Satyam was one of the most reputed and profit making software firms of the current decade. It was ranked as the number two Indian software company by a well distinguished source. Now suddenly it has come into limelight due to all the wrong reasons. The company has undergone tremendous defamation worldwide. It has become an object of mockery, malefaction and a epitome of treachery and deceit in trivial talks as well as group discussions which leads to subsequent decapitation of all the trust and goodwill we have on our digital behemoths.
So what actually went wrong with Satyam ??
Why did the “ Satyam empire ” crumble down like a pack of inferior quality cards?? It basically had to do with malicious ownership of the corporate giant.
Now Ramalingam Raju has become famous … errr…notorious due to his tyrannical acts in Satyam. Raju had falsified accounts , he had created fictitious assets and kept his employees and the board of directors in the dark.
He padded the company’s profits and cooked up the bank balances at satyam computers since genesis. When matters went haywire he tried to plug the gaping hole in his balance sheets by persuading the board of directors to “rubber-stamp” his acquisition of the two companies which he already owned – the Maytas ( “ satyaM ” read backwards ) Infrastructure and Maytas Properties as his last trick of the trade. This soon became public (ok it was still esoteric but the shareholders came to know of this .) The shareholders felt resentful at this debauched act of deception and revolted. Raju finally realized his game was over and the rest has gone down in history as a scornful act.
In his letter to the Directors Raju wrote : “ It was like riding a Tiger , not knowing how to get off without being eaten ! ”
His full 5-paged email can be read HERE
So what prompted Raju to do this ??
- The company ( Satyam ) which had grabbed 185 fortune 500 clients was under tremendous pressure to perform better than its peers – the Wipro , TCS and Infy.
- As Raju’s stake in Satyam had dwindled to 3.6 %, he was under pressure to create a hoopla around the stock markets and get FII to pick it up. To keep the FIIs interested, he had to show a 40% growth in profits, let aside turnovers.
- Showing a operating profit of Rs. 649.27 crores in the second quarter ended September 30 when in reality it was no more than Rs. 61 crores !! Which counts up to 10.64 times the actual profit !!!
- According to some data accounts and figures , Satyam would have reported a quarterly loss of Rs 74 crore probably the 1st by an InfoTech major in the country !
The aftershocks of the scam have been experienced as the investors have lost crores and eventually their hair , sleep and some have lost their lives. It was a grave lapse on part of the regulatory agencies deployed by the government like the SEBI, the banks and the Auditors .
Hope you liked this informative piece of info . Do keep looking for the next post in my drafts ( soon to be published ) –
“What after Satyam –1 ?”
Thanks to blogs.siliconindia.com and times of India for exact facts and figures that made it possible for me to write this article.
- Vandit .
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Superb use of language man apart from from the interesting facts that you have pointed out !! Overall a highly rated post !!
- T0rr3nT l33ch3r.
well done....it was one of the most breif and au fait explanations i had come across......:)