sew ibacde.org Ref.No.: FMO002 Infosys and Satyam Computers: Whose Wealth is Maximised? “The founders of Infosys emphasised om how much wealth i could create for its stakeholders ~ its ‘customers, shareholders and emplayess.”* Tarun Das, Chief Mentor, Confederation of Indian Industries (CID) “Creating shareholder wealth is integral to our values. We try to mect expectations, maximise shareholder returns and give them the hest posse information to evaluate ws."* B. Ramalinga Raju, Founder and Former Chaicmsn, Satyam Computers What is the primary responsibility of a company? Sharcholders’ wealth maximisation. What is the primary responsibility of a CEO? To ensure that sharcholders" wealth is maximised by leading and navigating the company through the market dynamics. What is the responsibility of a CFO? ‘Does any one ut there know for sure? CFO is the money bass in any company. However, what intrigues everyone is: how few CFOs are able to generate far superior returns while many other ‘CPOs fall wayward? What defines the roles and responsibilities of a CFO? For want of a clear definition of roles and responsibilities, a carcful examination of roles played by two CFOs at two different Indian IT companies — Infosys and Satyam Computers might just do the needful. At the cend of the description, one is intrigued with a simple yet powerful question: How was it that Infosys ‘CPO coald generate better returns for the company than his counterpart at Satyam Computers? * vtafouys Anaual Report 2008 2006 ", harp /swwu iniacys combnvestons/eports-filingslannual-reper/anmaaVlafosys ‘AROS pl, page 14 2 “Satyam Computers”, bap./204 200 86 64.scripucHIHO21C1 asp eectionid= | categaryid~AOieancleld=8214, September “Ts ce sly was wren by Fata eset Associ, WBSCDC and D, Satish (Professor of sane), IHS. Hyderabad It fneended wo be wed a he basis fer cass discussion rather than to state ether eect o inefotive hanuing of managemcet station. The case was comple from ped sources ‘© 2008, IBSCDC. [No part of this publication may be copied, stored, transmitted, produced or dictribwted in any form or medium swhatssever vrthout the permission of the copyright ewner: eee (Course: Financial Management MBA, SemesterInfosys and Satyam Computers: Whose Wealth is Maximised? Any listed company is responsible to maximise the returns ofits shareholders through its operations and earn good reputation, Maximising investors’ retums has become a factor of competitive advantage. Also, in the ever changing and competitive IT industry, companies are striving hardto increase their ‘market shares. Infosys, India's second largest software company has proven withits institutionalised approach that it is essential to understand the concems of the shareholders’ to generate greater returns. On the other hand, Satyam Computers, in spite of being a reputed company, suddenly lost ‘the trust of the shareholders” after the fraudulent accounting was exposed. The CFOs of both the ‘companies had played their respective roles. However, while one was successful in his attempts to ‘maximise shareholders’ returns, the other was not. Infosys: The Story of Wealth Maximisation Infosys Technologies Lid. is one ofthe best known software companies in India providing consulting and IT services globally. Founded by N. R. Narayana Murthy (Murthy) in 1931, along with six other ‘engineers with the initial capital of $250, Infosys in due course has become a $4 billion (2008) revenue generating company.* Infosys has always been recognised as a globally benchmarked ‘company with its value system and corporate governance standards. ‘Being formed prior to economic liberalisation in India (1991), it was hard for Infosysto grow due to currency restrictions in spite of the growing global demand for low-cost, off-shore IT services *Post-liberalisation, it began to grow at a much fasterrate by acquiring few foreign clients (in Europe — Labinf in Milan and Reebok in France) and expansions. In 1993, it went public, opening trade at INR 145 per share, though its IPO price was INR 95 per share. In 1994, it made private placement ‘of about $50,000 share at INR.450 each tothe financial institutions, foreign institutional investors and ‘sorporate. ‘Several factors including its intemal strengths and prominent and dynamic promoters contributed to the growth of the company. The growing global connectivity and growing number of Indian technicians formed the basis for the extraordinary growth of the company. In 1989, its revenue had touched $100 smillioa and it issued about 2,070,000 American Depository Shares (ADSs) under ADS programme (equivalent to 1,035,000 equity shares of par valuc INR: 10 cach) at $34 per ADS. The same shares ‘were listed on the NASDAQ (National