Satyam The Truth
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- Words: 2,863
- Pages: 56
Under the Guidance of: Submitted by: Dr. Sushil Sharma Chetan Bansal (60) Miss Nisha Sonu Yadav (61) . Suraj Sharma (62)
University School Of Management, KUK
IT Industry
Information technology (IT), as defined by the Information Technology Association of America (ITAA), is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware.“ Information Technology is one of the most important industries in the Indian economy. The IT industry of India has registered huge growth in recent years. India's IT industry grew from 150 million US Dollars in 1990-1991 to a whopping 50 billion US Dollars in 20062007.
In the last ten years the Information Technology industry in India has grown at an average annual rate of 30%. In 1970, high import duties had forced IBM to leave India. However, after the early nineties, many multi national IT companies, including IBM, have set up their operations in India. During the ten year period 1992-2002, the Indian software industry grew at double the rate as the US software industry. Deregulation policies adopted by the Government of India have led to substantial domestic investment and inflow of foreign capital to this industry.
SATYAM
Set up in the year 1987 to provide services in IT sector India’s 4th biggest software company in India It is listed in BSE, NSE, NYSE and Euronext (Amsterdam). BSE IPO oversubscribed 17 times when made public in 1991 The company employs 53,000 IT professionals across development centers in 6 continents
First IT Company in the World Certified under ISO9001:2000 Ranked Among India’s Top 10 Best Employers, 2004 and 2003 Top 13 Best-Managed Companies in India Winner, Corporate Citizen I award for Corporate Social Responsibility SAP Pinnacle Award 2008 Satyam Wins golden peacock award for excellence in Corporate Governance on Global level for 2nd time United Kingdom Trade and Investment India Business Award for Corporate Social Responsibility
The company was promoted by 2 brothers B Rama Raju and B Ramalinga Raju. On 26th August, 1991 it was converted into a Public Limited Company and went for PUBLIC ISSUE in 1992. Satyam headquater is situated in Hyderabad. During the year 1996 company promoted 4 subsidiaries: – Satyam Renaissance Consulting Ltd. – Satyam Enterprise Solutions Pvt. Ltd. – Satyam Infoway Pvt. Ltd (e-commerce) and – Satyam Spark Solutions Pvt. Ltd. (software's)
Providing internet in India
In the year 1999, Satyam Infoway Ltd, became the second largest Internet services provider in India based on the number of customers. Satyam Infoway (sify) is the first Indian Internet company listed on NASDAQ. The Company launched its shopping channel as (www.sifymall.com).
In 2001, The American depositary shares (ADS) of Satyam Computer Services on May 16 was listed at .16 $ on the New York Stock Exchange (NYSE) at a premium of 14.9 per cent to the offer price. Satyam became the world’s first ISO9001:2000 certified IT company. During 2002, Satyam Computer Launched operations in China.
Industry Presence Satyam provides services in the following areas:
Aerospace and Defence Banking, Financial Services &Insurance Energy and Utilities Life Sciences & Healthcare Manufacturing, Chemicals & Automotive Public Services & Education Retail and Consumer Packaged Telecom, Infrastructure, Media and Entertainment & Semiconductor Travel and Logistics & Industrial Equipment
> Chairman and founder Satyam Computers Services Limited > MBA from Ohio University > IT man of the year award by Data Quest in 2002 > Winner of Ernst & Young entrepreneur of the year award in 2007 B. Ramalinga Raju Founder & Chairman, Satyam Computers Ltd.
