ST02 Solution

VCE Summer Internship Program 2020
Smart Task Submission Format
Intern’s Details
Name Saurabh Pandey
Email-ID saurabh.pandey@sjmsom.in
Smart Task No. ST-02
Project Topic Case Study Analysis
Smart Task (Solution)
Company 1: Go IndiGo
Solution:
1. What was their prime business model and revenue source?
IndiGo Airlines began as a low-cost airline operating in India’s domestic market. With only one aircraft type
(Airbus A320), limited frills, high aircraft utilization, and low rein-over costs, IndiGo’s operating model has
been tied to its low-cost carrier model since its beginning. One of the continuous reasons for the carrier’s
success has been its business approach, known as the Sale and Leaseback Model, which has been one of
the consistent reasons for its soaring profits. Simply put, the Sale and Leaseback model is a transaction in
which a person sells an item and then leases (rents) it to himself. To put it another way, an asset that the
seller previously owned is sold to someone else and then leased back to the initial owner for the long term.
One who grants the use of the asset to the other party is known as a lessor, while one who uses that same
asset in return for periodic payments is called the lessee. We can deduce from their income statement (Profit
and Loss Statement) that passenger service sales account for 90% of their revenue (Ticket Sales). Cargo
services account for 2.75 percent of its earnings, with the remainder coming from various sources such as
interest from bank accounts and investments.
2. What was their long-term strategy?

Indigo’s long-term objective is to grow in both domestic and foreign markets. Indigo aspires to have a 70%
domestic market share and revenue equal to that from the rest of the world. Indigo now has a market share
of roughly 55%. The target of Indigo are the nations with large outbound tourism markets, such as Russia,
China, and Israel, and plans to launch service in these nations. Domestically the strategy of Indigo is as
following:
I. Provide access to more smaller cities
II. Providing Mobility to People
III. Boosting Tourism and Economic Growth
IV. Impeccable Customer service to be the first choice for the passenger.
V. Positioning IndiGo as an Attractive Stock and
VI. Investment in People
Indigo’s top management recognizes that the key to success has been and will continue to be a strategy of
establishing a solid network and an intelligent fleet plan supported by systems, people, and a clear vision.
Indigo’s approach can be summarised as follows: IndiGo is on a mission to enhance India’s economic
growth and social harmony. Indigo will accomplish so by encouraging trade, tourism, and mobility by offering
ST Solution Page 1 https://techvardhan.com

air connections and low fares across the country and to overseas locations. Indigo seeks to create the
world’s best air transportation system.
3. When and what was their first break-through?
IndiGo, India’s largest airline, is today valued at Rs 27,500 crore, demonstrating the heights to which a firm
can rise when led by visionary entrepreneurs like Rahul Bhatia and Rakesh Gangwal. They founded the
company with a Rs 350 crore investment. Their promoters conducted themselves with the utmost
professionalism and created the most incredible success story in the history of Indian aviation. But, if we had
to pick a year, it would be 2005, when the promoters persuaded a corporation like Airbus to commit to
supplying 100 planes to an airline that had yet to take flight. Indigo is a success story built on the
foundations of honesty and strong business practices. The promoters were adamant about playing and
winning the game fairly. And they did so in a very respectable manner, not engaging in shady transactions or
dubious methods to gain an advantage over the competitors. Through diligent planning and cost-cutting
tactics, the partnership quickly developed a profitable low-cost carrier. IndiGo used smaller planes and
implemented a variety of fuel-saving strategies. Indigo accomplished all of this without sacrificing the quality
of services. IndiGo operates with a young crew and boasts of on-time, courteous service. IndiGo went about
its task in the most meticulous, quiet, and professional manner. When IndiGo started its services, it was the
weakest player in terms of the money bag. But what it lacked in terms of capital, it more than made up by
future planning and professional service.
4. What were the reasons for their Success?

