index

•Introduction to satyam computers,

maytasinfra & maytas properties
•Satyam-maytas fiasco
•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.
Satyam has strategic technology and
marketing alliances with over 50 companies.
Apart from Hyderabad, it has development
centers in India at Bangalore, Chennai, Pune,
Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar,
and Visakhapatnam.
Satyam Maytas Fiasco
Satyam Computers had on  December 16,
2008,  announced that it will acquire two group
firms - Maytas properties and Maytas Infra
The BOD of Satyam had approved the
founder’s proposal to buy 51 per cent stake in
Maytas Infrastructure and 100 % in Maytas
Properties.
The total outflow for both the acquisitions was
expected to be US$ 1.6 bn comprising of US$
1.3 bn for the 100% stake in Maytas Properties
and US$ 0.3 bn for the 51% stake in Maytas
Infra.
This is the move that sparked a row over
alleged violation of corporate governance laws.
This deal is not profitable for investors .So after
this announcement they started to raise their
voices against the deal
Maytas Infra
The company is run by the sons of Ramalinga
Raju
It was started in the late 1980’s by Ramalinga
Raju
The main reason for the debacle of Maytas
Infra is due to the debacle of Satyam
Maytas Properties Ltd
One of the reasons for the debacle of Maytas
properties is the ongoing economic slowdown
The company has huge land banks and the
prices have dropped down in the real estate
significantly
Satyam’s justification for
Maytas buyout deal
de-risk the core business
the integrated organization would be stronger
and more diversified to deal with the
uncertainty of the market.
feeling that in the recent times it is difficult to
make a strategic deal with other IT companies.
Reaction of Investors
after the announcement
of accusation of Maytas
Investment giant Templeton and brokerage
house CLSA opposed to this decision.
Result of Investor’s
Reaction
It results that part of investors succeeded to
thwart an attempt by the minority-shareholding
promoters to use the firm’s cash reserves to
buy out two companies owned by them —
Maytas Properties and Maytas Infra.
That aborted attempt at expansion
precipitated a collapse in the price of the
company’s stock and a shocking confession of
financial manipulation and fraud from its
chairman, B. Ramalinga Raju
 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
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 Satyam’s stock and
threatened action against the
management.
•Satyam Computer ADRs took a huge
• 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.
. 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 the‘confessional’
statement of Mr. Raju, the balance
sheet shortfall was more than
•The following statement he made in his confession
letter – “Every attempt to eliminate the (balance
sheet) gap failed.
FINANCIAL
SHENANIGANS
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
 AND HOW….?????
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
 CURRENT ASSESTS ACTUAL CASH
IN BANK WAS
321
INFLATED
5040cr
2651.6
5312.62
376
ACTUAL DEBT WAS 2161
OVERSTATED 490 Cr

LIABILITIES NO ACCRUED
INTEREST
376 Cr

UNDERSTATED
LIABILITY 1230
Cr which was
arranged by
ARTIFICIALLY ADDED 588 Mr.Raju
OPERATING PROFIT
ADDED 588
INCREASING THE CASH 5040+376+1230+
RESERVE ONLY FOR Q2
ALONE TO 588
490= 7136
 ACTUAL OPERATING MARGIN
61 Cr REPORTED-649 Cr(
CREATED AN ARTIFICIAL
REVENUE OF 588)

GROWTH IN THE OPERATING PROFIT

INFLATING THE PROFIT AND REVENUE
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.
Satyam's auditors
So what were the auditing
company,Pricewater
houseCoopers, doing?
PwC has written a letter
to the BOD of Satyam
that its audit may be
rendered "inaccurate and
unreliable" due to the
disclosures made by
Satyam's (ex) Chairman.
Is it real? How could
Auditors miss the gaping
Auditors do bank reconciliation to check
whether the money has indeed come or not.
They check bank statements and certificates.
So was this a total lapse in supervision or were
the bank statements forged? No one knows
yet.
The company officials said they relied on data
from the reputed auditors.
The promoters
Since the promoters, in
this case, held only
about 8 percent shares,
their idea to push
through the Maytas
acquisition deal was
defeated by an angry lot
of shareholders.
Other company
bigwigs 
Satyam's CFO Srinivas
Vadlamani has already
been arrested.
But could only two or
three people have
managed to cook the
books for years of a
company so large? Highly
unlikely.
The Sebi
The Sebi had in
December given a clean
chit to Satyam in the
probe on violation of
corporate governance
law.
The bankers
If the auditors were
conned, it means that
either the bank
statement and
certificates were forged
Satyam's banks -- ICICI
Bank, HDFC Bank, Bank
of Baroda, etc
Directors and
independent directors
Despite the
shareholders not being
taken into confidence,
the directors went
ahead with the
management's decision.
The government
The government too is
equally guilty in not
having managed to save
the shareholders, the
employees and some
clients of the company
from losing heavily.
What Management
could do??
Change the name of the company.
Reconstitution of the board :-
Restore the management of the company and
appoint some reputed people as the board of
directors.
Try building confidence in the clients to get back
the lost projects.
The image of the company could be revived by a
series of press conferences highlighting the
ongoing contracts with the clients.
It could also be merged with any other
software company.
 Tech Mahindra wins bid for
Satyam Scam

ØTech Mahindra is paying Rs1757 crore

for a 31% stake in the company, or Rs 58
per share.
ØSatyam Computer Services has now
zoomed 15% to Rs 54.20 ahead of the
announcement of the highest bidder for
the company on April 13, 2009.
ØIn India this moment was full of praise
for the manner and speed with which the
reconstituted board of Satyam Computer
Services found a strategic investor .
Don’t try this at own

Thank you…