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    Satyam Fiasco

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    SATYAM

    Set up in the year 1987 to provide services in IT sector

    Indias 4th biggest software company in India

    It is listed in BSE, NSE, NYSE and Euronext

    (Amsterdam).

    BSE IPO oversubscribed 17 times when made public in

    1991

    The company employs 53,000 IT professionals across

    development centers in 6 continents

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    > Chairman and founder Satyam

    Computers Services Limited

    > MBA from Ohio University

    > IT man of the year award by Data Questin 2002

    > Winner of Ernst & Young entrepreneur

    of the year award in 2007

    > He became the Managing Director and

    Chief Executive Officer in 1991

    > Mr. Rama Raju holds a Master of

    Economics degree from Loyola College,Chennai and a MBA degree from Loredo

    State University, Texas

    > Before 1997, he was with Maytas Infra

    Limited as one of its Directors

    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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    Satyam Share holding Pattern

    Institutional & Non-

    Institutional Shareholders

    LIC 4.34%

    L&T 4%

    Lazard

    Aberdeen 13.16%

    Fidelity

    ICICI Prudential

    Citigroup

    JP MorganTotal Market capitalization of Rs.

    15,262 Cr

    (As on Dec 16, 2008 )

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    Satyam Decade at a Glance

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    Maytas Infrastructure

    The Rajus hold 36.64 per cent while

    institutional 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 last financial year

    Satyam planned to acquire 51 per cent stake

    for Rs 1, 440 crore or $0.3 billion

    Mr. Teja Raju(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 on 148acres

    An undisclosed stake is held by Infinite IndiaInvestment Management, a realty fund jointly

    promoted by JM Financial and US-based SRMInvestments, which invested Rs 600 crore inFebruary

    B. Rama Raju Jr. (VC)

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    So, How did it all began?

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    16 Dec2008

    Satyam backs out ofMaytas deal citinginvestors protest

    17 Dec2008

    26 Jan2009

    Major Clients ofSatyam expressdissatisfaction.Contracts worth$200 million up for

    grabs

    Satyam gets boardapproval for

    controlling stake inMaytas Infrastructure

    and Maytasproperties as fullyowned subsidiary for$1.6B (Rs. 8000 Cr.)

    Satyam shares plunge55 percent in NYSE.BSE share plunges over

    30%

    Board meeting to beheld on Dec 29 forproposed buyback of

    shares

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    19Dec

    23Dec

    206Jan2009

    British mobile solutionprovider Upaid files a law suit

    against Satyam in a district

    Court in the US over Maytas

    deal. May face $1 Billion in

    penalties

    20Dec

    Centre refersSatyam dealto Registrar ofCompanies

    (RoC)

    World Bank bans Satyam for 8 yearsdue to inappropriate payments to

    staff and inability to provide

    information sought on invoices

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    26Dec

    28Dec

    26 Jan2009

    Board announcesexploring optionfor buyback of

    shares to restoreinvestor

    confidence

    1st independent

    director Dr.MangalamSrinivasan

    resigns fromSatyam board

    29Dec

    3 more Independent Directors resign.Mendu Rammohan Rao, Krishna G

    Palepu and Vinod K Dham

    Satyam asks DSPto review board

    structure

    Rumors in marketabout strategic

    takeover by IBM,Accenture

    IL&FS sells 44.1 lakh sharespledged shares of Satyam

    promoters in 1 day.Promoters equity reduced

    from 8.6% to aprrox 7%

    Promoters disclose that their

    entire holding in Satyam

    pledged with institutional

    lenders since 2006

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    30Dec

    02Jan

    26 Jan2009

    Postcancellation ofdeal, Maytas

    looks for raising

    $500 millionthrough sale of

    equities andproperties

    IL&FS sellsfurther 44.27 Lakh

    pledged sharestaking the tally to1.5 crore pledged

    shares

    03Jan

    Satyam board confirmspromoters stake to be

    around 5%. Further 3.2%still pledged.

