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Satyam ScandalPresentation By :Mr.Sandip Magar

MBA first YearMIT (T)

4/27/2012 3:23 AM 1"Satyam Asatyam"


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January 7,2009

One of the Black Day for CorporateWorld



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Mr B.RamalingaRaju tried to fillthe gap b/w actual profits of hiscompany and the profits that were

shown in records, balance sheetsetc. and also tried to cope up thesituation till last minute . But nowthe situation were beyond his

hands and therefore heconfessed the frauds made by him by showing inflated profits inthe balance sheet

Confession



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Continued.. According to the 'confessional statement of Mr. Raju,

the balance sheet shortfall was more than Rs.7000crore.

The following statement he made in hisconfession letter Every attempt to eliminate the(balance sheet) gap failed.

He also said that "It was like riding a tiger, notknowing how to get off without being eaten,"



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What he Confessed :The Balance Sheet carries as of September 30, 2008

Inflated (non-existent) cash and bank balances of Rs.5,040crore (as against Rs. 5361 crore reflected in the books)An accrued interest of Rs. 376 crore which is non-existentAn understated liability of Rs. 1,230 crore on account offunds arranged by me

An over stated debtors position of Rs. 490 crore (as againstRs. 2651 [cr.] reflected in the books)



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Who isMr.B.Ramalinga

Raju?Founder CHAIRMAN of

Satyam Computer Services Ltd. ($2 Billion Company)



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Satyam

Computers



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IntroductionSatyam Computer Services Ltd. is a consulting andinformation technology services company based inHyderabad, India .

It was found in 1987 by B.Ramalinga Raju.The company offers information technology (IT)services spanning various sectors, and is listed on theNew York Stock Exchange and EuronextIt is considered as an icon among the IT companiesand at one point had over a billion dollar revenue



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Continued.. Satyam's network covers 67 countries across sixcontinents.The company employs 40,000 IT professionals across

development centres in India, the United States, theUnited Kingdom, the UAE, Canada, Hungary,Singapore, Malaysia, China, Japan, Egypt andAustralia.

It serves over 654 global companies, 185 of which areFortune 500 corporations.



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Continued..

Satyam has strategic technology and marketingalliances with over 50 companies.Apart from Hyderabad, it has development centers inIndia at Bangalore, Chennai, Pune, Mumbai, Nagpur,Delhi, Kolkata, Bhubaneswar, and Visakhapatnam.



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AwardsErnst & Young Entrepreneur of the Year ServicesAward 1999Dataquest IT Man of the Year Award 2000

Asia Business Leader Award 2002Ernst & Young Entrepreneur of the Year 2007(revoked after the fraud was confessed)Golden Peacock Award for Corporate Governance2008 (revoked after the fraud was confessed)

employees spread over many countries. Raju showeda strong social orientation and has been furthering thecause of social transformation through BVRRAJUFoundation .



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WHAT WENT WRONG? Simple manipulation of

revenues and earnings Toshow superior performance

Raising fictitious bills forservices that were neverrendered.

To increase the Cash & bankbalance correspondingly.

Operating profits wereartificially boosted from theactual Rs 61 crore to Rs 649 cr.



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5312.62

ACTUAL CASHIN BANK WAS

321crINFLATED

5040cr

2651.6

ACTUAL DEBT WAS 2161crOVERSTATED 490 Cr

CURRENT ASSESTS

376

NO ACCRUEDINTEREST

376 Cr

UNDERSTATEDLIABILITY 1230

Cr which wasarranged by

Mr.Raju

5040+376+1230

+ 490= 7136

LIABILITIES

REVENUE 2700

OPERATINGMARGIN

690

ARTIFICIALLY ADDED588cr

OPERATING PROFITADDED 588cr

INCREASING THE CASH

RESERVE ONLY FOR Q2ALONE TO 588cr4/27/2012 3:23 AM 13"Satyam Asatyam"


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Operating Profit

401.61468.72

545.49648.61 649.27

0

200

400

600

800

Quarter

O p e r a

t i n

P r o

f i t ( I N

C R O R E S )

Series1 401.61 468.72 545.49 648.61 649.27

Sep '07 Dec '07 Mar '08 Jun '08 Sep '08

ACTUAL OPERATING MARGIN 61Cr REPORTED-649 Cr( CREATED

AN ARTIFICIAL REVENUE OF 588)

GROWTH IN THE OPERATING PROFIT



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Satyam computer Services Ltd., B/s

SOURCES OF FUNDS AS ON 30.09.08

ADJUSTED BALANCE SHEET

ADJUST MENTS

1. Shareholders

fundsa. Share capital (share applicationmoney , pending)

b. Allotment

c. Reserves and surplus

________________ ___

134.70

2.76

8392.23 ________ __

8529.69

134.70

2.76

(415.47) _________ 278.01

_______ _

0



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SOURCES OF FUNDS AS ON 30.09.08


ADJUST MENTS

2. Loan Funds

a. secured loans

B. unsecured loans

___________________ _

APPLICATION OF FUNDS

30.49

234.80 ______8794.98

_______

AS ON 30.09.08

30.49

1464.80 _______ 1217.28

_______


1230.00 ______ _

1230.00 ______ __ ADJUST MENTS

1. Fixed assets 2. Investments 3. Tax 4. Current assets

a. sundry debtorsb. cash

1381.10618.64

118.75

2651.36 5312.62

1381.10618.64

118.75

490.00 272.62

1381.10618.64

118.75

2161.36 5040



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APPLICATION OF FUNDS

AS ON 30.09.08


ADJUSTM ENTS

c. accrued interest d. Loans

LIABITIES Net current assets

APLLICATION OF FUNDS

376.34 502.22

2166.05 6676.49

_______8794.98

- 502.22

2166.05 901.21

_________ 1217.28

376.34-

5775.21(difference

) ________7135.77

Satyam computer Services Ltd., B/s



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So who is to blame? Who is guilty in this sordidstate of events?Raju is by far the father ofthis fraud.But there were otherswho are also culpable.



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Satyam's auditors So what were the auditingcompany,PricewaterhouseCoopers, doing?PwC has written a letter tothe BOD of Satyam that itsaudit may be rendered"inaccurate and unreliable"due to the disclosures madeby Satyam's (ex) Chairman.



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Is it real? How could Auditors missthe gaping hole when

Auditors do bank reconciliation to check whether themoney has indeed come or not.They check bank statements and certificates.So was this a total lapse in supervision or were thebank statements forged? No one knows yet.The company officials said they relied on data from the

reputed auditors.



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Immediate Action TakenGovernment took control of management andappointed Mr.Dipak Parekh,Kiran Karnik andC.Achutan to shoulder the task of crisis management

at Satyam.Government had referred the case to the SFIO.



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Tech Mahindra is paying Rs1757 crore for a 31% stake inthe company, or Rs 58 per share.

In India this moment was full of praise for the manner

and speed with which the reconstituted board of SatyamComputer Services found a strategic investor .

This would send a strong signal globally that the countrycan respond well and fast to financial crisis.

Tech Mahindra wins Bid for Satyam



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Latest UpdateGovt. To Provide Help To CBI In Satyam ScamCaseSatyam Board Finalises Sales Process DetailsFraud Hit Satyam Keen On Buy Out By StrategicInvestorSatyam Likely To Exist Post Scam



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Referenceswww.satyamscam.comwww.ipsnews.netBusinessworld-18 th January 2010



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THANK YOU!


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