top of page


Author: Nickkita Shome Amity Law School, Kolkata

Introduction : –

In 1987, B Ramalinga Raju started SATYAM Computer with his brother-in-law. It was a Hyderabad-based IT company. Before starting SATYAM Computer, B Ramalinga Raju had a cotton business. In 1991-92 SATYAM Computer got listed in the BSE. In 2001, it got listed on the New York Stock Exchange. SATYAM Computer was one of India’s fastest-growing companies, for which SATYAM Computer and B Ramalinga Raju had received many awards. SATYAM was on a good growth track but, there was a high rise in Real Estates at that time, and Raju’s focus shifted towards that. Real Estate rates were going up fast in Hyderabad, so, Raju quickly started buying land properties in Hyderabad and areas around it. He started to buy properties in the name of his companies, Matyas Infra and Matyas Properties his family members, and himself. He started both these companies in 1988.

The Master Plan: –

Raju started to buy properties aggressively and, when he needed more money, he started to manipulate the financial statements of SATYAM Computers. That means he began foul play. For example, if the company had a profit of ₹60 Crores, Raju would show that as ₹600 Crores in the financial statements. And by doing this, he tried to show that SATYAM was rapidly growing. With SATYAM Computer’s constant growth and strong financials, its share price went up. And on that high share price B Ramalinga Raju and his brother B Rama Raju, began to sell their shares and kept their other shares as collateral and took a loan, and used that money to buy properties. To buy properties, Raju had opened nearly 365 companies. Raju used to buy land in the name of his family, friends, and relatives. He had made the people working on his farm, whose salary was ₹4000-₹5000, the directors of a few companies out of the 365 and bought land in their names. He made a lot of his friends’ the director of some companies too.

Metro Man Sreedharan said Raju had inside information about Hyderabad’s proposed metro route. That means Raju already knew the route of that metro line. Raju aggressively started to buy land near the proposed metro route, assuming when the metro starts, the prices of those lands will go up. And the profit he gets from Real Estate, some of it could go into SATYAM, and Raju could show fake financial figures such as sales, profit, etc. And thus, could easily fill the gap between the actual sales and profits SATYAM made. To show more sales in SATYAM Computers, Raju started making fake sales invoices. Raju made 7,500 fake sales invoices. Using the fake invoice he showed fake sales, and for showing profits for this sale he made fake bank statements to show that the money from profits is in the bank. That meant he showed a lot of cash reserve that did not exist.

The Satyam Scam : –

For many years, Raju kept faking the sales, profits, and other figures. Showing good growth in the company, Raju kept attracting investors, and because of which SATYAM Computer’s share price kept on increasing, and its promoters kept selling their shares at higher prices. Raju inflated the figures for the financial year 2008-09s second quarter. The profit shown by him was a lot more than the actual profit. Similarly, there was a lot of difference between the real cash deposit and the one shown by Raju. This way, he kept manipulating SATYAM’s financial statements for many years. In 1999, the promoter’s shareholding in SATYAM was 24%. It dropped to 2% by the end of 2008. And he used this money to buy properties. The more SATYAM grew, the gap between Raju’s fake figure and the actual figure increased too. This gap became a huge amount. In 2008, Real Estate slowed down because of the recession and Raju’s plan of selling properties and fixing the gap between the figures had failed. After this, Raju made a new plan to fill this gap. According to this plan, SATYAM Computer would buy a 51% stake in Maytas Infra and Maytas Properties. By this money would go to the promoters of Maytas. Maytas Infra and Maytas Properties were owned by his own family. SATYAM spelled backward is MAYTAS.

Raju thought this deal would help him show that the companies have been bought, using the gap between the actual figures and the fake figures. But in reality, there was no cash transaction because those were his family’s businesses. This way, the gap between the fake figures and the actual figures will get filled. On 16 December 2008, SATYAM Computer’s Board of Directors approved this plan. Raju sanctioned this deal without taking permission from the shareholders. But SATYAM’s investors didn’t like this decision, especially SATYAM’s institutional investors. After this decision, SATYAM’s stock fell rapidly.

