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A presentation on Satyam Scandal by Umesh & Group.

A presentation on Satyam Scandal by Umesh & Group.

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  • Just above 50 MA Way above 200 MA Next earnings report 4-21 FYE- March

 satyam Scandal satyam Scandal Presentation Transcript

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    • Satyam Computer Services Ltd. was founded in 1987. The company offers information technology (IT) services spanning various sectors, and is listed on the New York Stock Exchange and Euronext.
    • Satyam's network covers 67 countries across six continents. The company employs 53,000 IT professionals across development centers in India, the United States, the united kingdom, the united Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. It serves over 654 global companies, 185 of which are Fortune 500 corporations. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, KOlketa, Bhubaneswar, and Visakhapatnam
    • Executives Directors:
      • Mr. B. Ramalinga Raju (Founder & Chairman)
      • Mr. B. Rama Raju (Co-Founder & CEO)
    • Non-Executive Directors:
      • Mr. V. P. Rama Rao, IAS (Retd.)
      • Dr. (Mrs.) Mangalam Srinivasan
      • Prof. Krishna G. Palepu
      • Mr. Vinod Dham
    • Satyam provides services in the following areas:
    • Aerospace and Defense
    • Banking, Financial Services &Insurance
    • Energy and Utilities
    • Life Sciences & Healthcare
    • Manufacturing, Chemicals & Automotive
    • Public Services & Education
    • Retail and Consumer Packaged
    • Telecom, Infrastructure, Media and Entertainment & Semiconductor
    • Travel and Logistics & Industrial Equipment
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    • First Indian it company to get ITAA certification for Y2K solutions.
    • Satyam Infoway is the first Indian internet company to be listed on NASDAQ
    • Declared one of the hundred most pioneering technology companies by world economic forum. Davos in the year 2000.
    • First organization in the world to launch customer oriented global organization training.
    • First ISO:9001:2000 company in the world as certified by BVQI.
  • Satyam Computer Services Ltd. vs... Action Company Close (Rs) Compare +   Infosys Techno. (Sensex) 1,167.65 Compare +   Tata Consultancy (Sensex) 507.65 Compare +   Wipro Ltd (Sensex) 242.75 Compare +   Educomp Solutions (A) 2,642.30 Compare +   GTL Infrastructure (A) 32.10 Compare +   HCL Technologies (A) 129.85 Compare +   MphasiS Ltd. (A) 166.70 Compare +   Oracle Financial Ser (A) 479.05 Compare +   Patni Computer Sys (A) 134.45 Compare +   Rolta India (A) 132.85
  • THE BIGGEST ACCOUNTING SCANDAL EVER IN THE HISTORY OF INDIA SATYAM BECOMES ENRON OF INDIA
    • On 7 January 2009, company Chairman Ramalinga Raju resigned after notifying its board members and the SEBI that he had falsified accounts.
    • Raju affirmed in a letter to the board that neither he nor the managing director had benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of the situation in which the company was placed He noted that Satyam's balance sheet as of the September 30, 2008, carried inflated figures for cash and bank balances of INR 5,040 crore (as against INR 5,361 crore reflected in the books). It carried an accrued interest of INR 376 crore which was non-existent. An understated liability of INR 1,230 crore on account of funds was arranged by himself. An overstated debtors' position of INR 490 crore (as against INR 2,651 crore in the books).
    • UK mobile payments company Upaid Systems is suing Satyam for over 1 billion US dollars on complaints of fraud , forgery and breach of contract . The matter is still sub-judice and the company has stated that it will defend in accordance with U.S procedures.
    • inflated figures for cash and bank balances of Rs  5,040 crore ( US$  1.04 billion) (as against Rs  5,361 crore ( US$  1.1 billion) crore reflected in the books).
    • an accrued interest of Rs.  376 crore ( US$  77.46 million) which was non-existent.
    • an understated liability of Rs.  1,230 crore ( US$  253.38 million) on account of funds was arranged by himself.
    • an overstated debtors' position of Rs.  490 crore ( US$  100.94 million) (as against Rs.  2,651 crore ( US$  546.11 million) in the books).
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    • 52wk High: 43.38 – Low: 21.00
    • Market Cap: $6.88B
    • P/E = 29 (High: 116 – Low: 16)
    • Gross Margin = 37.5%
    • Debt/Equity = 0.01
    • Operating Cash Flow = $158.88M
    • In 2008, the company attempted to acquire two infrastructure companies founded by family members of company founder Ramalinga Raju - Maytas Infrastructure and Maytas Properties - for $1.6 billion, despite concerns raised by independent board directors. "Maytas" spelled as reverse of "Satyam". Both companies are owned by sons of Satyam's then Chairman Raju's. This eventually led to a review of the deal by the government a veiled criticism by the vice president of India and Satyam's clients re-evaluating their relationship with the company. Satyam's investors lost about INR 3,400 crore in the related panic selling. The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism as Satyam's shares fell 55% on the New York Stock Exchange. Three members of the board of directors resigned on Monday 29th Dec 2008.
    • He stated that
    • "What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.”
  • Following is the chronological summary of events which saw IT major Satyam Computer Services , founded in 1987, on its path to disaster
  • 1. December 16: Satyam gets board's approval for acquisition of Maytas Infrastructure and Maytas Properties for $1.6 billion. 2. December 18: British mobile solution provider Upaid files a law suit against Satyam in a district Court in the US over Maytas deal.
  • 3. December 24: World Bank bans Satyam for 8 years on charges of data-theft. 4. December 25: Satyam objects to World Bank's statements; asks Bank to apologise to the company or face legal action.
  • 5. January 2: Promoter holding in Satyam drops to 5.31 per cent from 8.27 per cent after sale of pledged shares by lenders.
  • 6. January 6: Raju family holding in Satyam falls to 3.16 per cent after sale of pledged share by lenders 7. January 7: Satyam Chairman Ramalinga Raju sends letter to board tendering his resignation and admitting to fraud in accounting books. 8. January 7: Satyam Managing Director B Rama Raju also resigns.
  • Marketmen said that the fundamentals of the company have been shaken completely and the malpractices in the financial disclosures has shattered investor confidence. "This is a big blow for the investors, employees and anybody associated with the company. It is also a shocking news for the FIIs and majority of them will exit the stock. The scrip on Wednesday plunged nearly 78 per cent to settle the trade at an all-time low of Rs 39.95, on the BSE.
    • It was like riding a tiger, not knowing how to get off without being eaten - Ram Raju