Company Profile Satyam Computers was founded in 1987. It converted into Public Ltd Co. in 1992. The company offers consulting and information technology services spanning various sectors. Mahindra Satyam is overall ranked #153 by Fortune India 500 in 2011. Satyam’s network covers 66 countries and 53000 employees across six continents. It is listed in BSE, NSE, NYSE
AWARDS ACHIEVED Top-50 Marketers Award, under the Resurgent Marketers category for 2010 by Pitch India. Mahindra Satyam BPO honored as “India’s Most Customer-Responsive BPO Company”AGC Networks, The Economic Times, Ernst & Young and Nielsen. Ranked # 1 in the ASTD BEST Award American Society for Training and Development (ASTD).
THE DISASTROUS REVELATION Accounting fraud of over 7800 crores rupees. From past 7 years accounting books were cooked: -Profits were inflated -Understated liability and overstated debts. -Accrued interest. -The gap in the balance had risen due to inflated profits.
The MAYTAS Acquisition• Maytas infra and Maytas properties : firms owned by the sons of Raju.• Planned to buy the Maytas to fill the gap in the balance sheet.• Last attempt Raju made to fill the gap in the balance sheet.• Major shareholder rebellion• Acquisition was termed “Poor corporate governance”.
CONFESSION LETTER Raju wrote in the confession letter “Every attempt to fill the gap failed". It was like riding a tiger, not knowing how to get off without being eaten”.
CONFESSION LETTERMaytas AcquisitionLast attempt to fill the gap.Top officials were unawareOnly MD & CFO were others.No personal profits.Did not sell any shares from 8 years.
• Biggest single day fall for a stock in Satyam stock market 77% shares • 175 Rs/-(Jan 6th) • BSE sensex fell by 749.05 i.e. 7.25% . Stock Market • NSE fell by 192.40 points i.e. 6.18%. Companies • 11464 Crore 1607 Crore worthAll time low of Rs 11.50 on 9th jan and closed at 23.75 Rs/-.Compared to highest of 524.90 Rs/- on may 29,2008
B. Ramalinga RamaRaj Raju uV. Srinivas S. T Srinivas Gopalkrishnan
THE ILLUSIONISTS• Ramalinga Raju: Satyam Former Chairman• B Rama Raju: Brother of Ramalinga Raju Former Managing director .• V Srinivas: Ex-chief financial officer• S Gopalakrishnan: PriceWaterhouse Auditor• Talluri Srinivas: PriceWaterhouse Auditor
CURRENT STATUS GOVT CONCERNED ABOUT SATYAM EMPLOYEES. GOVT TO HELP CBI IN SATYAM SCAM CASE. RAMALINGA RAJU SENT TO POLICE CUSTODY TILL 22 ND JANUARY. CBI INVESTIGATING FURTHER.
Ramalingam Raju along with 2 other accusedof the scandal, had been granted bail fromSupreme court on 4 November 2011 as theinvestigation agency CBI failed to file thechargesheet even after more than 33 monthsof Raju been arrested
PROBABLE REASONS PRESSURE TO MEET EXPECTATION OVERCONFIDENCE PERSONAL BENIFITS
WHY DID RAJU CONFESS??? RAJU WAS PROBABLY CONVINCED THAT THE GAP IN THE BALANCE SHEET WAS UNMANAGEABLE. A PERSON CLAIMED HIMSELF TO BE A FORMER SENIOR EXECUTIVE IN SATYAM INVOLVED WITH ITS CONTRACT WITH THE WORLD BANK , ACTED AS
THE GOVERNMENTTHE GOVERNMENT TOO ISEQUALLY GUILTY IN NOT HAVINGMANAGED TO SAVE THESHAREHOLDERS, THEEMPLOYEES AND SOME CLIENTSOF THE COMPANY FROM LOSINGHEAVILY.
SATYAM UNDER RECONTRUCTION Appointing New Board. Board appointed by Government. Tech Mahindra wins bid for Satyam scam.
VISION STATEMENT “to leverage information, knowledge, and technology to enhance human endeavor.
CORE VALUES OF SATYAM Belief in people Entrepreneurship Customer orientation Pursuit of excellance
EFFECTS OF SATYAM SCANDLE Jobs of over 50000 technocrats were at risk. Country`s booming economy was at risk. The GDP fell by 0.4%. I.T sector suffered a downturn. India`s global image was tarnished. Indian stock market fell dramatically.
ACTIONS TAKEN New board of directors were appointed. Disclosure of pledged securities. Increased financial accounting disclosure. Adoption of international standards. Creation of new corporate code of conduct by Ministry of Corporate Affairs. Steps taken by ICAI.
CONCLUSIONMore scandals like Satyam can be avoided if-1.If auditing firm is honest.2.SEBI plays an active role.3. Periodic review of legal compliance reports by independent directors.