FOUNDER : Mr.

Raju Ramalinga
CEO : Mr. A. S. Murthy

 1987 - Incorporated as Private Limited Company.

 1991 - Along with debut on BSE and recognized

as Public Limited company, IPO over
subscribed by 17 times.

 1999 - Presence established in 30 countries.

 2001 - Listed on NYSE

 2006 - Revenue Exceeds US $ 1 billion.

Year 2008 -

The story Begins …………………

 The Satyam Saga …

 December 16, 2008 :

 Satyam Board of directors has approved proposals to acquire 100% stake in
Maytas properties and a 51% share in Maytas Infra.

 December 18, 2008 :

 Krishna Papelu received an anonymous email from Joseph Abraham –
declared as whistle blower in this case.(what email)

 The email was forwarded to the Satyam audit committee and Company
auditors – Price Waterhouse.

 Price Waterhouse fixes up a meeting on 10th Jan, 09 to prove the allegations

are wrong.

 Raju receives calls from directors of the company for an answer to allegations.
 And the saga continues…

29th December 2009 :

 Resignation of Directors starts
…Krishna Palepu and Mr. Vinod
Dham resign from the board.

7th January, 2009 :

 The Board of directors and the

chairman of SEBI receives a
letter from Raju - tendering his
resignation and confessing
detailed financial irregularities.
 Contents of the Letter -

 Cash and Bank Balance

Accrued Interest

Liability

Debtors

Revenue

Operating Margin

Apology

Recommendations
 Market Reaction…..

DATE OPEN DAY HIGH DAY LOW CLOSE ON

17/12/08 214 215 152 157
7/1/09 179 188 30.80 40. 35
9/01/09 36 36 6.3 23.75
Aftermath of the scam….

A Giant account contributing $40 Million a year, Merrill Lynch

terminated its engagement with the company.

World bank banned Satyam for 8 years.

Unpaid Systems sued Satyam for over 1 billion $

NYSE halted trading in Satyam

Satyam unlisted from Nifty and was replaced with Reliance capital.

Faith in Corporate Governance and auditors shattered.

 Role of the Government ……

The Indian Government may provide temporary direct or indirect

liquidity support to the company

New Board of directors appointed by the government :

 Mr. C. Achuthan (Director – NSE)
 Mr. Deepak S. Parekh ( CEO – HDFC)
 Mr. Kiran Karnik (President / Trustee – Nasscom)

Proposal to audit private sector companies a/c’s by CAG have

business more than 1000 crores.

Offers invited to take over the Satyam Management.

 SFIO Findings – ……

1st phase - 1999-2000

 Y2K phenomenon - Huge orders – good profits

2nd phase – 2001- 2004

 Falsification starts to keep the share price high
 Satyam Promoters offloaded their shareholdings
 Money earned was invested into real estate (Raju created 374
infrastructure companies)

3rd Phase – 2007-2008

 Company accumulate huge false cash reserves.
 Actually it was starved of funds and running the company
became extremely difficult.
 Promoters decides to acquire Maytas properties and Matas Infra.
 Independet Director Krishna Palepu receives an email from
Joseph Abraham informing about the irregularities.
Current Status….

 Tech Mahindra wins the bid for Satyam with 41% stake.

 Raju still in Judicial Custody.

 Post the take over by Tech Mahindra – Satyam shares cross 100.
Other Major Scams..