SATYAM- The Case StudyPresented by-Shruti Thakker,Poonam Jaisinghani,Monika Sahu,Dhara Budhadev, Soniya Nirmalkar,Pratul Kukreja,Nitesh Nayak.

About Satyam-Fourth Largest outsourcing company of India.Employees more than 50,000 in India.High global reputation.Offered services to more than 550 MNCs.

About Raju Ramalinga - Ramalinga completed his graduation in commerce in the year 1975 from Andhra Loyola College in Vijayawada. Later, he went to the USA to do MBA from Ohio University. In the year 1977, Raju returned to India and started a textile business. His company was named Sri Satyam. After this, he forayed into real estate sector with introducing Satyam Constructions.

His capabilities and intelligence got him going and enabled him to come up with yet another venture - this time in IT sector. He opened Satyam Info way or Sify. Established in the year 1992, this venture soon took over the Indian IT market with surprise.

Ramalinga Raju has also been entitled to an array of prestigious awards, including; -Ernst and Young Entrepreneur of the Year Services Award in the year 1999 -Dataquest IT Man of the Year Award in the year 2000 -CNBC's Asian Business Leader - Corporate Citizen of the Year Award in the year 2002 -Lifetime Achievement Award conferred upon by Hyderabad Management Association (HMA) in the year 2005

How Satyam got formed, got famous, got wild, and got caught?

1987 B Ramalinga Raju along with his brother B. Rama Raju and brother-in-law DVS Raju founds Satyam with 20 employees.

1991 Satyam goes public. IPO oversubscribed by 17 times. First offshore contract from US tractor maker John Deere & Co is won .

1993 Awarded ISO 9001 Certification, Satyam Technology Center (STC) inaugurated, Joint venture with GE announced

1999 Satyam Infoway (Sify) becomes the first Indian Internet company listed on NASDAQ, Satyam now has a presence in 30 countries.

2000 Satyam now has 10,000 employees. World Economic Forum identifies Satyam as one of the 100 leading pioneering technology companies .

2000 Satyam receives National HRD Award from Indian government, Dataquest names Ramalinga Raju "IT Man of the Year"

2001 Satyam is listed in New York. Becomes the first IT Company in the World Certified under ISO9001:2000 by BVQI. Wins the Golden Peacock for Excellence in Corporate Governance again. 2003 Satyam starts providing IT services to the World Bank.

2004 Ranked Among India's Top 10 Best Employers (CNBC-Hewitt Best Employers Survey).

2005 Ranked among Top 13 Best-Managed Companies in India (Business Today and AT Kearney), Forbes Top Asian Companies under US$1 billion. 2005 Winner, Corporate Citizen I award for Corporate Social Responsibility (Business World , FICCI, and SEDF) .

2006 Revenue exceeds US$1 billion, Sets up the first "Global Innovation Hub" in Singapore, Sets up operations in Guangzhou, China .

2008 Revenue crosses $ 2-billion mark.

2008 World Council for Corporate Governance (WCFCG) awards Satyam the Golden Peacock Global Award for Excellence in Corporate Governance, Best IR Website in the Asia Pacific & Africa region for providing complete, accurate and timely investor relations information (MZ Consult), UK Trade & Investment India (UKTI) Business Award for corporate social responsibility.

Mar-08 Satyam reports a 46.3% rise in revenue to $2.1 billion under the US accounting standards, while net income rises 39.7% to $417 million.

16-Dec-08 Satyam announces plan to buy Maytas Infrastructure and Maytas Properties, two building firms part-owned by the outsourcer's founders for $1.6 billion to alledgedly "de-risk" Satyam's core business in IT services. 12 hour later the deal is killed. The company's share price plunges 55% in hectic US trading.

17-Dec-08 Ramalinga Raju says the about-turn reflected negative investor reaction. Satyam shares fall by a third on concerns about corporate governance.

18-Dec-08 Satyam board says will meet on Dec. 29 to consider a share buyback in a bid to restore confidence.

26-Dec-08 Mangalam Srinivasan, an independent director, resigns

29-Dec-08 Three more directors quit, but Satyam shares rise on hopes for moves to improve shareholder value and corporate governance.

02-Jan-09 Rajus stake falls by a third to 5.13%. Analysts say this means the company is a more attractive bid target.

