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

Although, both companies had strong presence globally, the companies had to resolve few other problems before going for the merger. An attempt has been made by the author to provide a brief description about the methodology used by the Satyam to commit the accounting fraud. The Crisis exposes all the flaws. Shockingly, the scam had caused an estimated notional loss of Rs. So, while Raju ran his fraud, the auditor slept, the analysts slept, and so did the media. Accounting Manipulations in Corporate Financial Reports: Talluri, partners of PwC had admitted they did not come across any case or instance of fraud by the company.

They made some recommendations to improve the auditing infrastructure in India that will enhance the corporate governance mechanism. Skip to main content. The Price Waterhouse received an annual fee of Rs. Moreover, the complexity and unpredictability of constantly changing environment makes it very difficult to consider all the possible situations in advance when setting standards. The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations —thereby significantly increasing the costs.

The fraud took place to sefvices company funds into real-estate investment, keep high earnings per share, raise executive compensation, and make huge profits by selling stake at inflated price. The reality was, at the end of the day, even as serices audit committee member or as an independent director, I would have to rely on what the management was presenting to me, drawing upon his experience as an independent director and audit committee member.

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Analysis: Tech Mahindra-Mahindra Satyam merger

They were the key players in the plot to falsify the accounts and hide the bottom-line truth from everyone. 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 Mahindra share.

Now, the final figure is a shade under Rs. In its recent http: In order to close this gap, he had to buy Maytas Infrastructure and Maytas Properties. Falsification of Fixed Deposits Accounts Rs.

The actual revenues were Rs. I am confident they will stand by the company in this hour of crisis.

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

This target can be motivated by a preference for more stable earnings. In fact, the balance sheet carried an accrued interest of Rs. By International Research Journal Commerce arts science. This consists of some of the most accomplished leaders of Satyam: How does this keep on happening for five years, without any suspicions? Truth, Lies and Corporate Governance, available at knowledge wharton.

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

In this, the much-bemoaned inefficacy of the Indian legal system http: Study of an Asian Market. Making up ghost nahindra might sound complicated, but investigators said it was not that difficult. Auditing cash is so basic that people do not think twice about accepting the number, never thinking to ask questions about it.

Fall of Satyam Computers Limited. Click here to sign up.

The audits for a company of that size would have been staggered, with millions of dollars of outstanding receivables pouring in to different locations at any given time. The knowledge available to independent directors and even audit committee members was inherently limited to prevent willful withholding of crucial information. The basic motto was to inflate the share prices of the company and subsequently, sell the promoters holding at the inflated prices.

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

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. For the September quarter Q2we reported a revenue of Rs.

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

Merger and acquisition and types of synergies. Unconvincing Role of Independent Directors: There were also several civil charges filed in the U.

When that failed, Raju confessed the fraud. An attempt has been made by the author to provide a brief description about the methodology used by the Satyam to commit the accounting fraud. Rama Raju 1,13,18, Apart from improving sztyam standards, re-auditing norms, and greater shareholder activism, there is also a need to counter corruption.

The companies are merged legally on 25 June