"SINKING SHIP OR TIP

OF ICEBERG"

16BCM1139-Shubham Chaurasiya
16BCM1111-Simar Singh Juneja
16BCM1112-Abhishek Maratha
16BCM1120-Nipun Kalotra
16BCM1132-Abhishek Chandley
 Company Profile
 Set up – 1987 to provide
services in IT sector.
 India’s 4th biggest software
company.
 Chairman and founder – B.
Ramalinga Raju.
 On 26th August, 1991 it was
converted into a Public Limited
Company and went for PUBLIC
ISSUE in 1992.
 Company Profile
 BSE IPO oversubscribed 17 times
when made public.
 It is listed in BSE, NSE, NYSE
and Euronext (Amsterdam).
 The company employs 53,000 IT
professionals across development
centers in 6 continents.
 It serves over 654 global
companies, 185 of which are
Fortune 500 corporations.
 First IT Company in the World Certified under ISO9001:2000
 Ranked Among India’s Top 10 Best Employers, 2004 and 2003
 Top 13 Best-Managed Companies in India.
 Corporate Citizen award for Corporate Social Responsibility.
 SAP Pinnacle Award 2008.
 Satyam Wins golden peacock award for excellence in Corporate
Governance on Global level for 2nd time.
 United Kingdom Trade and Investment India Business Award
for Corporate Social Responsibility
 Satyam
Clients
A total of 650+ Clients
185 of the top fortune
500
Companies
 Satyam Board
B.Rama Structure Othe
Independen
r B.Ramalinga
Promoter
Raju & Raju Promoter
CEO t & Chairman
Directors
Ram Mynampati Srinivas
Whole time Vadlamani Chief
Executive Financial
Director Officer

Dr M.
Srinivasan Prof. Mr. Vinod Prof. M Mr. T Prof. V
Krishna G K Rammoha R S
Palepu Dham n Rao Prasad Raju

GTB/Dr. Sasken Communication/ ISB Dean/

Reddy’s Hellsoft /Montalvo Bharat Former CabinetSecretary
Laboratorie Systems and Newpath electronic /GMR Infra/ GVK Taj
s s
 Satyam – Share holding
Pattern
Institutional & Non-
Institutional Shareholders

LIC 4.34%
L&T 4%
Lazard
Aberdeen 13.16%
Fidelity
ICICI Prudential
Citigroup
JP Morgan
Total Market capitalization was
Rs.
15,262 Cr
(still Dec 16, 2008 )
oAnnouncement to acquire 2 group
firms owned by Chairman Ramalinga
Raju's sons.
o51% stake in Maytas Infrastructure
and 100 % in Maytas Properties.
oUS $ 1.3 billion - Maytas Properties
and US$ 0.3 billion - Maytas Infra.
oTotal outflow for both the
acquisitions was expected to be US$
1.6 billion.
So, How did it all
begin?
16 Dec 17 Dec 26 Jan
2008 2008 2009

Satyam gets board

approval for Satyam backs out of
controlling stake in Maytas deal citing
Maytas Infrastructure investors protest
and Maytas
properties as fully Major Clients of
owned subsidiary for Satyam express
$1.6B (Rs. 8000 Cr.) dissatisfaction.
Contracts worth
$200 million up for
grabs

Satyam shares plunge Board meeting to be

55 percent in NYSE. held on Dec 29 for
BSE share plunges over proposed buyback of
30% shares
 19 20 23 206Jan
Dec Dec Dec 2009

British mobile solution World Bank bans Satyam for 8

provider Upaid files a law
suit against Satyam in a
district Court in the US over
Maytas deal. May face $1
Billion in penalties
years due to inappropriate
payments to staff and inability to
provide information sought on
invoices

Centre refers
Satyam deal
to Registrar of
Companies
(RoC)
 26 28 29 26 Jan
Dec Dec Dec 2009

3 more Independent Directors resign.

