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Updated: Mar 29, 2021


  1. Satyam Computers was founded in 1987.

  2. It converted into Public Ltd. Co. in 1992.

  3. The company offers consulting and information Technology Services spanning various sectors.

  4. People Behind this Scam –

  5. Ramalinga Raju, Former Satyam Chairman

  6. B Rama Raju, Brother of Ramalinga Raju, Former MD

  7. V Srinivas, Ex-chief financial officer

  8. S Gopalakrishnan, Price Waterhouse Auditor

  9. Talluri Srinivas, Price Waterhouse Auditor

The Satyam Scam

  1. Raju and his brother, B Rama Raju, were arrested by the Andhra Pradesh police on charges of breach of trust, conspiracy, cheating, falsification of records

  2. Raju has misled various investors

  3. Raju had also used dummy accounts to trade in Satyam’s shares.

  4. He has violated the insider trading norm.

  5. Funds from Satyam were diverted to Maytas (his son’s company)

  6. On 22nd January 2009, CID told in court that the actual number of employees is only 40000 and not 53000 as reported earlier and that Mr. Raju had been allegedly withdrawing 20 crore rupees every month for paying these 13,000 non- existent employees.

  7. Raju wanted to take over Maytas Infra and Maytas Properties (companies of his sons)

he was blamed that he was using the funds of the investors for the family business

  1. There were delegations that the funds from Satyam word directed to Maytas, causing the government Agencies to verify the infrastructure company’s record as well.

How did it happen?

  1. Floated two other companies for their purpose without taking permission of the shareholders

  2. Failed to repay the loans

  3. Transfer of money

Understanding the Satyam scam

  1. The balance sheet as of September 30, 2008, showed inflated (non-existent) cash and bank balances of Rs.5040 crore (as against Rs. 5312 crores reflected in the books)

  2. An accrued interest of Rs.376 Crore which is non-existent.

  3. An understated liability of Rs.1230 crore on account of funds arranges by BR Raju.

  4. Satyam Shares registered biggest single fall for a share in the market (77 % fall)

Stock Market Reaction

  1. BSE Sensex fell by 749.05 i.e., 7.25%

  2. NSE fell by 192.40 points i.e., 6.18 %

  3. All-time low of Rs.11.50 on 9th Jan and closed at Rs.23.75 compared to highest of Rs.524.90/- on May 20, 2008

Partners in Crime

  1. Previous record –

  2. Satyam had also been accused of frauds in 2001 and 2003, no importance was given to this.

  3. Getting Third-Party evidence –

  4. No Bank confirmation on fixed deposits

  5. Accrued interest on fixed deposit

  6. Debtors confirmation

  7. Factors Overlooked –

  8. Changing of accounting years

  9. Huge Debt despite cash surplus


January 7th, 2009

“It was like riding a tiger, Not knowing how to get off without being eaten”

– Ramalinga Raju

Why did Raju confess?

  1. The gap in the balance sheet read unmanageable proportions and could not be filled anyhow in the future.

  2. The whistleblower whose email to a Satyam board member triggered a chain of events.

Probable Reasons:

  1. The pressure to meet expectations – growing competition, the threat of being overtaken

  2. Overconfidence – on his ability

  3. Personal benefits – Siphoning of funds, the salary of non-existent 13000 employees


  1. New board of directors were appointed

  2. Disclosure of pledged securities

  3. Increased financial accounting disclosure

  4. Adoption of international standards

  5. Creation of new corporate code of conduct by the Ministry of corporate affairs.

  6. Steps were taken by ICAI


Before the scandal its share price was Rs300 in Oct 2008. Just after the scandal, the share price goes down to Rs.6.30

  1. On 10th January 2009, the company law board decided to bar the current Board of Satyam from functioning

  2. Bank of America and state farm insurance terminated its engagement with the company

  3. Credit Suisse suspended its coverage of Satyam. The Credit Suisse Group AG is a swiss multifunctional financial services company headquartered in Zurich, Switzerland.

  4. Jobs of over 50,000 technocrats were at risk. The country’s booming economy was at risk. The GDP fell by 0.4%.

  5. The IT sector suffered a downturn. India’s Global image was tarnished. Indian stock market dramatically

  6. The Citizens for a Better Public Transport in Hyderabad (CBPTH) Demanded a CBI inquiry into the process of how Maytas bagged the Hyderabad Metro Rail Project

  7. Analysts in India have termed the Satyam scandal India’s own Enron Scandal.

  8. Ramalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme Court on 4th November 2011 as the Investigation Agency CBI failed to file the charge sheet even after more than 33 months of Raju been arrested.


  1. Appointing new board

  2. The board appointed by the government:

  3. Former Nasscom Chief – Kiran Karnik,

  4. Chairman HDFC – Deepak Parikh

  5. Former SEBI member- C. Achuthan

  6. Satyam share gained over 44% the day after the appointment of new board

  7. New CEO – AS Murthy

  8. On 13th April 2009, via a formal public auction process, 46% stake in Satyam was purchased by Mahindra

  9. July 2009, Satyam rebranded its services as “MAHINDRA SATYAM”.

by Hari Singh


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