A brief report on Satyam Accounting Scandal .

1. SATYAM SCANDAL- INDIA'S OWN ENRON SCANDAL
ABOUT THE COMPANY
Mahindra Satyam (formerly Satyam Computer Services Limited) was an Indian IT services
company based in Hyderabad, India. The company was listed on the Pink Sheets, the National
Stock Exchange and Bombay Stock Exchange. It offered a range of services, including software
development, system maintenance, packaged software integration and engineering
design services. In June 2009, the company unveiled its new brand identity Mahindra Satyam
subsequent to its takeover by the $14 billion Mahindra Group's IT arm on 13 April 2009. It
subsequently merged within Tech Mahindra on June 24 2013.

2. TIMELINE
1987-On 24th June Company was incorporated as a Private Limited Co. for providing Software
Development and Consultancy Services to large corporations. The company was promoted by
B Rama Raju and B Ramalinga Raju.
1991- On 26th August it was converted into a Public Limited Company.
1992- The Company went in for a Public Issue of Equity shares
1996- During the year two offices were set up, one in USA and other in Japan. And the
company has added new business partners in Australia, Canada, Japan and Europe.
1997 - Satyam Computer Services Ltd., has been selected by the Switzerland-based World
Economic Forum and World Link magazine as one of India's most remarkable and rapidly
growing entrepreneurial companies.
1999- The company has also set up India's first Indian Institute of Information Technology and is
the first software company in India to get accredited by (SEI CMM) level 5 certificates.
Satyam Infoway Ltd is the second largest Internet service provider in India based on the number
of customers.
2000- The Company has received the National HRD award - 2000 for outstanding contributions
to HRD. Satyam Computers is setting up a joint venture with the billion TRW Inc., a Fortune-100
Company in the US. Mr. B. Ramalinga Raju, Chairman of Satyam Computer Services, has been
awarded the IT Man of the Year 2000 Award by Dataquest.
2001-The American depositary shares (ADS) of Satyam Computer Services on May 16 was listed
at .16 on the New York Stock Exchange (NYSE) at premium of 14.9 per cent to the offer price.
2007-Satyam Computer Services Ltd on June 11, 2007 has announced that it has forged an
alliance with US-based JDA Software Group Inc., the leading provider of supply and demand
chain solutions to 5,500 of the world's top retailers, manufacturers, and suppliers.
2008-Satyam Computer Services Ltd has informed that Satyam BPO, the business process
outsourcing arm of Satyam, a leading global business and information technology services
Company.
2009-It was reported that B Ramalinga Raju and auditors of PwC manipulated financial
statements of the company .Later, the company was merged with Tech Mahindra. It was
rebranded as MAHINDRA SATYAM Mahindra Satyam appointed Deloitte as auditors. Share
prices dropped.
2012- Mahindra Satyam acquires vCustomer's International Operations.
2014- Satyam Mahindra made 62,421 lakhs profit in Q4 year ending 2013-2014.

3. About ‘SATYAM’ Scam
Satyam Scandal occurred in 2009 where Chairman Ramalinga Raju confessed that company’s
accounts has been falsified and manipulated. He resigned on 7th January 2009 and confessed
that he manipulated the accounts by US$1.47 Billion.
Merrill Lynch (now a part of Bank of America) and State Farm Insurance terminated its
engagement with the company. Also, Credit Suisse suspended its coverage of Satyam.
‘Maytas’ Deal
In 2008, Satyam attempted to acquire Maytas Infrastructure and Maytas Computers for US$1.6
Billion Ramalinga Raju felt that the only way to cover up the scale of fraud perpetrated was
through buying the infrastructure companies owned by his sons and family members. The deal
was reviewed by the government and criticized by the Vice president Hamid Ansari. It was seen
that pointless investments to divide the dividends by manipulating profit margins were made by
the company.
Satyam intended to buy entire stakes in Maytas Properties for $1.3 Billion and 51%stakes in
Maytas Infra for another $300 Million. Raju and his immediate family members own up to 35%
stakes in Maytas. The deal was to be financed from “Surplus” cash.
Accounting Scandal
Ramalinga Raju, Chairman resigned as Chairman and publicly announced his involvement in
massive accounting fraud.
Following figures were manipulated by Ramalinga Raju with help of Auditors
 Inflated (non-existent) Cash and Bank balance of Rs. 5,040 Crores.
 accrued interest of Rs. 376 Crores which is non-existent
 An understated liability of Rs. 1,230 Crores
 An over stated debtors position of Rs. 490 Crores
Total 7126 Crores
Later, CBI found evidence for additional fraud of Rs. 4736 Crores.
Effects on Stock Market
The New York Stock Exchange has halted trading in Satyam stock as of 7 January 2009.
India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX
Nifty 50-share index on 12 January 2009.
Satyam's shares fell to 11.50 rupees on 10 January 2009, their lowest level since March 1998,
compared to a high of 544 rupees in 2008. In New York Stock Exchange Satyam shares peaked
in 2008 at US$29.10; by March 2009 they were trading around US$1.80.

4. Role of Auditors
At that time, PriceWaterhouse Coopers was statutory auditors of the company. PwC’s partners S.
Gopalkrishnan and Srinivas Talluri were official auditors and signed books of accounts for 8 years.
They were found accused in the fraud. They relied on forged bank confirmation letters supplied
by the company while conducting statutory audit and failed to verify the company’s current
account balances. ‘The “blatant deviations” adopted by the auditors auditing Satyam
accounts.’ Said by CBI showed their “underlying conspiracy” with the other key accused in the
accounting fraud.
Investigation
Initially, fraud was investigated by CDI of Andhra Pradesh, later, CBI took over the investigation
process. In its first chargesheet, Ramalinga Raju ,his elder brother and managing director B
Rama Raju , younger brother and director of SRSR Advisory Services Pvt. Ltd. Suryanarayana Raju
,CEO Srinivas Vadlamani of perpetrating the fraud. Satyam’s auditors, Price Waterhouse’s S.
Gopalkrishnan and Srinivas Talluri, also figured among the accused.
Raju and others were charged with offences ranging from cheating, criminal conspiracy,
forgery, and breach of trust under relevant sections of the Indian Penal Code by way of inflating
invoices and incomes, account falsification, faking fixed deposits, besides allegedly falsifying
returns through violation of various income tax laws.
During the trial, the CBI alleged that the scam caused a loss of Rs.14, 000 Crores to Satyam
shareholders.
The trial in Satyam fraud case had concluded in second half of June before the special court,
which examined 216 witnesses and marked 3,038 documents during the course of the hearing.
At Present
On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by
Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy.
Effective July 2009, Satyam rebranded its services under the new Mahindra management as
"Mahindra Satyam". After a delay due to tax issues,Tech Mahindra announced its merger with
Mahindra Satyam on 21 March 2012, after the board of two companies gave the approval. The
companies are merged legally on 25 June 2013.
The company added 188 employees in quarter three ending 31 December 2011 and recorded
29.4% quarter-on-quarter in its consolidated net profit of 3.08 billion. Mahindra Satyam reported
a net profit of 5.34 billion for the fourth quarter ended 31 March 2012.Mahindra Satyam
declared 30 per cent dividend, signaling a complete turnaround, after declaring Q4 results of
2012-2013 in May 2013.
No judgment has been passed by the court till date on Satyam accused.