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    Satyam Saga

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    Satyam Set up in the year 1987 to

    provide services in IT sector

    Indias 4th biggest softwarecompany in India

    It is listed in BSE, NSE, NYSEand Euro next (Amsterdam).

    BSE IPO oversubscribed 17times when made public in1991

    The company employs 53,000IT professionals acrossdevelopment centers in 6

    First IT Company in the World

    Certified under ISO9001:2000

    Ranked Among Indias Top 10

    Best Employers, 2004 and 2003

    Top 13 Best-Managed Companies

    in India

    Winner, Corporate Citizen I

    award for Corporate Social

    Responsibility

    SAP Pinnacle Award 2008

    Satyam Won golden peacock

    award for excellence in Corporate

    Governance on Global level for 2nd

    time United Kingdom Trade and

    Investment India Business Award for

    Corporate Social Responsibility

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    Chairman and founder Satyam

    Computers Services Limited

    Winner of Ernst & Young entrepreneur

    of the year award in 2007

    He became the Managing Director

    and Chief Executive Officer in 1991

    Before 1997, he was with Maytas Infra

    Limited as one of its Directors

    B. Ramalinga Raju

    Founder & Chairman, SatyamComputers Ltd.

    B. Rama Raju

    Promoter & CEO, Satyam

    Computers Ltd.

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    Satyam Decade at a Glance

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    Fabricated Income Statements

    Details of cash balances with Scheduled banks are notthere in the Annual report

    Question raised by Equity analyst Kawaljeet Saluja

    $500 mn cash parked in current account

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

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

    Overstated cash

    balances, Incomereceivables

    Understated

    Liabilities Fraud Amount

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    World Bank banned Satyam from doing any of its work after it

    found Satyam employees had hacked into its system and gained

    access to sensitive information

    It also did not renew their fiveyear contract

    Slippery Slope to Disaster

    December08 brought news of pending litigation by a former client,

    online mobilepayments service Upaid Systems which filed a case of

    intellectual fraud and forgery against Satyam in 2007

    On Dec. 16, when Raju announced the company would spend $1.3 billion

    to buy Maytas only to reverse the decision a few hours later under

    shareholder pressure

    Satyam ADRs lost 50% of their value overnight

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    SatyamDec-2008 to Jan-2009

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    Problems created

    Negligence of fiduciary duties, maintenance of ethical

    standards and

    CSR in attempt of covering up for accounting gap created by

    cooking up financial books over the years

    Causes of the problem

    Power of greed overshadowed the responsibility to meet

    fiduciary duties.

    Low ethical and moral standing of the top management.

    External factors are fierce competition and the need to

    impress the investor,

    analyst, shareholder, and stock market

    Causesof the problem

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    Analysisof the Causesof the Problem

    o Greed for money is not the only greed:

    Greed for power, competition, success, prestige (as Mr Raju did

    in many accolades and awards) may compelled the highly

    educated man to work unethically which resulted in violation of

    fiduciary duties by the executive and independent directors of thecompany.

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    Analysis of the Causes of the Problemo Low ethical and moral standards as they involved

    in following :

    Fudging Numbers: Pumped up revenue, profit, bank

    deposits, and cash reserve numbers.

    Undisclosed pledges: Procured a loan of Rs.1230 crores

    without disclosure

    Insider trading: Sold most of his 26% stake whiletweaking numbers to keep share price high.

    Take Over code: Probable violation if he knew when his

    stake fell below 5%

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    Analysis of the Causes of the Problem Satyam had incurred the loan of Rs 1230 crores fromvarious sources so they were under a pressure to show

    rosy picture of a company otherwise creditors would

    have been skeptical.

    Satyam did focus on the short term gains rather than

    long term strategies to flourish the company thereby

    engaging in cooking up the accounting books

    And then without consideration of shareholders in

    order to rectify the gap made an attempt to buy

    share in sister concern Maytas for $1.3 billion which

    was although granted by board but shareholdersexperienced an objective conflict of interest.

    However, the deal was called off.

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    In the News..

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    Marketing AspectOf

    Satyam Saga

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    Satyam Clients

    A total of 650+ Clients185 of the top fortune 500

    Companies

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    Satyam, which specializes in business software and offers

    backoffice outsourcing and consulting, had very high profile

    clients & counts

    General Electric, Nestle, Qantas and Fujitsu among its major

    customers.

    But with skeletons coming out of the closet, during the scam

    customers were unlikely to renew contracts when they came

    up for review, analysts said.

    As a result of the SCAM

    Satyam was foreseen losing some of its clients to

    MNCs such as IBM, HP and Accenture.

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    Nestle, the world's largest

    food company, has been a

    Satyam client since 2004.

    In 2007, it extended its

    engagement with the

    Indian IT firm for another

    three years, landing it a

    new multimillion dollar

    contract.

    GE, the largest client for

    Satyam, was learnt to be

    evaluating options of

    inducting the Satyam teamworking on its IT project & a

    source familiar with the

    matter said talks are on with

    other outsourcing vendors.

    Satyam's bigger rival Tata

    Consultancy Services (TCS)

    was considered & also provided

    services to GE.

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    Clients were looking out and so were

    the employees

    And companies were fine with clientsapproaching them, but had a moral issue

    if employees approached them?

    How fair is that?

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    H.R Aspect

    ofSatyam Saga

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    Employees It was nights and heartburns for the over 53,000employees of Satyam Computers as they conjured upworst case scenarioslike nonpayment of salaries, project cancellations ,layoffs and equally bleak prospects outside.

    As the company's management tried to reassureshocked employees, jobs sites had got flooded withresumes of hundreds of Satyam employees.

    Job consultants believed that in the current economicclimate , Satyam employees might have to settle forlower salaries outside.

    It was an Employers' Market

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    The question here is ????????

    Everybody wants Satyam clients, but not

    employees?

    Well, if you take the head out, tail will follow

    if Satyam clients move away, employees will

    ( have to) quit and thanks to all these we

    wont take you slogans, these employees were

    available for cheap.

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    This is where one has to respect a company like

    Wiprowhich made it clear that they will treat Satyam

    employees as any other candidate and will evaluate

    them on same scale i.e. be fair to clients as well as

    employees.

    And Wipro stated,

    Respect Talent thats what grows an industry,

    especially in these times when one is looking forward

    to mature action from the industry.

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    Each company said to itself.

    We applaud government for takingquick action in setting up the board

    (and restoring confidence on Indian IT

    industry) now it was time to ask

    Satyam competitors to go easy on

    their mouth.

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    AFTER THE SCAMNew CEO and special advisors

    - On 5 February 2009, the sixmember board appointed by the

    Government of India named A. S. Murthy as the new CEO of

    the firm with immediate effect.

    Murthy, an electrical engineer, has been with Satyam since

    January 1994 and was heading the Global Delivery Section

    before being appointed as CEO of the company.

    The twodaylong board meeting also appointed Homi

    Khusrokhan (formerly with Tata Chemicals) and Partho

    Datta, a Chartered Accountant as special advisors

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    Acquisition by Mahindra

    Group

    On 13th April 2009, via a formalpublic auction process, a 46% stake inSatyam was purchased by Mahindra

    & Mahindra owned company TechMahindra, as part of itsdiversification strategy.

    Effective July 2009, Satyamrebranded its services under the new

    Mahindra management as "MahindraSatyam" with a new corporate

    website www.MahindraSatyam.com.

    C.P Gurnani is the current CEO.

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    Restatement of Results

    As a result of the scandal, under the directions of the new

    Mahindra management team, Satyam Computer Services

    restated its financial results for the period 2002 to 2008.

    These restated results were published in September 2009.

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