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EX MANAGING DIRECTOR
NEW VICE CHAIRMEN & MANAGING DIRECTOR
Under the companies act, if you present fraudulent accounts to shareholders, then in itself is an offence but the amount of publishment is not as severe as under SEBI’s Law. Under the IPC this is cheating under section 420 and that could involve atleast 7 years imprisonment. It’s criminal offence under section 24 of the SEBI Act and could mean penalty and imprisonment of upto 10 years. The audit company, Price Water House Coopers, which was supposed to pay a sum of rs. 5 lakh.
Vineet Nayyar C. Achuthan T.N. Manoharan C.P. Gurnani Sanjay Kalra ULHAS N. YARGOP
On 7 January 2009, company’s 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: Inflated figures for cash and bank balances of Rs 5,040 crore (US$ 1.04 billion) (as against Rs 5,361 crore (US$ 1.1 billion) crore reflected in the books). An accrued interest of Rs. 376 crore (US$ 77.46 million) which was non-existent. An understated liability of Rs. 1,230 crore (US$ 253.38 million) on account of funds was arranged by himself. An overstated debtors' position of Rs. 490 crore (US$ 100.94 million) (as against Rs. 2,651 crore (US$ 546.11 million) in the books). Raju claimed in the same letter that neither he nor the managing director had benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of the situation in which the company was placed
Maytas was a company owned by the Raju
Family with a majority stake of 36% Chairman of Satyam, B.R. Raju proposed to purchase maytas for cash. B.R. Raju proposed the deal with an intention to Cover up the inflated cash balance. The investor objected the deal as entire cash of Satyam was being transferred to promoters through Maytas. B.R. Raju called of the deal to avoid getting caught and being exploited.
•Change the name of the company.
WHAT MANAGEMENT COULE DO?
Reconstitution of the board :- Restore the management of the company and appoint some reputed people as the board of directors. Try building confidence in the clients to get back the lost projects. The image of the company could be revived by a series of press conferences highlighting the on going contracts with the clients. It could also be merged with any other software company.
Tech Mahindra wins bid for Satyam Scam
Ø Tech Mahindra is paying Rs1757 crore for a 31% stake in the company, or Rs 58 per share. Ø Satyam Computer Services has now zoomed 15% to Rs 54.20 ahead of the announcement of the highest bidder for the company on April 13,
DON’T TRY THIS AT OWN
SATYAM TO MAHINDRA SATYAM
Mahindra Satyam. Type : Public BSE:500376 NYSE: SAY ADR Founded : 1987 Headquarters: : Hyderabad, India Key people: : Vineet Nayyar (Chairman) C.P. Gurnani (CEO) A. S. Murty (CTO) Industry : IT Services IT consulting Software services Owner(s) : Mahindra Group Website : MahindraSatyam.net
Satyam : Dec-2008 to Jan-2009
Group 7 - ET Presentation
What happened next???
WHAT WENT NEXT?
WIND UP NOW OR NOT ?
INDIA’S STEP TO SAVE SATYAM
The Indian Government had stated that it may
provide temporary direct or indirect liquidity support to the company
Govt. appointed new board of members for Satyam
consisting of heavy weights from India's corporate sector.
Role of PWC
PWC –Satyam’s auditors since Jun 2000 Credibility of PWC???...“amount too big to be noticed” PWC: “our audit in accordance with the auditing standards
generally accepted in India” “Satyam's financial statements are the responsibilities of the company's management” “under Satyam’s management controls over financial reporting and auditing” “Audit reports between June 2000 to September 2008 unreliable”
It worked very hard to gain the confidence of global corporations who have entrusted their engineering and mission critical operations with Indian companies. 2) It always made a great contribution in Indian IT sector as well as it was always helpful for the economy. 3) if we take a look at the ongoing project works of Satyam we surely come to know that those projects are good and successful, if they are brought to the completion
4) With new and honest people working in the company under a proper observation, the company can be proved as an asset for the nation. 5) If we look back at the track records of the company before the scam, the project works done are very good and are really bankable.
Now at last we can conclude that “the government can use SATYAM as an example to make companies absolutely transparent”.
