Satyam Computers services limited was a consulting and an Information Technology (IT) services company founded by Mr. Ramalingam Raju in 1988. The company offers information technology (IT) services spanning various sectors, and is listed on NSE, BSE, the New York Stock Exchange and Euronext. It was India’s fourth largest company in India’s IT industry, offering a variety of IT services to many types of businesses. Its’ networks spanned from 46 countries, across 6 continents and employing over 20,000 IT professionals.
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On 7th January 2009, Satyam scandal was publicly announced & Mr. Ramalingam Raju confessed and notified SEBI of having falsified the account. Raju confessed that Satyam’s balance sheet of 30 September 2008 contained: * Inflated figures for cash and bank balances of Rs 5,040 crores (US$ 1. 04 billion) [as against Rs 5,361 crores (US$ 1. 1 billion) reflected in the books]. * An accrued interest of Rs. 376 crores (US$ 77. 46 million) which was non-existent. * An understated liability of Rs. ,230 crores (US$ 253. 38 million) on account of funds which were arranged by himself. * An overstated debtors’ position of Rs. 490 crores (US$ 100. 94 million) [as against Rs. 2,651 crores (US$ 546. 11 million) in the books]. The letter by Mr. Ramalingam Raju where he confessed of inflating his company’s revenues contained the following statements: “What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years.
It has attained unmanageable proportions as the size of company operations grew significantly [annualised revenue run rate of Rs 11,276 crores (US$ 2. 32 billion) in the September quarter of 2008 and official reserves of Rs 8,392 crores (US$ 1. 73 billion)]. As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten. ”