Mendu Rammohan Rao, Krishna G
Board meet initially Palepu and Vinod K Dham
scheduled for 29th
postponed to 10th
1st independent January
director Dr.
Mangalam Board announces
Srinivasan exploring option Satyam asks DSP Rumors in market
resigns from for buyback of to review board about strategic
Satyam board shares to restore structure takeover by IBM,
investor Accenture
Satyam objects confidence
to world bank IL&FS sells 44.1 lakh shares
statements, Promoters disclose that pledged shares of Satyam
asks to their entire holding in promoters in 1 day.
apologies or
Satyam pledged with Promoters equity
face legal action
institutional lenders since reduced from 8.6% to
2006 aprrox 7%
 30 02 26 Jan
03 2009
Dec Jan Jan

Post Satyam board confirms

cancellation of promoters stake to be
deal, Maytas around 5%. Further 3.2%
IL&FS sells still pledged.
looks for raising
further 44.27 Lakh
$500 million
pledged shares
through sale of
taking the tally to
equities and
1.5 crore pledged
properties
shares

Satyam-Upaid case
hearing over the
Maytas deal in Texas
court on January 8.
 05 06 26 Jan
Jan Jan 2009

Total pledged shares sold by
IL&FS reaches 2.5 Cr. in last
13 days. Promoters stake
Promoters stake in down to 3.6%. Still a further
the company 1.7% are pledged
down to 4.5%
Tech Mahindra
(Revenues 3766 Cr.)
offers to merge with
Satyam (Revenues 8473
Cr.)

The Night Before 7th Jan

SEBI considers
proposal to make it Merill Lynch discovers serious
mandatory for irregularities in books of
promoters and accounts and approaches
majority share regulator SEBI for further
holders to disclosed course of action and its inability
pledged shares to to investigate further. DSP
stock exchange submits report to SEBI and
Satyam management late night.
 07 26 Jan
Jan 2009

09:45 A.M. ADR’s crash 90% Hunt for Raju brothers

Satyam Chairman Satyam BSE scrip falls begin. Amid speculation
Ramalinga Raju 78% over his
wrote letter to the whereabouts, Raju is
company board DSP snaps ties believed to have left
with for the United States
satyam. in connection with a
court case.
Auditing firm PWC Ram Mynampati takes
under scanner over as interim CEO Satyam stripped of
according to Raju’s Golden Peacock
letter award

Govt. instructs RoC

to review report NSE removes Satyam from its benchmark index
Nifty.
 08 09 10 26 Jan
Jan Jan Jan 2009

BSE to replace Satyam

PwC in major
Computer with Sun Former CFO
trouble. Stocks of
Pharmaceutical in its Valdamani Srinivas
PwC clients take
benchmark index remanded to judicial
a major beating
Sensex with effect custody
at the BSE and
from January 12.
NSE
CFO Valdamani Srinivas, Raju brothers arrested by the police
who is the financial on charges of criminal conspiracy,
custodian of the cheating, forgery, misappropriation of
company resigns funds and criminal breach of trust.

PwC shot back at Satyam, saying in

a media statement that the
auditing was based on the audit
evidence provided by Satyam and
in was accordance with applicable
standards.
Market Capitalization of satyam falls to Rs.
1,607 Cr from Rs.15,262 Cr. on Dec 16 in
19 trading sessions.
 13 14 15 26 Jan
16 2009
Jan Jan Jan Jan

Government
hands satyam 23 year old Maytas stocks
case to SFIO employee of hit the lower
satyam commits circuit for 7th
suicide in consecutive
Chennai trading session

The newly appointed 3 member

board appoints auditing firm
KPMG and Delloitte to assist it in
cleaning the mess in the scam
tainted company’s accounts
The government expanded the three-
member Satyam board to six to include S
Balakrishnan of Life Insurance Corporation,
Tarun Das, chief mentor of the
Confederation of Indian Industry and T N
Manoharan, former president of the
Institute of Chartered Accountants of India
STOCK
CHARTING
 Fabricated Income
Statements
‘Creative Account Practice’

• Details of cash balances with Scheduled banks are not there in

the Annual report
 UNDERSTAT
E D
LIABILITY
1230 Cr.
Which was
ARRANGED
BY MR.RAJU

