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    Satyam Scam: Highlights

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    Aavish Gupta
    Ramalinga Raju, owner of Satyam Computers, orchestrated an accounting scandal at the company. He falsified Satyam's financial statements to inflate assets and reduce liabilities by $1.43 billion. This led to a 300% increase in share prices and increased investment. However, when the real estate market declined due to recession, Raju's plan to use profits from property sales to cover losses failed. He was then arrested after admitting to the falsification, and the government facilitated the acquisition of Satyam by the Mahindra Group to allow the company to recover.

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    Satyam Scam: Highlights

    Uploaded by

    Aavish Gupta
    37 views1 page
    Ramalinga Raju, owner of Satyam Computers, orchestrated an accounting scandal at the company. He falsified Satyam's financial statements to inflate assets and reduce liabilities by $1.43 billion. This led to a 300% increase in share prices and increased investment. However, when the real estate market declined due to recession, Raju's plan to use profits from property sales to cover losses failed. He was then arrested after admitting to the falsification, and the government facilitated the acquisition of Satyam by the Mahindra Group to allow the company to recover.

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    SATYAM SCAM

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    Ramalinga Raju, owner of Satyam Computers, orchestrated an accounting scandal at the company. He falsified Satyam's financial statements to inflate assets and reduce liabilities by $1.43 billion. This led to a 300% increase in share prices and increased investment. However, when the real estate market declined due to recession, Raju's plan to use profits from property sales to cover losses failed. He was then arrested after admitting to the falsification, and the government facilitated the acquisition of Satyam by the Mahindra Group to allow the company to recover.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    37 views1 page

    Satyam Scam: Highlights

    Uploaded by

    Aavish Gupta
    Ramalinga Raju, owner of Satyam Computers, orchestrated an accounting scandal at the company. He falsified Satyam's financial statements to inflate assets and reduce liabilities by $1.43 billion. This led to a 300% increase in share prices and increased investment. However, when the real estate market declined due to recession, Raju's plan to use profits from property sales to cover losses failed. He was then arrested after admitting to the falsification, and the government facilitated the acquisition of Satyam by the Mahindra Group to allow the company to recover.

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    SATYAM SCAM

    Ramalinga Raju, the owner of SATYAM COMPUTERS was the main in this scam.

    HIGHLIGHTS

     MAYTAS was a company owned by Ramalinga Raju and his family.


     MAYTAS was further classified into two categories: MAYTAS Infra and MAYTAS Properties.
     At that time, the real estate business was at peak so Ramalinga Raju thought of buying
    properties in a huge amount.
     He bought 365 companies under the name of his friends, families, and even his farmers and
    made the director of each company.
     It is also known that Raju had internal information about the Hyderabad metro so he bought
    many properties near it, to sell them at high prices once the metro was established.
     Raju made the falsification in the company’s financial statement, where he increased his
    assets by approx. $1.43 million and also reduced the liability (including fake bank statements,
    fake invoices, fake revenue receipts, fake employee salary.) He also mentioned the fake profit,
    which was 10 times more than the actual profit. All this led to an increase in share price (300%
    increase) and an increase in investment. With all this money, he was able to buy so many
    properties and was able to apply for loans for the real estate business. He planned to fill the
    gap between actual profit and inflated profit by the profit from real estate. But due to the 2008
    recession, his plan failed as the real estate business was in huge loss. So, another way of
    cutting down the inflated profit was to have the approval of the directors to buy the MAYTAS
    Company. Buying MAYTAS will not involve any cash transaction as it is already owned by
    Ramalinga Raju and his family but it will somehow fill the gap of profit. First, everybody gave
    the green light, but the investors had doubts and they declined the purchase of MAYTAS.
     After this, Raju wrote a letter declaring the falsification of the company’s financial
    statements, which also ended up in him being arrested.
     After that, actions were taken against the audit team, and they were fined $6 Million.
     Being one of the 4th largest company in India, the government wanted SATYAM to start
    performing again, which was then acquired by Mahindra Group.
     They changed the name to SATYAM MAHINDRA first, and then to TECH MAHINDRA.

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