RAMALINGA RAJU,
FORMER CHAIRMAN ,MD,
SATYAM COMPUTER SERVICES LTD.
Founded: 1987
Headquarters:Hyderabad, Andhra Pradesh, India
Key people: Ramalinga Raju-now resigned Chairman
Industry: Information Technology
Revenue:As Reported by the Company:▲ 2.1 billion USD
Actual Figures: Unknown
Employees:52,865 (As of September 30, 2008)

EARLY LIFE:
Having made a humble beginning to rise to the dizzy heights of success and become one of the richest Indians, Byrraju Ramalinga Raju is described as the pride of Andhra Pradesh and the pride of Telugus. He was born to a farmer B. Satyanarayana Raju in Garagaparru village in West Godavari district of coastal Andhra Pradesh September 16, 1954. Satyanarayana Raju moved to Hyderabad in the 1960s. Ramalinga Raju's grandfather was an enterprising farmer who ventured out of traditional agriculture into agribusiness and bought a sugar mill. The venture backfired and the family lost a fortune. It then scattered into different parts of Andhra and Satyanarayan Raju, Ramalinga Raju's father, whose name inspired the group's name Satyam, moved to Hyderabad and became one of the first farmers to start commercial grape production around Hyderabad. The family recovered and Ramalinga Raju, the eldest son, was sent to the US in 1975 to get an MBA degree from Ohio University after he completed his B.com from Andhra Loyola College at Vijayawada. Ramalinga Raju had a stint at Harvard too. He had attended the Owner/President course at Harvard. He has two brothers and a sister. Raju is married to Nandini. They have two sons, Teja Raju and Rama Raju, and a daughter, Deepti who is married.
In India, as a commerce student at Vijayawada, he had been a carefree young man, from a well-to-do farming family, with not a worry in the World. To begin, when Ramalinga Raju came back from the US in 1977 armed with ambition and new ideas, he tried to build new business for the family. Ramalinga Raju moved away from the traditional agriculture business and set up a cotton-spinning and weaving mill named Sri Satyam. Thereafter he shifted to the real estate business and started a construction company called Satyam Constructions This earned him his bread and butter. Out of curiosity he had brought a small computer back with him from the US. It was a glorified programmable calculator. He realized that information technology would be big in the future and took the plunge in this new business, about which he had limited knowledge.
Satyam Computer Services Ltd:
Satyam (Sanskrit for 'truth') Computer Services Ltd was founded by B.Ramalinga Raju along with one of his brothers-in-law, DVS Raju in 1987 in Hyderabad. He was so influenced by his father that he named the company after him. It was a humble beginning for Satyam with only 20 employees. Satyam Computer Services Ltd was incorporated in 1989 and it went public in 1992. He learned a great deal during his time at OU and in the United States. During that time he foresaw the upcoming trend of outsourcing and the future prominence of computers. He started an IT company with 20 employees and bagged a multitude of IT projects from US companies. The company went public in 1992.Satyam rapidly developed and became a multinational company with thousands of employees spread over many countries.Ramalinga Raju very soon realized that there could be higher margins if one could convince companies abroad that Indian companies could develop the software in India and upload it to the US companies mainframe computers through a satellite data link. Satyam was one of the first companies to get a dedicated 64kbps data link for such "offshore" development. Satyam was among the first Indian companies to make the unique paradigm shift from onsite-led operations to offshore driven ones. Raju also found Satyam Infoway, now called SIFY, an Associate Company of Satyam and India’s largest Internet service provider and first Indian company to get listed in NASDAQ. With the launch of Satyam Infoway (Sify) Satyam became one of the first to enter Indian internet service market. Through his managerial skills and quality leadership, Ramalinga Raju built Satyam into a multinational company and bagged several key contracts, especially from the US. Satyam began trading on New York Stock Exchange in 2001. With each passing year, Satyam strengthened its position and extended its operations to various locations.
The Transformation:
