fertile, but cheap, said M. Padmanabha, a former Rajya Sabha MP.

“Every morning, Satya Narayan would sail to Matlam to do paddy culture. It wasn’t very profitable, but he made enough money to relocate to Hyderabad,” said 79-year-old Padmanabha, who has known the family since the time of Raju’s grandfather.

In Hyderabad’s outskirts, Raju’s father started grape gardens and later moved on to set up a spinning mill in 1983. The spinning business – Satyam Spinning & Weaving Mills – did very well riding on export demand, and renewed the family’s ambition to create a bigger business empire.

There are conflicting stories on what followed.

Raju’s supporters said the spinning business had stopped making profit because of increased competition and a downturn in the global market in the second half of 1990s. So there were bad debt, layoffs and the mill eventually shut down after Satya Narayan Raju died in July 2007.

But critics say this is an old trick of the Raju family.

“They borrowed from government-run financial institutions to modernise the mill, but diverted most of it to Satyam Computer Services,” said G.Durgaiah, a union leader who is still fighting a court case for retrenched employees – 675 of them.

“They started doing the same thing with Satyam, when Raju realised that infrastructure was going to be a big business,” said Balram Raju, who belongs to the same community, but is a rare critic of the Rajus.