1. SATYAM SCANDAL
presented by-
HARSHADA CHAUDHARI
BHUSHAN GANG
KOMAL RATHOR

2. CONTENTS
 MANAGEMENT BOARD
 COMPANY PROFILE & GLOBAL
PRESENCE
 SERVICES PROVIDED
 ACHIEVEMENTS
 SCANDAL
 LETTER TO THE BOARD
 IMPACT ON MARKET
 INDIA’S STEP TO SAVE SATYAM
 LESSONS LEARNED

3.  Founders-
 Mr. B. Ramalinga Raju (Chairman)
 Mr. B. Rama Raju (Co-Founder & CEO)*
 Non-Executive Directors:
 Mr. V. P. Rama Rao, IAS (Retd.)
 Dr. (Mrs.) Mangalam Srinivasan
 Prof. Krishna G. Palepu
 Mr. Vinod Dham
* The Current CEO is Mr. A. S. Murthy
MANAGEMENT BOARD

4.  Satyam was established in 1987 in Hyderbad
 The firm began with twenty employees and grew
rapidly as a global business.
 4th fastest growing IT company in India.
 9 % market share
 40,000 employees
 Revenue $2.1 billion
 It is the first company of India listed in three
International Exchanges i.e. NYSE, DOW JONES and
EURONEXT
COMPANY PROFILE

5. Satyam's network covers 67 countries across six
continents. The company employs 53,000 IT
professionals across development centers in India, the
United States, the united kingdom, the united Arab
Emirates, Canada, Hungary, Singapore, Malaysia,
China, Japan, Egypt and Australia. It serves over 654
global companies, 185 of which are Fortune 500
corporations. Satyam has strategic technology and
marketing alliances with over 50 companies. Apart
from Hyderabad, it has development centers in India
at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi,
Kolkata, Bhubaneswar, and Visakhapatnam
GLOBAL PRESENCE

6.  Aerospace and Defense
 Banking, Financial Services &Insurance
 Energy and Utilities
 Life Sciences & Healthcare
 Manufacturing, Chemicals & Automotive
 Public Services & Education
 Retail and Consumer Packaged
 Telecom, Infrastructure, Media and Entertainment &
Semiconductor
 Travel and Logistics & Industrial Equipment
Povides Services in the
Following Areas:

7. o Becomes the 1ST Asian Company to Features in the Training
Magazine’s List of Top 125 COMPANIES for Learning.
o Won Corporate Governance (INCLUDING GOLDEN GLOBAL AWARD
TWICE).
o First Indian it company to get ITAA certification for Y2K solutions.
o Satyam Infoway is the first Indian internet company to be listed on
NASDAQ
o Declared one of the hundred most pioneering technology
companies by world economic forum in the year 2000.
o First Organization in the World to Launch Customer Oriented Global
Organization Training.
o First ISO:9001:2000 Company in the World as Certified by
BVQI.
ACHIEVEMENTS

8. O n 7 t h J a n u ary 2 0 09 , W e d n es day, S a t yam C o m p u ter
S e r vices C h a irm an B . R a m alinga R a j u r e s i gns a n d
d i s ap pears a f t e r c o n fes sing t o t h e l a r g est f r a u d o f R s .
7 , 1 36 c r o r e i n I n d i an c o r p o rate h i s t o ry.
I n a l e t t er t o t h e b o a r d, t h e re w a s M i s s ing c a s h/b ank
b a lance o f R s . 5 0 40 c r o r es p l u s m i s s ing i n t er est i n c o m e
o f R s . 3 7 6 c r o r es p l u s u n d e r stat ed l i a b ilities o f R s . 1 2 3 0
c r o res p l u s o v e r st ated d u e s t o c o m p any o f R s . 4 9 0
c r o res a d d i ng i t u p R s . 7 1 3 6 c r o r e s w a s t o t al m i s s i ng
a m o u nt.
SCANDAL

9. 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.
 AN OVERSTATED DEBTORS POSITION OF RS. 490 CRORE (AS AGAINST RS.
2651 CRORE REFLECTED IN THE BOOKS)

10. SR
NO.
INFLATED FIGURES EFFECT IN BALANCE
SHEET
1. Inflated (non-existent) cash and
bank balances of Rs. 5,040
crore.
The cash will be reduced by
Rs.5040 crore and second effect
would be reduction from reserve
(1)
2. An accrued interest of Rs. 376
crore, which is non-existent
Accrued interest will be reduced
by Rs. 376 crore and second
effect would be reduce from
reserve (2)
3. An understated liability of Rs.
1230 crore on account of funds
arranged by him.
The liability will increase and the
second effect would be reduction
from reserve (4)
4. An overstated debtors position of
Rs. 490 crore (as against Rs.
2651 reflected in the books)
Debtors will be reduced by
Rs.490 crore and second effect
would be reduction from reserve
(3)

11.  FOR THE SECOND QUARTER SATYAM REPORTED
A REVENUE OF RS.2700 CRORE AND AN
OPERATING MARGIN OF RS.649CRORE (24% OF
REVENUES) AS AGAINST ACTUAL REVENUE OF
RS.2112 CRORE AND AN ACTUAL OPERATING
MARGIN OF RS.60 CRORE (3% OF REVENUES)
 THIS HAS RESULTED IN ARTIFICIAL CASH AND
BANK BALANCES GOING UP BY RS. 588 CRORE IN
Q2 ALONE.