    Satyam-Upaid casehearing over the

    Maytas deal in Texas

    court on January 8.

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    05Jan

    06Jan

    26 Jan2009

    SEBI considers

    proposal to make itmandatory forpromoters andmajority share

    holders to disclosedpledged shares to

    stock exchange

    Total pledged shares sold byIL&FS reaches 2.5 Cr. in last

    13 days. Promoters stakedown to 3.6%. Still a further

    1.7% are pledgedPromoters stake inthe company downto 4.5%

    Tech Mahindra(Revenues 3766 Cr.)offers to merge with

    Satyam (Revenues 8473

    Cr.)

    The Night Before 7th Jan

    Merill Lynch discovers seriousirregularities in books of

    accounts and approachesregulator SEBI for further

    course of action and its inabilityto investigate further. DSP

    submits report to SEBI andSatyam management late night.

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    07Jan

    26 Jan2009

    09:45 A.M.

    Satyam Chairman

    Ramalinga Raju writes the

    following letter to the

    company board

    ADRs crash 90%

    Satyam BSE scrip falls 78%

    DSP snaps ties with

    satyam.

    Auditing firm PWC underscanner

    Govt. instructs RoC to

    review report

    Ram Mynampati takes

    over as interim CEO

    according to Rajus letter

    Hunt for Raju brothers

    begin. Amid speculation

    over his

    whereabouts, Raju is

    believed to have left for

    the United States in

    connection with a court

    case.

    Satyam stripped of

    Golden Peacock award

    NSE removes Satyam from its benchmark index Nifty.

    It will be replaced by Reliance Capital with effect from

    January 12. It will also be removed from various other

    indices like CNX 100, S&P CNX 500,CNX IT and the CNX

    Services sector index

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    08Jan

    09Jan

    26 Jan2009

    Raju brothers arrested by the police on

    charges of criminal conspiracy,

    cheating, forgery, misappropriation of

    funds and criminal breach of trust.

    PwC in major

    trouble. Stocks of

    PwC clients take a

    major beating at

    the BSE and NSE

    BSE to replace Satyam

    Computer with Sun

    Pharmaceutical in its

    benchmark index

    Sensex with effect

    from January 12.

    PwC shot back at Satyam, saying in

    a media statement that the auditing

    was based on the audit evidence

    provided by Satyam and in was

    accordance with applicable

    standards.

    10Jan

    CFO Valdamani Srinivas,

    who is the financial

    custodian of the

    company resigns

    Market Capitalization of satyam falls to Rs.1,607 Cr from Rs.15,262 Cr. on Dec 16 in

    19 trading sessions.

    Former CFO

    Valdamani Srinivas

    remanded to

    judicial custody

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    13Jan

    14Jan

    26 Jan2009

    The newly appointed 3 member

    board appoints auditing firm KPMG

    and Delloitte to assist it in cleaning

    the mess in the scam taintedcompanys accounts

    Government

    hands satyam case

    to SFIO

    Maytas stockshit the lowercircuit for 7th

    consecutivetrading session

    16Jan

    The government expanded the three-

    member Satyam board to six to include S

    Balakrishnan of Life Insurance Corporation,Tarun Das, chief mentor of the

    Confederation of Indian Industry and T N

    Manoharan, former president of the

    Institute of Chartered Accountants of India

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    Why on 7th Jan 2009?

    DSP Merrill Lynch informed SEBI about

    Material irregularities in Accounts on 6th Jan

    Minutes of Meeting of 16th

    December,2008were not submitted to RoC-(This created somedoubts)

    Hearing of Upaid- satyam case on 8th Jan at theUS court

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    Raju ban gaya conmanHow?

    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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    Fabricated Income Statements

    Creative Account Practice

    Details of cash balances with Scheduled banks are not there in theAnnual report

    Question raised by Equity analyst Kawaljeet Saluja -$500 mn cashparked 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 LiabilitiesFraud Amount

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    Stake decreased from 21.6