Indigo’s success can be summed up in one word: operational excellence. The following explains how they
were able to attain excellence in the airline field when the majority of their competitors failed:
Sale and Leaseback Model: Let’s look at how this paradigm works with this example. The airline operator
signs a $40 million aircraft purchase agreement for ten planes. Following the delivery of the aircraft, the
airline will sell the aircraft to leasing companies. The plane, for example, is being sold for $45 million. The
airline makes a $5 million profit in this scenario, after which it offers the new owner to lease back the same
aircraft. The aircraft is leased for 5 to 8 years before being transferred to the leasing firms.
Advantages of the Lease Back transaction are listed further:
Benefits of an existing brand name to the lessor: The lessor is paid by the lessee (IndiGo Airlines) from
the revenue generated by the airlines that use the aircraft. The leasing business agrees to such an
agreement since it gives an asset and an existing client base without requiring the purchase of a new plane.
Cash Flow Generation: When the Lessee sells the aircraft, it produces cash that the company can use to
pay down debt on its balance sheet. In addition, when the company sells the airplane to a lessor/lender, the
original aircraft owner (IndiGo Airlines) will undoubtedly make some money that the company can reinvest
elsewhere.
Reduction in Tax Liability: The company does not have to pay taxes on the asset’s appreciation under the
sale and leaseback model. Furthermore, the asset lease is recorded in the profit and loss account, reducing
net profit and, as a result, lowering the tax liability.
Safety from Maintenance Repairs: The lessor is responsible for all maintenance and repairs in a Lease
Back agreement. As a result, the airlines’ costs are significantly reduced. The airline has kept its
maintenance costs low, at about 3%, compared to 8-12% for its competitors.
Other Operational activities which give an edge to Indigo over others are:
Single aircraft type: IndiGo began operations in 2006 with 97 Airbus A320 aircraft. It was able to operate
with fewer specialized engineers and maintenance personnel because of a single-model fleet. This model
boosted their standardization efforts and increased labor utilization. The most important and advantageous
features of the journey of IndiGo so far have been that the company could place a massive $11 billion order

for ~100 aircraft even in 2005. This model also aids the organization in achieving economies of scale, as
placing large orders entails a significant discount potential.
Route Planning and Aircraft utilization: IndiGo has a smaller number of destinations than its competitors
but a higher frequency of service. IndiGo’s destinations are all connected to at least two cities, with the
majority connecting to three or more. IndiGo will be able to keep its planes in the air for longer and save
money on airport fees due to this. Because of this, IndiGo has a high aircraft utilization rate of more than
11.5 hours per day per plane compared to the industry average of 8-10 hours per day. IndiGo operates a
point-to-point route network for passenger traffic, with no interlining or code-sharing with other airlines,
reducing turn-around time. This system also means that any IndiGo flight delays may affect passengers who
cannot board another flight due to the lack of code-sharing or trade agreements with other airlines. However,
it prevents the corporation from disclosing other airlines’ inefficiencies, particularly delayed flights. Indigo has
a lot of non-seasonal traffic ports, which makes it more efficient. Stage duration is defined as flying time per
flight – typically 1.5 hours for Indigo. This ties into their no-frills approach and increases turn-around time by
eliminating the need to store and serve hot meals in flights – ties into their no-frills model and improves turn-
around time. Because of the efficient use of space (150 seats against 190 on a full-fare airline), the airlines
are nearly always filled. IndiGo’s flights have the fastest turn-around time in the industry (the time between
landing and the next take-off). While other airlines need 35 to 50 minutes to turn around their flights, IndiGo
does so in 25 to 30 minutes. As a result, the company has reached a daily aircraft utilization time of 11.5
hours. This is due in part to the standard set of aircraft in use, which allows the crew to be optimized.
Lease agreements: IndiGo’s fleet of aircraft is the newest, with an average age of 3.26 years, compared to
the industry average of more than six years. For its planes, the corporation opts for six-year sale and
leaseback agreements. The lessor then returns the jets to the airline, allowing it to induct a brand-new
aircraft at an additional expense. This model is starkly different from the maximum use policy of other
airlines.
No frills model: Indigo’s operational excellence also includes paid on-board meals and a single flying class.
IndiGo’s “business class” seats are effectively the front row, with more legroom than the “economic class”
seats that come before them. They also save money by not having to operate expensive lounges at airports.
Indigo likewise does not provide a complimentary meal on their flights.
Reduction in Fuel Costs: Due to hefty domestic fuel taxes and excise duty, fuel accounts for around 45
percent of total operating costs for Indian airlines. IndiGo’s planes strive to save fuel by using software to
optimize flight planning for the least amount of fuel-burning routes and altitudes and employing the most up-
to-date fuel-saving technologies. Not bringing heavy cutlery or equipment reduces fuel consumption, which
fits with their no-frills approach of not serving hot meals on board. Indigo solely recruits female air hostesses
to lower the weight of their aircraft. IndiGo was also one of the first airlines to taxi a plane to the terminal with
only one engine running to save fuel.
IndiGo’s operational style, which includes some of the qualities listed above, has maintained a competitive
advantage over its competitors. In India, where airlines compete with much cheaper rail and road travel,
travellers are frequently drawn to planes because of the time advantage; a four-hour delay on a 55-minute
flight might be fatal. IndiGo has built a reputation for immaculate “On Time Performance,” assuring client
retention and a remarkable 90 percent on-time record. IndiGo, despite not having a frequent flier program,
routinely carries the greatest number of air passengers in India month after month.
5. What are the managerial learnings you got from this case?
I can summarise managerial learnings from this case as:
I. Operational excellence is the key: A company can only survive for the long term if it has achieved
operational excellence in its day-to-day processes (Low turn-around time in the case of Airline
Business).
II. A stunning success story can only be written professionally by meticulous planning and taking cost-
cutting measures.
III. Having a single type of equipment is cost-effective, as well as employees to achieve proficiency in it.
IV. Companies should be visible; They should go all out to project themselves as the market leader.

