WELCOME

SATYAM CASE STUDY

Table Of Contents

Introduction.

What Went Wrong?

Why Did Raju Confess?

Confessions of Raju.

Who’s the Culprit?

How was this done.

Post Actions After Scam.

Merge of Mahindra and Satyam Computers.

Future Plans Of Tech Mahindra.

Conclusion.

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.

SATYAM COMPUTER SERVICES LIMITED

WHO IS B.RAMALINGA RAJU ?

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 properties2.

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

2009

• Company Chairman Ramalinga Raju resigned.

11 January

2009

• Price Waterhouse,announced that Satyam rendered its audit reports.

22 January

2009

• CID reports in court.

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.Raju Ramalinga & his brother

Srinivas

Vadlamani

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.

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.

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.

“

”Thank you

Presented by:

Krina Merchant, Vidhi Patel, Zeel Shah, Disha Shah, Payal Chedda, Divya Patel.