B. Rama Raju Promoter & CEO, Satyam Computers Ltd.
> He became the Managing Director and Chief Executive Officer in 1991 > Mr. Rama Raju holds a Master of Economics degree from Loyola College, Chennai and a MBA degree from Loredo State University, Texas > Before 1997, he was with Maytas Infra Limited as one of its Directors
Satyam Clients A total of 650+ Clients 185 of the top fortune 500 Companies
Satyam Board Structure B.Rama Raju Promoter & CEO
Other Independent Directors
B.Ramalinga Raju Promoter & Chairman
Ram Mynampati Whole time Executive Director
Dr/ M. Srinivasan
GTB/Dr. Reddy’s Laboratorie s
Srinivas Vadlamani Chief Financial Officer
Prof. Krishna G Palepu
Mr. Vinod K Dham
Sasken Communication/ Hellsoft /Montalvo Systems and Newpath
Prof. M Rammoha n Rao
ISB Dean/ Bharat electronics
Mr. T R Prasad
Prof. V S Raju
Former CabinetSecretary /GMR Infra/ GVK Taj
Satyam – Share holding Pattern
Total Market capitalization of Rs. 15,262 Cr (As on Dec 16, 2008 )
Maytas Infrastructure Raju’s hold 36.64 per cent while institutional holding is 10.92 per cent The company had raised Rs 327.45 crore through IPO. It had a turnover of Rs 1,660 crore and net profit of Rs 100 crore in the last financial year Satyam planned to acquire 51 per cent stake for Rs 1, 440 crore or $0.3 billion
Mr. Teja Raju(VC)
Maytas Properties B. Rama Raju Jr. (VC)
o o o o
Raju’s family owns 35% of Maytas properties Founded in 2005, it has a land bank of 6,800 acres It has clearances for three IT SEZs based on 148 acres An undisclosed stake is held by Infinite India Investment Management, a realty fund jointly promoted by JM Financial and US-based SRM Investments, which invested Rs 600 crore in February
Controversies Maytas acquisition World Bank
Upaid lawsuit Accounting scandal of 2009
So, How did it all begun?
21 April 2008
2006
26 Jan 2009 22 Sep 2008
Satyam revenues cross $1 Billion
Satyam becomes first Indian company to publish IFRS audited financials
Satyam receives the Golden Peacock Award for excellence in Corporate Governance from World council
16 Dec 2008
17 Dec 2008
Satyam gets board approval for controlling stake in Maytas Infrastructure and Maytas properties as fully owned subsidiary for $1.6B (Rs. 8000 Cr.)
26 Jan 2009
Satyam backs out of Maytas deal citing investors protest Major Clients of Satyam express dissatisfaction. Contracts worth $200 million up for grabs Satyam shares plunge 55 percent in NYSE. BSE share plunges over 30%
Board meeting to be held on Dec 29 for proposed buyback of shares
19 Dec
20 23 Dec Dec
British mobile solution provider Upaid files a law suit against Satyam in a district Court in the US over Maytas deal. May face $1 Billion in penalties Centre refers Satyam deal to Registrar of Companies (RoC)
26Jan 2009
World Bank bans Satyam for 8 years due to inappropriate payments to staff and inability to provide information sought on invoices
26 28 29 Dec Dec Dec
1st independent director Dr. Mangalam Srinivasan resigns from Satyam board Satyam objects to world bank statements, asks to apologies or face legal action
26 Jan 2009
3 more Independent Directors resign. Mendu Rammohan Rao, Krishna G Palepu and Vinod K Dham
Board meet initially scheduled for 29th postponed to 10th January Board announces exploring option for buyback of shares to restore investor confidence
Satyam asks DSP to review board structure
Promoters disclose that their entire holding in Satyam pledged with institutional lenders since 2006
Rumors in market about strategic takeover by IBM, Accenture
IL&FS sells 44.1 lakh shares pledged shares of Satyam promoters in 1 day. Promoters equity reduced from 8.6% to aprrox 7%
30 02 03 Dec Jan Jan
Post cancellation of deal, Maytas looks for raising $500 million through sale of equities and properties
IL&FS sells further 44.27 Lakh pledged shares taking the tally to 1.5 crore pledged shares Satyam-Upaid case hearing over the Maytas deal in Texas court on January 8.
26 Jan 2009
Satyam board confirms promoters stake to be around 5%. Further 3.2% still pledged.
05 06 Jan Jan
Promoters stake in the company down to 4.5% SEBI considers proposal to make it mandatory for promoters and majority share holders to disclosed pledged shares to stock exchange
Total pledged shares sold by IL&FS reaches 2.5 Cr. in last 13 days. Promoters stake down to 3.6%. Still a further 1.7% are pledged The Night Before 7th Jan Merill Lynch discovers serious irregularities in books of accounts and approaches regulator SEBI for further course of action and its inability to investigate further. DSP submits report to SEBI and Satyam management late night.
