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The rise and fall of a dot.con

Byrraju Ramalinga Raju, 54, will be remembered in Indian business history — not the way he would have wanted, as a successful software entrepreneur, but as the perpetrator of India’s biggest corporate governance scandal.

india Updated: Jan 08, 2009 01:28 IST

Byrraju Ramalinga Raju, 54, will be remembered in Indian business history — not the way he would have wanted, as a successful software entrepreneur, but as the perpetrator of India’s biggest corporate governance scandal.

It used to be said Hyderabad had two major landmarks: The Charminar and Ramalinga Raju, who created Satyam Computer Services Ltd, that gave the city the sobriquet Cyberabad.

Raju belonged to a family of farmers from Bhimavaram near Vijaywada. His father Satyanaryana helped create the family fortune in a small way, shifting in the early 1960s to Hyderabad and starting a textile business even as he bought land and continued to be a farmer.

Raju recently told Business Today that after returning from the US with an MBA degree, “I had all the enthusiasm and passion to do something… of being an entrepreneur. A friend told me about a part-time teaching opportunity at the Administrative Staff College of India. This really appealed to me. But, in late 1977, over dinner, my father told me: It is always important to stay focused and to avoid distractions.”

Raju chose to enter the relatively new business of providing software services to international customers. Satyam, launched in 1987, started offering such services. In 1992 it raised money through a share sale and listed on the Bombay Stock Exchange.

It was in 1994 that Satyam got its big break when it tied up with Dun & Bradstreet. By then Satyam was well on its way to growth. What separated Satyam from say a Tata Consultancy Services Ltd or an Infosys Technologies Ltd was Raju, who was
always comfortable when surrounded by family and those who could speak his language, Telugu.

Says an ex-employee of Satyam Infoway, who did not want to be identified: “For Raju, family, caste and those who could speak Telugu came first. I am not saying he was not a professional but other things being equal, he would look at things in that order.”

To some extent this was true. His brother Rama Raju was the MD of the company and till 2000, Chinta Srinivasa Raju, known as Srini Raju, who was married to his wife’s sister, used to head one of the key divisions. A lot of senior management professionals also hailed from Andhra. Says another industry veteran who also did not want to be identified, “At one point of time there were so many Rajus (in the company) that it would be difficult to identify who was who.”

Raju has his sympathisers. The CEO of a company, who did not want to be named, noted that Raju had moved quickly to cancel plans to purchase two companies owned by his sons when investors rebelled. Echoing similar views, the CMD of IVRCL Infrastructures and Projects Ltd, E. Sudhir Reddy, said: ”Ramalinga Raju’s decision to buy the firms run by his sons should be seen probably as an aberration and one should not forget to take into account his contribution in building the company to over $2 billion.”