Satyam Computers was founded in 1987. It was converted into Public Ltd Co. in 1992.The company offers consulting and

information technology services spanning various sectors.

Mahindra Satyam was overall ranked #153 by Fortune India 500 in 2011.

Satyam's network covers 66 countries and 53000 employees across six continents. It is listed in BSE, NSE, NYSE

India’s 4th biggest software company.Introduction

B. Ramalinga Raju was born on Sept 16, 1954. A traditional agricultural family of the KSHATRIYA (RAJU) Community of Andhra Pradesh.

He founded Satyam Computers and was its Chairman until January 7, 2009 when he resigned from the Satyam board after admitting to corporate fraud.

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. 2007:- Becomes the 1st Asian company to features in the training

magazine’s list of top 125 companies for learning, 2008:-won corporate governance (including Golden Global Award

twice) Top-50 Marketers Award, under the Resurgent Marketers category for 2010 by Pitch India First IT Company in the World Certified under ISO9001:2000

SAP Pinnacle Award 2008. United Kingdom Trade and Investment India Business Award 2011:-Mahindra Satyam BPO honoured as “India’s Most Customer-

Responsive BPO Company” AGC Networks The Economic Times, Ernst & Young and Nielsen. And the list goes on…

Achievements

Satyam Clients

A total of 650+ Clients 185 of the top fortune

500 Companies

Satyam Scam

Ramalinga Raju : Satyam former chairman

B Rama Raju : Brother of Ramalinga Raju Former Managing Director

V Srinivas : Ex-Chief financial officer

S Gopalakrishnan: Price Waterhouse Auditor

Talluri Srinivas : Price Waterhouse Auditor

People Behind The Scam

Raju and his brother, B Rama Raju, were arrested by the Andhra Pradesh police on charges of breach of trust, conspiracy, cheating, falsification of records.

Raju has mislead various investors. Raju had also used dummy accounts to trade in

Satyam's shares. He has violated the insider trading norm. 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 rupees every month for paying these 13,000 non-existent employees.

Raju wanted to take over his MAYTAS INFRA and MAYTAS PROPERTIES(company of his sons). He was blamed that he was using the funds of the investors for the family business.

Satyam Computers had on December 16,2008, announced that it will acquire two group firms

Maytas properties Maytas Infra The Board Of Directors of Satyam had approved the

founder’s proposal to buy 51 per cent stake in Maytas Infrastructure and 100 % in Maytas Properties

The total outflow for both the acquisitions was expected to be US$ 1.6 bn comprising of US$ 1.3 bn for the 100% stake in Maytas Properties and US$ 0.3 bn for the 51% stake in Maytas Infra.

This is the move that sparked a row over alleged violation of corporate governance laws.

This deal is not profitable for investors .So after this announcement they started to raise their voices against the deal

Its financial statements for years were totally false, cooked up

The Balance sheet as of September 30, 2008 showed-Inflated (non-existent) cash and bank balances of Rs. 5040 crore (as against Rs. 5312 crore 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.

The Debtors were overstated by 400 millions plus.

‘Creative Account Practice’

Details of cash balances with Scheduled banks are not there in the Annual report

Overstated cash balances, Income receivables

Understated Liabilities Fraud Amount

IPC SECTION 120B • For criminal conspiracy

IPC SECTION 409• Criminal breach of trust

IPC SECTION 420• Cheating

IPC SECTION 468• Forgery

IPC SECTION 471• Falsification of records

SEBI INSIDER TRADING NORMS

CLASS ACTION SUITS IN US

IMPACT

PROBABLE REASONSPRESSURE TO MEET

EXPECTATIONGrowing CompetitionThreat of being overtaken

OVERCONFIDENCE On his ability

PERSONAL BENEFITSSiphoning of fundsSalary of non-existent 13000 employees

“Since about seven years we wanted to show more income in the accounts to avoid others from involving in the company affairs and any possible hostile acquisition.”

• Promoters held a small portion of equity • Created an image of charismatic leaders by showing falsified success

• Had unquestionable control over the company

SMALL HOLDINGS OD

THE PROMOTERS

• Failed the prime duty of oversight • Board of directors composed mainly of independent directors yet failed to notice the scam cooking in the company

• Ignorance didn’t lead to bliss in their case

FAILURE OF THE BOARD OF

DIRECTORS

FLAWS IN CORPORATE GOVERNANCE

• Failed to act on a whistle blower’s expose.

• The mail by an alias exposing the scam was forwarded to the auditors

• The auditor accused the contents of the mail to be false and assured of a detail reply on 29th Dec, however the meeting never took place.

FAILURE OF AUDIT

COMMITTEE

• Mr. Raju had pledged mist of his promoter’s shares to borrow funds.

• Mr. Raju’s share declined from 8.74% in 2008 to 3.6% in 2009

• The shareholders had no clue of the decline in the stake of the promoters.

NON DISCLOSURE

OF THE PLEDGING

PROMOTER’S SHARE

STOCK CHARTING

Impact of ScamStock Market Share - Holders Indian Economy

Employees Stake - Holders

Regulators investigating Satyam

SUPER USER LOG IN- Senior management allowed employees to log in to billing system by providing passwords.

FAKE INVOICES – employees logged in to billing system and created false invoices on instruction of senior management.

BOOST REVENUE AND PROFITS – fake invoices were used to show higher profits amounting to $1.1Billion.

FALSIFIED BANK STATEMENTS- Showed false cash receipts.

FALSIFIED INCOME EARNED FROM DEPOSIT- in order to justify higher cash showed false interest to complete the circle of fraud.

THE FRAUD

MAHINDRA SATYAM IS NOW MERGED WITH TECH MAHINDRA (2013).

C.P. Gurnani C.E.O. of Tech Mahindra

Milind KulkarniC.F.O. of Tech Mahindra

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.

Steps Taken After Satyam Fraud

More scandals like Satyam can be avoided if-1.If auditing firm is honest.~ Must not rely on management completely ~ Must conduct physical checks~ Must confirm balances in various accounts ~ Contact banks and costumers directly for matching balances 2.SEBI plays an active role.~ Stringent corporate governance laws~ Accurate review of financial reports 3. Periodic review of legal compliance reports by independent directors.

Conclusion