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Satyam Computer Case Study

The document summarizes the history of Satyam Computers from its founding in 1987 to its acquisition by Tech Mahindra in 2009. It discusses that Ramalinga Raju founded Satyam Computers in 1987 and took it public in 1991. However, in January 2009, Raju resigned after admitting to a corporate fraud where he had fudged Satyam's accounts for several years by falsely inflating profits and cash balances. Raju and his brother were subsequently arrested. After the scandal, the government appointed a new board for Satyam and a new CEO was selected. Tech Mahindra ultimately acquired Satyam in April 2009.

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Ridhi Saxena
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678 views10 pages

Satyam Computer Case Study

The document summarizes the history of Satyam Computers from its founding in 1987 to its acquisition by Tech Mahindra in 2009. It discusses that Ramalinga Raju founded Satyam Computers in 1987 and took it public in 1991. However, in January 2009, Raju resigned after admitting to a corporate fraud where he had fudged Satyam's accounts for several years by falsely inflating profits and cash balances. Raju and his brother were subsequently arrested. After the scandal, the government appointed a new board for Satyam and a new CEO was selected. Tech Mahindra ultimately acquired Satyam in April 2009.

Uploaded by

Ridhi Saxena
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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 Founded – 1987

 Public ltd. Co.- 1991


 Offered consulting and information tech.
services spanning various sectors.
 covers 66 countrie and 53000 employees
 Also listed in BSE,NSE,NYSE.
 Ramalinga raju was born
on September 16, 1954
in a family of farmers.
 He founded satyam
computers and was its
chairman until january 7 ,
2009 when he resigned
from satyam board after
admitting to corporate
fraud.
 1987 :
Satyam computers pvt. Ltd. Born.

 1991:
June – first fortune 500 clients
august – converted into public ltd co.

 1994:
The big break – allies with dun and bradstreet corp.
declared most pioneering technology companies by
world economic forum.

 2000:
Dataquest IT man of the year award.
THE SCAM
 Raju and his brother, B Rama Raju, were
arrested by the Andhra Pradesh police on
charges of breach of trust, conspiracy, cheating,
falsification of records.
 Raju has mislead various investors.
 Raju had also used dummy accounts to trade in
Satyam's shares.
. He has violated the insider trading norms.

 Funds from Satyam were diverted to maytas.

 On 22 January 2009,CID told in court that the actual


number of employees is only 40,000 and not 53,000 as
reported earlier.

 . Raju wanted to take over his MAYTAS INFRA and


MAYTAS PROPERTIES.
He was blamed that he was using the funds of the
investors for the family business.
World bank had banned the satyam to take any services
for 8 years (due to illegal profit and lack of essential
document).
 Liabilities were understated by $1.23billion.
 Debtor were overstated by 490million plus.
 Operating profit were boosted from RS. 649 crore .
 This was mainly done to hide the irregularities in the
accounts. It was also said that close association with
political leaders is one of the reason.
 Raising fictitious bills for services that were rendered
 To increase cash and bank balances correspondingly.
 Former CEO and founder of Satyam ,Raju Ramalinga
confessed that he fudged the accounts of the company
and inflated earning ,profit etc.
 The company accounts books said that Satyam had over
RS. 5000crore in the bank when it actually did not .Raju
said that he had been fudging account for several years yet
no one but and his brother knew about him.
 Satyam’s CFO Shrinivas Vadlamani said that he had knew
paid much attention to the balance sheet.
 Appointing new board

 Board appointed by government

 Satyam shares gained over 44% day after appointment


of new board

 New CEO – A S Murthy

 Tech Mahindra acquired Satyam on April 13,2009.


More scandals like Satyam can
be avoided if-

1. If auditing firm is honest

2. SEBI plays an active role

3. Periodic review of legal


compliance reports by
independent directors.

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