case study on sat yam 1111

8/8/2019 Case Study on Sat Yam 1111

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Case study on

SatyamFROM:-AMIT KUMAR

KAPIL DHINGRA

RAMANDEEPVARUN BANSAL


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INTRODUCTION OF SATYAM

RAMANLINGA RAJU- I started the company in

1987 as a private limited company and listed

it`s IPO in 1991. The major clients are IBM,

SBI, MICROSOFT, NESTLE, CITIBANK. We are

having the business in 67 countries with 185

companies which are in top fortune 500

companies. We have won the award forCORPORATE GOVERNANCE continuously for

2nd times from GOLDEN PEACOCK.


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Raju Raju

Yes Baba,Cheating us

No Baba,Telling Lies

No Baba,Open the balance sheet

HA! HA! HA!


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5,040 + 376 +470 (Rs. Cr)

Rs. 1,230 Cr Rs. 7,136Cr

Overstated cash

balances, Income

receivables

Understated LiabilitiesFraud Amount


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ON 16th December 2008

Satyam gets board approval for controlling

stake in Maytas Infrastructure and Maytas

properties as fully owned subsidiary for $1.6B

(Rs. 8000 Cr.)


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Satyam backs out of

Maytas deal citing

investors protest

17 Dec

2008

Satyam shares

plunge 55 percentin NYSE. BSE share

plunges over 30% Board meeting to be held onDec 29 for proposed buyback

of shares


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26th December 2008

The investor starts loosing the interest from

the company and started separating, on 26th

1st independent director resigned.

On 29th December 2008 three more

Independent directors resigned from the

company.

IL&FS sells 44.1 lakh pledged shares of Satyam

promoters in 1 day. Promoters equity reduced from

8.6% to aprrox 7%.


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On 6th January 2009

Total pledged shares sold by IL&FS reaches 2.5Cr. in last 13 days. Promoters stake down to3.6%. Still a further 1.7% are pledged

A Tech Mahindra (Revenues 3766 Cr.) offers tomerge with Satyam (Revenues 8473 Cr.)

The Night Before 7th Jan

Merill Lynch discovers serious irregularities in

books of accounts and approaches regulatorSEBI for further course of action and its inabilityto investigate further. DSP submits report toSEBI and Satyam management late night.


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On 7th January 2009

09:45 A.M

Satyam Chairman Ramalinga Raju writes the

following letter to the company boardaccepting his fraud.

Raju Raju sat on the wall,

Raju Raju had a great fall,Balance sheet died,

Shareholders cried,

Raju Raju made a fraud.


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Contd

Auditing firm PWC under scanner

Satyam BSE scrip falls 78%

Hunt for Raju brothers begin. Amid speculation over

his whereabouts, Raju is believed to have left for theUnited States in connection with a court case.

NSE removes Satyam from its benchmark index Nifty.

It was replaced by Reliance Capital with effect from

January 12. It was also be removed from various other

indices like CNX 100, S&P CNX 500,CNX IT and the

CNX Services sector index.


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On 9th Janaury 2009

Raju brothers arrested by the police

on charges of criminal conspiracy,

cheating, forgery, misappropriationof funds and criminal breach of trust.

Market Capitalization of satyam falls

to Rs. 1,607 Cr from Rs.15,262 Cr. on

Dec 16 in 19 trading sessions.


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On 14th January 2009

Government recruited it`s 3 board of directorsto control the scam and find out thedissimilarities in the company.

On 15th Jan The government expanded thethree-member Satyam board to six to includeS Balakrishnan of Life Insurance Corporation,Tarun Das, chief mentor of the Confederationof Indian Industry and T N Manoharan, formerpresident of the Institute of CharteredAccountants of India


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Satyam Decade at a Glance


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Why on 7Why on 7thth Jan 2009?Jan 2009?

DSPMerrill Lynch informed SEBI about

Material irregularities in Accounts on 6th Jan

Minutes ofMeeting of 16th December,2008were not submitted to RoC-(This created somedoubts)

Hearing of Upaid- satyam case on 8th Jan at theUS court


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Fake FD receipts and Employee Nos.??

Take FDreceipt

Tell to BanksFD receipt is

Lost

Ask forDuplicate

Receipts

Use the Duplicateto Withdraw

money

Park theMoney

in otherBank

At the endshow the

original FD

receipts

The moneyhas already

vanished

Repeat theprocedure


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STOCK CHARTING


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Some Comments

If the first fraud is for Rs100, the next

time add another zero to It (accounting

fraud) grows exponentially Anil Roy,Grant Thornton India

It was like riding a tiger, not knowing how

to get off without being eaten- RajuRamalinga while admitting the fraud.


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The Inside News

Satyam's CFO Srinivas Wadlamani has

sold around 8,00,000 shares & even

Satyam's interim CEO, Maynampati hassold 4,00,000 shares in past 6 months

above Rs 300 per share.

Satyams top 40 officials collectively soldshares worth more than Rs 300 crores in

the past 6 months


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Now company is in big trouble, and has lost

it`s entire goodwill build in the last 22 years,

had lost the interest of the investors, investors

had started pulling their money back from the

company.


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QUESTIONS AND

ANSWERSROUND???


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What do you think were the reasons behind

the whole scam that took place in theSatyam?

What do you think that company should do to

regain its goodwill and position back in themarket?

Why the corporate governance of the

company failed?

What do you think that company can do to

improve it`s goodwill?


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REASONS BEHIND THE WHOLE SCAM

Investment in Real estate

(Land Banks)

To keep EPS high

Sold his stake at inflated price

(Made Rs.2,065 cr from shares)


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REGAIN HIS GOODWILL AND POSITION

IN THE MARKET

To show some profitable opportunities to theinvestors.

By contributing some part on the promoter`s

side from their dividend for 2-3 years.

By promoting the company in a way that if itwere a completely newly restructured

company, having no previous board ofdirectors.

Buyback of shares.


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S&P

The S&P 500 is a free-float capitalization-

weighted index published since 1957 of the

prices of 500 large-cap common stocks

actively traded in the United States. The

stocks included in the S&P 500 are those of

large publicly held companies that trade on

either of the two largest American stockmarket exchanges; the NYSE Euronext and the

NASDAQOMX.


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Con Man

A con artist, or a person who uses a fraud

method known as a confidence trick.


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BSE

Today, BSE is the world's number 1 exchange in theworld in terms of the number of listed companies (over4900). It is the world's 5th most active in terms ofnumber of transactions handled through its electronictrading system. And it is in the top ten of globalexchanges in terms of the market capitalization of itslisted companies (as of December 31, 2009). Thecompanies listed on BSE command a total market

capitalization of USD Trillion 1.28 as of Feb, 2010. BSEis the first exchange in India and the second in theworld to obtain an ISO 9001:2000 certification.


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Byrraju Ramalinga Raju founded SatyamComputers in 1987 and was its Chairman until

January 7, 2009 when he resigned from theSatyam board after admitting to cheating sixmillion shareholders, some of whom have losttheir entire life savings.[1][2]. After being held in

Hyderabad's Chanchalguda jail on chargesincluding cheating, embezzlement and insidertrading, Raju was granted bail on 18 August 2010.

Raju was granted Bail With a condition that he

should report to local police station once a dayand another condition that he should not makeattempt to tamper with the current evidence.

case study on sat yam 1111

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