Essay on Case Study : Failure At Satyam

1535 Words Mar 10th, 2016 7 Pages
I. Case Synopsis –Governance Failure At Satyam

A. Introduction
a. Satyam, Sanskrit for truth, was an Indian company involved in one of the most infamous scandals in Indian corporate history.
b. This scandal occurred January 7, 2009, when B. Ramlinga Raju, chairman of Satyam, composed a letter directed towards the company board in which he took responsibility for the fraud of 50 billion rupees.
c. Satyam won several awards for corporate governance by the World Council for Corporate Governance.

B. History of Satyam
a. Satyam was once known as India’s fourth-largest software development and IT consulting company.
b. The company was founded by two brothers, B. Rama Raju and B. Ramalinga Raju, and the company became successful with the success of the Indian IT industry.
c. Converted from a private limited company to a public company in August 1991 and begun to issue shares to the public in 1992.
d. The first foreign office was formed in the United States in 1996.

C. Governance At Satyam
a. For a traditional family ran firm in India, Satyam had an overall small promoter holding and the promoters’ ownership share declined steadily over the years.

D. Financial Health
a. Satyam’s balance sheet provided the view of a stable and successful company.
b. Satyam’s turnover increased from 14.12 billion to 84.73 billion.

E. The Unfolding of the Crisis
a. B. Ramalinga Raju created a letter of resignation on January 7, 2009 in which he admitted to the fraud of more than 50…

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