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INTRODUCTION

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

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He is Ramalinga Raju born on September 16, 1954.
A traditional agricultural family of the KSHATRIYA
(RAJU) Community of Andhra Pradesh.

He founded Satyam Computers and was its Chairman


until January 7, 2009 when he resigned from the Satyam
board after admitting to corporate fraud.

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The Rise of Satyam
1987 : Satyam Computers Pvt. Ltd. Born.

1991 : June - First Fortune 500 Client.


August - Converted into Public Ltd. Co.

1994 : The Big Break- Allies with Dun and Bradstreet


Corp.
2000 : Declared one of the 100 most pioneering
technology companies by World Economic
Forum.

2002
Dataquest IT Man of the year award.

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History
He was first businessman in the field of construction
and textiles.
Raju founded Satyam in 1987.
He started an satyam computers with 20 employees in
1987.
Satyam was listed in INDIAN STOCK EXCHANGE in
1991.
Listed in NEW YORK STOCK EXCHANGE in 2001.
Satyam was listed in UNESCO(Amsterdam) in 2008.
There were 52000 employees working in Satyam in
September 2008

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ACHIEVEMENTS
2007:- BECOMES THE 1ST ASIAN COMPANY TO
FEATURES IN THE TRAINING MAGAZINES LIST OF
TOP 125 COMPANIES FOR LEARNING,

2008:-WON CORPORATE GOVERNANCE


(INCLUDING GOLDEN GLOBAL AWARD TWICE)
Top-50 Marketers Award, under the
Resurgent Marketers category for 2010 by
Pitch India

2011:-Mahindra Satyam BPO honored as


Indias Most Customer-Responsive BPO
Company AGC Networks The Economic
Times, Ernst & Young and Nielsen
And the list goes on..

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People Behind This Scam

Ramalinga Raju : Satyam former chairman


B Rama Raju : Brother of Ramalinga Raju
Former Managing Director
V Srinivas : Ex-Chief financial officer
S Gopalakrishnan: Price Waterhouse Auditor
Talluri Srinivas : Price Waterhouse Auditor

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The scam
1. Raju and his brother, B Rama Raju, were arrested by the Andhra
Pradesh police on charges of breach of trust, conspiracy,
cheating, falsification of records.
2. Raju has mislead various investors.
3. Raju had also used dummy accounts to trade in Satyam's
shares.
4. He has violated the insider trading norm.
5. Funds from Satyam were diverted to Mayas
6. On 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 carore
rupees every month for paying these 13,000 non-existent
employees.

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Raju wanted to take over his MAYTAS INFRA and
MAYTAS PROPERTIES.(company of his sons).
He was blamed that he was using the funds of the
investors for the family business.

There were allegations that funds from Satyam were


diverted to Maytas, causing the Government agencies to
verify the infrastructure companys records as well. .

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HOW DID IT HAPPENED?

FLOATED TWO OTHER COMPANIES FOR THEIR


OWN PURPOSE .
WITHOUT TAKING PERMISSION OF THE
SHAREHOLDERS.
FAILED TO REPAY THE LOANS.
TRANSFER OF MONEY.

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UNDERSTANDING THE SCAM!

THE BALANCE SHEET AS OF SEPTEMBER 30, 2008 SHOWED-


INFLATED (NON-EXISTENT) CASH AND BANK BALANCES OF RS.
5040 CRORE (AS AGAINST RS. 5312 CORE REFLECTED IN THE
BOOKS)
AN ACCRUED INTEREST OF RS. 376 CRORE WHICH IS NON-
EXISTENT
AN UNDERSTATED LIABILITY OF RS.1230 CRORE ON ACCOUNT
OF FUNDS ARRANGED BY BR RAJU.

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SATYAM SHARES
Biggest single day fall for a stock in stock
market.
77
Rs. 175 ( Jan 6 )
th
%

STOCK MARKET
BSE sensex fell by 749.05 i.e., 7.25%.
NSE fell by 192.40 points i.e., 6.18%.

