Download - Satyam scam
The Satyam Scandal
THE RISE OF SATYAM
Satyam Computers was founded in 1987. It converted into Public Ltd Co. in 1992. The company offers consulting and
information technology services spanning various sectors.
Mahindra Satyam is overall ranked #153 by Fortune India 500 in 2011.
Satyam’s network covers 66 countries and 53000 employees across six continents. It is listed in BSE, NSE, NYSE
Company Profile
AWARDS ACHIEVED
Top-50 Marketers Award, under the Resurgent Marketers category for 2010 by Pitch India.
Mahindra Satyam BPO honored as “India’s Most Customer-Responsive BPO Company”AGC Networks, The Economic Times, Ernst & Young and Nielsen.
Ranked # 1 in the ASTD BEST Award American Society for Training and Development (ASTD).
And the list goes on….
What happened on January 7,2009??
THE DISASTROUS REVELATION
Accounting fraud of over 7800 crores rupees.
From past 7 years accounting books were cooked:
-Profits were inflated
-Understated liability and overstated debts.
-Accrued interest.
-The gap in the balance had risen due to inflated profits.
FABRICATED INCOME STATEMENTS
Stock Charting
THE LAST ATTEMPT
The MAYTAS Acquisition• Maytas infra and Maytas properties : firms
owned by the sons of Raju.
• Planned to buy the Maytas to fill the gap in the balance sheet.
• Last attempt Raju made to fill the gap in the balance sheet.
• Major shareholder rebellion
• Acquisition was termed “Poor corporate governance”.
CONFESSION LETTER
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”.
CONFESSION LETTER
Top officials were unawareOnly MD & CFO were others.
No personal profits.Did not sell any shares from 8 years.
• 11464 CroreCompanies
worth
• BSE sensex fell by 749.05 i.e. 7.25% .• NSE fell by 192.40 points i.e. 6.18%.
Stock Market
• Biggest single day fall for a stock in stock market
• 175 Rs/-(Jan 6th)
Satyam shares 1607 Crore
77%
All time low of Rs 11.50 on 9th jan and closed at 23.75 Rs/-.Compared to highest of 524.90 Rs/- on may 29,2008
Ramalinga Raju
B. RamaRaju
T Sriniv
as
S. Gopalkrishna
n
V. Sriniv
as ILLUSIONISTS
THE ILLUSIONISTS
•Ramalinga Raju: Satyam Former Chairman•B Rama Raju: Brother of Ramalinga Raju
Former Managing director .•V Srinivas: Ex-chief financial officer •S Gopalakrishnan: PriceWaterhouse Auditor•Talluri Srinivas: PriceWaterhouse Auditor
CURRENT STATUS
GOVT CONCERNED ABOUT SATYAM EMPLOYEES.
GOVT TO HELP CBI IN SATYAM SCAM CASE.
RAMALINGA RAJU SENT TO POLICE
CUSTODY TILL 22 ND JANUARY.
CBI INVESTIGATING FURTHER.
Ramalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme court on 4 November 2011 as the investigation agency CBI failed to file the chargesheet even after more than 33 months of Raju been arrested
PROBABLE REASONS
PRESSURE TO MEET EXPECTATION
OVERCONFIDENCE
PERSONAL BENIFITS
WHY DID RAJU CONFESS???
RAJU WAS PROBABLY CONVINCED THAT THE GAP IN THE BALANCE SHEET WAS UNMANAGEABLE.
A PERSON CLAIMED HIMSELF TO BE A FORMER SENIOR EXECUTIVE IN SATYAM INVOLVED WITH ITS CONTRACT WITH THE WORLD BANK , ACTED AS A WHISTLE BLOWER WHOSE E-MAIL TO A SATYAM BOARD MEMBER TRIGGERED A CHAIN OF EVENTS.
THE GOVERNMENT
THE GOVERNMENT TOO IS EQUALLY GUILTY IN NOT HAVING MANAGED TO SAVE THE SHAREHOLDERS, THE EMPLOYEES AND SOME CLIENTS OF THE COMPANY FROM LOSING HEAVILY.
SATYAM UNDER RECONTRUCTION
Appointing New Board. Board appointed by
Government.
Tech Mahindra wins bid for Satyam scam.
VISION STATEMENT
“to leverage information, knowledge, and technology to enhance human endeavor.
CORE VALUES OF SATYAM
Belief in people Entrepreneurship Customer orientation Pursuit of excellance
EFFECTS OF SATYAM SCANDLE
Jobs of over 50000 technocrats were at risk.
Country`s booming economy was at risk.
The GDP fell by 0.4%. I.T sector suffered a downturn. India`s global image was tarnished. Indian stock market fell dramatically.
ACTIONS TAKEN
New board of directors were appointed. Disclosure of pledged securities. Increased financial accounting
disclosure. Adoption of international standards. Creation of new corporate code of
conduct by Ministry of Corporate Affairs.
Steps taken by ICAI.
CONCLUSION
More scandals like Satyam can be avoided if-
1.If auditing firm is honest.2.SEBI plays an active role.3. Periodic review of legal compliance
reports by independent directors.