HOW IT HAPPENED AN ANNOUNCEMENT THAT SHOCKEDTHE CORPORATE INDIA THAT B.RAMALINGA RESIGNED . The COMPANY’S BALANCE SHEET WAS INFLATED TO Rs 5,361 CRORE AT THE END OF SEPTEMBER 2008 AGAINST THE ACTUAL Rs 5,040 CRORE.
There is an artificial cash balance of Rs 588 crore in sept 2008. Raju also admitted that Satyams profits were inflated over several years. And it is difficult for him to stop this fraud gap. He added, "It was like riding a tiger, not knowing how to get off without being eaten." The Maytas deal was the last attempt to fill the fictitious assets with real ones. Raju also said Rs 1,230 crore was arranged to Satyam, which is not reflected in its books, to keep Satyams operations running. For this the promoter had to pledge the promoter shares and raising funds from other sources.
HOW DID THE SCAMMATTER TO THE NATION ? JOB’S OF OVER 50,000 TECHNOCRATS WERE AT RISK COUNTRY’S BOOMING ECONOMY FEARED SLIGHT COLLAPSE AS COUNTRYS GDP FELL BY ESTIMATED 0.4% INDIA’S IT SECTOR SUFFERED DOWNTURN AS IT’S IMAGE WAS TARNISHED GLOBALLY
How it wascaught? Satyam Computers hadon December 16, 2008,announced that it will acquire twogroup firms – Maytasproperties and MaytasInfra for $1.6 billion(about Rs 8,000 crore) aspart of its diversificationstrategy , this create aalleged violation ofcorporate governancelaws.
HOW GOVERNMENT KNOWSIT ? The ministry of corporate affairs later ordered a probe into whether the company violated any corporate governance laws while entering into such a deal involving share holders money.
IMPACT ON STOCK MARKET News of what is possibly the countrys biggest corporate fraud, sent the indices tumbling. The benchmark Sensex slipped over 7% on Wednesday, 7 January 09. Companies perceived to have poor corporate governance standards were most affected. The company’s share price has fallen 21.3 per cent since December 15, the day before the crisis broke.
SALVAGING SATYAM To stabilize the sinking Satyam Computers, the Government nominated banker Deepak KIRAN KARNIK Parekh, IT expert Kiran Karnik FORMER PRESIDENT OF and former SEBI member C NASSCOM Achutan to the IT companys board. .
ALL WELL THAT’S ENDWELL Anand Mahindra, Chairman, Tech Mahindra, the new owner of Satyam, will address the first board meeting of the company post the Rs 2,890-crore takeover, giving hope and future to Satyam’s 45,000-50,000 employees. A moment of truth for Satyam and a victory for the government and the regulators.