Satyam Computers was founded in
It converted into Public Ltd Co. in
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,
He is Ramalinga Raju born on September 16, 1954.
A traditional agricultural family of the KSHATRIYA
(RAJU) Community of Andhra Pradesh.
He founded Satyam Computers and was its Chairman
until January 7, 2009 when he resigned from
the Satyam board after admitting to corporate fraud.
The Rise of Satyam
Satyam Computers Pvt. Ltd. Born.
June - First Fortune 500 Client.
August - Converted into Public Ltd. Co.
The Big Break- Allies with Dun and Bradstreet
Declared one of the 100 most pioneering
technology companies by World Economic
Dataquest IT Man of the year award.
• He was first businessman in the field of construction
• Raju founded Satyam in 1987.
• He started an satyam computers with 20 employees in
• Satyam was listed in INDIAN STOCK EXCHANGE in
• Listed in NEW YORK STOCK EXCHANGE in 2001.
• Satyam was listed in UNESCO(Amsterdam) in 2008.
• There were 52000 employees working in Satyam in
2007:- BECOMES THE 1ST ASIAN COMPANY TO
FEATURES IN THE TRAINING MAGAZINE’S LIST OF
TOP 125 COMPANIES FOR LEARNING,
2008:-WON CORPORATE GOVERNANCE
(INCLUDING GOLDEN GLOBAL AWARD TWICE)
Top-50 Marketers Award, under the
Resurgent Marketers category for 2010 by
2011:-Mahindra Satyam BPO honored as
“India’s Most Customer-Responsive BPO
Company” AGC Networks The Economic
Times, Ernst & Young and Nielsen
And the list goes on……..
People Behind This Scam
• Ramalinga Raju :
• B Rama Raju :
• V Srinivas :
• S Gopalakrishnan:
• Talluri Srinivas :
Satyam former chairman
Brother of Ramalinga Raju
Former Managing Director
Ex-Chief financial officer
Price Waterhouse Auditor
Price Waterhouse Auditor
1. Raju and his brother, B Rama Raju, were arrested by the Andhra
Pradesh police on charges of breach of trust, conspiracy,
cheating, falsification of records.
2. Raju has mislead various investors.
3. Raju had also used dummy accounts to trade in Satyam's
4. He has violated the insider trading norm.
5. Funds from Satyam were diverted to Mayas
6. On 22 January 2009, CID told in court that the actual number of
employees is only 40,000 and not 53,000 as reported earlier and
that Mr. Raju had been allegedly withdrawing INR 20 carore
rupees every month for paying these 13,000 non-existent
Raju wanted to take over his MAYTAS INFRA and
MAYTAS PROPERTIES.(company of his sons).
He was blamed that he was using the funds of the
investors for the family business.
There were allegations that funds from Satyam were
diverted to Maytas, causing the Government agencies to
verify the infrastructure company’s records as well. .
HOW DID IT HAPPENED?
FLOATED TWO OTHER COMPANIES FOR THEIR
OWN PURPOSE .
WITHOUT TAKING PERMISSION OF THE
FAILED TO REPAY THE LOANS.
TRANSFER OF MONEY.
UNDERSTANDING THE SCAM!
THE BALANCE SHEET AS OF SEPTEMBER 30, 2008 SHOWEDINFLATED (NON-EXISTENT) CASH AND BANK BALANCES OF RS.
5040 CRORE (AS AGAINST RS. 5312 CORE REFLECTED IN THE
AN ACCRUED INTEREST OF RS. 376 CRORE WHICH IS NONEXISTENT
AN UNDERSTATED LIABILITY OF RS.1230 CRORE ON ACCOUNT
OF FUNDS ARRANGED BY BR RAJU.
Biggest single day fall for a stock in stock
Rs. 175 ( Jan 6 )
BSE sensex fell by 749.05 i.e., 7.25%.
NSE fell by 192.40 points i.e., 6.18%.
All time low of Rs.11.50 on 9th Jan and
closed at Rs.23.75/-
Compared to highest of Rs. 524.90/Powerpoint Templates
on May 29,2008.
PwC - Partners in Crime ???
• Previous record – Satyam has also been accused of frauds in 2001
– No importance was given to this.
• Getting third party evidence – No bank confirmation on fixed deposits
– Accrued interest(fixed deposit)
– Debtors confirmation
• Factors overlooked – Changing of accounting years
– Huge debt despite cash surplus
JANUARY 7TH, 2009
“ IT WAS LIKE RIDING A
TIGER , NOT KNOWING
HOW TO GET OFF
WITHOUT BEING EATEN “
Why Did Raju Confess?
WHY DID RAJU CONFESS
• The gap in the balance sheet reached
unmanageable proportions and could
not be filled anyhow in future.
• The whistle blower whose email to a
Satyam board member triggered a
chain of events .
PRESSURE TO MEET
Threat of being overtaken
On his ability
Siphoning of funds
Salary of non-existent 13000
“Since about seven years we wanted to show more income
in the accounts to avoid others from involving in the company
affairs and any possible hostile acquisition.
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.
BEFORE THE SCANDAL IT’S SHARE PRICE WAS RS 300 IN OCT.2008.
JUST AFTER THIS SCANDAL THE SHARE PRICE GO DOWN TO RS 6.30.
ON 10 JANUARY 2009, THE COMPANY LAW BOARD DECIDED TO BAR THE
CURRENT BOARD OF SATYAM FROM FUNCTIONING.
BANK OF AMERICA AND STATE FARM INSURANCE TERMINATED ITS
ENGAGEMENT WITH THE COMPANY.
CREDIT SUISSE SUSPENDED ITS COVERAGE OF SATYAM. THE CREDIT
SUISSE GROUP AG (SIX: CSGN, NYSE: CS) IS A SWISS MULTINATIONAL
FINANCIAL SERVICES COMPANY HEADQUARTERED IN ZURICH,
Jobs of over 50,000 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.
IMPACT OF SCAM
Ramalingam Raju along with 2 other accused of the
scandal, had been granted bail from Supreme court
on 4 November 2011 as the investigation agency
CBI failed to file the charge sheet even after more
than 33 months of Raju been arrested Appointing
New Board. Board appointed by Government.Tech
Mahindra wins bid for Satyam scam.
• Appointing new board.
• Board appointed by government :
• former Nasscom chief – Kiran Karnik,
• Chairman HDFC – Deepak Parikh
• Former SEBI member – C. Achuthan .
Satyam shares gained over 44% day
after appointment of the new board.
New CEO – A S Murthy
Tech Mahindra acquired Satyam on April
ON 13TH APR 2009, VIA FORMAL PUBLIC
AUCTION PROCESS, 46% STAKE IN SATYAM WAS
PURCHASE BY MAHINDRA.
JULY 2009, SATYAM REBRANDED ITS SERVICE
AS “MAHINDRA SATYAM”.
More scandals like Satyam can be
avoided if1.If auditing firm is honest.
2.SEBI plays an active role.
3. Periodic review of legal compliance
reports by independent directors.
Presented By –
Powerpoint Templates Shailesh Mali
Garvit Mathur Page 29
The rise of Satyam
Revelation by Raju
How did the fraud start?
Why did Raju confess?
Impact on the Nation