Association of Securities Dealers Automated Quotations), an American Stock Exchange making it the first Indian company to get listed on NASDAQin 1999. Over the years, a company rewarded its shareholders’ with bonus issues and stock splits (Exhibit 1) "Wha We Are, hips infosys comlaboat who-we- ane isin. 2Infosys and Satyam Computers: Whose Wealth is Maximised? Exhibit I Bonus Issues and Stock Splits of Infosys Ts adkition of shares, the company split the stock inthe rato of 2 for Lin fsa 20000 Source: “Infocyx Ansual Report 2007-20087, bp www inlays com investorrepost filing snwal-repor annual! Ifosys-AROK pal. page 122 Between 2000 and 2006, Infosys had achicved significant growth. It grew at compounded annual ‘growth of 41%, withrevennes increasing from$3545 million in 2000 to $2.16 billion in 2006,* It took around 23 years to reach the milestone of 51 billion revenue (2004), and just took another 23 months to reach 82 billion benchmark (2006). On this occasion, the company's top management officials ‘commented, “This sums up the remarkable change in scale and speed that Infosys has experienced ‘over the last 25 years. We have managed this growth without sacrificing quality, client satisfaction and corporate culture™.* During the same period, the company even completed the second issuc of ADSs. It offered $294 million issue in 2003, $1.1 billion and $1.6 billion issue in 2005 and 2005 respectively. The company's share price movement had always beaten sensex (Annexure I). Infosys has always believed in maximising the returns of its sharcholders in both short- and long-term. The company’s income had increased from just INR. 8,820 million in 2000 to INR 156,480 million in 2008 (Exhibit I1). Infosys had even de-risked itselfiby reducing its dependence ‘on the US markets —the company’s business from the US, which was about 90% in 2000, had reduced to 60% in 2008." The company is expecting about 19%-21% growth in revennes in 2009, resulting to the Earnings Per Share (EPS) growth between 17%—19%.’ The company pays 20% dividend every year and plans to increase the maximum dividend payout to 30% in 2009. Infosys has many firsts to its credits besides being the first Indian company listed on NASDAQ. In 1994, it was the first company to introduce Employee Stock Option Plan (ESOP) in India. It was also the first Indian company to follow Generally Accepted Accounting Principles (GAAP), and first ‘to announce its quarterly results regularly on time in India and abroad. Its vision statement ‘powered bby intellect — driven by values"* sums up the standards it had set in every business activity — best ‘campus, best working environment, best employer, mast transparent dealings, highest quality standards, never seek any deviant benefits from the government and highest ethical standards. "Mendoza Movie, “lnfusys reaches its milestones", hip:/wore.managementioday.ca uk/uews/S¥2449/infasyeseachesits milestone’, September 13° 2066 “anfocys Anaual Report 2005 2006 °, apc, page 20 * Chakkavelu Anasd, “ lacide lnfacys: A Chat With the CRO” . hiip//wew fal com/taverting/intermaional 2004/04/16 side ndoays-a-chat-with-the-cfo aspx, April 16° 2008 > id "Prof, Sadagopan $,, “lnfasys ~ the firt Billion Dellar listed Software Commpany”, hip!/wwwili ac in'x/PEX20NEW! FEw2046 hem, April 16? 3008Infosys and Satyam Computers: Whose Wealth is Maximised? Exhibit 1 The Financial Performance of Infosys during 2000-2008 (INR crore) Details 2000 | 2001 | 2002 | 2003] 2004 | 2005 | 2006 | 2007] 2008 Income sai} i901 | 2004) 303] 4761 | 6se0 | ops | 13,149] 15608 Operating Profit(PBIDTA) | 3738 | 768 | Lose | 1272] 1881 | 2208 | 29m | 4228] 4.963 Profit Afier Tax (PAT) 2sasz | onst |aorss | ose) 1231) 1908 | 2a | 3.783) 4070. EPS (parvalue of INR S each) | 4323] 9423 ]12212 Juste3| aoa4 | vas | sas? | 6782] 7824 PIE Ratio (times) 3657 | 2544 | 2128] 2635 | 3259 | sa | 2976] 1ea0 Compiled by the autor Infosys aspires to be the global benchmark company providing high value services. It provides a range of software services fram the basic application level such as system upgrades and maintenance tohigh-level consulting, enterprise architecture and enterprise security. It as expanded its verticals toinclude clients from differentindustries with itsinnovative services. For instance, Infosys wi services offering helps global companies in customer data management, sales and inventory, and sourcing models. Infosys has expanded its presence with its offices and development centres across the globe. It has about 50 offices and development centres in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan. The company alse takes pride in building long-term relations with its clients’ worldwide. [thas been observed that over 97% af its