Satyam also became one of the few companies in the world to attain the top rating -level5- in the capability maturity model (CMM) instituted by Carnegie-Mellon University's software engineering institute. Satyam's foray into corporate data and Internet services too was path breaking. While several e-mail companies were languishing in the pre-Internet days due to unreasonably high license fees and port charges by Dot, Satyam Infoway moved into this space in 1995. It invested heavily in TCP/IP networks when the only internet service provider was the government monopolized VSNL. At that time companies could only be listed in India after three years of profitable business, while Internet play required large funding for infrastructure and acquisitions. Satyam quickly moved to list Satyam Infoway (SIFY) on Nasdaq with great success. On 19 October 1999 it became the first internet company from India to be listed in the global markets. Satyam Infoway reached a milestone with its subscribers base crossing the two lakh mark. SIFY posted a profit of Rs 67 crore for the year ended March 31,2000 against Rs 10 crore in the previous year.
Setting Standards:
While high-flying SIFY has caught people's imagination, the flagship Satyam ComputerServices, a software services company, has grown from a turn over of less than Rs4.7 crore in1993 to Rs679 crore in 2000(146 times) and its net profit 149 times from Rs 90 lakh to Rs134 crore. Satyam today has become folklore in Andhra Pradesh. Satyam now has six development centers in India, seven overseas and marketing offices in 30 countries. To increase technology competency continuously, the company has started a Tech Guru scheme. These are top line tech professionals from the global IT industry, who come to the impressive Satyam Technology center (STC), Hyderabad and conduct courses for about two weeks. Already nearly 30 such professionals have been to the center. A brainchild of Ramalinga Raju, STC is perhaps the most impressive corporate campus in India and would be well placed in the rest of the World. IN THE PICTURE:Satyam Development Center
Choosing the right partner @ speed of thought:
Choosing the right partner in software services the world over, has been the key strength of Ramalinga Raju. The November 1999, the all-cash Rs499 crore India-world deal looked astronomical. It made several people to sit up and take notice. Nasdaq certainly did. It gave an even higher valuation to Satyam's subsidiary - Satyam Infoway (Sify), than before. Consequently, its market cap went up by $800 million.
It has tied up with Computer Associates international to provide online access to advanced E-business applications for small and medium enterprises. The venture will have an initial investment of $3million.It has also entered into an agreement with Texas-based Enterprise Inc. to enable E-market solutions for traditional businesses and dotcom companies worldwide. Focusing on the auto sector, Satyam decided to tie up with TRW under which the latter will outsource to the venture at least $200 million worth of projects, spread over a five- year period. Satyam Infoway Ltd took 25% stake in the popular Cricket website Cricketinfo.com by issuing $37 million worth of American Depository shares (ADS) in an all stock deal. SIFY's buying spree continued. It has signed an agreement to buy-out 100 per cent of IndiaPlaza.com for $8.1 million. It is an all-stock deal. Satyam computers is tying up with CCMB(Centre for Cellular and Molecular Biology) in bio-informatics, a hot new field which combines molecular biology with data mining and warehousing in information technology. True to its reputation for speed, Mr.Raju is in advanced discussions with CCMB for setting up an International training center in bio-informatics, among others.
How he runs the Company:
Raju has always felt that to really succeed one must have a vision and must be ready to take risks. That's the reason Satyam's management style is unique. It does not function as a normal pyramidal hierarchy. Every department or division is formed as a circle where the head operates as a CEO of an enterprise, with all the responsibility of running an independent company, including making profits. Even though the perks in Satyam are lower than the industry standards, What holds the staff together is Raju's unique "power in one" philosophy that promotes togetherness on the mind's plane, including the singing of a corporate anthem together. Its staff attrition rate is a half of the industry's turnover of 15 per cent per annum. Content wise, the crux of the philosophy is Japanese. Raju received the Ernst & Young Entrepreneur of the Year Award for the Services sector. In the manner true to him he explained that he was receiving the award on behalf of all Satyam associates.
The Person:
Raju is a very soft-spoken person and quite accessible. His passion is reading and has anextensive library at home. His reading interests include philosophy, science and management subjects. Raju showed a strong social orientation and has been furthering the cause of social transformation through Byrraju Foundation and EMRIEMRI.

