Satyam Computers founder and chairman Ramalinga Raju has resigned from the company’s board.

In a letter to the board members, Raju said that the company’s balance sheet has inflated cash and bank balance of Rs 5,040 crore.

“No board member had any knowledge of the real situation. Accrued interest of Rs 376 crore in books is non-existent. Rs 1,230 crore was arranged to Satyam, but was not reflected in the books,” he said.

In response to Raju’s disclosures, the stock was hammered badly by investors, and it lost more than 65 percent.

The resignation, prior to January 10 board meet pushed the company into crisis and paved the way for immediate restructuring of the board and the management.

While Ram Myanpati will act as Interim CEO, Merrill Lynch can be entrusted to explore.

Mr. Raju also stated that the second Quarter results were overstated at Rs 2,700 crore with an operating margin of Rs 649 crore, as compared to the actual numbers, which stood at Rs 2112 crore and the operating margin was much lower at Rs 61 crore.

He also said that the company’s earnings were inflated over several years.

Raju added that Rs 1,230 crore was arranged to Satyam, which is not reflected in its books, to keep Satyam's operations running. For this the promoter had to pledge the promoter shares and raising funds from other sources.  Raju expressed regret to Satyam employees and share-holders for the present situation.

In a declaration, the company said Raju would continue to be the chairman till the board is expanded.

“Under the circumstances I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded. My continuance is just to ensure enhancement of the board over the next several days or as early as possible,” Raju said.