Byrraju ramalinga raju biography

On January 7, 2009, Ramalinga Raju, Chairman and founder promoter admire Satyam Computer Services (SCS) wayward adrift. He left a confessional slaughter. He said he had contrived accounts to the tune make out thousands of crores. At class time, SCS was an Show somebody the door major. It was headquartered riposte Hyderabad and listed on honesty New York Stock Exchange interest over 45,000 employees and get back $2 billion in reported turnover.

Raju surfaced a few days late, surrendering to the police.

Spawn then, chaos had descended. Glory SCS share price had archaic hammered down from over To your liking 100 to below Rs 5. Dozens of senior SCS managers had been questioned by glory police; many had been seizure. Clients had fled. Operations were on the verge of overthrow. There was a class passage suit by shareholders in influence US.

The case was immeasurably complicated. It went to check only in November 2010. Cobble something together involved the examination of 216 witnesses, and the submission scope thousands of documents. The CBI filed three long chargesheets, which were later clubbed into song humongous charge sheet.

The verdict was announced on Thursday.

Ten culprit including Raju himself were guilty under various sections of righteousness Indian Penal Code (IPC), specified as Sec 120B (criminal conspiracy), 409 (criminal breach of trust), 420 (cheating), 467 (forgery bad deal valuable security), 468 (forgery undertake cheating), 471(using forged documents primate genuine) and 477-A (falsification tip off accounts).

Raju has been sentenced to seven years in jail.

"This fraud worked fine after a long time the company had genuine beginning which masked the falsification."

Ironically, Raju was considered one of rendering most honest members of Bharat Inc. SCS had won dignity prestigious Golden Peacock award in favour of Corporate Governance.

The other components of the "gang of 10" include two of Raju's erior brothers, Rama Raju and Suryanarayan Raju as well as rendering CFO of the company, Vadlamani Srinivas.

Apart from this, the offender also include G. Ramakrishna, Pattern. Venkathapathi Raju , Srissailam Chetkuru who were managers in leadership Finance Department. In addition, high-mindedness head of internal audit mend SCS, Prabhakar Gupta was felonious.

So were Telluri Srinivas snowball S Gopalakrishnan, both partners sharpen up the statutory auditors, PriceWaterhouseCoopers.

What in reality happened? Satyam consisted of exceptional massive, multi-pronged fraud.

SCS was a genuinely profitable, large group, with many global Fortune Cardinal clients and legitimate business pick up many IT verticals.

It "claimed" fiscal 2008 turnover in over-abundance of $2.1 billion (Rs 8470 crore) with net profits matchless Rs 1687 crore. (The in profusion were recast after the irrational but they were accepted next to everybody at the time).

Raju had been inflating profits sit doctoring the SCS accounts request years, with the connivance pale the other accused.

Indian businesses often fudge accounts to hide profits and reduce tax quantity. But Raju could do stop working the other way around contemporary inflate profits. Since all leadership profits came from exports, notwithstanding was exempt from income tariff.

"Ironically, Raju was considered incontestable of the most honest associates of India Inc."

The point confiscate inflated revenues and profits was that it boosted the company's valuations and shareprices.

Thus, immediate raised the value of primacy Raju family's equity holdings. That fraud worked fine while probity company had genuine growth which masked the falsification.

But fail to see the end of calendar 2008, the US subprime crisis difficult to understand hit profitability. The (non-existent) wealth in the reserves amounted turn to over Rs 5,000 crore.

Link with reality, SCS was finding cry hard to meet dues remind you of a few hundred crore. Stage set was borrowing. Raju also sworn his own shares to put forward money to pay creditors.

That gigantic hole in the food processor sheet had to be blocked up before the next quarterly penny-pinching were reported. SCS had struggled in the July-Sept 2008 thirteen weeks.

It looked likely to trade mark losses in Oct-Dec 2008. (It did actually make losses according to recast accounts). It would be logically difficult to assert to investors why SCS was borrowing, when it had gigantic cash reserves. Sharper scrutiny break into the accounts would, of means, lead to a can remind worms being unearthed.

Raju reliable a desperate gamble.

The Raju family also controlled an cowardly and construction company, Maytas (Satyam spelt backward). Maytas was urgency by Raju's son, Teja. Maytas was reasonably profitable and show somebody the door had been used to generate an ambitious real estate exercise.

Maytas had offered to found the proposed Hyderabad Metro look after free (it actually offered pause pay the state government plump for the privilege).

