Satam Computer Case Study
Satyam Computers was founded in 1987 in Hydrabad by Mr. Ramlinga Raju
2. It converted into public limited company in 1992
3. The Company offers Consulting and Information Technology services spanning various sectors
4. Mahindra Satyam is overall ranked 153 by Fortune India 500 in 2011
5. Satyam’s network covers 66 countries and 53000 employees across 6 continents
6. It is listed in BSE, NSE, NYSE
7. Satyam was as an example of “India’s Growing Success”
8. “In 2007, Ernst & Young awarded Mr. Raju with the ‘Entrepreneur of the Year’ award
9. On April 14, 2008, Satyam won awards from MZ Consult’s for being a ‘leader in India in CG
and accountability’
THE RISE OF SATYAM
1987 : Satyam Computers Pvt. Ltd. Born
1991 : June- First
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Mr. Raju falsified the bank accounts to inflate the balance sheet with balances that did not
exist.
Mr. Raju also revealed that he created 6000 fake salary accounts over the past few years
He also created fake customer identity
The global head of Internal Audit illegally obtained loans of the company
He planned to acquire a 51% stake of Maytas Infrastructure Ltd. He had 35% share in
Maytas properties
On December 16, 2008, the Satyam board, including its five independent directors had
approved the founder’s proposal to buy the stake in Maytas Infrastructure and all of Maytas
Properties, which were owned by family members of Satyam’s Chairman, Ramalinga Raju,
as fully owned subsidiary for $1.6 billion.
Without shareholder approval, the directors went ahead with the management’s decision.
The World Bank banned Satyam from conducted business for 8 years due to inappropriate
payments to staff
As a result Investment bank DSP Merrill Lynch terminated its engagement with company
soon after it found financial irregularities
On Jan.7,2009 Raju resigned after notifying Board Members and SEBI that Satyam’s
accounts had been falsified
SATYAM’S SCAMS FRADULANT FIGURES
Total amount of financial irregularities in
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2008 135.65
29 DEC. 2008 148.10
30 DEC. 2008 160.70
2 JAN. 2009 177.20
5 JAN. 2009 167.15
6 JAN. 2009 178.95
7 JAN. 2009 39.95
Merrill Lynch terminated its engagement with Satyam
PricewaterhouseCoopers (PwC) came under intense scrutiny and its license to operate was
revoked.
Criminal charges were brought against Mr. Raju, including: criminal conspiracy, breach of
trust, and forgery
New Board of Directors were appointed
Increased financial accounting disclosure
Adoption of international standards
Creation of new corporate code of conduct by Ministry Of Corporate Affairs
SATYAM’S PRESENT PHASE
Raju along with 2 others accused of scandal had been granted bail from supreme court on
4Nov,2011
Appointing new Board
Board appointed by government
Satyam shares gained up by 44% day after appointment of new board
New CEO – AS Murthy
Tech Mahindra acquired Satyam on April13,2009
On 13April,2009 via auction process, 46% Stake in Satyam duty of loyalty was purchased
by Tech Mahindra
July 2009, Satyam rebranded its service as “Mahindra Satyam”
FINDINGS
Jobs of over 50000 technocrats were at risk
Country’s booming economy were at risk
The GDP fell by
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