SATYAM TODAY:
Satyam rapidly developed and became a multinational company with thousands of employees spread over many countries. Satyam Computer Services Limited offers consulting and information technology (IT) services worldwide. The company operates in three segments: IT services, Business Process Outsourcing (BPO), and Software Products. The IT Services segment provides a range of services, including software development, packaged software integration, system maintenance, and engineering design services. Its BPO segment provides services covering human resource, finance and accounting, customer contact, and transaction processing. Its Software Products segment engages in the product development and creation of propriety software.

IN THE PICTURE: Ramalinga Raju (left), Founder and Chairman, Satyam Computers, and Ravi Narain, Managing Director and CEO, NSE, at a listing ceremony of company’s shares at NSE in Mumbai .

The company offers services to customers in a range of industries, including insurance, banking and financial services, manufacturing, telecommunications, transportation, and engineering services. The company markets its services primarily to companies in the United States, Europe, the Middle East, and the Asia-Pacific region. The company has a strategic alliance with MindFlow Technologies Inc.
Satyam's network covers 67 countries across six continents. The company employs 52,000 IT professionals across development centers in India, the United States, the United Kingdom, the United Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and Visakhapatnam. Satyam is listed on the New York Stock Exchange and Euronext. Today, Satyam has a global presence.It serves over 654 global companies, 185 of which are Fortune 500 corporations. The company, whose revenues crossed $2 billion in 2007-08, became the first Indian company to list its American Depository Shares (ADS) on Euronext, which is one single cross-border trading platform of NYSE Euronext Group.
AWARDS AND ROLES:
Raju has won several awards and global accolades, which include

• Ernst & young entrepreneur of the year services award 1999.
• Andhra Pradesh Academy of Sciences medal 1999.
• Dataquest IT Man of the Year Award 2000.
• Asia business leader award 2002.
• CNBC’s Asian Business Leader – Corporate citizen of the year award in 2002 .
• Hyderabad Management Association life time achievement award 2006.
• Honorary doctorate by Jawaharlal Nehru Technological University 2006.
• E&Y Entrepreneur of the Year 2007.

