2. INTRODUCTION
COMPANY OVERVIEW:
• Satyam Computer Services Ltd was founded in 1987 in Hyderabad by brothers, Rama Raju and Ramalinga Raju.
• Listed for an IPO in the BSE in 1991. and became the Fourth largest IT software exporter in the industry after
TCS, Wipro, and Infosys.
• Got the award for the Ernest and Youngest Entrepreneur in 2007.
• Annual revenue touched 1 billion and by the end of 2008, it crossed 2 billion. The company spread its wings to
20+ countries .
ABOUT SCAM:
• An increase in revenue attracted a lot of investors making the share price rise .The Satyam brothers used this
opportunity and sold their holdings at a much higher price.
• Modified the books and bank statements to act in their favor and developed their own ERP system for accounting
purposes inserting fictitious invoices and projecting fake bank statements holding more money than the actual
one.
3. HOW DID THE SCAM BURST?
• Raju bought properties in Hyderabad aggressively resulting in shortage of funds to obtain more
funds and profits, he manipulated the books of accounts of the company..
• Economy witnessed recession in the year 2008 and due to this, the prices of properties also
decreased. Mr. Raju tried to save SCSL and fill the gap between the actual profits and
manipulated profits in books of accounts of the company.
• Decided to buy MaytasProperties and Maytas Infra owned by his sons
• The board of directors of SCSL agreed and sanctioned the purchase of companies without prior
approval of the shareholders whereas investors unhappiness regarding the move dropped share
price.
• Questions were raised against the MaytasProperties legal documents
4. TOOLS USED TO FALSIFY BANK STATEMENTS
• Super User Login: The senior management allowed certain employees to have a super user
login password to access the company's billing system and create fake invoices for services
not provided. The applications used to accomplish these tasks were:
• Operational Real Time Management (OPTIMA) for creating and maintaining the fake projects
• Satyam Project Repository (SRP) for creating project ids
• Project Bill Management System (PBMS) for generating bills
• Invoice Management System (IMS) for generating the fake invoices used to perpetrate the
fraud
• Excel Porting was used for directly accessing company’s account and hiding the fake invoices.
5. • A law suit was filed against SCSL which led to a decrease in the shares by 55% on
the NYSE.
• Case was transferred to CBI which accused the promoters for fraudulent actions
within the company and sentenced 7 yr. jail , barred from market activity for 14
years with 5 cr penalty.
• The Government immediately appointed new board of directors for the company
and consequently 51% of SCSL shares were bought by Mahindra for Rs 2890 crore
and later merged with Mahindra group and now famously known as ‘Tech
Mahindra.’