26 Jan 2009
Tech Mahindra (Revenues 3766 Cr.) offers to merge with Satyam (Revenues 8473 Cr.)
07 Jan
09:45 A.M. Satyam Chairman Ramalinga Raju writes the letter to the company board
Auditing firm PWC under scanner Govt. instructs RoC to review report
ADR’s crash 90% Satyam BSE scrip falls 78% DSP snaps ties with satyam. Ram Mynampati takes over as interim CEO according to Raju’s letter
26 Jan 2009
Hunt for Raju brothers begin. Amid speculation over his whereabouts, Raju is believed to have left for the United States in connection with a court case.
Satyam stripped of Golden Peacock award
NSE removes Satyam from its benchmark index Nifty. It will be replaced by Reliance Capital with effect from January 12. It will also be removed from various other indices like CNX 100, S&P CNX 500,CNX IT and the CNX Services sector index
08 09 Jan Jan
PwC in major trouble. Stocks of PwC clients take a major beating at the BSE and NSE
BSE to replace Satyam Computer with Sun Pharmaceutical in its benchmark index Sensex with effect from January 12.
CFO Valdamani Srinivas, who is the financial custodian of the company resigns PwC shot back at Satyam, saying in a media statement that the auditing was based on the audit evidence provided by Satyam and in was accordance with applicable standards.
10 Jan
26 Jan 2009
Former CFO Valdamani Srinivas remanded to judicial custody
Raju brothers arrested by the police on charges of criminal conspiracy, cheating, forgery, misappropriation of funds and criminal breach of trust. Market Capitalization of satyam falls to Rs. 1,607 Cr from Rs.15,262 Cr. on Dec 16 in 19 trading sessions.
13 14 15 16 Jan Jan Jan Jan
Government hands satyam case to SFIO
The newly appointed 3 member board appoints auditing firm KPMG and Delloitte to assist it in cleaning the mess in the scam tainted company’s accounts
23 year old employee of satyam commits suicide in Chennai
26 Jan 2009
Maytas stocks hit the lower circuit for 7th consecutive trading session
The government expanded the threemember Satyam board to six to include S Balakrishnan of Life Insurance Corporation, Tarun Das, chief mentor of the Confederation of Indian Industry and T N Manoharan, former president of the Institute of Chartered Accountants of India
Why on 7th Jan 2009? •
DSP Merrill Lynch informed SEBI about Material irregularities in Accounts on 6th Jan
•
Minutes of Meeting of 16th December,2008 were not submitted to RoC-(This created some doubts)
•
Hearing of Upaid- satyam case on 8th Jan at the US court
Fabricated Income Statements
‘Creative Account Practice’
• Details of cash balances with Scheduled banks are not there in the Annual report • Question raised by Equity analyst Kawaljeet Saluja -$500 mn cash parked in current account
Overstated cash balances, Income receivables
Understated Liabilities
Fraud Amount
Why and How How ????
Fake FD receipts and Employee Nos.??
Repeat the procedure
Parallel Finance Department ???
Satyam-Maytas Nexus Contd….. Cash raised & siphoned off funds used
to buy several thousands of acres of land across AP through several benami accounts Helped Maytas in getting major contract
Some Comments
If the first fraud is for Rs100, the next time add another zero. It (accounting fraud) grows exponentially – Anil Roy, Grant Thornton India
It was like riding a tiger, not knowing how to get off without being eaten- Raju Ramalinga while admitting the fraud
On Wikipedia, for the first time, India has been put on to the list of largest corporate scandals in the world, all thanks to Satyam – a blogger
STOCK CHARTING
PWC had been auditing satyam’s balance sheet since year 2000. Companies have to keep bank statements for the current and preceding years at registered offices. It is suspected that the files vanished as they would have given away the fraud.
