BUSINESS ENTREPRENEURSHIP

FAILED Regional Entrepreneur

By :PRAKHAR GARG

SATYAM COMPUTERS

 It was founded in 1987 by B Ramalinga Raju. The company was listed on the Pink Sheets, the National Stock Exchange and Bombay Stock Exchange. In June 2009, the company unveiled its new brand identity Mahindra Satyam subsequent to its takeover by the $14 billion Mahindra Group's IT arm on 13 April 2009. It subsequently merged within Tech Mahindra on June 25, 2013. The company offers a comprehensive range of services, including software development, system maintenance, packaged software integration and engineering design services.

SATYAM SCANDAL

The Satyam Computer Services scandal was a corporate scandal that occurred in India in 2009 where chairman Ramalinga Raju confessed that the company's accounts had been falsified. The Global corporate community was shocked and scandalised when the chairman of Satyam, Ramalinga Raju resigned on 7 January 2009 and confessed that he had manipulated the accounts by US$1.47-Billion.

AFTER-MATH OF THE SCANDAL

Ramalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme court on 4 November 2011 as the investigation agency CBI failed to file the chargesheet even after more than 33 months Raju being arrested. The Indian Government has stated that it may provide temporary direct or indirect liquidity support to the company. However, whether employment will continue at pre-crisis levels, particularly for new recruits, is questionable .

NEW AUTHORITIES ELECTED

On 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-day-long board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors.

ACQUISITION OF MAHINDRA GROUP

On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy. Effective July 2009, Satyam rebranded its services under the new Mahindra management as "Mahindra Satyam".

REASONS FOR THE COMPANY’S DOWNFALL

The company fell weak under unethicality demonstrated by it’s authorities at the topmost level.

Lack of professionalism was demonstrated even by the external auditors when it was discovered that several audit protocols had been violated.

MEASURES THAT COULD HAVE BEEN TAKEN

Simply exercising regular and prompt checks on accounting books and cash flow would have been the first step to preventing such a man - made catastrophe.

Strict and supervised checks should have been followed by internal and external auditors under protocol.