This document summarizes the background of Satyam Computer Services and its former chairman B. Ramalinga Raju. It describes Satyam as a major Indian IT company that was involved in various industries. It then details how Raju confessed in January 2009 to embezzling over $1 billion by inflating cash and bank balances, accruing non-existent interest, understating liabilities, and overstating assets and revenues. The scandal came to light when an investment bank doing due diligence found financial irregularities and withdrew from an acquisition deal, and ultimately led to Raju's confession.

1. Presented to:
Ravikanth Ganti
Presented by:
Kishan Kumar Sharma DM-10-033
Ribu Abraham Varghese DM-10-037
Vijay Reddy DM-10-019

2. Company Background
Satyam was established in 1987.
4th fastest growing IT company in India.
9% market share
53,000 employees
Revenue $2.1 billion
NYSE, DOW(US) and
EURONEXT( Amsterdam, Brussels, London, Lisbon and Paris)

3. Mr. B.Ramalinga Raju
He earned a Bachelor of Commerce Degree from Andhra Loyola
College at Vijayawada and subsequently earned
an MBA from Ohio University in the United States. He ventured
into many businesses including Dhanunjaya Hotels, Cotton
spinning mill named Sri Satyam Spinning with an investment of
₹80 million. He was the former chairman of Satyam Computer
Services, from 1987 and till 7 January 2009, stepping down
admitting to embezzlement of financial figures of the company to
the tune of ₹71.36 billion (approximately US$1.5 billion), including
₹ 50.40 billion (approximately US$1 billion) of non-existent cash
and bank balances.

4. Satyam was Involved in the following
Business
Software
Development,
ERP, Outsourcing,
CRM, Consulting
IT and Health
Care
Automotive and
Bio-Tech
Banking and
Finance
Telecom and
Media

5. What happened.
Scandal.
Window
Dressing
Creative
Accounting
Manipulating
accounts

6. In most of the cases, investors are happy as long as
Assets are more than liabilities.
1. Overstate assets than actual.
2. Showing fictitious deposits in bank and also interests on it.
3. Hiding Liabilities.

7. How does the scam came out
According to ‘Investors Protection and Redressal’ Forum, “Investment bank
DSP Merrill Lynch, to whom Satyam have appointed to look for a partner or
buyer for the company, ultimately blew the whistle and terminated its
engagement with the company soon after it found financial irregularities”.
And this is how the acquisition of MAYTHAS’ has been aborted.

8. Raju’s Confession on 7th jan’09
The Balance Sheet carries as of September 30, 2008:
 Inflated cash & bank balances of ₹ 5,361 crore as against ₹ 321 crore.
 An accrued interest of ₹ 376 crore which is NON-EXISTENT.
 An understated liability of ₹ 1,230 crore.
 An over stated debtors position of ₹ 2,651 as against ₹ 490 crore.
 For the September quarter (Q2), reported a revenue of ₹ 2,700 crore
and an operating margin of ₹ 649 crore (24% of revenues)
 As against the actual revenues of ₹ 2,112 crore and an actual
operating margin of ₹ 61 Crore (3% of revenues).
 This has resulted in artificial cash and bank balances going up by
₹588 crore in Q2 alone.

9. Confession Cont.
 Created 6000 fake salary Bank accounts.
 The aborted Maytas acquisition deal was the last attempt to fill the
fictitious assets with real ones.
 Maytas’ investors were convinced that this is a good divestment
opportunity.

10. RESULT OF SCANDAL