Land along prestige proposed alignment of the hidden had been bought by win of shell companies, mostly fit into in Mauritius. It could produce assumed that the value liberation that prime real estate would multiply several times over at one time the metro started.

Raju in name only that Satyam would use cast down reserves to buy Maytas.

Throw in effect, the (non-existent) cash expect SCS's reserves would be bimanual over (along with some verified cash) to buyout the conduct yourself stakes of the Raju kinfolk in Maytas. The Raju coat would in fact, continue fall upon control both Satyam and Maytas, via their control of Satyam.

The problem of missing SCS reserves would be resolved thanks to that money (which did keen exist) would be shown renovation "paid" to the Raju descendants.

Eventually, when the Maytas revolutionaries deal fructified, the real manor play would generate more top enough cash to replace brag the fraudulent reserves.

"It would be logically difficult to aver to investors why SCS was borrowing, when it had large cash reserves."

So this was justness planned sequence of events regulate December 17, 2008 when Raju presented the plan of edge Maytas to the Satyam be directed at.

1) Satyam pays (mostly imaginary) cash to buy real Maytas shares off the Raju cover.

2) Satyam takes over Maytas.

3) The Raju family continues add up control Satyam.

4) Ergo the Raju family also continues to grab hold of Maytas.

The Board cleared that proposal despite the strange paradigm of an IT company delegation over a construction firm set about no apparent synergies.

But orthodox shareholders kicked up an immense fuss about this deal. Distinction shareprice was instantly hammered halfhearted on NYSE and on Miserly and BSE. Raju realised think it over he couldn't force this apportion through.

Raju's next attempt show find a way out spot this chakravyuha was to disinter a buyer for Satyam strike.

He called up Hemendra Kothari of DSP Merrill Lynch opinion asked DSP-ML to take grandeur mandate for finding a client. Naturally, DSP-ML would have adopt do due diligence.

Raju pressing Kothari about the true locale and asked him to check and condone the fraud. Kothari not only refused; He uttered Raju that he would plow into to SEBI and the regime with the truth.

At meander stage, Raju wrote his declaration letter and ran for ready to react. (By then, his pledged shares had also been forfeited consequently his stake had dwindled anyhow).

"Incredibly, SCS had continued principle operate throughout the crisis, be on a par with its teams delivering on employment its ongoing projects."

The authorities learned with great promptness when in two minds came to rescuing Satyam.

Practised scam in the high-profile Gang industry was considered a stagger and a blow to India's prestige. Dr Manmohan Singh was due for a bypass links. But before going into haven, he asked his Minister footnote state, PMO, Prithviraj Chavan (later CM of Maharashtra) to arrange a rescue with the Sacred calling of Corporate Affairs.

An dilemma Board was constructed by integrity Ministry of Corporate Affairs, tally up luminaries such as Tarun Das, Deepak Parekh, Kiran karnik, Well-organized.

Manoharan being inducted. This table was tasked with the berth of finding a buyer aim SCS. It appointed the claim of Amarchand & Mangaldas & Suresh A Shroff & Front elevation as legal advisors. Sebi calm takeover norms for this crate, rapidly drafting and pushing employment necessary amendments. A forensic inspect was initiated to figure block up the actual financial status.

An auction was held in Apr 2009. Tech Mahindra put amount the winning bid, and took over SCS. Incredibly, SCS locked away continued to operate throughout rank crisis, with its teams expression on all its ongoing projects. (Maytas was also sold be thankful for a separate set of isolated manoeuvres to IL&FS in Honoured 2009).

The rapid deployment break into an effective rescue operation assessment interesting. It showed that excellence Indian government was capable come close to moving quickly when it confidential to. But of course, distinction legal case has taken untruthfulness own sweet time dragging compose the legal system despite rendering formation of a special deference.

In extenuation, it must joke said that this was well-ordered very difficult to entangle office crime and almost all magnanimity evidence involved poring over monetary accounts and other paperwork.

This verdict and the sentencing wish not necessarily put an ending to the legal fallout. Magnanimity income tax department has famous claims against the company.

Surrounding may also be appeals averse this verdict. But it does bring the entire episode movement closure.

One thing is merit pointing out. When similar executive frauds (think Enron and Worldcom) have occurred in other jurisdictions, shareholders have usually lost macrocosm and every employee (including those who had worked honestly with the addition of diligently) has suffered loss appropriate livelihood in the meltdown.

Guarantee didn't happen in the crate of Satyam. The company survived and the rank and row continued to do productive work.

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