5,040 + 376
Rs. 1,230
Rs.
+
470 (Rs. Cr)
Cr 7,136
Cr
Understated Liabilities
Fraud
Overstated cash
Amount
balances, Income
receivables
SATYAM Meaning
TRUTH.
Now, Satyam :-
A Rs. 7000 cr
LIE.
oPressure to improve
the company's performance.
o Capture market.
o Achieve billion dollar sales mark.
o“It was like riding a tiger, not
knowing how to get off without
being eaten.”
 Impact of
Stock Market
ScamHolders
Share - Indian
Economy

Employees Stake -
Holders
Regulators investigating Satyam
include
 Action Taken By
Authorities
• Chartered accountants body ICAI constituted a six-member special committee to look into the auditing of crisis-hit Satyam
Computer and will submit its auditing report on February, 11.

• The special committee will headed by ICAI Vice-President Uttam Prakash Aggarwal .

• ICAI council members –

S L Dogra, Amarjeet Chopra;
Subodh Aggarwal ;
Akshay Gupta ;&
K R Maheshwari, a banker
and chartered accountant.

• Government asked the Serious Frauds Investigation Office (SFIO)-- a body set up to crack complex white collar crimes-- to
probe the financial irregularities in Satyam Computer Services and report its findings in three months.
 This decision to refer Satyam to SFIO is based on the recommendation of the Registrar of Companies (RoC) in Hyderabad, who
inspected the books of Satyam which were being fudged for the past 7 years.

 Raju was arrested on charges of cheating, fraud and and other criminal charges under various sections of Indian Penal Code
(IPC).

 The Securities and Exchange Board of India (SEBI) officials came to Hyderabad to investigate the entire scam, but they could not
do so as Raju was in the custody of CID.

 The former chief executive officer (CEO) of Satyam Computers, Raju and his younger brother Rama Raju were remanded to
judicial custody by sixth additional Metropolitan magistrate for 14 days (ie till January 23) and both were shifted to Chanchalguda
Central Jail near the city.
• Liquidating assets and bringing in new investors.
• DELOITTE and KPMG has been appointed as independent auditors to help
restate the company’s financial reports.
• Government superseded the board of Satyam and decided to appoint 10
nominee-directors.
• DEEPAK PAREKH set to be appointed Chairman (Chairman of HDFC ltd and
HDFC bank), KIRAN KARNIK and CACHUTAN (legal expert).
• 3 members of BCG has been appointed as a management advisor and is
working to revive satyam.
• TARUN DASS (CII Mentor), TN MANOHARAN (former president of ICAI) and SB
MAINAK are among other 3 board members appointed by the Government.
• Satyam board has appointed GOLDMAN SACHS & AVENDUS as its Investment
Bankers.
• SEBI and government of India devise appropriate fair and transparent
measures for enabling open bids.
 Why Govt.
•
Mediated
Govt. of India was very concerned about it’s Image
in International Market especially IT , as it is also
main source of foreign exchange for the country
and drives economic growth of a country.

• To safeguard the Interest of small investors, So that

faith can be restored in the market again.

• To take care of the employees working in Satyam. As

it was never their fault for whatever happened. Their
job has to be secured by the Govt. that too in
economic recession time.
 Steps Taken After Satyam
Fraud
• Introduction of new rules by the stock market regulator, making it
compulsory for promoters of companies to disclose the percentage
of shares pledged by them to lenders

• Appointment of Independent Auditors and Company Secretary by

Company Law Board to conduct Audit of any private organization
and time.

• Set-up of 5 member Committee to suggest how to implement

effective compliance and Corporate Governance in private sector by
CLB.
Finally Satyam acquired by tech
mahindra….
Anand Mahindra, Chairman, Tech Mahindra, the new owner of Satyam,
company post the Rs 2,890-crore takeover, giving hope and future to
Satyam’s 45,000-50,000 employees. A moment of truth for Satyam and a
victory for the government and the regulators.
 Raju Raju sat on the wall,
Raju Raju had a great fall,
Balance sheet died,
Shareholders cried,
Raju Raju made a fraud.

Raju Raju
Yes Baba,
Cheating us
No Baba,
Telling Lies
No Baba,
Open the balance
sheet
B. Ramalinga Raju
Founder & Chairman, Satyam Computers
HA! HA! HA!
Ltd.
Thank
You !
Thank
You !