Wary Investors exit PwC Clients Investors brought shares of other companies in the same sector Out of 100 clients of PwC, most companies share fell by 5-15%. Risk of Reputation
Other company bigwigs Satyam's
chief financial officer Srinivas Vadlamani has already been arrested. He has even admitted to signing on the dotted line , saying he never really paid much attention to the balance sheet! But could only two or three people have managed to cook the books for years of a company so large?. It is quite likely that some other top managers in the company too were in the know of what was happening but chose to keep quiet
RESTRUCTURING PROCESS
The
government decided to appoint 10 nominee-directors. The new board will take a decision on a new management team.
Deepak Parekh Former HDFC Chairmam
Kiran karnik Former NASSCOM Chairmam
C Achutan Former SEBI Member
The 3 members of BCG has been appointed as a management advisor and is working to revive satyam. Satyam board has appointed GOLDMAN SACHS & AVENDUS as its Investment Bankers.
Companies and government are closely watching Satyam strategies. They feel that satyam should stand of its own first, if not then only other company’s would approach for a takeover/acquisition of satyam. Other IT comany like HCL is also considering a possibility of the takeover and keeping a watch on satyam moves. But at last the TECH MAHINDRA has take over the satyam and in june 2009 it’s to new name “MAHINDRA SATYAM”.
Challenges ahead Client Acquisition and Retention Retaining employees Productivity Resource and Skill Gaps Funding What
(policies)
Who (decision)
How (processes)
Govt plans Rs 2000-crore package for Satyam
The Indian Government has decided to take direct action to looking at a salary bailout for the 53,000 Satyam Computer Services employees. A Rs 2,000 crore package is under consideration to ensure that Satyam employees get their salary on time after it the new board said that they are looking for funds. The government is looking at giving three instalments of Rs 500 crore to Satyam for the next three months and is planning another infusion of about Rs 400 crore.
IMPACT On INDIA INC. Questions have been raised on the balance sheets of
other IT Companies and the role of auditors. Investors loosing faith in major IT firms and other major Corporate due to fraud arisen out of Mr. Raju’s confession. Due to the satyam turbulence, 70 independent directors of various companies including ZeeNews, TVS Motors, BHEL etc, had quit from satyam and resigned from there respective companies. SEBI has made mandatory for the promoters of the companies to disclose details of the shares pledged by them.
Satyam’s Market Price Can Not Be Used For Valuation Of Satyam Asserting that only action could determine the sale price for Satyam, Modi said that stock market price could not be considered a benchmark in this case, as the market was not fully aware about the firm’s actual assets and liabilities. “Even the board is not aware (about the assets and liabilities), so the market is working on the available information. So, I don’t think there could be any basis of reserve price,” Modi added.
No advance tax paid by Satyam in FY09
Satyam Computer has not paid a single rupee as advance tax in the first three quarters of the current fiscal, though the IT company paid Rs 25 cr as fringe benefit tax (FBT) till December 15. As payment of advance tax is always considered an indicator of profitability of a company, Satyam’s non-payment of advance tax could also imply that trouble had been brewing for a long time.
Raju spends time in jail reading books, newspapers Former
chairman of Satyam Computers, B Ramalinga Raju spent his fourth day in the Chanchalguda Central prison reading books, news magazines and newspapers. January 10 and is now spending most of his time in the jail by reading books and is keeping himself abreast with latest developments through newspapers.
In the News..
CONCLUSION
We also wish that the company stands once again whooping investors not with the false promises but in accordance with its name that is TRUTHFULNESS. Quickly put the issues behind us and ensure continuity of our operations and our services delivered to our customers. Do everything that we can as an organisation to ensure the stakeholders Restore confidence of the customers employees, suppliers and investors by ensuring business continuity.
BIBLIOGRAPHY
http://en.wikipedia.org/wiki/Information_technology
http://www.rediff.com/money/2008/jul/17sd1.htm
http://www.livemint.com/2009/01/07214335/Truth-about-Satyam
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4
http://www.thehindubusinessline.com/2009/01/14/stories/20090
http://www.satyamscam.info/
http://satyamscam.in/2009/03/govt-to-provide-help-to-cbi-in-s
http://www.pdfcoke.com/
http://www.blonnet.com/2009/01/12/stories/20090112511306
http://www.blonnet.com
MAGAZINE
NEWS PAPER
Raju Raju sat up on the wall... Raju Raju had a great fall... Balance sheet died... Shareholders cried... Raju Raju made a fraud.
