CASE STUDY 3-1 THE MERGER OF TECH MAHINDRA AND SATYAM COMPUTER SERVICES

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. This case study was compiled from published sources, and is intended to be used as a basis for class discussion. Of this cash and bank balances stood at Rs. Dear Board Members, It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: The stock that hit its all-time high of Rs. Ultimately, the fake profits brought in fake cash, which therefore, needed to be invested somewhere. But according to investigators, the real number was around 43,

This has resulted in artificial cash and bank balances going up by Rs. They were the key players in the plot to falsify the accounts and hide the bottom-line truth from everyone. The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years limited only to Satyam standalone, books of subsidiaries reflecting true performance. In this, the much-bemoaned inefficacy of the Indian legal system http: This consists of some of the most accomplished leaders of Satyam: That is what the directors should have been asking… Like the dog that did not bark in the Sherlock Holmes story, the matter was allowed to slide. Prabhakara Rao involved in the Satyam accounting fraud.

A penalty of Rs.

Mahindra Satyam Merger with Tech Mahindra: Arriving at the Share Exchange Ratio

This consists of some of the most accomplished leaders of Satyam: Even to a casual observer of the Satyam fiasco, the dtudy of the scandal is a great eye-opener. That left an outstanding liability of Rs.

He also inflated the income statement by claiming interest income from the fake bank accounts. The pertinent question here is how were these companies able to misrepresent their assets to such a proportion without the knowledge of anyone within their organizations? However, wide gaps can be noticed in net income and cash flow from operation duringandrespectively.

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case study 3-1 the merger of tech mahindra and satyam computer services

These figures of accrued interest were shown in balance sheets in order znd suppress the detection of such non-existent fixed deposits on account of inflated profits. Skip to main content. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters.

Operating Performance of Satyam Rs. Prabhakara Rao involved in the Satyam accounting fraud.

case study 3-1 the merger of tech mahindra and satyam computer services

To keep from tripping the income-cash flow alarms, Raju had to manipulate almost every account related to operations. Initially, the minority shareholders of Mahindra Satyam were apprehensive about the timing of the merger with regards to the unattractive valuations and the number of shares they would receive in exchange for one Tech Stayam share.

By Marchthe company sales revenue had grown by over three times.

Abuse of Creative Accounting Practices at Satyam: All of them had been found guilty of gross negligence in discharge of their duties by the disciplinary committee of ICAI and they were barred from practicing as a chartered accountant. Effective JulySatyam rebranded its services under the new Mahindra management as Mahindra Satyam.

Of this amount Rs. I have promoted and have been associated with Satyam for well over twenty years now.

Analysis: Tech Mahindra-Mahindra Satyam merger | Business Standard News

Thus, CA is a starting point of a number of accounting scandals, which collapsed during the last decade, applied CA techniques and manipulated financial record. Why did Raju Chairman need the Money?: After reviewing the narrow and wide definitions of CA, Jones ended up with the definition of CA satya, follows: Accounting Manipulations in Corporate Financial Reports: Log In Sign Up.

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An attempt has been made by the author, based on media reports, to provide a description about the CA methodology used by the Satyam to stury the accounting fraud, duly supported by evidence wherever possible. In addition, the Ministry of Corporate Affairs MCA has devised a new Company Law and has changed the securities laws to make it easier for shareholders to bring class-action lawsuits. The fraud took place to divert company funds into real-estate investment, keep high earnings per share, raise executive compensation, and make huge profits by selling stake at inflated price.

It sounds ridiculous to listen to some of the independent directors at the Press interviews post-scandal that they were not aware of what was going on at Satyam.

Suspiciously, Satyam also paid PwC twice what other firms would charge for the audit, which raises questions about whether PwC was complicit in the fraud.

This includes the founder and the Chairman of caae company B.

Entries into this system get reflected straight in the Profit and Loss Statement. Suryanarayana Raju 1,11, It took nearly 2 years, involvement of multitude of investigation agencies, and over tevh to assess the total damage of the scam perpetrated by Raju.

Shockingly, the scam had caused an estimated notional loss of Rs.