Presented by: Varun Mussaddi Room | Roll 6th Semester Click to edit Master subtitle style Under the

guidance of Professor S Prakash St. Xaviers College, Kolkata

SATYAM SCAM

4/23/12

SATYAM
Click to edit Master subtitle style

SCAM

"SINKING SHIP OR TIP OF ICEBERG"

4/23/12

Summary
1 2 3 4 5 6 7 8 9

Introduction to Satyam Company Profile Satyam Scam Effects How Was It Caught Impact On Stock Market Shareholders Appointment Of New Board Takeover Of Satyam

INTRODUCTION
Set up in the year 1987

by B.Ramalinga Raju. Indias 4th biggest software company. On 26th August, 1991 it was converted into a Public Limited Company and went for PUBLIC ISSUE in 1992. BSE IPO oversubscribed 17 times when made public.
4/23/12

Company Profile
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,

4/23/12

Accounting Scam

4/23/12

 Satyam faced the biggest fraud in India's

corporate history. The company management, mainly disgraced chairman B Ramalinga Raju, kept everyone in the dark for a decade.

4/23/12

The Scam

On 7 January 2009, companys previous Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified. Raju confessed that Satyam's balance sheet of 30 September 2008 contained:

1. Inflated figures for cash and bank balances of Rs 5,040 crores as

against Rs 5,361 crore reflected in the books.

1. An accrued interest of Rs. 376 crore which was non-existent. 1.

An understated liability of Rs. 1,230 crore on account of funds was arranged by himself. An overstated debtors' position of Rs. 490 crore (as against Rs. 2,651 crore in the books. 4/23/12

1.

NO ACCRUED INTEREST 376.34

ACTUAL DEBT WAS 2161. OVERSTA TED 490 CRORES. ACTUAL CASH IN BANK WAS 321 CRORES, 4/23/12INFLATED

5,040 + 376 + 490 (Rs. Cr)

Rs. 1,230 Cr

7,136 Cr
4/23/12

UNDERST ATED LIABILITY 1230 Cr. Which was ARRANGE D BY Rs. MR.RAJU

HOW DID THE SCAM MATTER TO THE NATION ?

JOBS OF OVER 50,000 TECHNOCRATS

WERE AT RISK. COUNTRYS BOOMING ECONOMY FEARED SLIGHT COLLAPSE AS COUNTRYS GDP FELL BY ESTIMATED 0.4%. INDIAS IT SECTOR SUFFERED DOWNTURN AS ITS IMAGE WAS TARNISHED GLOBALLY.
4/23/12

How it was caught?

Satyam Computers had on December 16, 2008, announced that it will acquire two group firms Maytas properties and Maytas Infra for $1.6 billion (about Rs 8,000 crore) as part of its

4/23/12

The SEBI
The SEBI had in

December given a clean chit to Satyam in the probe on violation of corporate governance law.

4/23/12

The government
The government

too is equally guilty in not having managed to save the shareholders, the employees and some clients of the company from losing heavily.
4/23/12

Stakeholders Model

4/23/12

IMPACT ON STOCK MARKET

News of what is possibly the country's

biggest corporate fraud, sent the indices tumbling. The benchmark Sensex slipped over 7% on Wednesday, 7 January 09. Companies perceived to have poor corporate governance standards were most affected. The companys share price has fallen 21.3 per cent since December 15, the day before the crisis broke.
4/23/12

SHAREHOLDERS
An accounting fraud was the

last thing investors in India would have imagined as a trigger for a reversal in investor sentiment.

This scam is likely to affect the image of Indian companies among foreign portfolio investors. The share prices of Satyam saw a sharp fall after Rajus confession. The share prices fell down from 190 to 30 (approximately) in a matter of a day.
4/23/12

NEW BOARD APPONTED..

On 11 January 2009, the

government nominated noted banker Deepak Parekh, former NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyam's board.

4/23/12

The Takeover Of Satyam

4/23/12

MAHINDRA SATYAM
Tech Mahindra paid Rs 1757 Crore for a 31%

stake in the company, at Rs 58 per share. Satyam Computer Services zoomed 15% to Rs 54.20 ahead of the announcement of the highest bidder for the company on April 13,2009. In India this moment was full of praise for the manner and speed with which the reconstituted board of Satyam Computer Services found a strategic investor .
4/23/12

Thank You !

4/23/12