The saga of satyam
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1) Satyam Company Services Ltd. was an Indian IT company that was embroiled in a major accounting scandal in 2009 when it was revealed that the former chairman had engaged in a fraud involving inflated cash and bank balances and profits. 2) The fraud came to light when an internal email from a board member was circulated detailing the chairman's misdeeds, following which the chairman resigned and confessed to the $1 billion fraud. 3) The fraud had wide-ranging impacts, including hurting India's reputation in global markets, and the Indian government took steps to appoint a new board and support the company to prevent its collapse.
The saga of satyam
- 1. THE SAGA OF SATYAM
- 2. INTRODUCTIONSatyam Company Services Ltd. was incorporated on June 24, 1987
- 3. Main business of the company was IT related fields and it came into prominence after Y2K problem
- 4. Company was listed in Bombay Stock Exchange in 1992
- 5. Company bags its first fortune 500 client John Deere & CoListing in NASDAQ, New York Stock Exchange and EURONEXTCurrent revenue: 1.24 billion USD
- 6. Was acquired by Mahindra group in June 2009 and renamed as Mahindra Satyam HOW IT HAPPENEDMaytas Acquisition.E-mail dated 18.12.2008 from Joe Abraham to Mr. Krishna G. Palepu and circulated to other Board Members wherein misdeed of the chairman/company was narratedHemantKothari, Non Executive Chairman of DSP, Merril Lynch Ltd. after having discussion with B. RamalingaRaju forced him to confess.Investors Aborted.Board Members Resigned.On 7th Jan., 09, Chairman resigned after announced involvement in fraud.
- 8. FACTS AND FIGURESInflated figures for cash and bank balances of INR 5,040 cr. (as against INR 5,361 crore reflected in the books).Operating Profit were artificially boosted from the actual 61 cr. to 649 cr.Satyam also showed an interest earning of Rs. 376 cr. that was fictitious.
- 9. Area covered for investigationManpower Management
- 10. Sales
- 11. Cash and bank balances
- 12. Role of Statutory Auditors
- 13. Role of Internal Auditors
- 15. Purchase of land
- 16. Floatation of 327 companies
- 17. Acquisitions
- 18. Income Tax LiabilityIMPACT ON INDIAN IT INDUSTRYIt is surely going to be more difficult for other Indian IT service players to win business.Undoubtedly, this is going to hurt the prospects of foreign money flowing into India. Global perception about indian companies.Indian stock market slipped over 7% on 7th Jan., 09.
- 19. INDIA’S STEP TO SAVE SATYAMThe Indian Government has stated that it may provide temporary direct or indirect liquidity support to the company Govt. has appointed new board of members for Satyam consisting of heavy weights from India's corporate sector.Satyam is seeking bank loans to help cover salaries and other operating expenses