MUMBAI: A fortnight ago when Satyam Computer announced a $1.6 billion acquisition of Maytas Infra and Maytas Properties, investors considered the move as a father trying to bailout sons' companies facing a liquidity crisis.

Nobody could have imagined that the Maytas acquistion was an attempt to save Satyam Computer from what would be India's biggest corporate scandal.

Satyam chairman Ramalinga Raju resigned from the board of the company today after admitting to inflating profits over the last several years.

"The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years," Raju said in a statement to the stock exchanges.

The company has formed a task force to address the situation, appointed Ram Maynampati as interim CEO and plans to appoint Merrill Lynch to explore merger opportunities.

Shareholders and analysts were fuming over Satyam's decision to use Rs 5,361 crore cash to acquire the Maytas firms. Till now, every one was thinking that the company was sitting on hefty cash reserves.

Ramalinga Raju's revelation, early this morning, has not only shook the corporate world but every investor is now left wondering - what happened to the cash kitty?

Well, Mr Raju's letter to stock exchanges admited that the company's cash reserves are only Rs 321 crore and the balance Rs 5,040 crore is fictitious. This means 94% cash on the company's book has turned out to be fictitious.

One thing apparent from the letter is that the aborted Maytas deal was the last-ditch  attempt to fill the fictitious assets with real ones.

The strategy of Ramalinga Raju, it now seems, was to swap the real assets of Maytas Infra and Maytas Properties with fictitous cash... Nearly 36% equity of Maytas Infra is owned by the Raju family, and hence the payment towards the acquisition would have been just a book-entry for Satyam. By paying Maytas shareholders, Raju would have ensured that the cheques would never be presented for realisation...

Quick Takes

1.   Inflated cash, bank balance at Rs 5,040 crore
2.   Cash, bank balance reflected in book was Rs 5,361 crore
3.   Understated liability of Rs 1,230 crore
4.   Accrued interest of Rs 376 crore which was non-existent
5.   September quarter revenue at Rs 2,112 crore vs reported Rs 2,700 crore
6. September quarter OPM at Rs 61 crore vs reported Rs 649 crore
7. Manipulation resulted in balances rising Rs 588 crore
8. PwC India is the auditor for Satyam
9. ICAI likely to investigate matter immediately
10. Ramalinga Raju: Other board members unaware of real situation
18. Raju: Accrued interest of Rs 376 crore which was non-existent