V. Connect the locals: In India, there is a huge untapped market comprising the purchasing power of the
middle class. Always go to tap the untapped.
VI. Focus on your core competencies and identify your competitors vigilantly. Indigo offers always low
fares, flights that are on time, and a courteous, hassle-free travel experience. Indigo also takes
railways as its competitors.
VII. There should be a synergy in your offering. No frills then Lowest fare without any delay in the case of
Indigo.
VIII. The business model should be dynamic and can withstand misfortune. Indigo shifted its agenda from
profit to cash during the lockdown.
IX. As you cannot provide everything that customer wants, prioritize what customers are willing to pay
and what is actually the customer’s need.
6. What other learning you concluded from this case?
My few other learnings from the case are:
1. Visionary entrepreneurs can make a success story even in loss-making industries.
2. It is easier to win the game in a fair way by working hard and delivering results.
3. Incremental improvements can do wonders.
4. Customers are the king. Listen to their requirement and act accordingly.
5. Be clear with your objective even before starting. Indigo was planned to be a low-cost carrier and
always has been the same.
6. Innovation is always appreciated in the industry, but consistency is the key to success.
7. Always differentiate between what you want and what you don’t want, then focus on what you
want.
7. Reference links for your search. (Important to add).

https://blog.finology.in/entrepreneurship/Indigos-Secret-Sauce-to-Making-Profits
https://digital.hbs.edu/platform-rctom/submission/indigo-airlines-ready-for-takeoff/#:~:text=IndiGo's
%20operating%20model%20ties%20into,the%20lowest%20in%20the%20world)
https://www.goindigo.in/information/investor-relations/annual-report.html
https://www.theweekendleader.com/Success/2790/the-power-of-11.html
https://www.youtube.com/watch?v=QfkAb9ZDvao&t=902s
Company 2: YES Bank
Solution:
YES Bank Ltd is a financial services company that offers a variety of banking and financial services.
Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations are the four
segments in which the Bank operates. The Treasury division encompasses all financial market activities
carried out on behalf of the Bank's customers, including trading, reserve requirements, and resource
mobilization from other Banks and financial institutions. Lending, deposit-taking, and other services for
corporate customers are included in the Corporate/Wholesale Banking sector. Lending, deposit-taking, and
other services provided to retail consumers are included in the Retail Banking category. Para banking

