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Companys Goal: To find creative and productive ways of delighting its stakeholders
A look at their awards shows that the achievements for which they were awarded, later
turned out to be the crimes for which they were criticized.
FINANCIAL HEALTH
Before the scam unfolded, Satyams balance sheet showed signs of a healthy
company. In 8 years, from 2001 to 2008, its turnover increased from Rs 14.12
billion to Rs 84.73 billion.
Profit margin increased from 10% to 20%. Growth rate was between 24% to 26%.
Robust profile of Customers: Top 100 customers accounted 85% of revenue.
Number of Customers
50
> 10 million $
230
> 1 million $
Satyam was the first Indian company to post its audited results for 2007/08
financial year in accordance with International Financial Reporting Standards
(IFRS).
FACTS OF CASE
Date: 16 December 2008
Act:
CONSEQUENCES
December 26:
Mangalam Srinivasan, independent director since 1991 resignes,
responsibility for not opposing acquisition
takes moral
December 29:
Infrastructure leasing and Financial services Trust sells 4.41 million satyam shares at
Rs. 139.83
Raju and familys stake diluted to 5.13%(dec) from 8.65% (sept)
Anonymous email
Regards,
Anonymous Board member
RESIGNATIONS
RAJUS CONFESSION
Cheated on
False Figures
Facts
5341 crores
5040 Crores
Accurued interest
376 crores
Nil
2651 crores
490 crores
September Q2 revenue
2700 crore
2112 crore
September Q2 operating
649 crore (24% of revenue)
61 crores(3% of revenue)
Falsified
margin the financial statements to the tune of Rs.71.36 billion, including Rs.50.46 billion in non-existing cash
and bank balance
Profits as low as 3%
Financial gaps in actual profits and stated profits was known to senior officials like CFO, COO
ANATOMY OF FRAUD
The agency has retrieved over 7,000 fake invoices and forged documents showing fixed deposits and bank
balances and their evaluation shows that the size of the scam is over Rs9,600 crore, much more than the
Rs7,800 crore disclosed by Raju on 7 January.
The accused relied heavily on technology to generate nearly 7,000 fake invoices to the tune of Rs4,500 crore
and fed the same into Satyams books.
.
The accused forged documents and created fake fixed deposit receipts to the tune of Rs3,300 crore
It was found that SATYAM closed the 2007/08 financial year with a debt of INR 2.36bn even though they had
enormous amount of INR 44.62bn lying unused in the accounts.
CONTINUES.
The FDRs were shown by the accused as available deposits by the company & the accused had also allegedly
manipulated the bank guarantees to show the balance in bank accounts as Rs1,800 crore.
The CBI alleged that the accused had forged bank documents showing the existence of the cash balance in
five banks including ICICI Bank, HSBC, Citibank and BNP Paribas but the banks clarified that they do not
have any cash balance in the name of the firm.
The CBI also probed the rotation of funds and role of front companies used in rotation of funds & it was
found that the accused had floated more than 320 companies and nearly 60 companies had same addresses.
Rajus claim that SATYAM earned only 3% net profits was hard to believe given that competitors made 2025% net profits during the same years.
Satyam's shares fell to 11.50 rupees on 10 January 2009, their lowest level since
March 1998, compared to a high of 544 rupees in 2008.
In New York Stock Exchange Satyam shares peaked in 2008 at US$29.10; by
March 2009 they were trading around US$1.80.
Fraud resulted in a decline of more than 78% of Satyams market cap.
In February,2008 SEBI passed the sale of 51% stake of Satyam through a global
bidding process.
Tech Mahindra, a M&M group company won the bid for Satyam by paying INR
17.57 billion for a 31% stake in the company.
In 2010, SEBI amended the Listing Agreement to include the provision dealing with the
appointment of a chief financial officer but it did not insist on the compulsory rotation of
auditors.
In 2009, the Ministry of Corporate Affairs also released a set of voluntary guidelines for
corporate governance.
i.
ii. The roles and responsibilities of audit committees & the boards of companies, whistle-blower
policies.
iii. The separation of the offices of the chairman and the CEO to ensure independence and a
system of checks and balances, and various other provisions relating to directors such as their
tenures, remuneration, evaluation, the issuance of a formal letter of appointment.
iv. Placing limits on the number of companies in which an individual can be a director
BY
TEAM 3
ADITYA DEVANG RAVAL(063)
BISWAA BIJAYEE BHATRA(073)
KARAN BAKSHI(083)
POOJA RAWAT(093)
SANAL SAMKUTTY(103)
SUSHIL DANDAGE(113)