Comparing Megan Media And Satyam

Posted yesterday: More From Satyam Scandal

The following passage...

• Raju also said Satyam's balance sheet as of Sept. 30 had a non-existent cash balance of 50.4 billion rupees; nonexistent accrued interest of 3.76 billion rupees; an understated liability of 12.3 billion rupees; and an overstated debtor position of 4.9 billion rupees compared with 26.51 billion rupees reflected in its books.
  
  "This has resulted in artificial cash and bank balances going up by 5.88 billion rupees in the second quarter alone," said the executive.

Hmmm...

1. had a non-existent cash balance of 50.4 billion rupees;

2. nonexistent accrued interest of 3.76 billion rupees;

3. an understated liability of 12.3 billion rupees;

4. and an overstated debtor position of 4.9 billion rupees compared with 26.51 billion rupees reflected in its books.

I decided to dig my old notes on Megan Media. Yeah, our Malaysian version of Enron. See The Naked Truth in Megan

Let me repeat what was posted in that posting.

Ok, Megan posted that Megan Media posts RM1.14b net loss in 4Q.

I have decided to have some fun in spotting the differences between yesterday's Quarterly rpt on consolidated results versus their previous quarterly earnings reported on March 2007.

I will state the current one first followed by the previous quarter.

1. Sales revenue. 21.417 million versus 306.150 million.

2. Property & plant. 101.939 million versus 588.601 million.

3. Investment in associate. Zero versus 67.502 million.

4. Inventories. 26.355 million versus 125.090 million.

5. Trade receivables. 13.601 million versus 430.354 million.

6. Other receivables,deposits and prepayments. 12.891 million versus 260.787 million.

7. Total assets. 163.441 million versus 1.511 billion!

8. Accumulated losses of 1.041 billion versus retained earnings of 262.545 million.

9. Total Equity-(Deficit) of 796.963 million versus total equity of 506.963 million.

10. Net Asset per share of -3.92 versus Net Asset per share of 2.50.

Well Megan cooked up their sales revenue, the property plant value, investment value in its associate, inventories and receivables!

So who was the better cooker? :P

And lastly, I would like to state that it's best one not be narrow minded and assume that all Indian companies and all Malaysian companies are crooked as Satyam and Megan Media. Or just because there was a Maddoff, I do not think it's right to assume that all American funds are crooked.

For me, I truly believe that one cannot make such prejudiced and narrow minded statement such as that above. Yes, crooks will exist. Not only in India. Not only in America. Not only in Malaysia. Crooks simply exist. However, let us not discriminate the majority of honest and hard working people that exist too.

And as for investing, isn't the golden rule in investing is that one should want to invest only in the wonderful business that is managed/owned by people that can be trusted at a low price?

Take Megan Media for example. Was it ever an investment grade stock? My answer is simply NO.