University School Of Management, KUK
IT Industry
Information technology (IT), as defined by the Information Technology Association of America (ITAA), is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware.“ Information Technology is one of the most important industries in the Indian economy. The IT industry of India has registered huge growth in recent years. India's IT industry grew from 150 million US Dollars in 1990-1991 to a whopping 50 billion US Dollars in 20062007.
In the last ten years the Information Technology industry in India has grown at an average annual rate of 30%. In 1970, high import duties had forced IBM to leave India. However, after the early nineties, many multi national IT companies, including IBM, have set up their operations in India. During the ten year period 1992-2002, the Indian software industry grew at double the rate as the US software industry. Deregulation policies adopted by the Government of India have led to substantial domestic investment and inflow of foreign capital to this industry.
SATYAM
Set up in the year 1987 to provide services in IT sector India’s 4th biggest software company in India It is listed in BSE, NSE, NYSE and Euronext (Amsterdam). BSE IPO oversubscribed 17 times when made public in 1991 The company employs 53,000 IT professionals across development centers in 6 continents
First IT Company in the World Certified under ISO9001:2000 Ranked Among India’s Top 10 Best Employers, 2004 and 2003 Top 13 Best-Managed Companies in India Winner, Corporate Citizen I award for Corporate Social Responsibility SAP Pinnacle Award 2008 Satyam Wins golden peacock award for excellence in Corporate Governance on Global level for 2nd time United Kingdom Trade and Investment India Business Award for Corporate Social Responsibility
The company was promoted by 2 brothers B Rama Raju and B Ramalinga Raju. On 26th August, 1991 it was converted into a Public Limited Company and went for PUBLIC ISSUE in 1992. Satyam headquater is situated in Hyderabad. During the year 1996 company promoted 4 subsidiaries: – Satyam Renaissance Consulting Ltd. – Satyam Enterprise Solutions Pvt. Ltd. – Satyam Infoway Pvt. Ltd (e-commerce) and – Satyam Spark Solutions Pvt. Ltd. (software's)
Providing internet in India
In the year 1999, Satyam Infoway Ltd, became the second largest Internet services provider in India based on the number of customers. Satyam Infoway (sify) is the first Indian Internet company listed on NASDAQ. The Company launched its shopping channel as (www.sifymall.com).
In 2001, The American depositary shares (ADS) of Satyam Computer Services on May 16 was listed at .16 $ on the New York Stock Exchange (NYSE) at a premium of 14.9 per cent to the offer price. Satyam became the world’s first ISO9001:2000 certified IT company. During 2002, Satyam Computer Launched operations in China.
Industry Presence Satyam provides services in the following areas:
Aerospace and Defence Banking, Financial Services &Insurance Energy and Utilities Life Sciences & Healthcare Manufacturing, Chemicals & Automotive Public Services & Education Retail and Consumer Packaged Telecom, Infrastructure, Media and Entertainment & Semiconductor Travel and Logistics & Industrial Equipment
> Chairman and founder Satyam Computers Services Limited > MBA from Ohio University > IT man of the year award by Data Quest in 2002 > Winner of Ernst & Young entrepreneur of the year award in 2007 B. Ramalinga Raju Founder & Chairman, Satyam Computers Ltd.