12. • PricewaterhouseCoopers(PwC) was the statutory auditor of
Satyam Computer Services when the report of scandal in the
account books of SatyamComputer Services was broke out.
The Indian arm of PwC was fined $6 million by U.S. Securities
and Exchange Commission for not following the code of
conduct and auditing standards while pursuing its duties
while auditing the accounts of SatyamComputer Services
• 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 crore (US$3 million) every month for
paying these 13,000 non-existent employees

13.  FOR SEPTEMBER QUARTER (Q2) REVENUE AND OPERATING
MARGIN
 ARTIFICIAL CASH AND BANK BALANCE GOING UP BY RS 588
CRORES IN Q2 ALONE
 EVERY ATTEMPT TO ELIMINATE THE GAP FAILED
 THE ABORTED MAYTAS ACQUISITION DEAL
 SHARES WERE NOT SOLD IN THE LAST 8 YEARS
 NET AMOUNT OF RS 1230 CRORE WAS ARRANGED TO SATYAM
IN THE LAST 2 YEARS
 NONE OF THE BOARD AND THE FAMILY HAD KNOWLEDGE
 APOLOGISED
 RESIGNED AS THE CHAIRMAN
 PREPARED TO FACE CONSEQUENCES
LETTER TO THE BOARD

14.  Merrill Lynch terminated its engagement with
Saytam
 Contarct of Satyam as were terminated with
tresis and world bank and investors were scared.
 Credit Suisse suspended its coverage of Satyam
 PricewaterhouseCoopers came under intense
scrutiny and its license to operate may be
revoked.
 Awards won by Satyam were stripped
 As result major fall in shares and fall in share
prices of around 100 companies varying between
5‐15%.
IMPACT ON MARKET

15.  Satyam's shares fell to 11.50 rupees on 10
January 2009, their lowest level since March
1998, compared to a high of 544 rupees in
2008.[14] In New York Stock Exchange Satyam
shares peaked in 2008 at US$ 29.10; by March
2009 they were trading around US $1.80.
 The benchmark Sensex slipped over to 7% on 7
January 2009.
 Satyam stock is being removed from its S&P
CNX Nifty 50-share index.
 Satyam’s largest shareholder, Aberdeen AMC,
dumped the tainted software entity’s shares.

16. VICTIMS OF FRAUD
INVESTORS - Panicked as Stock plummeted & Class
action suits filed.
EMPLOYEES - Stranded in many ways-
morally, financially, legally and socially.
CUSTOMERS - Shocked and worried about the project
continuity, confidentiality and cost over run.
BANKERS - Concerned about recovery of financial and
non-financial exposure and recalled facilities.

17. It Was Like Riding A Tiger,
Not Knowing How To Get Off
Without Being Eaten - Ram
Raju
FINAL WORDS

18. INDIA’S STEP TO SAVE SATYAM
 The Indian Government had stated that it may provide
temporary direct or indirect liquidity support to the company.
 Satyam is seeking bank loans to help cover salaries and other
operating expenses
 On 5 February 2009, the six-member board appointed by the
Government of India named A. S. Murthy as the new CEO of
the firm with immediate effect. Murthy, an electrical
engineer, has been with Satyam since January 1994 and was
heading the Global Delivery Section before being appointed as
CEO of the company. The two-day-long board meeting also
appointed Homi Khusrokhan (formerly with Tata Chemicals)
and Partho Datta, a Chartered Accountant as special advisors.

19.  Satyam’s fraud spurred the government of India to tighten
corporate norms to prevent recurrence of similar frauds in
future. The government took action to protect the interest of
the investors and safeguard the credibility of India and the
nation’s image across the world.
 It has forced the government to re‐write corporate
governance rules and tighten the norms for chartered
accountants.
 The Committee therefore recommends that a qualified and
independent audit committee should be set up by the board of
a company. This would go a long way in enhancing the
credibility of the financial disclosures of a company and
promoting transparency
LESSONS LEARNED

20. TAKE-OVER
 O N 13T H A P R 2009, V I A F O R M A L P U B L I C
A U C T I O N P R O C E S S , 46% S T A K E I N
S A T Y A M WA S P U R C H A S E B Y M A H I N D R A .
 P O S T E D R S 2890 C R O R E A S T A K E O V E R
 J U L Y 2009, S A T Y A M R E B R A N D E D I T S
S E R V I C E A S “M A H I N D R A S A T Y A M ”.
 N O W I T B E C A M E “T E C H M A H I N D R A ”
E F F E C T I V E F R O M 26 J U N E 2013 WI T H
M E R G E R A P P R O V A L B Y A N D H R A P R A D E S H
& M A H A R A S H T R A H I G H C O U R T S .