2. SATYAM BACKGROUND
It was established in 1987
4th fastest growing IT company in India
9% share in market
53,000 of employees
$2.1 billion revenue
1st Indian company is to be listed in 3
international exchanges: NYSE, DOW &
EURONEXT
3. Timeline of what went wrong at
satyam
In 1987, 33 year Raju establishes Satyam
Computer with his brother and a brother-in-law
in Hyderabad.
In 1991, the company was listed in Bombay
stock exchange (BSE)
In 1993, : Satyam Computer signs a deal with
US-based Dun & Bradstreet to set up Dun &
Bradstreet Satyam Software. Satyam holds 24%
stake in the venture, while Dun & Bradstreet
holds the remaining.
4. In 1999, it becomes the first Indian information
and communication technology company to be
listed on Newyork stock exchange(NYSE), and
Satyam expands footprint to 30 countries.
In 2006, Satyam’s revenues cross $1 billion. Raju
becomes the chairman of industry body,The
National Association of Software and Services
Companies.
In 2007, Raju is named Ernst &Young Entrepreneur
of theYear
In 2008, Satyam’s revenues cross $2 billion. In
December, the company decides to buy out Mytas
Infra—owned by Raju’s sons—for $1.6 billion.
5. In Jan,2009 Satyam is banned from doing business
with theWorld Bank for 8 years because it was
involved in data thefts and staff bribery.
Satyam employees receive a letter from Raju
admitting to the fraud, following which he resigns
as chairman.
In June,2009 Satyam merge to form India’s fifth
largest IT exports company.The merged entity is
called Mahindra Satyam.
In Nov,2011 Raju gets bail from India’s supreme
court after the CBI fails to file charge-sheet.
6. In Oct,2013 India’s enforcement directorate files a
charge-sheet against Raju and 212 others under
money-laundering charges.
In July,2014 India’s market regulator SEBI bars Raju
from the capital markets for 14 years, and also
seeks Rs1,849 crore as fine.
In April,2015 The special CBI court holds Raju and
nine other officials guilty of cheating.
Raju, who also has to pay a fine of about $800,000
(Rs5 crore), has served 32 months in prison so far.
7. ISSUES
Inflated figures of cash & bank balances of INR
5,040 crore (as against INR 5,361 crore reflected
in the books)
Operating profit were artificially boosted from
the actual INR 61 crore to INR 649 crore.
Satyam also showed an interest earning on Rs.
376 crore that was fictious.
8.
9. KEY PLAYERS IN THIS SCAM
B Ramalinga Raju, founder and chairman of IT
services provider Satyam.
Raju's brother and Satyam's former MD B Rama
Raju, another brother B Suryanarayana Raju
Former CFOVadlamani Srinivas
Former PwC auditors Subramani Gopalakrishnan
andT Srinivas
Former employees G Ramakrishna, D
Venkatpathi Raju and Ch Srisailam
Satyam's former internal chief auditorV S
Prabhakar Gupta
10. REASONS
The board of directors & the auditor were unable
to catch hold of the issue for so long.
Raju inflated cash & bank balances in Satyam’s
financial records.
He acquired 6800 acres of land property by
pledging promoters shares & raising funds.
To hide the deficit in Satyam’s books.Raju
decided to acquire a controlling stake in mytas
infrastructure & properties.
11. IMPLICATION
Satyam was blacklisted by the world bank for 8 yrs
on data theft & bribing bank officials.
5 independent directors resigned from the board ,
after the announcement of the Mytas acquisition.
In 2009, the share price of satyam fell to an all time
low of 78%.
Satyam employees faced a black future as they
were not assured of salaries in 2009.
Ultimately, the company ceased to exist on its own
& was taken over by TECH MAHINDRA.
12. ROLE OF INDEPENDENT & NON-
EXECUTIVE BOARD MEMBERS
An independent director is expected to perform the
fiduciary duties and the duty to exercise care and
skill.
They represent divergent viewpoints on issues
brought before them.
They exercise independent judgment on the issues
of strategy, performance and standards of conduct
They should have the courage to ask the
uncomfortable questions..