Abstract

The case discusses the 100-day turnaround of Satyam Computers Services Limited (Satyam), the then fourth largest IT services company in India, by the board nominated by the Government of India (GoI) in April 2009. The GoI sprang into action soon after the then chairman and founder B Ramalinga Raju (Raju) confessed to an accounting fraud of INR70 billion or US$1.4 billion in January 2009. Soon after Raju’s confession, the GoI intervened and dissolved the existing board of Satyam and nominated veterans to resurrect the company. The GoI-appointed board faced the Herculean task of restoring fiscal sanity, ensuring business continuity of operations, and engaging with the Satyam employees to keep them motivated in reviving Satyam. Since most of the consumers were concerned over the continuity of projects, the board assured them that the company would complete the projects on time. The new board tackled all the challenges and in March 2009, it started the registration process for bringing in a strategic investor for Satyam. On April 13, 2009, Tech Mahindra stood as the highest bidder and acquired Satyam. After the acquisition, Satyam was renamed as Mahindra Satyam. The international media appreciated the public-private partnership between the GoI and the board of directors it had appointed for successfully reviving the company without tax payers’ money having to be injected. Going forward, Mahindra Satyam had to tackle the challenges of settling the lawsuits against Satyam, restating its financial accounts, client attrition, and excess manpower.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand how a company responds to a crisis.
• Evaluate whether a private-public partnership can be a template to revive loss-making companies.
• Apply a turnaround framework to analyze how loss-making companies can be revived.
• Analyze why boards fail to fulfill their responsibilities toward an organization.

Keywords

B Ramalinga Raju; Corporate governance; Accounting Fraud; Brand image; Class action lawsuits; Business continuity; Public-private partnership; Accounting irregularities; Strategic investor; Mahindra Satyam; Corporate scandal; Maytas; Ram Mynampati; Government-nominated board; Vineet Nayyar,NASSCOM; Pricewaterhouse Coopers; National Stock Exchange; Amarchand & Mangaldas ; Suresh A Shroff & Co; Life Insurance Corporation of India; Securities and Exchange Board of India; Company Law Board; National Association of Securities Dealers Automated Quotations; Ernst & Young