revenues are from its ‘existing customers making it a high potential performing company.” its. Besides possessing the ability to manage hyper-growth and deliver IT services, Infosys aims at achicving the highest levels of corporate governance, transparency and ethics (Annexure II}. These: additional aims were inspired by its founder Murthy and helped the company to set itself apart from. its main rivals. Nandan Nilekani, co-chairman of board of directors (since 2007), presents the legacy ‘of Murthy to the company, “If Infosys is today regarded as a transparent, respected corporation, Murthy sowed the seeds for it. He taught Infoscions (the name given to Infosys employees) the true meaning of the term ‘healthy respect for competition’ and for entrepreneurs like me the importance ‘of the term “deferred gratification’. Infosys has been a consistent performer and a debi-free company since its inception. Though the ‘company wasrated BBB in 2005 and BBB+ in 2008 by international creditrating company Standard & Poor, it has never planned to raise debt. It has also been receiving Level I rating from CRISIL since: 2004 for its corporate governance report in India. The company’s highest credit ratings and its debe- fice policy make it cash-rich, debt-frec and ultimately a risk free company. ‘LV. Mohandas Pai, former CPO and present director of administration, human resource, Infosys, justified the plan as, “Itis a good thing todo. It helps you in risk management, and in benchmarking with global competitors.""* What We De", hupu/www infosys com about what we dodefaul sp * -tnforys reaches ts milestones”, ep it * “Infosys says wo debt plan on cards” hep /wwurciolcomlcontent/ncws904/108080407 asp, April 4* 2008 4Infosys and Satyam Computers: Whose Wealth is Maximised? Infosys has pioneered the Global Delivery Model (GDM), which became the standard model in the ‘industry and Jed 10 the increase of offshore outsourcing. As per the company reports, “Our Global Delivery Model allows us to produce where it is most cost-effective and cell services where itis most profitable? The company had perfected its GDM over years and it hecame a formidable competitive ‘weapon against MNCS like IBM, EDS, Accenture, etc. The MNCs which threatened Infosys overtime are now concentrating on perfecting their own versions of the Infasys-invented delivery model Infosys places its high concern om its employees as its crucial resources and their growth along ‘with the organisation, Starting its operations with just seven people (1987), it had grown into a ‘company emplaying over 103,000 people. As per the company reports, onan average, the company receive | million job applications in a year and just 2.3% of them get selected. "* Infosys recruits ‘from global campuses and believes in recruiting global citizensas its employees. For instance, 5% of its employees are non-Indians.* Infosys had improved the value of its enterprise and fostered the trust and confidence of its shareholders with higher returns. The company outperformed the market and many of its pecrs ssince 2004 resulting in millions of returns to the investors. Its profitability remains one of the best in the market with Return on Equity (ROE) at nearly 30% since 2004." The company has been successful in creating high returns to its sharcholders overtime from the Economic Value-Added (EVAY® inetease to INR 22.860 million in 2008 from INR. 6,890 million in 2004 making the company ‘one of the hot picks for glabal investors (Exhibit IID). Exhibit I ‘The Enterprise Value of Infosys (EVA and PAT) 20 20 nana * aos ane * aan * 200 eA oes) PAT aang ap emp Source: “infosys Ansual Report 2007-2008", bp! ww: inkys.conninvestorsitepost:filingyanawal-report/arnual! Tfosys- AROS pal. page 13 © “tnforys aches ite milestones”, ep.cit * “Lafasys Annual Report 2007-2018", btpwww infosys. (8 pa. page “lafoeys~ the fist Billice Dallar listed Softmare Company”, opi id maual/inanye-AR- hmvestarstepart filing’ anmal-repo EVA meacues the profitability ofa company afer taking igo account the cos af capital Its the post-tax eeu on ape employed lee the coat of capital employedInfosys and Satyam Computers: Whose Wealth is Maximised? Satyam’s Wealth Destruction ‘Satyam was the fourth largest software company in India after TCS, Infosys and Wipro. It was och Mahindra wins Satyam Computer bid". hup/belive in comncws tech -nahindra-winsaatyam-bid—fullcoverage 901247 aum, Apel 138 2009 ~ “India's Best CEOs", bu: aadinodaygroup com/benday/20Sib424icoverS hal, Apail 28% 3008 9Infosys and Satyam Computers: Whose Wealth is Maximised? ‘Pai worked on articulating the company’s financial policies, and helped the company to become a reputed brand among the investors by enhancing transparency and disclosure mechanisms. In Pai's words, “We have created a robust financial model which has consistently enabled us to meet the challenges of growth and profitablity.”