activities such as third-party product distribution and merchant banking are included in the Other Banking
Operations section. Syndicated loans and corporate banking are the major areas of interest for YES Bank.
YES Bank, Yes Capital, and Yes Asset Management Services are its three subsidiaries. YES Bank also
offers Unified Payments Interface (UPI) services to many well-known companies, including Airtel, Cleartrip,
RedBus, and PhonePe. In January 2020, it was responsible for handling 514 million UPI transactions out of
the 1.31 billion made that month. As a result, YES Bank can be described as a "full-service commercial
bank" that provides a complete range of goods and services to its corporate, SME, and retail clients. Since
its foundation, the Bank has been customer-centric and service-driven. It is confidently moving forward by
combining its broad physical reach with digital capabilities to create innovative services in line with India's
evolving banking needs. Looking at their income statement, we can see that interest collected on advances
and bills and income from investments are the primary sources of revenue.
On November 21, 2003, YES Bank Ltd was established. Rana Kapoor founded the bank. On January 21,
2004, the bank received a certificate of the beginning of the operation. In conjunction with MasterCard
International, they entered the retail banking market in 2005, launching the International Gold and Silver
debit cards. They issued a public offering in June 2005, and its stock was listed on stock exchanges. The
bank was awarded the Corporate Dossier award by the Economic Times in December 2005. Financial
Express Awards for India's Best Banks were given to the bank in 2006. They partnered with the Agriculture
Insurance Company of India in April 2007 (AIC). At the FT/IFC Washington Sustainable Banking Awards
2008 in London, the bank was named the No. 1 Emerging Markets Sustainable Bank of the Year-Asia. In the
2008 Business Today-KPMG Best Banks Annual Survey, Survey called the bank first.
The long-term objective of YES Bank was to deliver long-term financial solutions to its stakeholders and
strengthen long-term relationships with them. Yes, the bank had established its strength along the same
lines, customizing solutions for each customer to offer them a pleasant banking experience. YES Bank had
divided its customers into four groups and approached each with a unique strategy to each group.
Institutional banking: YES Bank offers this group a complete financial and risk management solution. This
company's distinguishing feature was its unrivalled capacity to provide a full variety of client-focused
services. YES Bank has focused on a sectoral approach based on knowledge, which benefits from lowering
entrance barriers, establishing business relationships, and early risk mitigation. YES Bank also strategies to
develop on the public-private partnership to build a robust platform for economic growth of the company.
Corporate Banking: Yes-aim Bank's in this sector supported businesses from the outset by providing
project advisory services to help them accomplish their corporate and financial objectives. YES Banks
products include both regular and specialized banking.
Business Banking: This division of YES Bank specializes in providing exceptional banking services to small
and medium-sized businesses. This unit's main goal was to provide MSME access to capital and help them
grow their businesses.
Retail Banking: Individuals and small enterprises can use this unit for retail and wealth management. These
consumers were served by a large branch network and the full capabilities of internet banking, mobile
banking, and other online banking services and ATM services.
3. When and what was their first break through?

YES Bank has had a strong track record since its beginnings. YES Bank was founded in November 2003
and received its banking license in May 2004. Iy was India's youngest greenfield bank (and the RBI's only
greenfield license in the last 16 years). The promoters took around a year to open their first branch in
Mumbai. They also opened a corporate banking branch at the same time. However, their first major success
came in the fiscal year 2005-2006. They made a profit of $553 million in that year, with a Return on Asset of

2%. As a result of this achievement, Yes Bank has received numerous honours, and its promoters have
demonstrated their expertise in the banking industry. After that, there hasn't been any downturn for a long
time for YES Bank. During the global financial crisis of 2008-09, when other banks were being cautious, YES
Bank has pressed the accelerator pedal. They expanded their branch network, invested in the branch, hired
more people, and improved product management and customer service. Most crucially, he demonstrated
risk appetite in a nearly frozen money market.
The deregulation of the saving bank deposit rate by the RBI was another milestone for the YES Bank. YES
Bank then upped the savings deposit rate by 200 basis points to 6%. YES Bank recognized this as a great
opportunity and seized it with both hands. Bankers are notoriously short-sighted, preferring to "go completely
by the data and ratings that computers hurl at them." YES Bank, on the other hand, considers the broader
picture. YES Bank grew at a compound annual growth rate (CAGR) of 74 percent in its first six years of
existence, becoming the country's fourth-largest private sector bank in 2010-2011. YES Bank is a full-service
commercial bank that offers corporate, small, and medium-sized business (SMB) and retail banking services
and a complete product suite that includes financial markets, investment banking, business and transaction
banking, and wealth management. YES Bank has received numerous awards in various banking surveys
over the years. At the Bloomberg-UTV Financial Leadership Awards 2011, it was named India's fastest-
growing bank of the year.
4. What were the reasons for their Failure?
On March 31, 2014, the bank's loan book was Rs 55,633 crore, and its deposits were Rs 74,192 crore.
Since then, the loan book has grown to nearly four times as much, at Rs 2.25 trillion as of September 30,
2019. At the same time, deposit growth failed to keep pace and increased at less than three times to Rs 2.10
trillion. The bank's asset quality also worsened, and it came under regulator RBI's scanner. YES Bank has
substantial exposure to several troubled borrowers, including the Anil Ambani-led Reliance group, DHFL,
and IL&FS. The tipping point came when one of the bank's independent directors Uttam Prakash Agarwal,
resigned from the board in January 2020, citing governance issues. Now let us look at the few reasons for
YES Bank failures.
1. Bad loans to all the bad boys of the Indian banking sector: The first and foremost reason being cited
for the collapse of the Yes bank is bad loans. As per banking experts, YES Bank granted loans to all the bad
boys of banking. In lieu of hefty interest rates, IL&FS, Dewan Housing, Jet Airways, Cox & Kings, CG Power,
and Cafe Coffee Day have received easy loans from the bank, which has amassed an asset book of Rs 3
lakh crore in just over a decade. It's worth noting that most of these businesses have either failed or had
negative growth in recent years.
2. Governance Issues: In recent years, the bank has also faced major governance concerns and
procedures, which has resulted in the bank's continuous collapse. For example, in 2018-19, the Bank under-
reported NPAs to the tune of Rs 3,277 crore. As a result, RBI appointed R Gandhi, a former Deputy
Governor, to the bank's board of directors.
3. A policy of financial misadventures adopted by the bank: According to banking experts, the bank
provides money on easy terms without scrutinizing the firms' financial condition to create profit through high
interest rates. Experts believe the bank was conducting direct loan transactions with the promoters rather
than going through a consortium, which appeared to be a less complicated and more leisurely approach to
make money at first but ultimately led to the bank's demise.
4. Lack of investment and overflow of liquidity: According to documents filed with the stock exchange
this year, the bank was in talks with a private equity group to infuse cash and recruit investment, but no
investors showed up. These investors met with senior Reserve Bank officials but did not infuse any funds for
various reasons. Furthermore, analysts claim that the bank was experiencing a liquidity outflow, suggesting
that consumers were withdrawing their deposits. That is why the RBI has imposed a withdrawal limit. At the
end of September 2019, the bank has a deposit book of Rs 2.09 lakh crore.
5. NBFC crisis: The collapse of Infrastructure Leasing & Financial Services (IL&FS) sparked India's shadow
banking sector crisis, which later spread to Dewan Housing Finance Limited (DHFL). As of September 2019,
YES-total Bank's exposure to IL&FS and DHFL was 11.5 percent. In April 2019, the bank classified around

