NEW DELHI - Shocked by the revelations of Satyam co-founder and chairman B. Ramalinga Raju that the software services firm had overstated profits and hidden liabilities in a Rs.40-billion scandal, leading industry lobbies called for stricter corporate governance norms.

'Satyam was always seen as one of the top Indian IT companies and often represented as shining example of Indian liberalisation and entrepreneurship. This fraud on the investors and employees of the company shows a systemic breakdown in audit and board oversight of the company,' said Rajeev Chandrasekhar, member of parliament and president of the Federation of Indian Chambers of Commerce and Industry (FICCI).

'Questions will need to be asked to quickly establish how this happened and who caused it to happen,' added Chandrasekhar.

Nasscom, the apex body of the IT-BPO industry in India, also expressed disbelief following the confession made by Satyam Computers' erstwhile chief Raju, who admitted to the fraud before quitting.

'While the law will take its course, this incident is particularly unfortunate as the Indian IT-BPO industry had set very high standards of ethics and corporate governance,' Nasscom said in a statement.

Another industry lobby, Confederation of Indian Industry (CII), conveyed its disappointment.

'We believe there is need to immediately examine the loopholes in regulation, accounting, audit and governance that allowed such lapses to occur and address them with urgency,' CII said.

'While the occurrence of such events in a major company is a matter of deep regret, CII believes it would be inappropriate for this to be the basis of questioning of general governance standards in other companies.'

The Associated Chambers of Commerce and Industry of India (Assocham), too, expressed shock and suggested setting up of an investigative committee.

'The government should hasten process of investigating the matter so that the confidence of investors in Indian corporate world is retained and not shaken at any cost,' Assocham president Sajjan Jindal said in a statement.

'It is a very serious issue which has come to limelight, leading to resignation of the chairman of Satyam Computer and all possible efforts should be initiated so that those that have committed corporate frauds in the company are exposed and lesson drawn for others so that such fraudulent practices in corporate world are never repeated and investors keep investing in corporate sector,' he added.