detailed case study on satyam case.

1. Group (1)
Sudheer
Jinnu
Vinay
Vijay
saikumar
Group (2)
Yogitha
Ruchi
Jitesh
Santhosh
Chandra sekher

2. 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

3.  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.

4. Satyam Computers Pvt. Ltd. Born.
June - First Fortune 500 Client.
August - Converted into Public Ltd. Co.
The Big Break- Allies with Dun and Bradstreet Corp.
Declared one of the 100 most pioneering
technology companies by World Economic
Forum.
Dataquest IT Man of the year award.
 1987 :
 1991 :
 1994 :
 2000 :
The Rise of Satyam

5. Video

6. ACHIEVEMENTS
2007:- BECOMES THE 1ST ASIAN COMPANY TO
FEATURES IN THE TRAINING MAGAZINE’S 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
“India’s Most Customer-Responsive BPO
Company” AGC Networks The Economic
Times, Ernst & Young and Nielsen
And the list goes on……..

7. Ramalinga Raju :
B Rama Raju :
V Srinivas :
S Gopalakrishnan:
Talluri Srinivas :
Satyam former chairman
Brother of Ramalinga Raju
Former Managing Director
Ex-Chief financial officer
Price Waterhouse Auditor
Price Waterhouse Auditor

8. 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.

10. FLOATED TWO OTHER COMPANIES FOR THEIR OWN
PURPOSE .
WITHOUT TAKING PERMISSION OF THE SHAREHOLDERS.
FAILED TO REPAY THE LOANS.
TRANSFER OF MONEY.

11. 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.

12.  SATYAM SHARES
 Biggest single day fall for a stock in stock market.
 Rs. 175 ( Jan 6th
)
77%
 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/- on
May 29,2008.

14. 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

15. JANUARY 7TH
, 2009
“ IT WAS LIKE RIDING A
TIGER , NOT KNOWING
HOW TO GET OFF
WITHOUT BEING EATEN “
CONFESSION

16. 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 .

17. PRESSURE TO MEET
EXPECTATION
Growing Competition
Threat of being overtaken
OVERCONFIDENCE On his ability
PERSONAL BENEFITS
Siphoning of funds
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.

18. 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.
Action Taken:

19. Regulators Investigating Satyam
Investigating Satyam

20. Consequences

21. 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.

22. Company Logo
IMPACT OF SCAM
Stock Market Share-holders Indian economy
Employees
Stake-holders

23. The people of his native village, Garagaparru, hail the
development works undertaken by the Raju Foundation,
the charitable arm of Satyam.
The Citizens for a Better Public Transport in Hyderabad
(CBPTH) demanded a CBI inquiry into the process of
how Maytas bagged the Hyderabad Metro Rail project.
Analysts in India have termed the Satyam scandal
India's own Enron scandal.
.

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.

25. 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.

26.  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”.

27. Now Satyam is running with the help of following people
Mr Anand Mahindra
Chairman
Mr Rakesh Soni
COO
C P Gurmani
Managing Director

28. Evaluate the potential for fraud in a given audit engagement.
Be obliged to utilise tests that provide reasonable assurance
of detection of fraud
Evaluate the strength of the overall control environment
Facilitate the identification of areas of high audit risk by
reviewing the procedure analytically
Communicate their role and responsibilities to all those who
rely on their work

29. In addition to the present statutory requirement, companies
should be required to institute sufficient internal
management controls.
 Management should ensure that the internal audit staffs are
able to prevent and detect financial statement fraud.
Companies whose shares are publicly traded should be
required to have audit committees to monitor the internal
control system

30. 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.
Conclusion