The Confession : –

A US investor even filed a lawsuit against SATYAM and there was a 55% drop in SATYAM’s stock in NYSE. Due to this pressure, SATYAM decided to cancel the plan of acquiring Maytas Infra and Maytas Properties. As soon as this plan failed, the four independent Directors of SATYAM resigned. Watching his last plan fail for filling the gap, on 7 January 2009, Raju confessed that SATYAM Computer has been manipulating financial statements for years now.

Raju revealed that there is a difference of ₹7000 crores between the actual and the fake figures. After this, along with Raju, the independent directors and auditors of SATYAM were being questioned, that how the company has been manipulating the financial statements for so long and, the Independent Directors and Auditors are not aware of this. SATYAM’s auditor was PWC (Price Waterhouse Coopers). An auditor’s job is to check a company’s financial statement and its reliability and accuracy. In a way, an Auditor is a representative of the shareholders but here, the auditor cheated them too. Recently, SEBI banned PWC for two years and the US stock market regulator, SEC has fined PWC with $6 million. Later, it was that SATYAM had to pay PWC double the fee as any other IT company gave their auditor. On 9 January 2009, Raju and his brother B Rama Raju got arrested. After this scam, the government immediately appointed new Board Members in SATYAM and began preparing to save SATYAM from collapsing. The government planned to sell the company as soon as possible. Finally, Tech Mahindra bought SATYAM. Tech Mahindra, in April 2009, bought 51% stakes in SATYAM. And changed the company’s name to Mahindra SATYAM. Later, in June 2013, Mahindra SATYAM merged with Tech Mahindra.

Conclusion: –

According to the CBI report, Raju was into money laundering. He first used to send money to Europe and would then re-route it to India. And with this money, he used to buy lots of anonymous buildings. The Enforcement Directorate pressed charges on Raju and 47 people along with him and on his 166 companies for money laundering. Finally, they seized all his and his family’s property. SEBI charged him and his family with Insider Trading and ordered them to return, ₹1850 crores of profit they made through insider trading, with an interest of 12%. They also banned them from dealing in the securities market for 14 years. On 10 April 2015, the special CBI court sentenced Raju, his brother B Rama Raju, the then CFO, Srinivas Vadlamani, two PWC partners, and five other people, to 7 years of jail.

Raju and his brother were fined ₹5.5Crores. Before this scam got exposed, SATYAM had a big name. It was India’s 4th largest IT company. Satyam’s stock was in NIFTY and Sensex too. On 9 January 2009, Satyam Computer’s stock got removed from NIFTY and Sensex. In September 2008, the World Council for Corporate Governance presented Satyam Computer with the Global Peacock Award and, just four months later, Satyam’s accounting fraud got exposed. Satyam’s CFO at the time, Srinivas Vadlamani, and some executives, few months before Raju confessed, had sold their Satyam shares. Just a few days after confessing, Satyam’s share price fell from ₹170 to ₹6.50. After the scam, the investors of Satyam incurred a loss of ₹14,162 Crores. LIC, which was an institutional investor of SATYAM, faced a loss of ₹950 crores. The meaning of SATYAM in Sanskrit is Truth. But what Satyam’s promoters did, it did not have an ounce of Truth. They were all lies. Raju just wanted to make money and for that, he committed crimes such as Money Laundering, Insider Trading, and accounting fraud.


  1. Aron Almeida, Satyam Scam – The Story of India’s Biggest Corporate Fraud!, TRADE BRAINS ( Sep. 12, 2021, 08:22 PM),

  2. Madan Bhasin, India’s Satyam Accounting Scandal: How the Story Unfolded?, RESEARCH GATE ( Sep. 13, 2021, 06: 45 PM), ://’s_Satyam_Accounting_Scandal_How_the_Story_Unfolded

For daily Updates Do Follow Us on Facebook Instagram LinkedIN Twitter YouTube

To read more blogs click here

bottom of page