Ramalinga Raju founded Satyam Computer Services in 1987 and grew it into a large IT company. In 2008, it was revealed that Satyam's accounts had been falsified for years, with profits and cash balances inflated. Raju resigned and admitted to the fraud. An investigation found that around 13,000 employees did not actually exist in order to siphon off funds. Tech Mahindra later acquired Satyam and it is now known as Mahindra Satyam, overseen by a new board and leadership while continuing legal proceedings around the original fraud.

1. SATYAM SCAM CASE STUDY
FOR THE CLASS OF INDIAN FINANCIAL SYSTEM
 SUBMITTED TO  SUBMITTED BY
ANITA SONI ARSH KOUL
MANISH MEHRA

3. Introduction
 Byrraju Ramalinga Raju was
born on September 16, 1954
in a family of farmers.
 He did his B. Com from
Andhra Loyola College at
Vijayawada and subsequently
did his MBA from Ohio
University, USA.
 Ramalinga Raju had a stint at
Harvard too. He attended the
Owner / President course at
Harvard.

4. Family background
 He has two brothers and a
sister.
 Raju is married to Nandini.
 They have two sons, Teja
Raju and Rama Raju,
 Who runs the Hyderabad-
based Maytas Properties
and Maytas Infra
 And a
daughter, Deepti, who is
married.

5.  After returning to India in 1977, Ramalinga Raju moved
away from the traditional agriculture business and set up a
spinning and weaving mill named Sri Satyam.
 Thereafter he shifted to the real estate business and
started a construction company called Satyam
Constructions.

6.  In 1987, Ramalinga Raju founded Satyam Computer
Services along with one of his brothers-in-law, DVS Raju.
 The company went public in 1992. With the launch of
Satyam Infoway (Sify) Satyam became one of the first to
enter Indian internet service market.

7.  Ramalinga Raju have promoted and have been associated
with Satyam for well over twenty years now He has seen
it grow from few people to 53,000 people, with 185
Fortune 500 companies as customers and operations in 66
countries.
 Satyam has established an excellent leadership and
competency base at all levels.

8. Satyam Scam

10. Satyam scam
Satyam Computers had on December 16,2008, 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 buy 51 per cent stake in Maytas
Infrastructure and 100 % in Maytas Properties

11.  The total outflow for both the acquisitions was expected
to be US$ 1.6 bn comprising of US$ 1.3 bn for the 100%
stake in Maytas Properties and US$ 0.3 bn for the 51%
stake in Maytas Infra.
 This is the move that sparked a row over alleged violation
of corporate governance laws.
 This deal is not profitable for investors .So after this
announcement they started to raise their voices against the
deal

12. TWIST IN WHOLE SCAM

13. Firms which he wanted to purchase
Maytas Infra
 The company is run by the sons of Ramalinga Raju
 It was started in the late 1980’s by Ramalinga Raju
 The main reason for the debacle of Maytas Infra is due to the
debacle of Satyam
Maytas Properties Ltd
 One of the reasons for the debacle of Maytas properties was
the then ongoing economic slowdown
 The company has huge land banks and the prices have dropped
down in the real estate significantly

14. HOW DID HE FAIL

15. The promoters decided to inflate the revenue and profit figures
of Satyam. In the event, the company had a huge hole in its
balance sheet
So to fill up this gap……..
Company announced Acquisition of 51% stake in Maytas
Infra and 100% stake in Maytas Properties on 16th Dec 2008
but The deal was not profitable for investors
Investors dumped Satyam’s stock and threatened action
against the management.

16. Why was this action done
 This was mainly done to hide the irregularities in the
accounts of Satyam. It is also said the close association
with the political leaders is one of the reasons.

17. • Raising fictitious bills for
services that were never
rendered.
• To increase the Cash &
bank balance
correspondingly.
• Operating profits were
artificially boosted from
the actual Rs 61 crore to 5064
crores

18.  Its financial statements for years were totally
false, cooked up
 Never had Rs 5064 crores (US$ 1.05 Billion) shown as
cash for several years.
 Its liability was understated by $ 1.23 Billions
 The Debtors were overstated by 400 millions plus.

19. HOW DID THIS SCAM COME
IN NOTICE

20. 7 January 2009
 Company Chairman Ramalinga Raju resigned after
notifying board members and the Securities and Exchange
Board of India (SEBI) that Satyam's accounts had been
falsified

21. 11 January 2009
 Company Law Board decided to bar the current board of
Satyam from functioning and appoint 10 nominal directors.
 "The current board has failed to do what they are
supposed to do. The credibility of the IT industry should
not be allowed to suffer." said then Corporate Affairs
Minister Prem Chand Gupta.
 Chartered accountants regulator ICAI issued show-cause
notice to Satyam's auditor Price waterhouse Coopers (PwC) on
the accounts fudging. "We have asked PwC to reply within 21
days," then ICAI President Ved Jain said.

