Satyam Computer Services was founded in 1987 and went public in 1991. In 2009, the company's chairman Ramalinga Raju resigned after admitting to a corporate fraud where he had falsified Satyam's accounts for years, inflating cash and bank balances. An investigation found that Raju had misstated over $1 billion in liabilities and cash to hide financial issues. In the aftermath, Tech Mahindra acquired Satyam and rebranded it as Mahindra Satyam to restore credibility and focus on industries like telecom, manufacturing, and banking.

1. CASE STUDY PE
Enrolment No. 180500116020 Page 1
SATYAM COMPUTER SERVICES LIMITED
 INTRODUCTION
 SATYAM COMPUTERS WAS FOUNDED IN 1987.
 IT CONVERTED INTO PUBLIC LTD CO. IN 1991.
 THE COMPANY OFFERS CONSULTING AND INFORMATION TECHNOLOGY
SERVICES SPANNING VARIOUS SECTORS.
 SATYAM’S NETWORK COVERS 66 COUNTRIES AND 53000 EMPLOYEES ACROSS
SIX CONTINENTS. IT IS LISTED IN BSE, NSE, NYSE.
 WHO IS B.RAMALINGARAJU ?
 Ramalinga raju was born on september 16,1954 in a family of farmers.
 He founded satyam computers and was its chairman until january 7, 2009 when he
resigned from the satyam board after admitting to corporate fraud.
 What Went Wrong?
 The success-run of the company was halted rather abruptly on December 16,2008,
they announced that it will acquire two group firms –
1. Maytas properties
2. Maytas Infra
 The Board Of Directors of Satyam had approved the founder’s proposal to invest the
company’s funds in buying stakes for an amount equivalent to USD 1.6 billion against
their book worth of only USD 225 million in both firms.
 The two firms, Maytas Properties and Maytas Infra Limited was founded by chairman
Ramalinga Raju’s sons.
 He was blamed that he was using the funds of investors for the family business.
 There were allegations that funds form satyam were diverted to maytas, causing the
government agencies to verify the companies records.
 7 January
 7TH JANUARY 2009 – Company Chairman Ramalinga Raju resigned.
 11TH JANUARY 2009 – Price Waterhouse, announced that Satyam rendered its audit
reports.
 22ND JANUARY 2009 - CID reports in court.

2. CASE STUDY PE
Enrolment No. 180500116020 Page 2
 Why Did Raju Confess?
 The gap in the balancesheet reached unmanageable proportions and could not be filled
any how in future.
 The whistle blower’s email to a Satyam board member triggered a chain of events.
 This person had written to Krishna G. Palepu, one of the company’s independent
director.
 The mail spead like wildfire with Palepu forwading it to other directors & key people
including S.Gopalkrishnan of PricewaterhouseCoopers(PwC), Satyam’s statutory
auditor.
 Confessions Of Raju
 “The scam of INR 71.36 billions in the company’s balancesheet was a result of small
manipulation done many years back.”
 Raju wrote in the confession letter “Every attempt to fill the gap failed.”
 It was like riding a tiger, not knowing how to get off without being eaten.
 Who’s the culprit?
 Former CEO and founder of Satyam, Raju Ramalinga confessed that he fudged the
accounts of the company and inflated earnings, profits etc.
 The company account books said that Satyam had over Rs.5000 crore in the bank
when it actually did not. Raju said that he had been fudging account for several years
yet no one but he and his brother knew about this.
 Satyam’s CFO Srinivas Vadlamani said that he had never paid much attension to the
balance sheet.
 How was this done?
 Liabilities were understated by $1.23 billion.
 Debtors were overstated by 490 millions plus.
 Operating profits were boosted from Rs.61 crore to Rs. 649 crore.
 This was mainly done to hide the irregularities in the accounts. It was also said that
close association with political leaders is one of the reasons.
 Raising fictitious bills for services that were never rendered.
 To increase cash and bank balances correspondingly.

3. CASE STUDY PE
Enrolment No. 180500116020 Page 3
 FABRICATED BALANCE SHEET
 Actions After Scam
 Appointing new board.
 Board appointed by the government.
a) Former Nasscom chief – Kiran Karnik,
b) Chairman HDFC - Deepak Parikh,
c) Former SEBI member – C. Achuthan.
 Satyam shares gained over 40% day after appointment of new board.
 New CEO – A S Murthy.
 Merger of Mahindra & Satyam Computer
 Tech Mahindra Acquired Satyam on April 13,2009.
 On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was
purchased by Mahindra & Mahindra owned company Tech Mahindra.
 Effective July 2009, Satyam rebranded its services under the new Mahindra
management as "Mahindra Satyam”.
 The Board of Tech Mahindra and Mahindra Satyam approved the merger on March
21, 2012.
 The Board of the New Tech Mahindra New CEO and MD Vineet Nayyar was
appointed as the Vice Chairman.

4. CASE STUDY PE
Enrolment No. 180500116020 Page 4
 Future Plans of Tech Mahindra
 Tech Mahindra will aim to almost double the Turnover to $5 billion by 2015 with
focus on telecom, manufacturing and BFSI(Banking, Financial services, Insurance).
 The merged entity has a combined workforce of 84,000, including 36,000 in the
erstwhile mahindra Satyam and 40,000 in Tech Mahindra.
 Tech Mahindra now focuses on four segments-telecom, manufacturing, Healthcare
and retail.
 Conclusions
 More scandals like Satyam can be avoided if –
 If auditing firm is honest.
 SEBI plays an active role.
 Periodic review of legal compliance reports by independent directors.