Bhavin Patadia(34) Sandeep Rane (39) Vicky Trikmani (51)
Manish Haldankar (60) Incorporated in June 1987 In 1997 selected by the Switzerland-based World Economic Forum and World Link Magazine as one of India's most remarkable and rapidly growing entrepreneurial companies Satyam Infoway (Sify), was the first Indian Internet Company listed on NASDAQ Mr. B. Ramalinga Raju, awarded the IT Man of the Year 2000 Award by Dataquest 2001, worlds first ISO 9001:2000 company to be certified by BVQI 2003, started providing IT services to World Bank 2005, ranked 3rd in Corporate Governance Survey by Global Institutional Investor SATYAM: A Company whose name itself means Truth Triggers On December 16, 2008, the Satyam board, including its five independent directors had approved the founders proposal to buy the stake in Maytas Infrastructure and all of Maytas Properties, which were owned by family members of Satyams Chairman, Ramalinga Raju, as fully owned subsidiary for $1.6 billion
Without shareholder approval, the directors went ahead with the managements decision
The decision of acquisition was, however, reversed twelve hours after investors sold Satyams stock and threatened action against the management
This was followed by the law-suits filed in the US contesting Maytas deal
The World Bank banned Satyam from conducting business for 8 years due to inappropriate payments to staff and inability to provide information sought on invoices
Four independent directors quit the Satyam board and SEBI ordered promoters to disclose pledged shares to stock exchange
On 7 January 2009, Saytams Chairman, Ramalinga Raju, resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyams accounts had been falsified
Two Versions of Satyam's Accounts (I) SOURCES OF FUNDS BEFORE CONFESSION AFTER CONFESSION (1) Shareholdes Funds a) Share capital 134.7 134.7 b) Share application money, pending allotment 2.76 2.76 c) Reserves and surplus 8392.23 -415.47 8529.69 -278.01 (2) Loan Funds a) Secured loans 30.49 30.49 b) Unsecured loans- others 234.8 1464.8 8794.98 1217.28 (I) APPLICATIONOF FUNDS (1) Fixed Assets 1381.1 1381.1 (2) Investment 618.64 618.64 (3) De ferred Tax Assets (net ) 118.75 118.75 (4) Current Assets, Loans and Advances a) Sundry debtors 2651.36 490 b) Cash and bank balances 5312.62 272.62 c) Interest accrued on fixe d deposits 376.34 0 d) Loans and advances 502.22 502.22 8842.54 1264.84 Less: cur rent liabilities and provisions a) Liabilities 1669.26 1669.26 b) Provisions 496.79 496.79 2166.05 2166.05 Net Current Assets 6676.49 -901.21 8794.98 1217.28 AUDITORS ROLE PwC - Statutory Auditor Relied on Satyams investigative tools Failed to verify the invoices No verification of Sundry debtors No bank accounts were scrutinized for verifying No investments were verified to check proper funds investments Impact (Internal & External) Termination of contracts by several high profile clients including World Bank Migration of intellects All awards were stripped from the company and executives Corrosion of Investors wealth & confidence Reputation of the country was seriously dented Appointement of Board members by Government to sell the company
Factors overlook Changing of accounting year Huge debt despite cash surplus (no need to maintain cash being IT company and infra cost is low) Excess cash not distributed among the shareholders Operating margin peer companies 20-25% and Satyam 3% Huge profit compared to others Extra ordinary payment of audit fees Not verifying the accrue interest on fake FD (Accrued interest of Rs.376 Crs) Not verifying the TDS on accrued interest Audit plan were prepared on the basis of approval of promoters Inflated bank balance of Rs.5040 Crs against Rs.5312 Crs Debtors Rs.490 Crs against Rs.2651 Crs