COMPANIES WORTH
11464 crore 1607 crore.
All time low of Rs.11.50 on 9th Jan and
closed at Rs.23.75/-
Compared to highest of Rs. 524.90/-
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on May 29,2008. Page 12
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PwC - Partners in Crime ???
Previous record -
Satyam has also been accused of frauds in 2001
and 2003.
No importance was given to this.
Getting third party evidence -
No bank confirmation on fixed deposits
Accrued interest(fixed deposit)
Debtors confirmation
Factors overlooked -
Changing of accounting years
Huge debt despite cash surplus

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CONFESSION

JANUARY 7TH, 2009


IT WAS LIKE RIDING A
TIGER , NOT KNOWING
HOW TO GET OFF
WITHOUT BEING EATEN

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Why Did Raju Confess?

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Company Logo Page 17
WHY DID RAJU CONFESS
The gap in the balance sheet reached
unmanageable proportions and could
not be filled anyhow in future.

The whistle blower whose email to a


Satyam board member triggered a
chain of events .

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PROBABLE REASONS
PRESSURE TO MEET Growing Competition
EXPECTATION Threat of being overtaken

OVERCONFIDENCE On his ability

Siphoning of funds
PERSONAL BENEFITS Salary of non-existent 13000
employees

Since about seven years we wanted to show more income


in the accounts to avoid others from involving in the company
affairs and any possible hostile acquisition.
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Action 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.

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Regulators Investigating Satyam
Investigating Satyam

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Consequences

BEFORE THE SCANDAL ITS SHARE PRICE WAS RS 300 IN OCT.2008.


JUST AFTER THIS SCANDAL THE SHARE PRICE GO DOWN TO RS 6.30.

ON 10 JANUARY 2009, THE COMPANY LAW BOARD DECIDED TO BAR THE


CURRENT BOARD OF SATYAM FROM FUNCTIONING.

BANK OF AMERICA AND STATE FARM INSURANCE TERMINATED ITS


ENGAGEMENT WITH THE COMPANY.

CREDIT SUISSE SUSPENDED ITS COVERAGE OF SATYAM. THE CREDIT


SUISSE GROUP AG (SIX: CSGN, NYSE: CS) IS A SWISS MULTINATIONAL
FINANCIAL SERVICES COMPANY HEADQUARTERED IN ZURICH,
SWITZERLAND.

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Jobs of over 50,000 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.

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IMPACT OF SCAM

Stock Market Share-holders Indian economy

Stake-holders
Employees

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Company Logo Page 24
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 charge sheet even after more than
33 months of Raju been arrested Appointing New
Board. Board appointed by Government.Tech
Mahindra wins bid for Satyam scam.

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SATYAM UNDER
RECONSTRUCTION
Appointing new board.
Board appointed by government :
former Nasscom chief Kiran Karnik,
Chairman HDFC Deepak Parikh
Former SEBI member C. Achuthan .
Satyam shares gained over 44% day
after appointment of the new board.
New CEO A S Murthy
Tech Mahindra acquired Satyam on April
13,2009.
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ON 13TH APR 2009, VIA FORMAL PUBLIC
AUCTION PROCESS, 46% STAKE IN SATYAM WAS
PURCHASE BY MAHINDRA.

JULY 2009, SATYAM REBRANDED ITS SERVICE


AS MAHINDRA SATYAM.

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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.

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Page 28
T
H
A
N Presented By

K Prakhar Jain
Ronan Vadher
Pooja Prajapati
Diptesh Deherkar
Ankita Chougule
Y Ankur Barot
Abhijeet Purohit
O Shailesh Mali
Garvit Mathur

U
Company Logo
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Page 29
CONTENTS
The rise of Satyam
Revelation by Raju
How did the fraud start?
Probable reasons
Maytas acquisition
Why did Raju confess?
Impact on the Nation
investigation

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