satyam case study

of 31 /31
Group (1) Sudheer Jinnu Vinay Vijay saikumar Group (2) Yogitha Ruchi Jitesh Santhosh Chandra sekher

Upload: gandemallesudheer

Post on 17-Jan-2017

665 views

Category:

Law


4 download

TRANSCRIPT

Page 1: Satyam case study

Group (1)

Sudheer

Jinnu

Vinay

Vijay

saikumar

Group (2)

Yogitha

Ruchi

Jitesh

Santhosh

Chandra sekher

Page 2: Satyam case study

INTRODUCTION

Satyam Computers was founded in 1987. It converted into Public Ltd Co. in 1992.The company offers consulting and information technology services spanning various sectors.Mahindra Satyam is overall ranked #153 by Fortune India 500 in 2011.

Satyam's network covers 66 countries and 53000 employees across six continents. It is listed in BSE, NSE, NYSE

Page 3: Satyam case study

He is Ramalinga Raju born on September 16, 1954. A traditional agricultural family of the KSHATRIYA (RAJU) Community of Andhra Pradesh.

He founded Satyam Computers and was its Chairman until January 7, 2009 when he resigned from the Satyam board after admitting to corporate fraud.

Page 4: Satyam case study

Satyam Computers Pvt. Ltd. Born.

June - First Fortune 500 Client. August - Converted into Public Ltd. Co.

The Big Break- Allies with Dun and

Bradstreet Corp. Declared one of the 100 most pioneering

technology companies by World Economic Forum.

Dataquest IT Man of the year award.

1987 :

1991 :

1994 :

2000 :

The Rise of Satyam

Page 5: Satyam case study

Video

Page 6: Satyam case study

ACHIEVEMENTS2007:- BECOMES THE 1ST ASIAN COMPANY TO FEATURES IN THE TRAINING MAGAZINE’S LIST OF TOP 125 COMPANIES FOR LEARNING,

2008:-WON CORPORATE GOVERNANCE (INCLUDING GOLDEN GLOBAL AWARD TWICE) Top-50 Marketers Award, under the Resurgent Marketers category for 2010 by Pitch India

2011:-Mahindra Satyam BPO honored as “India’s Most Customer-Responsive BPO Company” AGC Networks The Economic Times, Ernst & Young and NielsenAnd the list goes on……..

Page 7: Satyam case study

Ramalinga Raju :B Rama Raju :

V Srinivas :S

Gopalakrishnan: Talluri Srinivas :

Satyam former chairmanBrother of Ramalinga RajuFormer Managing DirectorEx-Chief financial officerPrice Waterhouse AuditorPrice Waterhouse Auditor

Page 8: Satyam case study

1. 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.

2. Raju has mislead various investors.3. Raju had also used dummy accounts to trade in

Satyam's shares.4. He has violated the insider trading norm.5. Funds from Satyam were diverted to Mayas6. 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 and that Mr. Raju had been allegedly withdrawing INR 20 carore rupees every month for paying these 13,000 non-existent employees.

Page 9: Satyam case study
Page 10: Satyam case study

FLOATED TWO OTHER COMPANIES FOR THEIR OWN PURPOSE .WITHOUT TAKING PERMISSION OF THE SHAREHOLDERS.FAILED TO REPAY THE LOANS.TRANSFER OF MONEY.

Page 11: Satyam case study

THE BALANCE SHEET AS OF SEPTEMBER 30, 2008 SHOWED- INFLATED (NON-EXISTENT) CASH AND BANK BALANCES OF RS. 5040 CRORE (AS AGAINST RS. 5312 CORE REFLECTED IN THE BOOKS)AN ACCRUED INTEREST OF RS. 376 CRORE WHICH IS NON-EXISTENTAN UNDERSTATED LIABILITY OF RS.1230 CRORE ON ACCOUNT OF FUNDS ARRANGED BY BR RAJU.

Page 12: Satyam case study

SATYAM SHARES Biggest single day fall for a stock in stock

market. Rs. 175 ( Jan 6th) 77%

STOCK MARKET BSE sensex fell by 749.05 i.e., 7.25%. NSE fell by 192.40 points i.e., 6.18%.