B. Rama Raju Promoter & CEO, Satyam Computers Ltd.
> He became the Managing Director and Chief Executive Officer in 1991 > Mr. Rama Raju holds a Master of Economics degree from Loyola College, Chennai and a MBA degree from Loredo State University, Texas > Before 1997, he was with Maytas Infra Limited as one of its Directors
Satyam Clients A total of 650+ Clients 185 of the top fortune 500 Companies
Satyam Board Structure B.Rama Raju Promoter & CEO
Other Independent Directors
B.Ramalinga Raju Promoter & Chairman
Ram Mynampati Whole time Executive Director
Dr/ M. Srinivasan
GTB/Dr. Reddy’s Laboratorie s
Srinivas Vadlamani Chief Financial Officer
Prof. Krishna G Palepu
Mr. Vinod K Dham
Sasken Communication/ Hellsoft /Montalvo Systems and Newpath
Prof. M Rammoha n Rao
ISB Dean/ Bharat electronics
Mr. T R Prasad
Prof. V S Raju
Former CabinetSecretary /GMR Infra/ GVK Taj
Satyam – Share holding Pattern
Total Market capitalization of Rs. 15,262 Cr (As on Dec 16, 2008 )
Maytas Infrastructure Raju’s hold 36.64 per cent while institutional holding is 10.92 per cent The company had raised Rs 327.45 crore through IPO. It had a turnover of Rs 1,660 crore and net profit of Rs 100 crore in the last financial year Satyam planned to acquire 51 per cent stake for Rs 1, 440 crore or $0.3 billion
Mr. Teja Raju(VC)
Maytas Properties B. Rama Raju Jr. (VC)
o o o o
Raju’s family owns 35% of Maytas properties Founded in 2005, it has a land bank of 6,800 acres It has clearances for three IT SEZs based on 148 acres An undisclosed stake is held by Infinite India Investment Management, a realty fund jointly promoted by JM Financial and US-based SRM Investments, which invested Rs 600 crore in February
Controversies Maytas acquisition World Bank
Upaid lawsuit Accounting scandal of 2009
So, How did it all begun?
21 April 2008
2006
26 Jan 2009 22 Sep 2008
Satyam revenues cross $1 Billion
Satyam becomes first Indian company to publish IFRS audited financials
Satyam receives the Golden Peacock Award for excellence in Corporate Governance from World council
16 Dec 2008
17 Dec 2008
Satyam gets board approval for controlling stake in Maytas Infrastructure and Maytas properties as fully owned subsidiary for $1.6B (Rs. 8000 Cr.)
26 Jan 2009
Satyam backs out of Maytas deal citing investors protest Major Clients of Satyam express dissatisfaction. Contracts worth $200 million up for grabs Satyam shares plunge 55 percent in NYSE. BSE share plunges over 30%
Board meeting to be held on Dec 29 for proposed buyback of shares
19 Dec
20 23 Dec Dec
British mobile solution provider Upaid files a law suit against Satyam in a district Court in the US over Maytas deal. May face $1 Billion in penalties Centre refers Satyam deal to Registrar of Companies (RoC)
26Jan 2009
World Bank bans Satyam for 8 years due to inappropriate payments to staff and inability to provide information sought on invoices
26 28 29 Dec Dec Dec
1st independent director Dr. Mangalam Srinivasan resigns from Satyam board Satyam objects to world bank statements, asks to apologies or face legal action
26 Jan 2009
3 more Independent Directors resign. Mendu Rammohan Rao, Krishna G Palepu and Vinod K Dham
Board meet initially scheduled for 29th postponed to 10th January Board announces exploring option for buyback of shares to restore investor confidence
Satyam asks DSP to review board structure
Promoters disclose that their entire holding in Satyam pledged with institutional lenders since 2006
Rumors in market about strategic takeover by IBM, Accenture
IL&FS sells 44.1 lakh shares pledged shares of Satyam promoters in 1 day. Promoters equity reduced from 8.6% to aprrox 7%
30 02 03 Dec Jan Jan
Post cancellation of deal, Maytas looks for raising $500 million through sale of equities and properties
IL&FS sells further 44.27 Lakh pledged shares taking the tally to 1.5 crore pledged shares Satyam-Upaid case hearing over the Maytas deal in Texas court on January 8.
26 Jan 2009
Satyam board confirms promoters stake to be around 5%. Further 3.2% still pledged.
05 06 Jan Jan
Promoters stake in the company down to 4.5% SEBI considers proposal to make it mandatory for promoters and majority share holders to disclosed pledged shares to stock exchange
Total pledged shares sold by IL&FS reaches 2.5 Cr. in last 13 days. Promoters stake down to 3.6%. Still a further 1.7% are pledged The Night Before 7th Jan Merill Lynch discovers serious irregularities in books of accounts and approaches regulator SEBI for further course of action and its inability to investigate further. DSP submits report to SEBI and Satyam management late night.
