B Ramalinga Raju

Parakhiya Vasant

• Byrraju Ramalinga Raju was born on September 16, 1954 in a family of farmers.

• He did his B. Com from Andhra Loyola College at Vijayawada and subsequently did his MBA from Ohio University, USA.

• Ramalinga Raju had a stint at Harvard too. He attended the Owner / President course at Harvard.

• He has two brothers and a sister. • Raju is married to Nandini. • They have two sons, Teja Raju and

Rama Raju, • who runs the Hyderabad-based

Maytas Properties and Maytas Infra • and a daughter, Deepti, who is

married.

• After returning to India in 1977, Ramalinga Raju moved away from the traditional agriculture business and set up a spinning and weaving mill named Sri Satyam.

• Thereafter he shifted to the real estate business and started a construction company called Satyam Constructions. In 1987,

• Ramalinga Raju founded Satyam Computer Services along with one of his brothers-in-law, DVS Raju.

• The company went public in 1992. With the launch of Satyam Infoway (Sify) Satyam became one of the first to enter Indian internet service market.

• Ramalinga Raju have promoted and have been associated with Satyam for well over twenty years now He have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries.

• Satyam has established an excellent leadership and competency base at all levels.

Satyam Maytas Fiasco

Satyam Computers had on December 16,2008, announced that

it will acquire two groupfirms –

1. Maytas properties and

2. Maytas Infra

The BOD of Satyam had approved the founder’s proposal to buy 51 per cent stake in Maytas Infrastructure and 100 % in Maytas Properties.

The total outflow for both the acquisitions was expected to be US$ 1.6 bn comprising of US$ 1.3 bn for the 100% stake in Maytas Properties and US$ 0.3 bn for the 51% stake in Maytas Infra.

This is the move that sparked a row over alleged violation of corporate governance laws.

This deal is not profitable for investors .So after this announcement they started to raise their voices against the deal

Maytas Infra• The company is run by the sons of Ramalinga Raju• It was started in the late 1980’s by Ramalinga Raju• The main reason for the debacle of Maytas Infra is due to the

debacle of Satyam

Maytas Properties Ltd• One of the reasons for the debacle of Maytas properties is the

ongoing economic slowdown• The company has huge land banks and the prices have

dropped down in the real estate significantly

WHY HE FAILED……????

The promoters decided to inflate the revenue and profit figures of Satyam. In the event, the company had a huge hole in its balance

So to fill up this gap……..

Company announced Acquisition of 51% stake in Maytas Infra and 100% stake in Maytas Properties on 16th Dec 2008 but The deal was not profitable for investors

Investors dumped Satyam’s stock and threatened action against the management. Satyam Computer

This was mainly done to hide the irregularities in the accounts of Satyam. It is also said the close association with the political leaders is one of the reasons.

WHAT WENT WRONG?Simple manipulation of revenues and

earnings To show superior performance

• Raising fictitious bills for

services that were never

rendered.

• To increase the Cash &

bank balance

correspondingly.

• Operating profits were

artificially boosted from

the actual Rs 61 crore to

AND HOW….?????

Its financial statements for years weretotally false, cooked up and...

Never had Rs 5064 crores (US$ 1.05 Billion) shown as cash for several years.

Its liability was understated by $ 1.23 BillionsThe Debtors were overstated by 400 millions plus.The interest accrued and receivable by

7 January 2009• company Chairman Ramalinga Raju resigned after notifying

board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified

10 January 2009• Company Law Board decided to bar the current board of

Satyam from functioning and appoint 10 nominal directors.

• "The current board has failed to do what they are supposed to do. The credibility of the IT industry should not be allowed to suffer." said Corporate Affairs Minister Prem Chand Gupta.

• Chartered accountants regulator ICAI issued show-cause notice to Satyam's auditor PricewaterhouseCoopers (PwC) on the accounts fudging. "We have asked PwC to reply within 21 days," ICAI President Ved Jain said.

11 January 2009• The government nominated noted banker Deepak Parekh, former

NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyam's board.

