PRESENTATION OF FINANCIAL MANAGEMENT

Presented by: Shalvi mahajan & Simran aggarwal

TOPICS
SATYAM

SCANDAL AGENCY COST BHOPAL GAS TRAGEDY ENRON SCAM

THE SATYAM SCAM

COMPANY PROFILE

Satyam was established in 1987 by Mr. B Ramalinga Raju. . 4th fastest growing IT company in India. It serves over 654 global companies. 40,000 employees. On 26th August, 1991 it was converted into a Public Limited Company.

ACHIEVEMENTS
First

IT Company in the World Certified under ISO9001:2000. Corporate Citizen award for Corporate Social Responsibility. Top 13 Best-Managed Companies in India. Satyam Wins golden peacock award for excellence in Corporate Governance 2008 on Global level for 2nd time (revoked after the fraud was confessed).

Satyam Clients
A total of 650+ Clients 185 of the top fortune 500 Companies

HOW DID IT HAPPENED?

Floated

two other companies for their own

purpose. Without taking permission of the share holders. Raju had used dummy accounts to trade in Satyam's shares. On 7th Jan., 09, Chairman (Ramalinga raju) resigned after announced involvement in fraud.

Reasons for Satyam Scam:1.

2.

Raju wanted to take over his MAYTAS INFRA and MAYTAS PROPERTIES.(company of his sons). He was blamed that he was using the funds of the investors for the family business.

UNDERSTANDING THE SCAM!

The balance sheet as of september 30, 2008 showedinflated (non-existent) cash and bank balances of rs. 5040 crore (as against rs. 5312 crore reflected in the books) an accrued interest of rs. 376 crore which is nonexistent an understated liability of rs.1230 crore on account of funds arranged by br raju.

Fabricated Income Statements

Creative Account Practice

FRAUD

5,040 + 376 + 490 (Rs. Cr)

Rs. 1,230 Cr

Rs. 7,136 Cr
Fraud Amount

Overstated cash balances, Income receivables

Understated Liabilities

IMPACT OF SCAM
Before

the scandal its share price was Rs 300 in oct 2008. Just after this scandal, the share price go down to Rs 6.30.. Before the scandal Satyam was the 4th ranked among IT companies of India and on 9th jan2009 it became least valuable IT company in India.

Finally Satyam acquired by tech mahindra.

All well thats end well

Anand mahindra- new owner of the satyam. Post rs 2890crore as takeover. July 2009, satyam rebranded its service as MAHINDRA SATYAM.

AGENCY COST
Agency cost is the cost incurred to the company or share holders in monitoring the activities of the managers.