Download - 112 Satyam edit

8/7/2019 112 Satyam edit

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ow one man managed to chang ow one man managed to chang

Sundaram to ScandalamSundaram to Scandalam


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Awards

) &1 1999 Ramalinga Raju receives Ernst.Young Entrepreneurship award

) -2 2000 Satyam Chairman Ramalinga Raju

named IT man of the year by Dataquest

) -3 2002 Wins Golden Peacock Award for Excellence in Corporate Governance


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) 4 2002 Wins CNBC s Asian Business Leader Corporate Citizen of The Year Award

) 5 In 2003 Won prestigious IBM Lotus Award

) 6 2008 Again won the Golden Peacock award for excellence in Corporate Governance .

Awards Contd

?


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Achievements and Awards of SatyamComputers

)1 :First ISO 9001 2001 company in the world

)2)3)4 -Satyam Infoway First Indian internet

company to be listed on NASDAQ)5

)6 )7 , - World Economic Forum Davos 100 mostPione er in g Technology Com pa ni es

)8)9

)10 First to launch Customer Oriented Global O rg an iz at io n Tra in in g


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)5 2001 - Satyam listed on New York Stockexchange

)6)7 )8 2005 Satyam acquired Singapore based

K now le dg e D yn am ic s)9)10

)11 Becomes the official IT provider for the,FIFA World Cups 2010 and 2014)12)13


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1)Ramalinga Raju born on 16 sep, 1954 in a family of farmers.2)3)4)5)Completed his B.com degree in 1975 from Andhra Loyola

College in Vijayawada.6)7)8)9)His father was one of the first farmers to start commercial

grape production in Hyderabad.

10)11)12)13)His wifes name is Nandini and they have two sons, Teja and

Ramu, both of whom have studied engineering.

)14

:Ramalinga Raju The man behind:Ramalinga Raju The man behindSatyamSatyam


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Journey Begins

1)Mr. raju did his MBA from Ohio university, USA.2)

3)1977 - Initially developed a Textile industry named Sri Satyam.4)5)Then he ventured into real estate business under the name

Satyam Constructions.6)

Magic that changed his life

1)On 24 th June, 1987 company was incorporated as Satyam privateltd by B Rama Raju and B Ramalinga Raju.

2)

2) On 26 th august 1991, it was converted into a Public Company.


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19921)The company debuts in BSE and went in for a Public issue of

equity shares.2)3)Initial Public Offer Oversubscribed by 17 times.4)5)Infrastructural facilities at Secundarabad, Hyderabad and

Bangalore.6)7)Installation of 64kbits/s satellite link.8)9)Satyam became one of the first to enter the Indian Internet

Service Market with SIFY.10)1994

5) On 26th

January a joint venture company called Dun &Bradstreet Satyam Software (P) ltd was incorporated.


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SATYAMBIRDS EYE VIEWBIRDS EYE VIEW

Operations spread across63 countries


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yam in the Service Sector yam in the Service Sector

:-List of services A pp li ca ti on S er vi ce s Business Value

Enhancement

Consult ing and E nt er pr is e S ol ut io ns

SAP Solutions

Six Sigma Consulting Supply Chain Management

& .many more

List of industries:-served

Automotive F in an ci al S er vi ce s

Government andHealthcare

Infrastructure

Media andEntertainment

&Retail Supply Chain

&Management manymore .


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Business process consult ing

IT strategyconsult ing

Quali tyconsult ing

ERP SupplyChain CRM PLM-e

business

&Engineering E mb ed de d s ol ut io ns BI EAI

Applicat ionMgmt Infrastruct

ureservices

Business

ProcessOutsourcing Custom built Packaged

CONSULTING

OUTSOURCING

SYSTEM INTEGRATION

COMPANY COMPOSITION


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A Fortnight that undid 21 years of Endeavour

Dec 16 Major announcement%stating 100 stake in Maytas

Properties %and 51 in Maytasinfra . Investors revolt and the

.stock plunges The ADR listed on the NYSE lost 52 per cent in a

.single day

Dec 17 The deals were killed off a mere 12 hrs. ,later after

.vicious investor reaction

Dec 18 Announces Board Meeting on 29 th Dec to consider the

share buyback in a bid to restore confidence and boost

investor sentiments.

Dec 19 UK s Upaid Systems fi les

motion to request deposit ion of

top Satyam executives inconnection with Maytas

-transaction asset stripping.attempt

Dec 23 Barred from business with

World Bank for 8 yrs for

providing bank staff with .Improper Benefits Its shares

%fall another 14 to their lowest .in more than 4 yrs

Dec 25 . ( )Dr Mrs Mangalam,Srinivasan who has been on the

Satyam Board since July 1991 as an,independent director takes a lead

.and resigns

Dec 28 Board meeting rescheduled from DEC 29 to Jan

10 to address issues beyond buyback and look at additionaloptions , including measures to

strengthen governance .