• Merrill Lynch (Now with Bank of America) terminated its engagement with the company.

• The New York Stock Exchange has halted trading in Satyam stock as of 7 January 2009.

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

• The founder of Satyam was arrested two days after he admitted to falsifying the firm's accounts. Ramalinga Raju is charged with several offences, including criminal conspiracy, breach of trust, and forgery.

14 January 2009• Price Waterhouse, the Indian division of

PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam may have rendered its audit reports "inaccurate and unreliable"

• CID told in court that the actual number of employees is only 40,000 and not 53,000 as reported earlier and that Mr. Raju had been allegedly withdrawing INR 20 crore rupees every month for paying these 13,000 non-existent employees

22 January 2009

• the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect.

• Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company.

• The two-day-long board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals and

• Partho Datta, a Chartered Accountant as special advisors

5 February 2009

• Satyam announces Renewed customer confidence; Wins new business of over USD 250 Mn. in last seven weeks

• Company Law Board Authorizes Satyam to Induct Strategic Investor, Raise Authorized Equity Capital and Make Preferential Allotment of Equity Shares

• Order passed by the Hon’ble Company Law Board dated 19th of February

• Satyam Ranks Eighth in Training Top 125

February

• Satyam Wins Corporate University Xchange Awards• Satyam submits letter to SEBI regarding bidding process• Satyam to Implement SAP at Vijay Dairy & Farm Products (P)

Ltd.• Satyam Innovation Garners Progressive Manufacturing Award for

Rain CII Carbon• Satyam Announces Outcome of Board Meeting• Satyam Wins Consumer Health World Award for Tele-

Ophthalmology Program• Satyam Announces Commencement of Process to Select an

Investor• Satyam receives SEBI approval on bidding process• Satyam’s New CEO Assures Singapore “It’s Business As Usual”

March

• Satyam announces approval from the Federal Cartel Office of Germany and in-principle approval from BSE and NSE

• Satyam receives SEBI approval - Corrigendum• SEBI Clarification dated April 21, 2009

• SEBI Letter dated April 20, 2009• Satyam receives SEBI approval

• Tech Mahindra issues Public Announcement of the Offer• Euronext Amsterdam approves Satyam’s application to delist

ADSs from Euronext Amsterdam

April

Continue…• Tech Mahindra and Satyam Discuss Transition• Tech Mahindra receives Company Law Board approval

• Satyam files application to delist ADSs from Euronext Amsterdam

• Tech Mahindra selected as the Highest Bidder

• Satyam Completes Bidding Process

• Satyam Collaborates with Pentaho Corporation to offer ‘on Demand BI Solutions’

• Satyam Refines Bidding Process

• Appointment of Venturbay Nominees to the Board of Directors of Satyam Effective May 27, 2009

• Appointment of Venturbay nominees to the board of directors of Satyam

• Satyam allots shares to Venturbay

May

• Tech Mahindra and Mahindra Satyam strengthen their boards with executive leadership appointments

• Satyam Unveils Its New Brand Identity – “Mahindra Satyam”

• Satyam receives accolades from American Society for Training & Development

• Satyam initiates Virtual Pool Program to manage surplus staff

• Satyam Appoints New Leadership in Australia and New Zealand

June

• Company Law Board Withdraws Four Government-Appointed Directors from Mahindra Satyam Board

• Satyam allots shares to Venturbay

• Mahindra Satyam signs a 5 year multi-million dollar SAP contract with GSK

Julay

• Achievement: Founder and Chairman of Satyam Computer Services Ltd; Chosen as Ernst & Young Entrepreneur of the Year for Services in 1999

• Ramalinga Raju is one of the pioneers of the Information Technology industry in India. He is the founder and Chairman of Satyam Computer Services Ltd.

• Dataquest IT Man of the Year in 2000,

• CNBC's Asian Business Leader –

• Corporate Citizen of the Year award in 2002 and

• E&Y Entrepreneur of the Year Award in 2007.

• Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance Issues, which was stripped from them in the aftermath of the scandal.

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From : Parakhiya Vasant