COMPANIES WORTH 11464 crore 1607 crore. All time low of Rs.11.50 on 9th Jan

and closed at Rs.23.75/- Compared to highest of Rs.

524.90/- on May 29,2008.

Page 13: Satyam case study
Page 14: Satyam case study

Previous record -Satyam has also been accused of frauds in

2001 and 2003.No importance was given to this.

Getting third party evidence -No bank confirmation on fixed depositsAccrued interest(fixed deposit)Debtors confirmation

Factors overlooked -Changing of accounting yearsHuge debt despite cash surplus

Page 15: Satyam case study

JANUARY 7TH, 2009“ IT WAS LIKE RIDING A TIGER , NOT KNOWING HOW TO GET OFF WITHOUT BEING EATEN “

CONFESSION

Page 16: Satyam case study

The gap in the balance sheet reached unmanageable proportions and could not be filled anyhow in future.

The whistle blower whose email to a Satyam board member triggered a chain of events .

Page 17: Satyam case study

PRESSURE TO MEET

EXPECTATIONGrowing CompetitionThreat of being overtaken

OVERCONFIDENCE On his ability

PERSONAL BENEFITS

Siphoning of fundsSalary of non-existent 13000 employees

“Since about seven years we wanted to show more income in the accounts to avoid others from involving in the company affairs and any possible hostile acquisition.

Page 18: Satyam case study

New board of directors were appointed.

Disclosure of pledged securities.

Increased financial accounting disclosure.

Adoption of international standards.

Creation of new corporate code of conduct by Ministry of Corporate Affairs. Steps taken by ICAI.

Action Taken:

Page 19: Satyam case study

Regulators Investigating Satyam Investigating Satyam

Page 20: Satyam case study

Consequences

Page 21: Satyam case study

Jobs of over 50,000 technocrats were at risk.Country`s booming economy was at risk.

The GDP fell by 0.4%.

I.T sector suffered a downturn.India`s global image was tarnished.Indian stock market fell dramatically.

Page 22: Satyam case study

Company Logo

IMPACT OF SCAM

Stock Market Share-holders Indian economy

Employees Stake-holders

Page 23: Satyam case study

The people of his native village, Garagaparru, hail the development works undertaken by the Raju Foundation, the charitable arm of Satyam.

The Citizens for a Better Public Transport in Hyderabad (CBPTH) demanded a CBI inquiry into the process of how Maytas bagged the Hyderabad Metro Rail project.

Analysts in India have termed the Satyam scandal India's own Enron scandal.

.

Page 24: Satyam case study

Ramalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme court on 4 November 2011 as the investigation agency CBI failed to file the charge sheet even after more than 33 months of Raju been arrested Appointing New Board. Board appointed by Government.Tech Mahindra wins bid for Satyam scam.

Page 25: Satyam case study

Appointing new board.Board appointed by government :

• former Nasscom chief – Kiran Karnik,• Chairman HDFC – Deepak Parikh• Former SEBI member – C. Achuthan .

Satyam shares gained over 44% day after appointment of the new board.

New CEO – A S Murthy Tech Mahindra acquired Satyam on April

13,2009.

Page 26: Satyam case study

ON 13TH APR 2009, VIA FORMAL PUBLIC AUCTION PROCESS, 46% STAKE IN SATYAM WAS PURCHASE BY MAHINDRA.

JULY 2009, SATYAM REBRANDED ITS SERVICE AS “MAHINDRA SATYAM”.

Page 27: Satyam case study

Now Satyam is running with the help of following people

Mr Anand MahindraChairman

Mr Rakesh SoniCOO

C P GurmaniManaging Director

Page 28: Satyam case study

Evaluate the potential for fraud in a given audit engagement.

Be obliged to utilise tests that provide reasonable assurance of detection of fraud

Evaluate the strength of the overall control environment

Facilitate the identification of areas of high audit risk by reviewing the procedure analytically

Communicate their role and responsibilities to all those who rely on their work

Page 29: Satyam case study

In addition to the present statutory requirement, companies should be required to institute sufficient internal management controls.

Management should ensure that the internal audit staffs are able to prevent and detect financial statement fraud.

Companies whose shares are publicly traded should be required to have audit committees to monitor the internal control system

Page 30: Satyam case study

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.

Conclusion

Page 31: Satyam case study