26 Jan 2009
Tech Mahindra (Revenues 3766 Cr.) offers to merge with Satyam (Revenues 8473 Cr.)
07 Jan
09:45 A.M. Satyam Chairman Ramalinga Raju writes the letter to the company board
Auditing firm PWC under scanner Govt. instructs RoC to review report
ADR’s crash 90% Satyam BSE scrip falls 78% DSP snaps ties with satyam. Ram Mynampati takes over as interim CEO according to Raju’s letter
26 Jan 2009
Hunt for Raju brothers begin. Amid speculation over his whereabouts, Raju is believed to have left for the United States in connection with a court case.
Satyam stripped of Golden Peacock award
NSE removes Satyam from its benchmark index Nifty. It will be replaced by Reliance Capital with effect from January 12. It will also be removed from various other indices like CNX 100, S&P CNX 500,CNX IT and the CNX Services sector index
08 09 Jan Jan
PwC in major trouble. Stocks of PwC clients take a major beating at the BSE and NSE
BSE to replace Satyam Computer with Sun Pharmaceutical in its benchmark index Sensex with effect from January 12.
CFO Valdamani Srinivas, who is the financial custodian of the company resigns PwC shot back at Satyam, saying in a media statement that the auditing was based on the audit evidence provided by Satyam and in was accordance with applicable standards.
10 Jan
26 Jan 2009
Former CFO Valdamani Srinivas remanded to judicial custody
Raju brothers arrested by the police on charges of criminal conspiracy, cheating, forgery, misappropriation of funds and criminal breach of trust. Market Capitalization of satyam falls to Rs. 1,607 Cr from Rs.15,262 Cr. on Dec 16 in 19 trading sessions.
13 14 15 16 Jan Jan Jan Jan
Government hands satyam case to SFIO
The newly appointed 3 member board appoints auditing firm KPMG and Delloitte to assist it in cleaning the mess in the scam tainted company’s accounts
23 year old employee of satyam commits suicide in Chennai
26 Jan 2009
Maytas stocks hit the lower circuit for 7th consecutive trading session
The government expanded the threemember Satyam board to six to include S Balakrishnan of Life Insurance Corporation, Tarun Das, chief mentor of the Confederation of Indian Industry and T N Manoharan, former president of the Institute of Chartered Accountants of India
Why on 7th Jan 2009? •
DSP Merrill Lynch informed SEBI about Material irregularities in Accounts on 6th Jan
•
Minutes of Meeting of 16th December,2008 were not submitted to RoC-(This created some doubts)
•
Hearing of Upaid- satyam case on 8th Jan at the US court
Fabricated Income Statements
‘Creative Account Practice’
• Details of cash balances with Scheduled banks are not there in the Annual report • Question raised by Equity analyst Kawaljeet Saluja -$500 mn cash parked in current account
Overstated cash balances, Income receivables
Understated Liabilities
Fraud Amount
Why and How How ????
Fake FD receipts and Employee Nos.??
Repeat the procedure
Parallel Finance Department ???
Satyam-Maytas Nexus Contd….. Cash raised & siphoned off funds used
to buy several thousands of acres of land across AP through several benami accounts Helped Maytas in getting major contract
Some Comments
If the first fraud is for Rs100, the next time add another zero. It (accounting fraud) grows exponentially – Anil Roy, Grant Thornton India
It was like riding a tiger, not knowing how to get off without being eaten- Raju Ramalinga while admitting the fraud
On Wikipedia, for the first time, India has been put on to the list of largest corporate scandals in the world, all thanks to Satyam – a blogger
STOCK CHARTING
PWC had been auditing satyam’s balance sheet since year 2000. Companies have to keep bank statements for the current and preceding years at registered offices. It is suspected that the files vanished as they would have given away the fraud.
Wary Investors exit PwC Clients Investors brought shares of other companies in the same sector Out of 100 clients of PwC, most companies share fell by 5-15%. Risk of Reputation
Other company bigwigs Satyam's
chief financial officer Srinivas Vadlamani has already been arrested. He has even admitted to signing on the dotted line , saying he never really paid much attention to the balance sheet! But could only two or three people have managed to cook the books for years of a company so large?. It is quite likely that some other top managers in the company too were in the know of what was happening but chose to keep quiet
RESTRUCTURING PROCESS
The
government decided to appoint 10 nominee-directors. The new board will take a decision on a new management team.
