2. THE DEAL THAT SHOCKED THE
WORLD
INDIA’S 4TH LARGEST COMPANY SATYAM
COMPUTERS SERVICE LIMITED CALLED OFF $1.3
BILLION MAYTAS DEAL
THE DEAL WHICH WAS THE MOCKERY OF
CORPORATE GOVERNENCE
THE SATYAM FIASCO WHICH WAS TERMED AS
THE ENRON OF INDIA SHOCKED THE WHOLE
WORLD
RAMALINGA RAJU MAD THE SHOCKING
REVELATION ABOUT THE ACCOUNTS FUDGING
3. DECISION WAS NOT ANNOUNCED TAKING INTO A/C
ALL THE STAKE HOLDERS OF THE CO.
TWIN MAYTAS CO. MAYTAS PROPERTIES & MAYTAS
INFRASTRUCTURES WERE THE COMPANIES RUN BY
HIS FAMILY MEMBERS.
DEAL MADE THE CASH RICH CO. INTO DEBT RIDDEN
COMAPANY AS ITS ENTIRE CASH HOLDING WOULD
HAVE GONE TO MAYTAS
RAMALINGA RAJU WAS HOLDING ONLY 8.5% STAKE
CONSENT OF 91.5% STAKE WAS NOT ASKED
RAMALINGA RAJU WENT FOR SHOPPING, WHEN
ECONOMIC SLOW DOWN WAS @ ITS SEVEREST!!!
FACTS ABOUT SATYAM –
MAYTAS DEAL
4. THE FRAUDULENT ACTIVITIES
CARRIED ON BY THE CHAIRMAN
PRICEWATERHOUSECOOPERS PwC did contribute in
fudging of accounts
BALANCE SHEET CONSISTED OF ACCRUED INTEREST
OF RS 360 CRORE
UNDERSTATED LIABILITY OF RS. 1230 CRORE ON
ACCOUNTS OF FUNDS ARRANGED BY THE CHAIRMAN
OVERSTATED DEBTOR’S POSITION OF RS 490 CRORE
AS AGAINST RS. 2651
IT WAS STATED THAT THE REVENUE OF RS. 2700
CRORE FOR SEP. QUARTER AS AGAINST ACTUAL
REVENUE OF RS. 2112 CRORE
5. AN OPERATING MARGIN OF RS. 649 CRORE AGAINST
THE ACTUAL OPERATING MARGIN OF RS.61 CRORE.
THIS RESULTED IN ARTIFICIAL CASH & BANK BALANCE
GOING UP RS. 588 CRORE IN Q2 ALONE.
RAMALINGA RAJU THOUGHT THAT THE GAP SUCH
ARISEN CAN BE FILLED BY PURCHASING MAYTAS
INFRASTRUCTURE & MAYTAS PROPERTIES WHICH WAS
CALLED OF EVENTUALLY
6. BREACH OF TRUST
DETAILS ABOUT THE MAYTAS WAS NEVER
DISCLOUSE TO THE NY OF THE SHARE HOLDERS.
CLAUSE 49 OF LISTING AGREEMENT TO THE
INDIAN STOCK EXCHANGE WAS NOT FOLLOWED
7. CLAUSE 49
It would be necessary for chief executives and chief
financial officers to establish and maintain internal
controls and implement remediation and risk mitigation
towards deficiencies in internal controls, among others.
Clause VI (ii) of Clause 49 requires all companies to
submit a quarterly compliance report to stock exchange
in the prescribed form. The clause also requires that there
be a separate section on corporate governance in the
annual report with a detailed compliance report.
A company is also required to obtain a certificate either
from auditors or practising company secretaries regarding
compliance of conditions as stipulated, and annex the
same to the director's report.
8. The clause mandates composition of an audit
committee; one of the directors is required to be
"financially literate".
It is mandatory for all listed companies to comply
with the clause by 31 December 2005.
9. SOLUTION TO OVERCOME SUCH
ISSUE
THE FUTURE OF 53000 EMPLOYEES WAS ON
STAKE
HENCE THE BEST AVAILABLE OPTION IS
ACQUISITION
