satyam ppt final

7/28/2019 Satyam Ppt Final

1/16

Asias Enron: Satyam(Sanskrit Word for Truth)


2/16

INDEX Introduction to Satyam computers. Why Raju was failed.

Confession of Raju.

How did he cook the balance sheet

Who is to be blame.!!

What was possible solution ..? Current status of company.


3/16

INTRODUCTION Satyam Computer Services Ltd. is a consulting and information

technology services company based in Hyderabad, India .

It was found in 1987 by B.Ramalinga Raju.

The company offers information technology (IT) services

spanning various sectors, and is listed on the New York StockExchange and Euronext.

It is considered as an icon among the IT companies and at onepoint had over a billion dollar revenue.


4/16

Satyam's network covers 67 countries across sixcontinents.

The company employs 40,000 IT professionals acrossdevelopment centers in India, the United States, theUnited Kingdom, the UAE, Canada, Hungary, Singapore,Malaysia, China, Japan, Egypt and Australia.

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


5/16

WHY HE FAILED????

The promoters decided to inflate the revenueand profit figures of Satyam.

In the event, the company had a huge hole in itsbalance sheet, consisting of non-existent assetsand cash reserves that have been recorded andliabilities that are unrecorded.

So to fill up this gap..

Company announced Acquisition of 51% stake in

Maytas Infra and 100% stake in MaytasProperties on 16th Dec 2008 but wereunsuccessful.


6/16

The deal was not profitable for investors

Investors dumped Satyams stock and threatenedaction against the management.

Satyam Computer ADRs took a huge beating.

This was mainly done to hide the irregularities inthe accounts of Satyam

It is also said the close association with thepolitical leaders is one of the reasons.


7/16

Day by Day situation

16th Dec,2008 Mr Raju ( MBA from ohio state uni.

and Mgt program from Havard ) announced the

purchasing of two son owned companies-un relateddiversification-to unfold issue and just before scandal-

last chance

18th

dec negatives response of share holder regardingabove decision

23rd dec world bank announced to ban satyam for 8 yrs

for bribing the bank staff and data theft.

7th jan Day ofCONFESSION


8/16

CONFESSION

He tried to fill the gap b/w actual profits of the company and the profitsthat were shown in records, balance sheets etc. and also tried to cope

up the situation till last minute . But now the situation were beyond hishands and therefore he confessed the frauds(on Jan 7, 2009) made byhim by showing inflated profits in the balance sheet.

According to Mr. Raju, the balance sheet shortfall was more thanRs.7000 crore. It was Riding a tiger ,not knowing how to get off withoutbeing eaten.

The following statement he made in his confession letter Every

attempt to eliminate the (balance sheet) gap failed. None of BOD orMember or family aware of the accounting scam.


9/16

WHAT WENT WRONG?

Simple manipulation of revenuesand earnings To show superior

performance.

Raising fictitious bills for servicesthat were never rendered.

To increase the Cash & bankbalance correspondingly.

Operating profits were artificially

boosted from the actual Rs 61crore to Rs 649 crore.


10/16

HOW AND WHY hidden..?? Its financial statements for years were totally false, cooked up

and...

Never had Rs 5064 crores (US$ 1.05 Billion) shown as cash forseveral years. Its liability was understated by $ 1.23 Billions. TheDebtors were overstated by 400 millions plus. The interestaccrued and receivable by 376 Millions never existed.

The IT outsourcing industry has been going exponentially inthe last twenty years and Satyam took advantage of thisfavorable scenario to inflate its own growth.

Weak system of internal control

No Transparency by Raju brothers .If you dont understand what a co. does , dont

invest in it .If mgt refuse to fill in holes and

keeps Invester in the dark ,RUN!

-Warren Buffet


11/16


12/16


13/16


14/16

SATYAM SCAM: SO WHO

IS TO BLAME?

Who is guilty in this sordid stateof events?

Raju is by far the father of this

fraud.

But there were others who arealso culpable.


15/16

DONT

TRY

THIS

ATOWN..


16/16

THANK YOU

satyam ppt final

Documents