*' The standards he has set in preparing the company's annual reports, helped the company’s annual report to win “Best Presented Annual Accounts’ award ‘from the ICAI continuously over the years from 1999. He has been awarded “Hest CFO in India’ by ‘Finance Asia in 2002 and ‘Best Chief Financial Officer in India” in the Best Managed Companies ppoll conducted by AsiaMoney in 2004." In 2006, be voluntarily stepped down as CFO, to head the Jhuman resource, education and rescarch operations of the company. His successor Vibin Balakrishnan, former company secretary and vice president finance, who: became the CFO in 2006 (joined the ‘company in 1991), is also playing active role in making the company stable and successful. ‘On the other hand, the CFO of Satyam, V. Srinivas carried on his duties as the head of finance ‘function purely highlighting the interests of the head of the company. During his interrogation by ICAL after his arrest, Srinivas had admitted his active role in aiding the chairman in fudging and falsifying the accounts by forging and creating fake records. He even confessed that he had created ‘some 10,004 fake jobs since 2004 and drawn about INR 20 crore per month from these non-existent accounts."* Besides this, his acts such as selling of his ESOP holdings of 92.358 shares of Satyam in ‘September 2008 (few months before the scam) had raised many doubts that he was aware of the ‘coming events. Srinivas along with G Ramakrishna accepted that their team used to prepare false documents to cover the fraud of their chairman. “The investors were disappointed and lost trust in the company. An Institutional investor commented, ~The CFO should have been aware of the financial irregularities, including fudging of the earnings figures."** Another investor commented, “As CFO of the global software major, Srinivas would. have been privy to all the transactions taking place in the company aver the years." Shareholders wondered whether the CFO worked to further the interests of his bess (CEQ) and his cronies or for them. Even the business media questioned the CFO's role in the entire Satyam Computers fiasco ‘thot Satyam's fraud is an odd-man out in Indian FT industry (Annexure V). Puneet Kumar, manager, ‘Wipro, opined, “Satyam was an aberration, the fact isthat the [T industry thrives on good reputation and every major in the business lays great emphasis on maintaining global standards of corporate “ Hence, the two different scenarios clearly indicate how a CFO can maximise the westors and on the other hand can also destray the wealth of the shareholders. hands Pa Quote”, bap tinkexist. com quotes mohandas = LV. Motandac Pub - Member af the Board and Director Human Resources, lforys Tecaoioge<” arruwut infos com ‘spout management-profiles mahandas-pa.asp "Pavan PB, “We created 10K fake jobs: Satyam's CFO", bripy/www mumbaimirrorcom! index aspnpage-antcletsectd -Si2conteetid-200001222000012203202470332aa80H9, January 22% 2000 " “Satyam chief financial officer Srinivas resigns, xp. Jwuhaindian com/newsportabuncate crise satya hie: financial ‘ffcer-srnevat-esigne_1OOLA0012 umd, January 8° 2008 id © Thakerta Guha Paranjoy, “INDIA: Satyam Scam Questions Corporate Governance”, bipi//ipanews nat) sews aspidncwe-48347, January 9° 2008 10Infosys and Satyam Computers: Whose Wealth is Maximised? Annexure I Share Price Movement of Infosys on BSE Index a 5 A| a} a 2 |e Qt 5 ‘ t i 3 i \|le i } , i | ls i i . 7 « = 3 t 3 : = Fi ‘ : \ik i : Z bl ri § at : & afogy : Peete eaee £34 HEY eee ee zoe —= zad Sours nfs Anna Repan 207-2008, bp ona con iver iepr aga epora Infos ARLOK pl, page 126 WWInfosys and Satyam Computers: Whose Wealth is Maximised? Annexure IL Corporate Governance Principles of Infosys We believe that sound corporate govemance is critical to enhance and retain stakeholders’ trust Accondingly, we always seek to ensure that we attain our performance rules with integrity. Our Board exercises its fiduciary responsibilities in the widest sense of the term. Our disclosures always. seck to attain best practices in intemational corporalc governance. We also endeavour to enhance long-term shareholder value and respect minority rights in all our business decisions. (Our corparate governance philosophy is based on the following principles: ‘+ Satisfy the spirit of the law and not just the letter of the law. Corporate governance standards should go beyond the law + Betransparent and maintain a high degree of disclosure levels. When in doubt, disclose ‘Make a clear distinction between personal conveniences and corporate resources ‘+ Communicate externall ina truthful manner, about how the Company is run internally + Comply with the laws in all the countries in which we operate + Have a simple and transparent corporate structure driven solely by business needs + Management is the trustee of the shareholders’ capital and not the owner Source: “Iafocys Ansual Report 2007-2008", hyp www inlays cominvestorsepont filing anmual-teport| aorta Infosys AR-O8 pa. page 1077 izInfosys and Satyam Computers: Whose Wealth is Maximised? Annexure III Satyam’s Corporate Governance Report Corporate Gavernance assumes a great deal of importance in the business life of Satyam, The driving forces of Corporate Governance at Satyam arc its core values— Associate Delight, Investor Delight, Customer Delight and the Pursuit of Excellence. The Company's goa! isto find creative and productive ways to delight its stakeholders, ic., Investors, Customers, Associates and Society, thereby fulfilling the role of a responsible corporate representative committed to best practices. Satyam believes that sound Corporate Govemance practices provide an important framework to help the Board of directors fulfil itsresponsibilities. The Board iselected by shareholders. [tis responsible for setting strategic objectives to management and ensuring that stakeholders’ long-term interests are served. Itdoes so by adhering to and enforcing the principles of sound Corporate Governance. Thus, the management is responsible to establish and implement policies, procedures and systems 10 enhance the long-term value of the Company and delight all of its stakeholders. The principle of “Delighting stakeholder” is part of everything we doat Satyam and is depicted in our valucemblem (depicted below) as a mark of our commitment towards this principle. Source: “21 Annual Report 2007-2008", batp://wwv: satyam.comv/investorsidacuments/ar0708/ amual_repor_ 0708 pal, page 38 13Infosys and Satyam Computers: Whose Wealth is Maximised? Annexure IV Satyam’s Former Chairman B Ramalinga Raju’s Letter to the Board January 7* 2009) ‘To the Board of Directors, Satyam Computer Services Lid. Dear Board! Members, It is with deep regret, at tremendous burden that Iam carrying on my conscience, that I would like to bring the following facts to your notice: 1. The Balance Sheet carries as of September 30* 2008 + Inflated (non-existent) cash and bank balances of INR $0,400 million (as against INR 33,610 million reflected in the books) ‘+ An accrued interest of INR 3.760 million which is non-existent + An understated liability of INR 12,300 million on account of funds arranged by me + An over stated debtors position of INR 4.900 million (as against INR 26,510 reflected in the books) 2. For the September quarter (02) we reported a revenue of INR 27,000 million and an operating margin of INR 6,490 million (24% of revenues) as.against the actual revenues of INR 21,120 millionand an actual operating margin of INR’ 610 million ( 3% of revenues). ‘This has resulted in artificial, cash and bank balances going up by INR 5,880 million in Q2alone. ‘The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years (limited only tn Satyam standalone, books of subsidiaries reflecting true performance). ‘What started as a marginal gap between actual operating profit and the one reflected in the books af accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualized revenue run rate of INF. 112,760 million in the September quarter, 2008 and official reserves of INR 83,920 million). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations — thereby significantly increasing the cost. Every attempt made to eliminate the gap failed, As the promoters held a small percentage of equity, the concem was that poor performance would result in atake-over; thereby exposing the gap. Itwas like riding a tiger, not knowing how-to get aff without being eaten, ‘The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Mayias’ investors were convinced that this isa good divestment opportunity anda strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas’ payments can be delayed. But that was not Contd. 14Infosys and Satyam Computers: Whose Wealth is Maximised? to be, What followed in the last several days is common knowledge. I would like the Board to know: 1. ‘That neither myself, northe Managing Director (including our spouses) sold any shares in the last eight years — excepting for a small proportion declared and sold for philanthropic purposes. 2. That inthe last wo yearsa net amount of INR 12,300 million was arranged to Satyam (not reflected in the books af Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of mast of the pledged shares] by the lenders on account of margin triggers. 