Rs 10,000 crore of its exposures as probable non-performing loans over the following 12 months, accounting
for 4.1 percent of its total loans on the watch list.
When the economy deteriorated, and the government announced demonetization, Yes-problems Bank's
grew worse. Analysts believe the bank's inability to monetize collateral against that loan also lead to the
crisis.
Managerial Learning from this case can be summarised as:
I. Strict supervision is required. Despite discovering vulnerabilities in the management, the RBI granted
Yes Bank a big rope.
II. Bank CEOs should not be allowed to serve for extended periods.
III. A bank's ownership and control must be separated.
IV. All parties, including bank boards, auditors, and regulators, must keep a continual eye on the
situation.
V. The RBI's regulatory and supervisory capabilities should strengthen.
VI. The central bank must keep a close eye on lending institutions on various fronts, including fit and
proper.
VII. The central bank must carefully select the board of directors.
VIII. Banks must make the selection of auditors with caution.
IX. The central bank should have responded sooner rather than later.
X. Investors should be aware of corporate governance flaws.
I. We should pay attention to is the lapse in corporate governance.
II. While evaluating, we must pay attention to reliable sources.
III. Those who do not learn from their mistakes are doomed to repeat them.
IV. Privatization isn't the only option available.
V. Customers should not be given false guarantees.
VI. Customers must be aware of the dangers associated with the products they purchase.
VII. In the stock market, there is no such thing as a free lunch. If there is one, it is unpredictable and not
consistently reproducible.
VIII. Investors should re-evaluate their assumptions regularly.
IX. Quality and value should be mutually exclusive.

https://www.business-standard.com/company/YES Bank-25267/information/company-history#:~:text=Yes
%20Bank%20Ltd%20is%20engaged,Banking%20and%20Other%20Banking%20Operations.
https://www.yesbank.in/pdf/annual_report_2019_2020_pdf
https://www.yesbank.in/pdf/annualreport_2018_19_pdf
https://www.nationalheraldindia.com/economy/why-did-YES Bank-collapse-from-bad-loans-to-rbis-
negligence-are-the-reasons
https://www.businesstoday.in/sectors/banks/6-reasons-why-YES Bank-collapsed/story/397655.html