The profit margins were as low as 3% as declared by Chairman in his letter to the Board. 3. Maximize the returns of the stakeholders 4. High interest of Promoter family in the company & hence to protect it from being taken over.
JOURNEY OF SATYAM
Satyam Computer Services Ltd. was founded by B.Ramalinga
Raju in 1987. One of the most prominent companies of India, and it is also one of the constituents of Nifty. It was the first company of India listed in three International stock Exchanges i.e. NYSE, DOW and EURONEXT. 4th largest IT company in India. 9 % market share 53,000 employees Revenue $2.1 billion The company offers a variety of information technology (IT) services spanning various industry sectors. In June 2009, the company unveiled its new brand identity “Mahindra Satyam” subsequent to its takeover by the Mahindra Group’s IT arm, Tech Mahindra.
Satyam – A Snapshot
Major Satyam Clients
LEADER TO BAD LEADER
He started an IT company with 20 employees that obtained contracts for IT projects, mostly from US companies. Satyam rapidly developed and became a multinational company, with thousands of employees spread over many countries. Raju along with the then chief minister of Andhra Pradesh Chandra Bab Naidu was able to obtain high scale government contracts worth of US $1.2 Billion in Information technology for AP and Indian government..
He founded Satyam Computers and was its Chairman until January 7, 2009 when he resigned from the Satyam board after admitting to corporate fraud and cheating six million shareholders, some of whom have lost their entire life savings. As of November 28 2009, Mr Raju has yet to appear in court to face charges
ROAD TO DISATER
December’08 brought news of pending litigation by a
former client, online mobile-payments service Upaid Systems which filed a case of intellectual fraud and forgery against Satyam in 2007 World Bank banned Satyam from doing any of its work after it found Satyam employees had hacked into its system and gained access to sensitive information It also did not renew their five-year contractOn Dec. 16, when Raju announced the company would spend $1.6 billion to buy Maytas only to reverse the decision a few hours later under shareholder pressure
Satyam ADRs lost 50% of their value overnight
Upaid is a privately-held company registered in the British Virgin Islands for which Satyam
Enterprise Solutions, a subsidiary of Satyam Computer, executed a project for developing software for mobile prepaid technology. The project was executed between 1997 and 2002 for which Satyam got $10 million, partly in shares due to Upaid’s inability to pay cash.
Soon after, Upaid wished to patent the technology for which the software coding was done by Satyam.
For this, they needed the signatures of the 20 Satyam employees who worked on the project. Satyam helped Upaid get these signatures though some of those employees had by then moved out of the company.
Armed with the patent, Upaid, filed a suit against Qualcomm and Verizon Wireless in 2005, alleging
that they were using the patented technology. However, one of the original Satyam employees who had worked on the Upaid project had moved to Verizon by then. He pointed out that the signature that was supposedly his on the patent application was a forged one. Upaid was forced to retreat after this revelation. In 2007 it filed a suit against Satyam accusing it of forgery and fraud.
WHAT WENT WORNG T THE COMPANY
Inflated figures for cash and bank balances of INR
5,040 cr. (as against INR 5,361 crore reflected in the books). Operating Profit were artificially boosted from the actual 61 cr. to 649 cr. Satyam also showed an interest earning of Rs. 376 cr. that was fictitious. PWC –Satyam’s auditors since Jun 2000 Credibility of PWC???...“amount too big to be noticed”
IMAPCT ON INDUSTRY
It is surely going to be more difficult for other
Indian IT service players to win business. Undoubtedly, this is going to hurt the prospects of foreign money flowing into India. Global perception about indian companies. Indian stock market slipped over 7% on 7th Jan., 09.
Indian economy is at a threshold of either
leapfrogging ten years ahead or retracing ten years backwards, after the global economic slow down cycle gets completed.
As a leader , Mr. Raju did not justify. He
was undoubtedly a leader who try made a great success but he became a bad leader, but indulging himself into different foggeries. He uses unethical practices
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 HA! HA! HA!
Satyam Current News
Satyam Lost 46 Customers to Rivals (Economic Times Reports)
Applied Materials Inc., Nissan Motor Co., Sony Corp., State Farm Mutual Automobile Insurance Co. to name a few.
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