Dec 29 3 more directors

. , . ,Mr Krishna Palepu Mr Vinod Dham. .Mr Mendu Rammohan Rao Quit

02 Jan - Satyam founder s stake

fell by a third to 5.13% . Analysts said this made the company a more attractive bid target .

06 Jan %Shares rose more than 7 on a newspaper report that

Satyam had been approached by smaller r ival Tech Mahindra for

an all share Merger .

07 Jan Ramalinga Raju sends a let ter to the Board of Directors

and admits to committing financialfraud for many years and submits

.resignation Ram Mayanpati was appointed as the interim CEO of.Satyam


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,t le by Little Bit by


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BEFORE(in crores)

AFTER (in Crores)

DIFFERENCE

(in crores)(I) SOURCES OFFUNDS1. ShareholdersFunds(a) Share Capital 134.70 134.70

(b) ShareApplication moneypending allotment

2.76 2.76

(c) Reserves and

Surplus

8392.23 (415.47) 8807.7

TOTAL 8529.69 (278.01) 8807.7

The Satya and the Asatya of the Balance Sheet


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BEFORE(in crores)

AFTER (in Crores)

DIFFERENCE

(in crores)(I) SOURCES OFFUNDS2. Loan Funds

(a) Secured Loans 30.49 30.49

(b) UnsecuredLoans-others

234.80 1464.80 (1230)

TOTAL 8794.98 1217.28 7577.7


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BEFORE(in crores)

AFTER (in Crores)

DIFFERENCE

(in crores)(II) APPLICATIONOF FUNDS1. Fixed Assets

(a) Gross Block 2173.91 2173.91

(b)Less:Depreciation/Amortization

1158.13 1158.13

(c) Net Block 1015.78 1015.78

(d) Capital Work inProgress

365.32 365.32

TOTAL 1381.10 1381.10


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BEFORE(in crores)

AFTER (in Crores)

DIFFERENCE

(in crores)

2. Investments 618.64 618.64

3. Deferred TaxAssets (net)

118.75 118.75


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BEFORE(in crores)

AFTER (in Crores)

DIFFERENCE

(in crores)4. Current Assets,Loans andAdvances(a) Sundry Debtors 2651.36 490.00 2161.36

(b) Cash and Bank Balances

5312.62 272.62 5040

(c) Other CurrentAssets:Interest Accrued on

Fixed Assets

376.34 0 376.34

(d) Loans and

Advances

502.22 502.22

TOTAL 8842.54 1264.84 7577.7


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BEFORE(in crores)

AFTER (in Crores)

DIFFERENCE

(in crores)Less: CurrentLiabilities andProvisions(a) Liabilities 1669.26 1669.26

(b) Provisions 496.79 496.79

TOTAL 2166.05 2166.05

Net Current Assets 6676.49 (901.21) 7577.7

TOTAL 8794.98 1217.28 7577.7


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.5312 62

ACTUAL CASH IN BANK IS321

INFLATED 5040cr

.2651 6

ACTUAL DEBT IS2161

OVERSTATED 490Cr

CURRENT ASSETS

376

NO ACCRUED INTEREST 376 Cr

UNDERSTATED LIABILITY 1230 Cr which is arran

+ + + =5040 376 1230 490 7136

LIABILITIES

REVENUE 2700

OPERATINGMARGIN 690

ARTIFICIALLY ADDED 588 OPERATING PROFIT ADDED 588

INCREASING THE CASH RESERVE ONLY FOR Q2 ALONE TO 588


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Remember Enron

Remember Remember Arthur ArthurAndersenAndersen


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:ROLE OF AUDITORS:ROLE OF AUDITORS PRICEWATERHOU PRICEWATERHOU COOPERS ? COOPERS ?

,An auditor is a watchdog not a,An auditor is a watchdog not a- bloodhound but what is a watchdog s- bloodhound but what is a watchdog s duty? duty?

How can the Auditor s Remain-Mute When

It is normal practice of the Auditors to verify the Bank

Balance by writing to the concerned bank officially and

directly without any copy to the company .

