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Presented by:

Jay patel

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What is Ethical? It refers to the basic principles of moral values that are

expected to be followed by every citizen in a civilized

society

Any of the organization whether manufacturing or

service oriented needs to abide by ethical principles so

that entire nation is benefited

E.g.1. Religious books

2. Culture

3. Law

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What is Unethical?

Unethical is just opposite to ethical, i.e. when someone

goes against rules, becomes immoral, does not follow any

norms, etc is unethical.

It can be divided into three category.

By organization

By employees

By regulating agencies

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For understanding the unethical

practices done by variousorganizations, we have opted

Satyam as an example

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THE

SATYAM

FRAUD

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INTRODUCTION

IT WAS FOUND IN 1987 BY B.RAMALINGA RAJU.

4th largest growing IT company

in India. 9% market share

53,000 employees

Revenue $2.1 billion

First Indian company to belisted in three international

exchanges:

NYSE, DOW and EURONEXT

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Services offered by Satyam

Software development, ERP, Outsourcing, CRM,

Consulting

IT

Healthcare

Bio Tech

Telecom and Media

Banking and Finance

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UNDERSTANDING THE SCAM!

THE BALANCE SHEET AS OF SEPTEMBER 30, 2008

SHOWED-

INFLATED (NON-EXISTENT) CASH AND BANK BALANCES

OF RS. 5040 CRORE (AS AGAINST RS. 5312 CORE

REFLECTED IN THE BOOKS)

AN ACCRUED INTEREST OF RS. 376 CRORE WHICH IS

NON-EXISTENT

AN UNDERSTATED LIABILITY OF RS.1230 CRORE ON

ACCOUNT OF FUNDS ARRANGED BY BR RAJU.

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AN OVERSTATED DEBTORS POSITION OF RS. 490 CRORE(AS AGAINST RS. 2651 CRORE REFLECTED IN THE BOOKS)

FOR THE SECOND QUARTER SATYAM REPORTED A

REVENUE OF RS.2700 CRORE AND AN OPERATINGMARGIN OF RS.649 CRORE (24% OF REVENUES)

AS AGAINST ACTUAL REVENUE OF RS.2112 CRORE AND

AN ACTUAL OPERATING MARGIN OF RS.61 CRORE (3%OF REVENUES)

THIS HAS RESULTED IN ARTIFICIAL CASH AND BANK

BALANCES GOING UP BY RS. 588 CRORE IN Q2 ALONE.

FRAUD

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IT CONCLUDES THAT UNETHICAL PRACTICE WAS MADE

BY RAMALINGA RAJU FOR MANIPULATING ACCOUNTS

JANUARY 7TH, 2009

IT WAS LIKE RIDING A TIGER , NOT KNOWING HOW TO

GET OFF WITHOUT BEING EATEN

SATYAM COMPUTERS WERE BANNED.

SOLD OF SHARES.

RESIGNATION BY RAMALINGA.

Conclusions

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ACQUISITION BY

MAHINDRA GROUP ALL WELL THATS END WELL

ANAND MAHINDRA NEW OWNER OF SATYAM

POST RS2890 CRORE AS TAKEOVER

JULY 2009, SATYAM REBRANDED ITS SERVICE AS

MAHINDRASATYAM.

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Recommendations Investors:

They must ensure that the share value which is listed is genuine and as per its

financial status.

Board:

They must monitor the ethical policies and the way they are being

maintained in the company.

Government:

a. Government should always play an active role in the company affairsbecause the company runs with the public money.

b. The government must frequently check the companys performance

in the market and take necessary steps in curtailing any malpractices

or falsification.

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Contd

Accounting Standards:

Auditors main responsibility is to check fairness and trueness offinancial statements which can be done with the help of proper audittools.

Ethics of company:

a. Proper code of conduct updated on regular basis should beimplemented.

b. Every company should have a fraud detection mechanism.

c. Good corporate governance.

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