22. 11 January 2009
 The government nominated noted banker Deepak
Parekh, former NASSCOM chief Kiran Karnik and
former SEBI member C Achuthan to Satyam's board.
 Merrill Lynch (Now with Bank of America)
terminated its engagement with the company.
 The New York Stock Exchange had halted trading in
Satyam stock as of 7 January 2009.
 India's National Stock Exchange had announced that
it will remove Satyam from its S&P CNX Nifty 50-
share index on January 12.
 The founder of Satyam was arrested two days after he
admitted to falsifying the firm's accounts. Ramalinga
Raju is charged with several offences, including
criminal conspiracy, breach of trust, and forgery.

23. 14 January 2009
 Price Waterhouse, the
Indian division of Price
water house
Coopers, announced that its
reliance on potentially false
information provided by the
management of Satyam
may have rendered its audit
reports "inaccurate and
unreliable"

24. 22 January 2009
 CID told in court that the
actual number of
employees is only 40,000
and not 53,000 as reported
earlier and that Mr. Raju
had been allegedly
withdrawing INR 20 crore
rupees every month for
paying these 13,000 non-
existent employees

25. 5 February 2009
 The six-member board appointed by the Government of
India named A. S. Murthy as the new CEO of the firm
with immediate effect.
 Murthy, an electrical engineer, has been with Satyam
since January 1994 and was heading the Global Delivery
Section before being appointed as CEO of the company.
 The two-day-long board meeting also appointed Homi
Khusrokhan (formerly with Tata Chemicals) and Partho
Datta, a Chartered Accountant as special advisors

26. February 2009
 Satyam announces Renewed customer confidence; Wins new
business of over USD 250 Mn. in last seven weeks
 Company Law Board Authorizes Satyam to Induct Strategic
Investor, Raise Authorized Equity Capital and Make
Preferential Allotment of Equity Shares
 Order passed by the Hon’ble Company Law Board dated 19th
of February
 Satyam Ranks Eighth in Training Top 125

27. March 2009
 Satyam Wins Corporate University Xchange Awards
 Satyam submits letter to SEBI regarding bidding process
 Satyam to Implement SAP at Vijay Dairy & Farm Products
(P) Ltd.
 Satyam Innovation Garners Progressive Manufacturing
Award for Rain CII Carbon
 Satyam Announces Outcome of Board Meeting
 Satyam Wins Consumer Health World Award for Tele-
Ophthalmology Program
 Satyam Announces Commencement of Process to Select an
Investor
 Satyam receives SEBI approval on bidding process
 Satyam’s New CEO Assures Singapore “It’s Business As
Usual”

28. April 2009
 Satyam announces approval from the Federal Cartel
Office of Germany and in-principle approval from BSE
and NSE
 Satyam receives SEBI approval - Corrigendum
 SEBI Clarification dated April 21, 2009 SEBI Letter
dated April 20, 2009 -Satyam receives SEBI approval
 Tech Mahindra issues Public Announcement of the
Offer

29.  Tech Mahindra and Satyam Discuss Transition
 Tech Mahindra receives Company Law Board approval
 Satyam files application to delist ADSs from Euronext Amsterdam
 Tech Mahindra selected as the Highest Bidder
 Satyam Completes Bidding Process
 Satyam Refines Bidding Process

30. May
 Appointment of Venturbay Nominees to the Board of
Directors of Satyam Effective May 27, 2009
 Satyam allots shares to Venturbay

31. June
 Tech Mahindra and Mahindra Satyam strengthen their
boards with executive leadership appointments
 Satyam Unveils Its New Brand Identity – “Mahindra
Satyam”
 Satyam receives accolades from American Society for
Training & Development
 Satyam initiates Virtual Pool Program to manage surplus
staff
 Satyam Appoints New Leadership in Australia and New
Zealand

32. July
 Company Law Board Withdraws Four Government-
Appointed Directors from Mahindra Satyam Board
 Satyam allots shares to Venturbay
 Mahindra Satyam signs a 5 year multi-million dollar SAP
contract with GSK

33. Some good side of R.Raju
 Achievement: Founder and
Chairman of Satyam
Computer Services Ltd;
Chosen as Ernst & Young
Entrepreneur of the Year for
Services in 1999
 Ramalinga Raju is one of the
pioneers of the Information
Technology industry in India.
He is the founder and
Chairman of Satyam
Computer Services Ltd.

34. Awards
 Dataquest IT Man of the Year
in 2000,
 CNBC's Asian Business
Leader
 Corporate Citizen of the Year
award in 2002 and
 E&Y Entrepreneur of the Year
Award in 2007.

35.  Satyam was the 2008 winner of the coveted Golden
Peacock Award for Corporate Governance under Risk
Management and Compliance Issues, which was stripped
from them in the aftermath of the scandal.

36. Who controls Satyam now

37. Now Satyam is running with the help of following people
Mr Anand Mahindra
Chairman
Mr Rakesh Soni C P Gurmani
COO Managing Director