https://www.business-standard.com/about/what-is-YES Bank-crisis
https://bfsi.economictimes.indiatimes.com/news/banking/YES Bank-crisis-ten-lessons-to-prevent-bank-failures-
infuture/74668041#:~:text=Here%20are%20some%20of%20the,finding%20loopholes%20in%20the%20management
https://www.financialexpress.com/money/YES Bank-crisis-lessons-for-investors/1894617/
https://www.linkedin.com/pulse/YES Bank-crisis-lessons-indian-banking-industry-biplab-chakraborty
https://www.organiser.org/Encyc/2020/3/8/YES Bank-crisis.html
http://www.businessworld.in/article/What-Can-We-Learn-From-The-Failure-Of-YES Bank-/27-03-2020-187396/
Company 1: Mahindra Satyam
Solution:
According to 2008 data, Satyam Computers Limited (Satyam) was India’s fourth-largest software
development and information technology (IT) consultancy firm. Satyam was founded in 1987 by two brothers
as a private limited company, and its success became synonymous with the success of the Indian IT
industry for the next 20 years.
In August 1991, Satyam was converted from a private limited company to a public company, and Satyam
issued shares to the general public in 1992. The company utilized the money raised in the stock market to
construct a software technology park and a unit that is only focused on exports. Satyam made its first
entrance into the worldwide market the following year when it formed a joint venture with the American firm
Dun & Bradstreet. Satyam established its first foreign office in the United States in 1996, followed by another
in Japan. It formed new business relationships in many other countries, including Australia, Canada, and
several European nations. Meanwhile, Satyam pursued its expansion plans in India, constructing new offices
and facilities in various parts of the country and promoting four subsidiaries:
 Satyam Spark Solutions
 Satyam Renaissance Consulting Ltd
 Satyam Enterprise Solutions Private Ltd. and
 Satyam Info-way Private Ltd.
Satyam Computer Services Limited) was an Indian information technology (IT) services company based in
Hyderabad, India, offering software development, system maintenance, packaged software integration, and
engineering design services. Satyam launched its first greenfield investment in the United States in 1998,
constructing a software development centre in New Jersey. Then they went on to open many more across
the world, including in Singapore, the United Arab Emirates (UAE), Australia, Malaysia, China, Egypt, and
Brazil, to capitalize on the late 1990s IT-boom. Satyam entered into several alliances and long-term
contracts with many global bodies and corporations such as World Bank, Microsoft, Yahoo!, etc. Satyam had
a turnover of over US$2 billion in 2008, with over 51,000 employees from over 60 nationalities, 654

customers representing one-third of the Fortune Worldwide and US 500 firms, a presence in 63 countries,
and 31 global solution centres.
Satyam and its staff have received numerous national and international accolades and recognitions and their
spectacular growth like web business 50/50 award, exceptional HRD initiative award, one of the ten most
well-recognized companies of India Frost and Sullivan market engineering award, and IBM Lotus award for
innovation. These awards and honours were clear reflections of Satyam’s prestige and reputation amongst
its clients, employees, and society in general.

"To leverage information, knowledge, and technology to enhance human endeavour," Satyam's vision
statement read. It extols the advantages of "Execution: Ordinary Persons doing Extraordinary Things." It also
claimed that the company's goal is to "demystify business difficulties." Satyam changed the way people did
business. The organization had defined many major emphasis areas in order to maintain its growth and
value realization. Apart from the United States, Satyam's global strategy also included Europe and the Asia
Pacific regions. The company had aimed for a rapid rate of expansion and a regional focus.
Following are the few points which suggest the long-term strategy of Satyam at their peak:
Dominance in CEBS Space: Satyam's consulting and enterprise business solutions assisted customers in
reducing operational costs, improving business process efficiency, and increasing overall competitiveness.
The development, deployment, integration, and maintenance of diverse enterprise-wide applications are all
covered by these solutions.
Alliances with strong global brands: Satyam's strategic connections with technology vendors and system
integrators enabled the company to offer a wide range of IT solutions to suit the challenging business issues.
They were able to provide their customers with industry-leading end-to-end solutions as a result of these
collaborations. Satyam provided professional services such as business process consulting, systems
integration, bespoke application development, content development, and other consulting and
implementation experience, while the alliance partner delivered the software application.
De-risked Business Portfolio: Satyam received a revenue contribution of 27% from its top five customers,
down from 43% previously. Satyam aimed to lessen their reliance on one market, a small number of
customers, and ultimately the firm's risk by doing numerous things.
Nearshore Centres: To serve consumers in the United States, Europe, and Japan, we established
nearshore centres in Canada, Hungary, and China. These nearshore centres used their proximity to
consumers and provided the added benefit of being in the same time zone.
Knowledge Management: Satyam's Knowledge Initiative managed the company's current knowledge
resources and fosters a culture of knowledge creation and sharing within the organization. Associates had

access to the Knowledge Repository, a query-based knowledge management system that allowed them to
benefit from collective experience.
Quality: Quality was a culture at Satyam, and it showed how employees connect with and respond to their
client's demands and the goods and procedures they offer. It has an internal support unit known as Total
Quality Assurance, which was part of the Corporate Quality Circle and was responsible for all Software
Quality Assurance activities in the projects.
Full Life Cycle Leadership: Satyam recognized that to compete in the competitive business environment, it
must have a varied set of industry experience and, more significantly, a deeper understanding of the
services were required in these industries.
People Power: Satyam strived to be an employer of choice in all geographies to represent its accurate
global view. It had a remarkable capacity to attract and retain top talent. It kept s its workforce diverse by
offering specialized programs. Rather than employee management, employee engagement was the
company's philosophy, allowing each Associate to reach their full potential.
After considering the aspects mentioned above, we can conclude that Satyam has a solid long-term strategy
and was anxious to ride the chariot of globalization and international corporations' rapid economic
expansion. However, we shall learn in the next question how it was all predicated on one untruth, which
resulted in a calamity in the Indian IT industry.
3. When and what was their first break through?

