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Company Profile
Satyam computer services limited was founded in 1987 by Mr. B. Ramalinga Raju Satyam computers started with only 20 employees The company offers consulting and information technology services to various sectors Satyam computers converted into public ltd co. In 1991 Listed in Bombay stock exchange in 1991 Listed in New York stock exchange in 2001 Listed in EURONEXT Amsterdam stock exchange in 2008 There were 52000 employees working in satyam in September 2008
Achievements
In June 1991 satyam made 185 clients from first fortune 500 companies In 1994 satyam made allies with Dun & Brad Street Crop an USA based company In 2000 satyam was declared one of the 100 most pioneering technology companies by World Economic Forum In 2006 satyam ranked No. 1 in the ASTD award (American Society For Training And Development) On April 14, 2008, Satyam won awards from MZ consult's for being a leader in India in corporate governance and accountability
Responsible Parties
Ramalinga Raju:
B Rama Raju:
V Srinivas:
Stock markets around the world collapsed during 2008 & the BSE fell from 21,000 to below 8,000. The losses caused investors to withdraw funds from the stock market. Satyams continuance positive results during 2008 , even in the economic crisis. In October 2008, satyam reported net income of $132.3 million, an increase of 28 percent from the same quarter of the previous year.
Saytam asserted that, despite the challenging environment, it continued to find opportunities for growth. During October, one stock analyst drew attention to large cash balances in noninterest bearing bank accounts & expressed concern about the large balances and the accuracy of the numbers. Investors ignored the analyst's and the stock price rose with the reports of positive earnings and revenue growth.
In December 2008, Board of Directors approved the purchase of Maytas Properties and Maytas Infrastructure, two companies unrelated to the information technology field. At the time, Mr. Raju and the Board anticipated that the market would "be delighted" by the two transactions as it would provide Satyam with greater diversification. However, investors were outraged over the transactions because Mr. Raju's family held a larger stake in Maytas Properties and Maytas Infrastructure.
Shareholders viewed the transactions as an attempt to siphon money out of Satyam into the hands of the Raju family. Satyam quickly aborted the transactions, but the incident still caused significant damage to Satyam's reputation as a well-managed company. After the incident, satyam's shares dropped nearly 10 percent and four of the five independent directors resigned. On december 30, analysts with Forrester research advised clients to stop doing business with satyam because of the fear of widespread fraud. Satyam hired Merrill lynch to advise it on ways to increase shareholder value.
Fake Accounts
Mr.Raju overstated income in every quarter for several years to meet analyst expectations.
Mr. Raju created fake bank statements to advance the fraud. Mr. Raju created 6,000 fake salary accounts and appropriated the money after the company deposited it. The global head of internal audit created fake customer identities and generated fake invoices against their names to inflate revenue. Mr. Raju diverted a large amount of cash to other firms that he owned ,since 2004
Investment Current Assets , Loan & Advance 1.Sundry Debtor 2.Cash & Bank Balance 3.Other Current Assets- Interest Accrued On Fixed Deposits
502.22
Role Of Auditors
Global auditing firm Price Waterhouse Coopers audited Satyam's books from June 2000 until the discovery of the fraud This fraud was not committed overnight
Maytas infra and Maytas properties : firms owned by the sons of Raju. A property development company founded in 2005
The Raju family directly owned about onethird of each in the two companies.
Impact Of Scam
Jobs of over 50000 were at risk. India`s global image was suffered. Indian stock market fell dramatically. Biggest single day fall of 175 Rs. On Jan 6th in saytam share. SEBI said that, if Saytam found guilty, its license to work in India may be revoked. The New York Stock Exchange halted trading in Satyam stock. India's National Stock Exchange announced removal of Satyam from S&P CNX & Nifty 50. The GDP fell by 0.4%. I.T sector suffered a downturn.