final b ethics

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INSIDER TRADINGGROUP MEMBERS:-

MOHAMMED IMDAD

MOUSAM KU ROY

RAHUL PANDEY

ABDUL NOOR

ABDUL HAI



Insider information is information (aboutcompany strategy and plans) that someonewithin a company has but that is not available

to those outside the company.

The moral problems connected with insider

information concern the use that individualsmay make of such information while they arestill members of the firm.



SEBI considers an “insider” any one who haspertinent information that is not publiclyavailable, and that gives the trader an advantage

over public. Thus the secretaries, lawyers,consultants, financial printers, and others whohave access to inside information becomeinsider because of their knowledge.



Satyam Company Services Ltd. was incorporated on

June 24, 1987

Promoters holding of the shares in 1992 was 18.78%

Main business of the company was IT related fieldsand it came into prominence after Y2K problem

In 1991, it was in a rented house having 10 Engineers.

Company was listed in Bombay Stock Exchange in1992

company bags its first fortune 500 client John Deere

& Co



Formed the joint venture with Dun & Bradstreet

for IT services

Listing in NASDAQ, USA- 1999 Listed on New York Stock Exchange- 2001

Revenue crossed $1 Billion-2006

Ramalinga Raju got the Ernst & YoungEntrepreneur of the Year Award -2007

Revenue crossed $2 Billion -2008



> Chairman and founder SatyamComputers Services Limited> MBA from Ohio University> IT man of the year award by

Data Quest in 2002> Winner of Ernst & Youngentrepreneur of the year award in2007

B. Ramalinga Raju

Founder & Chairman, Satyam

Computers Ltd.

B. Rama Raju

Promoter & CEO, Satyam Computers

Ltd.

> He became the Managing Director

and Chief Executive Officer in 1991

> Mr. Rama Raju holds a Master of

Economics degree from LoyolaCollege, Chennai and a MBA degree

from Loredo State University, Texas

> Before 1997, he was with Maytas

Infra Limited as one of its Directors



Satyam Board Structure

Other Independe

nt Directors

Dr/ M.Srinivasan

Prof.Krishna GPalepu

Mr. VinodK Dham

Prof. MRammohan Rao

Mr. T RPrasad

Prof. V SRaju

ISB Dean/Bharatelectronics

SaskenCommunication/Hellsoft /MontalvoSystems and Newpath

Former CabinetSecretary/GMR Infra/ GVKTaj

GTB/Dr.Reddy’s

Laboratories

B.Ramalinga RajuPromoter &

Chairman

B.Rama RajuPromoter &

CEO

Ram MynampatiWhole time

Executive Director

SrinivasVadlamani ChiefFinancial Officer



Satyam – Share holding

Pattern Institutional & Non-Institutional

Shareholders

LIC 4.34%L&T 4%LazardAberdeen

13.16%Fidelity

ICICI PrudentialCitigroupJP MorganTotal Market capitalization of

Rs. 15,262 Cr

(As on Dec 16, 2008 )



The case was initially registered by CB-CID, AndhraPradesh on January 9, 2009 on a complaint receivedfrom Smt. Leela Mangat, a retd. employee of SyndicateBank stating that she had invested her retirementbenefits for purchase of the shares of the company on

seeing the performance of the company. She purchased100 shares for a sum of Rs. 19000. She filed thecomplaint after the confessional letter of the chairmanmade public

The case was handed over to CBI on February 16, 2009by Government of India under section 5 of DSPE Actand notification under 6 of DSPE Act by theGovernment of Andhra Pradesh. ACB Hyderabad re-registered the case and investigation was started



The Raju’s hold 36.64 per cent while institutional

holding is 10.92 per cent

The company had raised Rs 327.45 crore throughIPO.

It had a turnover of Rs 1,660 crore and net profit

of Rs 100 crore in the last financial year Satyam planned to acquire 51 per cent stake for

Rs 1, 440 crore or $0.3 billion

Mr. Teja Raju(VC)



• Raju’s family owns 35% of Maytas properties

• Founded in 2005, it has a land bank of 6,800

acres• It has clearances for three IT SEZs based on 148

acres

• An undisclosed stake is held by Infinite India

Investment Management, a realty fund jointlypromoted by JM Financial and US-based SRMInvestments, which invested Rs 600 crore inFebruary

B. Rama Raju Jr.(VC)



The confession letter by B. Ramalinga Raju was

submitted to SEBI/BSE and to the Board of

Directors on January 7, 2009 which stated thatbalance sheet as on 30.09.2008, cash and bank

balance, interest accrued on fixed deposits,

debtors were overstated and liabilities were

understated Company inflated operating profit.The gap in balance sheet was on account of

inflated profits shown over a period



•Details of cash balances with Scheduled banks are not there in the

Annual report

• Question raised by Equity analyst Kawaljeet Saluja -$500 mn cash

parked in current account



5,040 + 376

+ 470 (Rs.Cr)

Rs. 1,230Cr

Rs.