In this case, there are two types of breakthroughs. The first is how Satyam came to be associated with the
Indian IT industry. The year 1995-96 will be a watershed moment for Satyam in this regard. The company
issued fully convertible debentures worth about Rs. 37 crore this year. This deal was an imprint on Satyam
Computers' future performance. Satyam also established offices in the United States and Japan in the same
year. Various business partners from all around the world have been added to the company. The Indian IT
industry got off to a flying start as a result of these policies. The growth of India's IT industry will pave the
way for India to become the world's services powerhouse.
The second breakthrough occurred in December 2008, when Satyam reversed course and purchased Mytas
Infra and Mytas Properties. It's worth noting that the family of Mr. Ramlingam Raju, the chairman of Satyam
Computers, owned those businesses. As a result of this, there was a lot of conjecture, and investors reacted
negatively. Satyam's stock dropped by more than 40%, and Mr. Ramlingam Raju was compelled to take a U-
turn. To understand this setback, we must first examine Mr. Ramlingam Raju's strategy. He was well aware
that the cash balance and profits were artificially overstated. He was attempting to purchase Mytas with an
excessive amount. So, while there would be no transaction between Satyam and Mytas in reality, the non-
existent cash amount would be substituted by Mytas' genuine asset on paper. The company would have
survived as Satyam would have resolved the cash balance problem. But, in my opinion, we can debate Mr.
Raju's intentions, but the reality is that he either fudged or allowed the financial facts to be misinterpreted.
He may have fixed the cash flow problem with the Mytas deal, but that deal would not have solved the habit
of deceiving investors with phony financial statistics and rampant misconduct by the corporation to stay
ahead of the game. We cannot accept his justification that he had no choice but to misrepresent financial
figures in order to avert a hostile takeover. "It was like riding a tiger, not knowing how to get off without being
eaten," he wrote in his resignation letter. "If you dare to ride a tiger, attempt to get off as well. Maybe it
wasn't a tiger at all," I'd want to respond.
4. What were the reasons for their Exposed?
ST Solution Page 10
https://techvardhan.com
Satyam's board of directors approved a US$1.3 billion acquisition of a 51 percent investment in Mytas Infra,
a Bombay Stock Exchange-listed company, and a US$300 million acquisition of a 100 percent investment in
Mytas Properties, an unlisted company. The two sons of Satyam's chairman, Ramalinga Raju, promoted
both of these enterprises in the construction and real estate market. Raju's close family and friends owned
36% of Mytas Infra and 35% of Mytas Properties, respectively. The acquisition's effective completion
necessitated the borrowing of $300 million to supplement Satyam's reported financial reserves of US$1.2
billion. Satyam justified its foray into the real estate and property business by claiming that real estate was a
sunrise industry in India. Diversification was essential given the sluggish growth of IT business in key
markets such as the United States and Europe. The investors reacted very negatively to this news, resulting
in a 55 percent decline in Satyam's ADRs. Following stiff resistance from investors in general and
institutional investors, Satyam called off the acquisition on December 17, 2008. However, this decision did
not alleviate unfavourable attitudes or share values, which plunged 30% on Indian exchanges. Given the
considerably related party transactions involved, investors and the media began to question Satyam's
corporate governance processes. Satyam called a board meeting on December 29, 2008, to contemplate a
share buyback to restore investor trust. On December 23, the World Bank suspended Satyam for eight years
from doing any business with the world bank because Satyam was allegedly offering bribes to World Bank
staff to obtain lucrative contracts. While Satyam vehemently denied the allegations, its share prices
continued to fall.
In the midst of this disaster, someone purporting to be a former Satyam senior executive sent an anonymous
email to one board member detailing financial irregularities and fraud at Satyam. According to the letter,
Satyam did not have adequate liquid assets, which Satyam could verify with its bankers. Some anticipated
that this letter might eventually lead to the discovery of financial fraud. B. Ramalinga Raju resigned from the
Securities and Exchange Board of India (SEBI) on January 7, 2009. Raju acknowledged falsifying financial
accounts to the tune of INR71.36 billion in his resignation letter: falsified amount included INR50.46 billion in
non-existing cash and bank balances. Raju confessed that he overstated the profits. The profit margins were
as low as three percent; he also stated that the financial gap in actual and stated profits was known to senior
officials, including the chief operating officer and the CFO. Raju argued that he was forced to overstate
profits to keep the share price stable, which was necessary to avoid a hostile takeover of Satyam. Raju had
to borrow money from friends, relatives, and others by pledging his shares, which he did by reducing his
ownership position from 20.74 percent in 2003 to 8.74 percent in 2008. In the letter, Raju justified his actions
by stating that in his last attempt to preserve Satyam from a hostile takeover and bridge the gap between
actual and declared funds, Mr. Raju tried the Mytas deal, which failed. As a result, he chose to resign.
ST Solution Page 11
Following are the managerial learning from this case:

