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8/4/2019 SATYAM fulllll

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APresentation onRise and Fall ofSatyam


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Presented By:

RANU JAIN (ROLL NO 47)

NEHA SURANA (ROLL NO 35)

JIMIT PARIKH(ROLL NO 23)

TARAK CHAUHAN(ROLL NO 59)


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SATYAMSet up in the year 1987 toprovide services in IT sector

Indias 4th biggest softwarecompany in India

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

BSE IPO oversubscribed 17times when made public in

1991 The company employs 53,000

IT professionals acrossdevelopment centers in 6continents

First IT Company in theWorld Certified under

ISO9001:2000 Ranked Among IndiasTop 10 Best Employers,2004 and 2003 Top 13 Best-Managed

Companies in India Winner, CorporateCitizen I award forCorporate SocialResponsibility SAP Pinnacle Award


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> Chairman and founderSatyam Computers Services

Limited> MBA from Ohio University> IT man of the year awardby Data Quest in 2002> Winner of Ernst & Youngentrepreneur of the yearaward in 2007

> He became the ManagingDirector and Chief

Executive Officer in 1991> Mr. Rama Raju holds aMaster of Economicsdegree from Loyola College,Chennai and a MBA degree

from Loredo State

B. Ramalinga RajuFounder & Chairman, Satyam

Computers Ltd.

B. Rama RajuPromoter & CEO, Satyam Computers

Ltd.


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Satyam Clients

A total of 650 Clients(185 of the top fortune

500 Companies)


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So, How did it all began?


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Satyam Decade at aGlance


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Why on 7th Jan 2009?

DSP Merrill Lynch informed SEBIabout

Material irregularities in Accounts on

6th Jan

Minutes of Meeting of 16th

December,2008 were not submitted toRoC-(This created some doubts)

Hearing of Upaid- satyam case on 8th

Jan at the US court


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Raju ban gayaconmanHow? Proposing High risk Maytas acquisition

Overvaluing the proposed acquisition

Promoter pledging their holdings (decrease

in holding)

Refusing to resign Fudging Income statement


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Maytas Acquisition

Valuation of Maytas duo was done at$1.6 bn

as against actual $ 225 mn

Violation of Section 372A of theCompanies act


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Statements Creative Account

Practice

Details of cash balances with Scheduled banks are not there inthe

Annual report

Question raised by Equity analyst Kawaljeet Saluja -$500 mncash

parked in current account


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Overstatedcashbalances,Incomereceivables

UnderstatedLiabilities Fraud

Amount


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Stake decreased from 21.6% to 3.6%

Money raised through 4 Front run Co. byoffloading pledged shares (under

investigation)

0 50 100 150 200

Bangar Agro

Amravati Greenlands

Narayandri Greenfields

Harangi Agro

Amount (In Rs. Cr)

Amount (In Rs. Cr)

Share Pledging

F FD t


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Fa e FD rece pts anEmployee Nos.??

Repeat theprocedure


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Satyam-Maytas NexusContd..Cash raised & siphoned off funds used

to buy several thousands of acres ofland across AP through several benami

accounts Helped Maytas in getting major

contracts

Question raised by E.Shreedharanregarding

Hyderabad Metro Project beingallocated to

Maytas Infra.


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Maytas Infrastructure

The Rajus hold 36.64 per cent whileinstitutional holding is 10.92 per cent

The company had raised Rs 327.45

crore through IPO. It had a turnover of Rs 1,660 crore and

net profit of Rs 100 crore in the lastfinancial year

Satyam planned to acquire 51 per centstake for Rs 1,440 crore or $0.3 billion

Mr. TejaRaju(VC)


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Maytas Properties

Rajus family owns 35% of Maytas properties

Founded in 2005, it has a land bank of 6,800acres

It has clearances for three IT SEZs based on148 acres

An undisclosed stake is held by Infinite India

Investment Management, a realty fund jointlypromoted by JM Financial and US-basedSRM Investments, which invested Rs 600crore in February

B. Rama RajuJr. (VC)


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Some Comments

If the first fraud is for Rs100, the next time addanother zero. It (accounting fraud) growsexponentially Anil Roy, Grant Thornton India

