Asias Enron: Satyam (Sanskrit Word for Truth)

INDEX
Introduction to Satyam computers. Why Raju was failed. Confession of Raju. How did he cook the balance sheet Who is to be blame.!! What was possible solution ..? Current status of company.

INTRODUCTION
Satyam Computer Services Ltd. is a consulting and information technology services company based in Hyderabad, India .

It was found in 1987 by B.Ramalinga Raju.

The company offers information technology (IT) services spanning various sectors, and is listed on the New York Stock Exchange and Euronext. It is considered as an icon among the IT companies and at one point had over a billion dollar revenue.

 Satyam's network covers 67 countries across six continents.

The company employs 40,000 IT professionals across development centers in India, the United States, the United Kingdom, the UAE, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia.
It serves over 654 global companies, 185 of which are Fortune 500 corporations.

WHY HE FAILED????
The promoters decided to inflate the revenue and profit figures of Satyam. In the event, the company had a huge hole in its balance sheet, consisting of non-existent assets and cash reserves that have been recorded and liabilities that are unrecorded. So to fill up this gap.. Company announced Acquisition of 51% stake in Maytas Infra and 100% stake in Maytas Properties on 16th Dec 2008 but were unsuccessful.

 The deal was not profitable for investors Investors dumped Satyams stock and threatened action against the management. Satyam Computer ADRs took a huge beating. This was mainly done to hide the irregularities in the accounts of Satyam It is also said the close association with the political leaders is one of the reasons.

Day by Day situation

16th Dec,2008 Mr Raju ( MBA from ohio state uni. and Mgt program from Havard ) announced the purchasing of two son owned companies-un related diversification-to unfold issue and just before scandallast chance 18th dec negatives response of share holder regarding above decision 23rd dec world bank announced to ban satyam for 8 yrs for bribing the bank staff and data theft. 7th jan Day of CONFESSION

CONFESSION
He tried to fill the gap b/w actual profits of the company and the profits that were shown in records, balance sheets etc. and also tried to cope up the situation till last minute . But now the situation were beyond his hands and therefore he confessed the frauds(on Jan 7, 2009) made by him by showing inflated profits in the balance sheet.

According to Mr. Raju, the balance sheet shortfall was more than Rs.7000 crore. It was Riding a tiger ,not knowing how to get off without being eaten. The following statement he made in his confession letter Every attempt to eliminate the (balance sheet) gap failed. None of BOD or Member or family aware of the accounting scam.

WHAT WENT WRONG?

Simple manipulation of revenues and earnings To show superior performance. Raising fictitious bills for services that were never rendered. To increase the Cash & bank balance correspondingly. Operating profits were artificially boosted from the actual Rs 61 crore to Rs 649 crore.

HOW AND WHY hidden..??

Its financial statements for years were totally false, cooked up and... Never had Rs 5064 crores (US$ 1.05 Billion) shown as cash for several years. Its liability was understated by $ 1.23 Billions. The Debtors were overstated by 400 millions plus. The interest accrued and receivable by 376 Millions never existed. The IT outsourcing industry has been going exponentially in the last twenty years and Satyam took advantage of this favorable scenario to inflate its own growth. Weak system of internal control No Transparency by Raju brothers .

If you dont understand what a co. does , dont invest in it .If mgt refuse to fill in holes and keeps Invester in the dark ,RUN! -Warren Buffet

SATYAM SCAM: SO WHO IS TO BLAME?

Who is guilty in this sordid state of events? Raju is by far the father of this fraud.

But there were others who are also culpable.

DONT TRY THIS AT OWN..

THANK YOU