I. Systems and processes should be continuously strengthening. As criminals find newer ways to
commit a crime, law enforcement also should keep pace.
II. There should be adequate investor protection in the regulatory framework.
III. Authorities should ensure good governance practices.
IV. Increasing competition forced big corporations to seek unethical ways of conducting their business.
But authorities should make sure that it does not happen.
V. Regulatory measures that demand accountability need to be imposed on corporations.
VI. Auditing firms also need to be brought under the regulatory umbrella. Else it will be difficult to tell if
the auditor and the company are working together to tamper with the accounts.
VII. Directors are supposed to represent the interests of shareholders and thus be alert to issues and ask
tough questions.
VIII. Company managers should look at the larger picture, and Companies shouldn't only exist for the
stock market.

I. Wheels of justice may grind slowly, but they do surely
II. Frauds hit the investors and employees, but it also tarnishes the image of the overall industry and the
whole country.
III. It would be equally unwise, however, to think of the fraud as an isolated case.
IV. A small cover-up will lead to big frauds.
V. Overconfidence in the ability to turn things around will lead when things got out of hand
VI. All companies need to come to a consensus to practice ethical behaviour.
VII. A key takeaway from the incident is the finesse with which the government handled it.
VIII. Do not wait for legalities. Ethics is all about self-discipline.
IX. The sense of responsibility should match with the ambition
https://en.wikipedia.org/wiki/Mahindra_Satyam#:~:text=Mahindra%20Satyam%20(formerly%20Satyam
%20Computer,integration%20and%20engineering%20design%20services.
https://www.moneycontrol.com/bse_annualreports/5003760310.pdf
https://www.ibef.org/download/Satyam.pdf
https://www.hindustantimes.com/india/the-business-plan-of-raju/story-O4gjCBY0h96mPQN5M5bpcK.html
https://www.slideshare.net/vriddhee/satyam-scam-11459107
https://www.moneycontrol.com/company-facts/mahindrasatyam/history/SCS
ST Solution Page 12
https://www.businesstoday.in/opinion/perspective/five-lessons-to-learn-from-the-satyam-computer-scam-
saga/story/217942.html
https://testfunda.com/examprep/mba-resource/current-affairs/article/what-we-can-learn-from-the-satyam-
case.htm?assetid=1648ed57-6ff5-4803-817f-018bc75e1a83
https://www.boomlive.in/three-reasons-satyam-case-still-relevant-today/
ST Solution Page 13

ST02 Solution

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ST02 Solution

Uploaded by

Copyright:

Available Formats

VCE Summer Internship Program 2020

Smart Task Submission Format

Smart Task No. ST-02

Project Topic Case Study Analysis

Smart Task (Solution)

2. What was their long-term strategy?

ST Solution Page 1 https://techvardhan.com

4. What were the reasons for their Success?

ST Solution Page 2 https://techvardhan.com

ST Solution Page 3 https://techvardhan.com

7. Reference links for your search. (Important to add).

Company 2: YES Bank

ST Solution Page 4 https://techvardhan.com

3. When and what was their first break through?

ST Solution Page 5 https://techvardhan.com

ST Solution Page 6 https://techvardhan.com

7. Reference links for your search. (Important to add).

ST Solution Page 7 https://techvardhan.com

Company 1: Mahindra Satyam

ST Solution Page 8 https://techvardhan.com

2. What was their long-term strategy?

ST Solution Page 9 https://techvardhan.com

3. When and what was their first break through?

Following are the managerial learning from this case:

6. What other learning you concluded from this case?

7. Reference links for your search. (Important to add).

You might also like