Corporate governance with Satyam Case Study by ROAR Group
BUSINESS ETHICS ANDCORPORATE SOCIAL RESPONSIBILITY
ROAR GROUP• VIKAS P. MISHRA 106• RAKESH S. AMIN 109• OMKAR A. SHINDE 108• AZHAR N. SHAIKH 107• ROGER Y. PETER 110• RAHUL N. TAKALE 105• UMESH S. DASONI 122
CORPORATE GOVERNANCE• INTRODUCTION• DEFINITION• FEATURES• OBJECTIVES• MECHANISM• ROLE OF SEBI• IMPORTANT CONCEPTS• CASE STUDY• CONCLUSION
INTRODUCTION• Corporate Governance is a relationship among stakeholders that is used to determine and control the strategic direction and performance of organizations.• Concerned with identifying ways to ensure that strategic decisions are made effectively.• Used in corporations to establish order between the firm’s owners and its top-level managers.
DEFINITION“Corporate Governance is about promotingcorporate fairness, transparency and accountability.” -James. D. Wolfensohn“Corporate Governance is holding the balancebetween economic and social goals and betweenindividual and community goals.” -Sir Adrian Cadbury “Corporate Governance is the system by whichbusinesses are directed and controlled.” -Cadbury Report (UK)
FEATURES• Interface between company and shareholder• Maximum welfare• Voluntary concepts• Managerial decision• Accountability• Transparency• Essence• Responsibilities and duties• Ethics, values and morals• Set of system
OBJECTIVES• Economic efficiency• Employees participation• Code of conduct• Balance• Efficient use of resources• Setting standards• Standard of living• Accurate and reliable information• Transparency
MECHANISM• The Companies Act• SEBI• Capital Market• Statutory Audit• Nominee on Company Boards• Code of Conduct
ROLE OF SEBI• Issue of guidelines• Public interest advertisement• Dealings with complaints of investors• Investor education• Investor surveys• Disclosures by companies• Code regarding takeovers
IMPORTANT CONCEPTS• Insider Trading - Insider trading refers to trading on price sensitive information by companies employees or individual closely connected with the firm.• Whistle Blowing - It is an attempt by a member or ex-member of an organization to disclose wrong doing in or by the organization.
B. RAMALINGA RAJUFOUNDER AND FORMER CHAIRMAN OF ONE OF THE BIGGEST I.T.GIANT OF OUR NATION “SATYAM COMPUTERS” THE PRIME CONVICT IN ONE OF THE BIGGEST SCAM OF COUNTRY
FOURTH LARGESTI.T. OUTSOURCINGCOMPANY OF INDIA EMPLOYEES MORETHAN 50,000 PEOPLEIN INDIA HIGH GLOBALREPUTATION OFFERS SERVICESTO MORE THAN 550MNC’s
What was Scam all about… The company’s balance sheet was inflated to Rs.5,361 Cr at the end of September 2008 against the actualRs 5,040 Cr. There is an artificial cash balance of Rs.588 Cr inSeptember 2008. Rs.1,230 Cr was arranged to Satyam, which is notreflected in its books, to keep Satyams operationsrunning. Raju also admitted that Satyams profits were inflatedover several years.
HOW DID THE SCAM MATTER TO THE NATION ? Job’s of over 50,000 technocrats were at risk. Country’s booming economy feared slightcollapse as Countrys GDP fell by estimated 0.4%. India’s I.T. sector suffered downturn as it’simage was tarnished globally.
How it was caught ?Satyam Computers hadon December 16, 2008,announced that it willacquire two group firms– Maytas properties andMaytas Infra for $1.6billion (about Rs 8,000cr) as part of itsdiversification strategy ,this created a allegedviolation of corporategovernance laws.
SALVAGING SATYAMTo stabilize the sinking Satyam Computers, theGovernment nominated Banker Deepak Parekh,I.T. Expert Kiran Karnik and Former SEBIMember C. Achutan to the I.T. Companys Board. KIRAN KARNIK C. ACHUTAN
ALL’s WELL THAT’s END WELLSatyam Computers was took over by Mahindra GroupI.T. Arm , Tech Mahindra on April 13, 2009.
ASIAN CASE STUDY The World Bank has conducted a number of studies of corporate governance practices in various countries all over the world. It has conducted Eight Studies of Asian Countries. This part summarizes some of the components of those studies. Noticeably absent are China and Japan.
Chart shows the scores for each of the Eight Asian Countries Corporate Governance Scores 90 80 70 60 50 40 Corporate Governance 30 Scores 20 10 0
REVIEW/ANALYSIS OF ASIAN CASE STUDY No perfect score India’s progress in Corporate Governance Improvement with time Clean up