7,136Cr

Overstated cash

balances, Income

receivables

Understated Liabilities Fraud Amount



Investment in Real estate

(Land Banks )

To keep EPS high

Sold his stake at inflated price

(Made Rs.2,065 cr from shares)



Take FDreceipt

Tell to BanksFD receipt is

Lost

Ask for Duplicate

Receipts

Use the Duplicateto Withdraw

money

Park theMoneyin other

Bank

At the endshow the

original FD

receipts

The moneyhas

already

vanished



The brief discretion: Inflated non-existent cash – Rs. 5040 crore

Accrued interest – Rs. 376 crore

Understand liability- Rs. 1230 crore Over stated debtors position - Rs. 490 crore

Operative margin 24% as against actual of 3%

Every attempt made to eliminate the gap failed. It was likeriding a Tiger, not knowing how to get off without being eaten

Aborted MAYTAS acquisition deal was the last attempt to fillthe fictitious assets with real ones

Neither he nor the MD took any money from the company

Board of Directors were not aware of the fraud



The promoters were holding 2.18% of total

shares as on Dec., 2008 which was 18.78% in 1991

The shares were sold through various brokers and some

were benami transaction and amounts received by the promoters wasRs. 767.73 crore.

The promoters in planned way sold the shares when

the price of the share was high. They resorted to inside trading.

The promoters also borrowed the money from NBFCS by pledging the shares of the company. The loans were

to the extent of Rs. 1951.46 crore were raised

against pledging of 100941592 shares.



The shares were unloaded through margin calls

.The un loading of the shares was done at the

instance of B. Ramalinga Raju The promoters and their families wrongfully gain

to the extent of Rs. 2743 crore (767 crore + 1951

crore+25.80 crore dividend payment)

V.Srinivas Rs. 32 crore

G.Ramakrishan Rs. 11.27 crore

D. Ventapathi Rs. 1.76 crore



The promoters received dividend to

the extent of Rs. 27.08 crore for the year

2007-08 and 2008-09 where the actual profit

after adjustment of fake revenue was Rs.

176.12 crore in 2007-08 and 269.16 crore in 2008-09. They were not eligible to

get the dividend as per company law section 205.



37 companies out of 327 companies had given

advances to Satyam to the extent of Rs. 1425 crore

between November 2006 to October 2008.194.60 crore was returned back to 15 companies

between October 2008 to December 2008

Net amount of Rs. 1230 crore still outstanding

The borrowing and returning was not reflected in

the books while out of the amount salary, dividend

and acquisitions have been made.



The quantum of law suffered by various

institutions and the investors was 14162.25 crore

on the basis of actual law suffered by various

institutional investors, loss suffered on account of

slide in share price was average price. As on

01/09/2009 price was Rs. 19.76 and average price

as on 16.12.2008 was Rs. 227.55.



The sales were inflated and in order to

get the benefit the tax paid overseas were

shown and deductions were obtained in India.

The tax assessment was made without

actual verification of the records



Fake TDS Rs. 60.84 crore

Actual TDS Rs. 20 crore

Actual interest Rs. 1 crore Fake interest Rs. 269.01 crore

Fictitious sales were shown as off shore exports

Other income as a part of income of USA butactually not included

False claim in overseas tax payments Rs. 329.59crore



B. Ramalinga Raju.

B. Ramaraju

V. Srinivas Gopalakrishnan

T. Srinivas

B. Suryanarayana Raju

G. Ramakrishna D. Venkatapathi Raju

Srisailam Chetkuru

VS P Gupta



120-B -Criminal conspiracy to commit anoffence

409 -Criminal breach of trust

420 -Cheating

467 -Forgery of a valuable security

468 -Forgery for the purpose of cheating

471- Using as genuine a forged documents whichis known to be forged

477 A- Falsification of accounts



First charge sheet was filed on April 7, 2009

Supplementary charge sheet filed on November

22, 2009 Additional Charge sheet filed on January 7, 2010

All charge sheet have been clubbed together for

faster trail The case is with Additional Chief Metropolitan

Magistrate which has been approved by High

Court of AP on 17 February 2010

final b ethics

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