05-Jan-09 Company shares tumble 9 percent on concern that corporate governance issues could hit new business.

06-Jan-09 Shares rise more than 7 percent on a newspaper report Satyam had been approached by smaller rivals Tech Mahindra for an all-share merger.

7- Jan- 2009 Chairman Ramalinga Raju confessed that Satyam's accounts had been falsified .

13- April- 2009 a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra.

Vadlamani Srinivas CFO Satyam speaks- The fraud in the balance sheets of the company was going on for the last four-five years. The masterminds behind the scam were Ramalinga Raju and his brother Rama Raju. All FD receipts and bank statements were provided by the head of the companys cost accounts department. These papers, in turn, were produced before the two external auditors S Gopalakrishnan and Srinivas Talluri .

Impact on 'Brand India' -

Satyam Scandal created a huge impact on Foreign Investments in India.

Analysts in India have termed the Satyam scandal India's own Enron scandal Some social commentators see it more as a part of a broader problem relating to India's caste-based, family-owned corporate environment.

India's National Stock Exchange had announced that it will remove Satyam from its S&P CNX Nifty 50-share index on 12 January.

Ramalinga Raju is charged with several offences, including criminal conspiracy, breach of trust, and forgery.

Corruption is the main problem which is making the country ashamed.

Governments Role- The Indian Government has stated that it may provide temporary direct or indirect liquidity support to the company. The State government AP had nothing to do with the Satyam Computer issue. The Centre was looking into the issue.

The Government also said strict action under the law would be taken against the guilty after verifying the facts.

The Govt. focus was on the protection of interest of average investors, particularly small investors & ensure that nothing goes wrong in addition to bringing in more transparency for boosting public confidence.As said the minister.

The state government is incurring an additional expenditure of Rs.32.5 lakhs by setting up a new ACMM court to exclusively deal with the case. The amount include salaries of officers and staff, contingent expenditure of 7 lakh & 3 lakh towards purchase of library & furniture.

Auditors Role-The statutory auditor for Satyam Computer Services were, PricewaterhouseCoopers (PwC).

It is the world's second-largest professional services firm (after Deloitte) and one of the "Big Four" accountancy firms. In January 2009 PwC was criticized, along with the promoters of Satyam, an Indian IT firm listed on the NASDAQ, in a $1.5 billion fraud.

There is intense debate about the role of PricewaterhouseCoopers, the external auditors of the company in clearing the accounts of Satyam. Auditors are supposed to have checked, verified cash balances, bank statements, assets with relevant confirmations. Satyam was a large company, not a street store; PricewaterhouseCoopers is a globally reputed firm.

The auditors cannot hide under the standard clause auditors can be watchdogs and not blood-hounds especially when cash and bank balances have been overstated.

Stakeholders Role-Cost of Satyam shareholders who bought the stock during the initial phase of bull phase is estimated to be around Rs.300-350 per share.

Uncertain prospects for 45000 odd Satyam employees what with the deal not binding Tech Mahindra to retain majority of the employees.

In the final analysis, the genuine long-term shareholders would continue to remain the ultimate losers even after finding a new owner for their company. Though, over a period of next 2-3 months as more certainty prevails over the stock's fortune related with its actual re-stated accounts, the stock may witness revival from the current depressing levels.

Positive for Satyam clients as now there would be more clarity and certainty. Clients would be in more comforting position with a new owner on the anvil.

On 13th April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy. Effective July 2009, Satyam rebranded its services under the new Mahindra management as Mahindra Satyam.

C.P Gurnani is the current CEO.Acquisition By Mahindra Group-

The Satyam Computer Services scandal brought to light the importance of ethics and its relevance to corporate culture. The fraud committed by the founders of Satyam is a testament to the fact that the science of conduct is swayed in large by human greed, ambition, and hunger for power, money, fame and glory. The gross negligence of stakeholder concerns and over indulgence of key management on a personal and organizational level in immoral practices for personal benefit.Learnings-

Though satyam scandal put a black mark on our economy, but it teaches us a lesson of how deadly can be a result of corruption.

Finally, we conclude by providing recommendations for ethical code of conduct in organizations and the need to foster a culture of integrity and trust.