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Satyam sagaAn overview…..
Vikas Varma
An introduction
about Corporate
Governance
Corporate governance means a system by which corporate entities are under control and are directed
ECONOMIC
Social
Environment
FEATURES
• A system & process which embraces organizational structure
• Ensures that company works in the best interest of stakeholders
• Denotes direction and leadership• Explains the relationship between
directors , owners & managers
• It attempts to put a check on working of an organization
• Holds the balance between economic and social goals
• It ensures timely flow of all information to board of directors
Corporate Governance a brief explanation
by Mr. Godrej
SATYAM The story begins…..
1987 Incorporated as
private
limited company
1991
Recognized as a public
limited company;
and First Appeared on the
Bombay Stock Exchange
(BSE)
1993
Satyam signs joint venture
with Dun & Bradstreet for IT
Services Awarded ISO 9001
Certification
1999
Satyam Infoway (Sify) becomes
the first Indian Internet company
listed on NASDAQ Satyam forms joint venture with
TRW Inc. Presence established in 30
countries
2000
Satyam receives National
HRD Award from Indian
government Dataquest names
Ramalinga Raju IT Man
of the Year
2001 - 2002
Satyam becomes world’s first
ISO 9001:2000 company Headquarters established in
Singapore Satyam BPO launched in
Hyderabad
2008
Adopts new tagline
“Business Transformation.
Together.” Becomes the first
company to be invited by
the National
Stock Exchange (NSE)
Satyam Maytas Fiasco
• Satyam Computers had on December 16,2008, announced that it will acquire two group firms –
• Maytas properties and Maytas Infra
• The BOD of Satyam had approved the founder’s proposal to buy
• 51% stake in Maytas Infrastructure and
• 100 % in Maytas Properties.
• The total Amount for both the acquisitions was expected to be
• US$ 1.6 bn
• Consist of US$1.3 bn for the 100% Share in
Maytas Properties
Maytas Properties Ltd
• One of the reasons for the complete failure of Maytas properties is the ongoing economic slowdown and real estate market slop
•US$ 0.3 bn for the 51% Share in
Maytas Infra
Maytas Infra
• The company is started in 1980 now run by the sons of RamalingaRaju
• The main reason for the complete failure of Maytas Infra is due to the disaster of Satyam
Satyam’s justification forMaytas buyout deal
• the integrated organization would be stronger , and more diversified to deal with the uncertainty of the market.
• This is the move goes to the real 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
WHY HE FAILED…????
• 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
•This was mainly done to hide the irregularities in the accounts of Satyam
• He tried to fill the gap b/w actual profits of the company and the profits that were shown in records, balance sheets etc.
• The deal was not profitable for investors.
• investors put down carelessly Satyam's stock
Confession!!!
• he confessed
(on Jan 7, 2009),
the frauds made by him for showing inflated profits in the balance sheet
• According to the ‘confessional’ statement of Mr. Raju, the balance sheet manipulation was more than Rs.7000 crore
NDTV report
WHATWENT
WRONG?
Simple manipulation of revenues and earnings To
show superior performance
Raising fictitious
bills for services
that were never
rendered.
Operating profits were artificially boosted from
the actual
Rs 61 crore to
Rs 649 crore.
Actual Op Reported Difference0
100
200
300
400
500
600
700
61
649588
Operating Profit
Auditors missing in…
• do bank reconciliation to check whether the money has indeed come or not.
• check bank statements and certificates.
•So was this a total lapse in Supervision or were in the bank statements ,no one knows is it fraud
ACTIONSTAKEN
The SEBI
• The SEBI had in December given a clean official note to Satyam in an investigation on violation of corporate governance law.
What Managementcould do??
• Change the name of the company
• Reconstitution of the board • Try building confidence in
the clients to get back the lost projects.
• It could also be merged with any other software company.
L&T deals
Tech Mahindra’s deal….
• Tech Mahindra is paying Rs1757 crore
• for a 31% share in the company, or Rs 58 per share.
THANK YOU…..