Deepak Parekh Former HDFC Chairmam
Kiran karnik Former NASSCOM Chairmam
C Achutan Former SEBI Member
The 3 members of BCG has been appointed as a management advisor and is working to revive satyam. Satyam board has appointed GOLDMAN SACHS & AVENDUS as its Investment Bankers.
Companies and government are closely watching Satyam strategies. They feel that satyam should stand of its own first, if not then only other company’s would approach for a takeover/acquisition of satyam. Other IT comany like HCL is also considering a possibility of the takeover and keeping a watch on satyam moves. But at last the TECH MAHINDRA has take over the satyam and in june 2009 it’s to new name “MAHINDRA SATYAM”.
Challenges ahead Client Acquisition and Retention Retaining employees Productivity Resource and Skill Gaps Funding What
(policies)
Who (decision)
How (processes)
Govt plans Rs 2000-crore package for Satyam
The Indian Government has decided to take direct action to looking at a salary bailout for the 53,000 Satyam Computer Services employees. A Rs 2,000 crore package is under consideration to ensure that Satyam employees get their salary on time after it the new board said that they are looking for funds. The government is looking at giving three instalments of Rs 500 crore to Satyam for the next three months and is planning another infusion of about Rs 400 crore.
IMPACT On INDIA INC. Questions have been raised on the balance sheets of
other IT Companies and the role of auditors. Investors loosing faith in major IT firms and other major Corporate due to fraud arisen out of Mr. Raju’s confession. Due to the satyam turbulence, 70 independent directors of various companies including ZeeNews, TVS Motors, BHEL etc, had quit from satyam and resigned from there respective companies. SEBI has made mandatory for the promoters of the companies to disclose details of the shares pledged by them.
Satyam’s Market Price Can Not Be Used For Valuation Of Satyam Asserting that only action could determine the sale price for Satyam, Modi said that stock market price could not be considered a benchmark in this case, as the market was not fully aware about the firm’s actual assets and liabilities. “Even the board is not aware (about the assets and liabilities), so the market is working on the available information. So, I don’t think there could be any basis of reserve price,” Modi added.
No advance tax paid by Satyam in FY09
Satyam Computer has not paid a single rupee as advance tax in the first three quarters of the current fiscal, though the IT company paid Rs 25 cr as fringe benefit tax (FBT) till December 15. As payment of advance tax is always considered an indicator of profitability of a company, Satyam’s non-payment of advance tax could also imply that trouble had been brewing for a long time.
Raju spends time in jail reading books, newspapers Former
chairman of Satyam Computers, B Ramalinga Raju spent his fourth day in the Chanchalguda Central prison reading books, news magazines and newspapers. January 10 and is now spending most of his time in the jail by reading books and is keeping himself abreast with latest developments through newspapers.
In the News..
CONCLUSION
We also wish that the company stands once again whooping investors not with the false promises but in accordance with its name that is TRUTHFULNESS. Quickly put the issues behind us and ensure continuity of our operations and our services delivered to our customers. Do everything that we can as an organisation to ensure the stakeholders Restore confidence of the customers employees, suppliers and investors by ensuring business continuity.
BIBLIOGRAPHY
http://en.wikipedia.org/wiki/Information_technology
http://www.rediff.com/money/2008/jul/17sd1.htm
http://www.livemint.com/2009/01/07214335/Truth-about-Satyam
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4
http://www.thehindubusinessline.com/2009/01/14/stories/20090
http://www.satyamscam.info/
http://satyamscam.in/2009/03/govt-to-provide-help-to-cbi-in-s
http://www.pdfcoke.com/
http://www.blonnet.com/2009/01/12/stories/20090112511306
http://www.blonnet.com
MAGAZINE
NEWS PAPER
Raju Raju sat up on the wall... Raju Raju had a great fall... Balance sheet died... Shareholders cried... Raju Raju made a fraud.
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