The countdown to the exposure for Satyam and its founder began on December 16, 2008, when it had announced an intent to acquire a 51 per cent stake in Maytas Infra and a 100 per cent stake in Maytas Properties, both promoted by Raju’s sons, Teja Raju and Rama Raju, for around Rs 7,000 crore. This was severely opposed by other investors in the company, forcing Raju to call off the proposed acquisition within a day of the announcement, on December 17.
Background
Raju’s confessional letter to the company’s board said he tried to sell the two promoter-related firms to Satyam in a final attempt to plug the Rs 5,500 crore of “fictitious” cash on the balance sheet. Two days after the confession, Raju and his brother, then Managing Director Rama Raju, were arrested. Satyam’s shares plummeted to Rs 11.50 on January 10, 2009, the lowest since March 1998, as compared to a high of Rs 544 each in 2008. On January 14, Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam could have rendered its audit reports “inaccurate and unreliable”.
FROM THE PEAK TO THE PIT AND BACK |
2009
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Forward
Taking questions from apprehensive employees of Satyam a day after the acquisition announcement, TechM chairman Anand Mahindra said the aim of the acquisition was to go well beyond the legacy. A S Murty, who after the acquisition continued as the CEO of Satyam, said: “It is a rebirth for all of us. Together, we will make our dreams come true and continue to focus on customer retention and gain back some portion of the business that was lost. Please continue the delivery excellence. Tightening our belts is the need of the hour. We should tune expenses in line with our revenues.” In line with its new strategy and to also erase everything related to Ramalinga Raju, the new management had in June 2009 terminated lease contracts of four facilities in Hyderabad, three offices in Bangalore and two in Chennai, the lease rental papers of which were reportedly signed by Raju during the real estate boom in 2007-08.
Also, on June 11, 2009, Satyam’s new management had announced a Virtual Pool Programme, a one-time initiative aimed at addressing ‘non-billable’ staff costs while retaining talent. Close to 10,000 ‘associates’, their preferred term for employees, got sabbatical letters, settling for a ‘basic’ pay in addition to provident fund and medical insurance.
After battling a spate of legal cases in India and abroad through February 2011 to April 2012, Satyam (rebranded as Mahindra Satyam in June 2009) has paid $125 million to settle US lawsuits and $68 million to settle a claim in the UK.
And, after several rounds of cosmetic surgeries and medication over five years, the ‘recuperated patient’ (Satyam) was merged with TechM on June 25, 2013. Now called Tech Mahindra, the entity is the country’s fifth largest IT company, with annual revenue of $2.7 billion. TechM aims to almost double the turnover to $5 billion by 2015, with focus on telecom, manufacturing and BFSI (banking, financial services, insurance).
“Today we have fulfilled the commitment made in 2009, when we acquired Satyam, to jointly become one of the largest, diversified players, leveraging technology for business solutions,” Anand Mahindra, group chairman, Mahindra & Mahindra, had said after announcing the final merger.
Glacial courts
Simultaneously, the Central Bureau of Investigation (CBI) continued its probe into the fraud case and filed three chargesheets. It filed 160,000 documents pertaining to the case and cited a total of 613 witnesses. Following this, the trial court framed charges on October 25, 2010. The trial commenced on November 2, 2010.
In all, the prosecution has examined 226 essential witnesses, instead of the 613 mentioned in the chargesheets. The defence has yet to examine any..