It was like riding a tiger, not knowing how to get offwithout being eaten- Raju Ramalinga whileadmitting the fraud

On Wikipedia, for the first time, India has been puton to the list of largest corporate scandals in theworld, all thanks to Satyam a blogger


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STOCK CHARTING


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Comparison Satyam and Maytas share prices


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The Inside News

Satyam's CFO Srinivas Wadlamani hassold around 8,00,000 shares & evenSatyam's interim CEO, Maynampati hassold 4,00,000 shares in past 6 monthsabove 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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SEBI Investigation

Regulation 7 of the SEBI (Prohibition of Fraudulent UnfairTrade Practices relating to the Securities Markets)Regulations, 2003

Sub-regulation (1) of Regulation 5 of the SEBI(Prohibition of Insider Trading) Regulations, 1992

Sub-regulation (1) of Regulation 29 of the SEBI(Merchant Bankers) Regulations, 1992

Regulation 38 of the SEBI (Substantial Acquisition ofShares and Takeovers) Regulations, 1997.

Section 24(Contravening provisions of the Act or anyrules or regulations) - Imprisonment up to 10 years and/orfine of up to Rs 25 crore


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Role of Auditor

According to law there should be an externaland an internal auditor(can be outsourced)

Job is to check whether processes are beingfollowed and are accurate and adequate

One of the key audit test is to validate firms

cash and bank balances(what was PwCdoing)


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Dec 05 - RBI bars PwC from bank audits after it

found that the firm under-provided for non-performing assets of Global Trust Bank

Mar 06 - Out of court settlement withshareholders of Internet Company E-district

Mar 07 - Raid by Russian Ministry in criminalcases related to oil firm OAO Yukos

July 07 - Paid $225 million to shareholders ofTyco international after proved guilty ofaccounting fraud

July 08 - Facing a probe at Scottish Mineralwater subsidiary for inability to spot $90 m fraud

And Now the Satyam Fiasco I th


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In thetrap..PwC One of the big four Auditors world wide

( Revenues of $28 Bn)

Arthur Andersen(child of PwC) & Enron -Year

2001-02 Evading Income tax & Service tax in at least two

cases of tax evasion.

Imp thing to note that How could PwC have no

clue of inflation of Balance sheet to 5,040 croressince yrs and DSP ML realizing it in less than 2weeks


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Wary Investors exitPwC Clients

Investors brought shares ofother companies in the samesector

Out of 100 clients of PwC,

most companies share fell by5-15%.

Risk of Reputation

The ICAI & RBI stand on this


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Whats next.CA ministry dissolved the Satyam Board and

announced new members 3 more members-chief mentor of CII Tarun

Das, ex-president of ICAI T N Manoharan

and S Balkrishna Mainak of LIC

Deepak Parekh

Former HDFC

Chairmam

Kiran karnik

Former

NASSCOM

Chairmam

C Achutan

Former SEBI

Member

What after that:

Board says No to

financial Bailoutpackage

Lazard sold its 5.3 %stake

KPMG and Deloitte


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Other Options for theGovernment Satyam to be broken up into pieces

BPO, Verticals, Service Lines

Stabilize Satyam and merge with bigger

IT firm ( as L & T hike in its stake) The new team may fight back to retain

the existing clients and once everythingsettled may emerge again


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In the News..


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Bidders For Satyam

iGATE, Tech Mahindra and Essar Grouphave already evinced interest in buyingparts of Satyam.


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Satyam's new board of directors, which met here toselect the highest bidder, chose Tech Mahindrafollowing its bid of Rs 1,757 crore ($351.4 million)for 31 per cent stake in the scam-tainted IT giant.

Tech Mahindra offered Rs 58 for each Satyamshare.

Outbidding the engineering giant L&T, TechMahindra on Monday emerged the highest bidderfor Satyam Computer and may have to shell out upto Rs 2,900 cr for acquiring a 51 per cent stake.Tech Mahindra offered Rs 58 for every Rs 10 sharewhile L&T's bid price stood at Rs 45.90. The highestbidder is required to bring in Rs 1,756 cr for 31 per

cent.


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Thankyou

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