Satyam Case

Presented by – Vinod K.NDivyansh JainPallavi AgarwalNeema JosePriyanka Mishra

Outline of the Case

The Satyam scandal has shaken corporate India, and damaged its reputation with investors, domestic and foreign. It turns out that founder and CEO B. Ramalinga Raju invented $ 1 billion in cash, which never existed.

False profits and cash resources were exhibited in the financial statements to create an illusion of a highly profitable business which duped gullible small investors. The financial manipulation had been going for seven long years but neither the so-called “independent directors” nor the professional auditors discovered it.

 Ramalinga Raju resigned on 7 January 2009 and confessed that he had manipulated the accounts by US$1.47-Billion.

Lessons Learned from Satyam Scam

The 2009 Satyam scandal in India highlighted the nefarious potential of an improperly governed corporate leader.

Investigate All Inaccuracies: The fraud scheme at Satyam started very small, eventually growing into $276 million white-elephant in the room.Ruined Reputations-Indian rivals will come under greater scrutiny by the regulators, investors and customers.Corporate Governance Needs to Be Stronger: All public-companies must be careful when selecting executives and top-level managers

Effects on Owner

Imprisoned by the Hon. Court and Govt.of India.

Reputation went down.

Bank took over their property.

Social boycott.

Stock Market

Within hours, Satyam stocks plunged over 82%. It dragged the benchmark Sensex index down 7.3% to close at 9,586.88 on Wednesday.

The New York Stock Exchange halted trading in Satyam stock. India’s National Stock Exchange expelled Satyam from all its equity indices and the BSE and several domestic followed the suit.

Effects on Company

Non functioning of the company.

Closure of the company – all the employees lost their jobs.

Company was later acquired by Mahindra and now known as Tech- Mahindra.