A sum of Rs 5000 crores are not normally held in Savings or Current .accounts They are usually placed in short term or

long term Time deposits.physically issued by the bank In,that case Auditors could have

seen and checked the Time Deposit receipts .physically

There is usually a provision for Continuous Audit for such

.large company The auditors would have known any irregularity in.routine manner

Auditors are required to prepare and verify the Cash

Flow statement for relevant period from where deficiency.could have been found out

The job of verification was so simple that even ordinary Commerce graduate could have

found out glaring discrepancy.in seconds How could then Professional CPA miss this

symptom?


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?? Satyam was a heavy tax payer .They would not be paying taxes if the profit was bogus one .- :The company paid during 07 08 Income Tax running into Rs 226 crores

Dividend of Rs 235 crores Dividend tax of Rs 40 crores


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??,If that was so it would mean that the cash holding was genuine and present

admission of fraud by its Chairman is misleading with some ulterior motive .

The Auditors would have certainly seen

physical receipts of such payment.while auditing


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omething Fishy? omething Fishy?

uld Satyam s margins be so low?

.34 33%

.23 66%

.20 13%

%3

Figures are in percentage for

THE WEB OF DECEITTHE WEB OF DECEIT


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THE WEB OF DECEIT THE WEB OF DECEIT

Nitor GlobalSolutions

CA SatyamASP Sat ya m Vent ure eng in ee ringServices


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rmer directors of Saty rmer directors of Saty

. ( .)Dr Mrs Mangalam

Srinivasan

.Prof Krishna G

Palepu( .Prof of

)HBS

.Prof Mendu Rammohan

(Rao ISB)Dean

.Vinod KDham

. .B O D. .B O D??

??

??

??


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Probable motives behind the Satyam

:-Case)1 Increase the share price .of Satyam)2)3

)4 Increase compensation &to directors ESOPS.)5)6)7 Eligibil i ty for contract cri teria l ike

, .sales net worth etc This would have helped to achieve more sales .

)8)9

)10 &Siphoning small amount for investing promoting other companies .


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)5 Diluting of Satyam shares slowly to promote.other companies

)6)7)8 Purchase shares of Satyam when the price is

down or through pre fe rent ia l a llotment .)9 )10

)11 Legitimate the cooking by either bringingcash from the other promoted companies or

.investment in other promoted companies


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Satyam s Corporate SocialResponsibil i ty

)1 Byrraju Foundation Aims to catalyze rural transformation by providing 54 different

:services in the areas of)a Health)b Education)c Adult l iteracy

) (2 EMRI Emergency Management and Research) Insti tute

-NENA National Emergency Number

Authority -AAPI American Association of Physicians of Indian Origin

-AAEMI American Association for Emergency in India

-SHS Singapore Health Services

??


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)1 The whole perception of CorporateGovernance .was shaken to the very roots)2)3)4 Those companies who had already a question

mark over their Corporate Governance were.very badly hit)5)6)7 The realty sector , with its complex land

.bank valuations had been the worst hit

)8)9

)10 The BSE realty index fell by . %16 95 .


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)5 The firms with Satyam in their portfolios are t rying to sell other stocks they held creating

a situation in which short sellers reveled and rumors flew .

)6)7)8 The premium that is attached with good

Corporate Governance is rising and these.companies are gett ing their dues

)9 )10)11 ,Companies like HDIL Indiabulls Real Estate

, , , ,l td Unitech ltd DLF ltd Suzlon Energy ltd,Aptech ltd Lanco Infratech ltd are only some of

.the names who of those that has been affected


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Why is Satyam still being soughtafter?)1 , .Though Satyam is down it is st i l l not out

Companies sti ll see promise in its core.business)2) ,2 Satyam won 15 new clients last month

,despite the scandal from places l ike US, .Europe Japan and Middle East)1)3 Sectors like insurance and pharmaceuticals

sti l l recognize its abil i ty to provide.business solutions to them

)4 Most of the current clients are sti ll loyal

.to the company


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)5 , ,Local projects from Indian Railway BSNL Vizag Steel Plant and India Mint are in the

.offing)6)7)8 ,Internat ional clients l ike GE Canadian

Conglomerate Bombardier and UK s Birds Eye Iglo have promised Satyam with continuing.projects

)9

)10)11 It has about 690 clients and 28 development

. centres around the world It s backbone is.not broken as yet


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Companies that were interested in:acquiring Satyam

v &L Tvv Spice Groupvv Hinduja Groupvv Tech Mahindravv iGate

vv IBM


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Risks associated:withSatyam

Loss of goodwillChange in Management

Deal with lawsuits

&legal

obstructions Impact on relationship with otherclients

Maintain ing serv ice quality Gaining employee trust


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Gains to be had from:Satyam

Int ellec tual capit al in the form ofemployees &National International clients

Recovery of possible siphoned fundsContinuity of business deals


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