3. ‘That neither me, nor the Managing Director tonk even one rupec/dollar from the company and have not benefited in financial terms on account of the inflated results. 4. None of the board members, past or present, had any knowledge af the situation in which the company is placed. Even business leaders and senior executives inthe company, such as, Ram Mynampati, Subu D.,'T-R. Anand, Keshab Panda, Virender Agarwal, AS. Murthy, Han T, SV Krishnan, Vijay Prasad, Manish Mehta, Murali V. Sriram Papani, Kavale, Joe Lagioia, Ravindra Penumetsa, Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or Managing Director's immediate or extended family members has any idea shout these issues. Having put these facts before you. I leave it tothe wisdom af the board totake the matters forward. However, Iam also taking the liberty to recommend the following steps: 1. A Tack Force has been formed in the last few days to address the situation arising but of the failed Maytas acquisition attempt. This consists of some of the most accomplished leaders of Satyam; Subu D, T.R. Anand, Keshab Panda and Virender Agarwal, representing business functions; and.A.S. Murthy, Han'T and Murali V representing support functions. I suggest that Ram Mynampati be made the Chairman of this Task Force to immediately address some of the operational matters on hand. Ram can also act as an interim CEO reporting to the board. 2. Merzill Lynchcan beentrusted with the task of quickly exploring some Merger opportunities. 3. You may have a statement of accounts’ prepared by the auditors in light of the facts that I have placed hefore you have promoted and have been associated with Satyam for well aver twenty years naw Lhave seen it grow from few people to 53,000 people, with 185 Fortune $00 companies as customers and ‘Cont 15Infosys and Satyam Computers: Whose Wealth is Maximised? Annexure V ‘Satyam Fraud: Vadlamani’s Role? ho re that the FDs Were non-extirtent, rele: ma~ Ripsilated and. The” fuse siemec! Gn Instructions from Mr Res inal ex Chairman. the ii ots6-erore financial Fraud ug at the centre of all aortas sin wit an ‘and actene™ sea ae a car or ae «fone ecaimencs were used for fraudulently in flacing the cash and bank bal fally fn che books of accounts for several years, the Chi chargsheet has brought co Basar iors wm ee eee: the “angus! fnandlat” sesee: ene eee rector, the weaeigrating: coe ee Sei yoccian sac ae Ce rh and perpe- raved ‘frauchilent acts, Mr V. Srinivas wilfully manipulated financial data and guided the staff in modifying the published results, which were false and forsed. a ‘Tiwan e was, fomees, ie ‘Rerthor, Mz Srinivas guided the finance department sonnel on the quantum afin, to the of = Of sales to be infused ‘the: oer fromm Sime te timer The CHI hag re PRESENTATIONS Mr Srinivas along with Mr Ka: repli¢s on Satyam’s ear during conference calls cor ducted every quarter to var ous investors, thus distorring the actunl Snancial position: During board mactings ane the ex-CFO made rs senearions of dae compa: i nancial dowpiee eds lntee reat abeciat SINOn. Mlentlasly. bor con Sonniine with the Raja brothe: Worked auainbe che itersse & the company and sharehol ders, whose Interests he wast PT Miille being ratings the tratd oith ee Fay Eecthers Nifong Teacieiny fectledl and dhe amount go Sfiioadingeshares at oppor eee Stsed in the chargesheet, ‘Source: "Satyam aud: What was Vadlamani's ole", Business Line, 20+ Apeil 2009, page 2Infosys and Satyam Computers: Whose Wealth is Maximised? operations in 66 countries. Satyam has established an excellent leadership and competency base at al levels. I sincerely apologize to all Sotyamites and stakeholders. who have made Satyam a special organization, for the current situation. I am confident they will stand by the company in this hour of crisis. In light of the above, [fervently appeal tothe board to-hold together to take some important steps Mr ‘TR Prasad is well placed to mobilize support from the government at this crucial time. With the hope that members af the Task Force arid the financial advisor, Merrill Lynch (now Bank of America) will stand by the company at this crucial hour, lam marking copies of this statement to them as well Under the circumstances, I am tendering: my resignation as the chairman of Satyam and shall continue in this position omly till such time the current board is expanded. My continuance is just to ensure enkuncement of the board over the next several days or as early as possible: Lam now prepared to subject myself to the laws of the land and face consequences thereof. (B.Ramalinga Raju) Copies marked to: 1. Chairman SEBI 2. Stock Exchanges Source: “Ramalinga Raju's leter to Board”, htp://www.moneycontrol coms umalinga-rajus-lester-1o-boord/375195, January 7* 2009 16