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8/6/2019 Final Stayam

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THE SATYAM SCAMTHE SATYAM SCAM

SHAHIL PUNJANISHAHIL PUNJANI-- 196196RUSHANK RAJWATRUSHANK RAJWAT --

197197

BHAVITA SHAHBHAVITA SHAH--199199

DARSHIL SHAHDARSHIL SHAH 10011001--


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INTRODUCTIONINTRODUCTION


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COMPANY PROFILECOMPANY PROFILE

Set up in the year 1987 by B.

Ramalinga Raju.

Indias 4thbiggest software

company.

On 26th August, 1991 it was

converted into a Public Limited

Company.

It went for PUBLIC ISSUE in1992.

BSE IPO oversubscribed 17 times

when made public.


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It is listed in BSE, NSE, NYSE andEuro next (Amsterdam).

The company employs 53,000 ITprofessionals across developmentcenters in 6 continents.

It serves over 654 global companies,

185 of which are Fortune 500corporations.

BUSINESS PROFILEBUSINESS PROFILE


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B. Ramalinga Raju

Founder & Chairman, Satyam

Computers Ltd.

B. Rama Raju

Promoter & CEO, Satyam Computers

Ltd.


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BACKGROUND OF THEBACKGROUND OF THE

FRAUD CASEFRAUD CASE


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BACKGROUND OF THE FRAUD

CASE

Company owned by Two sons

Used Manpower and Other Resources

Management Focused Elsewhere

Companies Filed Cases Against Satyam.


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Proposed Stake

Lost 50% value.

Shareholders pressure.

Covering Satyam's tracks

CONTINUEDCONTINUED


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THE SCAMTHE SCAM

On 7 January 2009, companys previous Chairman Ramalinga Raju resigned.

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 crorereflected in the books.

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

3. An understated liability of Rs. 1,230 crore on account of funds was arranged byhimself.

4. An overstated debtors' position of Rs. 490 crore (as against Rs. 2,651 crore in thebooks.


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Biggest fraud.

The company management, mainly disgraced chairman BRamalinga Raju, kept everyone in the dark for a decade.


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ACCOUNTING SCAMACCOUNTING SCAM


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ACTUAL

DEBT WAS

2161.

OVERSTATED490 CRORES.

ACTUAL CASH

IN BANK WAS

321 CRORES,

INFLATED

5040 CR.

NO ACCRUED

INTEREST

376.34 CR.


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UNDERSTATED

LIABILITY

1230 Cr.

Which was

ARRANGED BY

MR.RAJU

5,040 + 376

+ 490 (Rs.

Cr)

Rs. 1,230

Cr

Rs.7,136

Cr


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IMPACT OF THE CONFESSIONIMPACT OF THE CONFESSION


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IMPACT OF THE CONFESSION

India analyst Bhavtosh Vajpayee is calling the satyam's case "an accounting fraud beyondimagination [and] an embarrassing and shocking episode in Indian corporate governance."

Indian rivals will now come under greater scrutiny by regulators, investors, and customers.

Tech Mahindra made a public statement that it would not be interested in acquiring Satyam

"in the current environment.

Price water house cooper, satyams official auditors are under scrutiny.

Raju familys holding in Satyam falls to 3.64%.


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Infosys, Tata Consultancy Services, Wipro, Accenture, and IBM couldbenefit from $500 to $700 million in business from Satyam over the next six

months if the company flounders.

Satyam Computer crashed after the Chairman announced the company had

falsified accounts and assets for several years.

BSE Fell 700 points.

The Sensex, showed a wide fluctuation of nearly 960 points.

Sensex recorded the biggest single-day loss in the past two months.


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ACTIONS TAKENACTIONS TAKEN


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Actions Taken

Chartered accountants body ICAI constituted a six-member special committee to look into the

auditing of crisis-hit Satyam Computer and had submited its auditing report on February, 11.

The special committee was headed by ICAI Vice-President Uttam Prakash Agarwal .

ICAI council members

S L Dogra, Amarjeet Chopra;

Subodh Aggarwal ;

Akshay Gupta ;&K R Maheshwari, a banker and chartered accountant.


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Government asked the Serious Frauds Investigation Office (SFIO) to investigate .

Based on the recommendation of the Registrar of Companies (RoC) in Hyderabad.

y Arrestment .

y The former chief executive officer (CEO) of Satyam Computers, Raju and his youngerbrother Rama Raju were remanded to judicial custody by sixth additional Metropolitanmagistrate for 14 days (ie till January 23) and both were shifted to Chanchalguda CentralJail near the city.


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SATYAM'S NEW BOARDSATYAM'S NEW BOARDGovernment of India announced a new board for Satyam. Three eminent persons were selected

to serve on Satyams board, the minimum number of directors required under Indian law. The

three are :-

Deepak Parekh, the chairman of the Housing Development Finance Corp;

Kiran Karnik, a former head of the National Association of Software and Services

Companies;&

C. Achuthan, a lawyer and former member of the Securities and Exchange Board of India, thecountrys market regulator.


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RECENT DEVELOPMENTSRECENT DEVELOPMENTS

It has been said that companies employees have been inflated in the books. ActualEmployees of Satyam are 40,000 which were shown as 53,000.

Raju, was signing off 20 crore rs of the company in the name of fictitious employees.

L & T stake in Satyam have been increased to 12%.

Raju admits of diverting funds to Mayta s properties and Maytas Infra.

Two pricewaterhouse Coopers officials have been arrested in this fraud case.

Satyam 3rdchief financial officer has been arrested.


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CONCLUSIONCONCLUSION

The Satyam Scam can be avoided :

If auditor firm is honest.

If SEBI plays an active role.

Review legal compliance report periodically by

independent directors.

Documents

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