For his achievements and contribution to society, he has been awarded Doctorate by Anna University Chennai on 14 Dec 2007.
Raju has played a key role in taking the Indian IT flag globally, and is presently on the
Executive Council of National Association of Software and Services Companies (Nasscom), the apex forum of the Indian IT industry( NASSCOM) National Council of CII, Board of Indian Institute of Foreign Trade and on the Consultative body of Ministry of IT, Govt. of India. He is also a member of International Advisory Panel of Malaysia’s Multimedia Super Corridor. He speaks at several forums in India and abroad on behalf of the industry and the country.
FRAUD:
Raju was involved in a controversy involving the company Maytas and margin selling of his shares. It eventually ended in Raju admitting to an accounting fraud to the tune of 7000 crore Rupees or 950 million pounds, and subsequently resigning from the Satyam board. The Indian subsidiary of PricewaterhouseCoopers was the auditor of Satyam.
FRAUDS AND CONTROVERSIES:
Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance, despite concerns raised by independent board directors and was later stripped off the award. In 2008 the company attempted to acquire two infrastructure companies - Maytas infrastructure and Maytas properties for $1.6 billion. Both companies are owned by Satyam CEO Ramalinga Raju's sons. His sons Teja B. Raju and Rama B. Raju are running Maytas Infrastructure and Maytas Properties. This eventually led to the probing of the deal by the government, a veiled criticism by the vice president of India and Satyam clients re-evaluating their relationship with the company. Satyam investors lost about INR 3,400 crore in the panic selling. The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism all around as Satyam's shares fell 55% on the New York Stock exchange as well. Considering that none of the independent board of directors questioned the deals, investors are expecting a complete revamp of the board. In line with this three members of the board of directors resigned on Monday 29th December 2008. The World Bank has banned Satyam from doing business with it for 8 years due to inappropriate payments to the World Bank's staff. The World Bank in its own statement has denied allegations of "data theft/ malicious attacks", but confirmed the bribery and improper invoicing allegations. UK mobile payments company Upaid Systems is suing Satyam for over 1 Billion dollars on charges of fraud, forgery and breach of contract.
MAYTAS CONTROVERSY:
India's fourth largest IT bellwether Satyam Computers Services late Tuesday drew a barrage of criticism after it announced a decision to spend $1.6 billion (Rs.79.2 billion) to buy real estate and infrastructure firms run by the sons of its founder-chairman B. Ramalinga Raju. In a hurriedly convened conference call, investors and analysts questioned the move by the Hyderabad-based software exporters to pay such a huge sum to acquire companies linked to Raju and raised concerns about corporate governance at Satyam and its credibility in the eyes of global clients and shareholders. Wall Street made its displeasure known by pummeling the Satyam stock, which lost over 50 percent of its value on the New York Stock Exchange (NYSE) to $5.71 at 10.40 p.m. (IST). Ramalinga Raju, however, justified the decision, saying it was part of a 'good diversification strategy' and that it was only 'incidental' the target companies were controlled by members of his family. The listed firm informed the stock exchanges that it would spend $1.3 billion (Rs.64.35 billion) to buy a 100 percent stake in real estate firm Maytas Properties and $300 million (Rs.14.85 billion) for a 51 percent stake in Maytas Infra. Hyderabad-based Maytas Properties is run by Rama Raju, the younger son of the Satyam founder, and Maytas Infra by Teja Raju, the elder son.
Ramalinga Raju told analysts the privately held Maytas Properties was owned by a 'combination of some members of the immediate family and other related investors' while the promoters owned a 36 percent stake in the infrastructure firm.Satyam proposes to acquire a 31 percent stake in the listed Maytas Infra from the promoters at Rs.475 per share and make an open offer for a 20 percent stake at Rs.525 per share. Ramalinga Raju said he expected the process to be completed in about three months. The infrastructure company's stock lost 2.26 percent to close at Rs.486 on the Bombay Stock Exchange (BSE), while the Satyam stock gained about 0.5 percent to Rs.226.50 in Tuesday trading. Satyam's announcement was made after trading had ended.
When analysts and fund managers wanted to know why Satyam's robust balance-sheet was being saddled with acquisitions that would dilute margins, Ramalinga Raju argued that the infrastructure sector in India was poised for high growth in the years to come and that there would 'not be much of dilution, especially at the earnings-per-share level.' 'The business model of IT services has become riskier and depends on the export market and currency fluctuations. Rather than buying just another IT asset, we decided to de-risk and diversify,' he maintained. Satyam posted sales of Rs.81.37 billion and net profit of Rs.17.16 billion during the last fiscal to March 2008. At the end of September, the IT firm had cash and bank balances totalling Rs.53.13 billion. Representatives of institutional investors on the conference call were highly critical of the fact that Satyam had taken a decision which would change the face of the company without consulting the shareholders and warned of their strong opposition to the planned deals.
Ramalinga Raju said Satyam had to make a 'judgment call' and came to the conclusion that buying businesses unrelated to software but related to him personally was the best course. Representatives of investors such as Templeton and Motilal Oswal complained that Satyam had no business buying real estate or infrastructure companies and that their investment in Satyam was because it was engaged in providing software services. There was a 'fair amount of analysis and evaluation' before the deal was announced but there was 'no dialogue' with companies other than those which Satyam decided to buy, Ramalinga Raju added. Rama Raju, the vice-chairman of Maytas Properties, would have no role to play in Satyam while a decision was yet to be taken about what part Teja Raju would play in the affairs of the software company. The Satyam founder predicted that the share of the software and BPO business to the company's revenue would fall to 50 percent over four-five years, with the rest coming from the acquired entities. Maytas Infra posted a net profit of Rs.969 million on sales of Rs.18.74 billion during the 12 months to March 2008. Asked if the decision was reversible, Raju declined to give a direct reply, only observing that 'there are other parties involved'. He also argued that the credibility of Satyam would not suffer in the eyes of its clients. ' If we do the right things and make the right moves, there is no way the acquisition will dilute our ability to service our existing clients.'
ACCOUNTING SCANDAL OF 2009:
On the 7th January 2009, the company Chairman Ramalinga Raju resigned after notifying its board members and the SEBI that he had falsified accounts. Raju affirmed in a letter to the board that neither he nor the managing director had benefited financially from the reporting of inflated revenues. He confessed that none of the board members had any knowledge of the situation in which the company was placed. He noted that Satyam’s balance sheet as on the 30th of September, 2008, carried inflated figures for cash and bank balances of Rs 5,040 crore(as against Rs 5,361 reflected in the books). Furthermore, it carried an accrued interest of Rs 376 crore which was non-existent. An understated liability of Rs 1,230 crore on account of funds was arranged by himself. An overstated debtors' position of Rs 490 crore (as against Rs, 2,651 crore in the books).

He stated that: What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.” Raju had appointed a task force in the last few days before revealing the news to address the situation .Satyam’s official website notes that
"We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation” said Mr. Ram Mynampati, Interim CEO (pending ratification by the Board) and Member of the Board, who has been mandated by the Board to steer the company through this crisis.”

AFTERMATH:
Analysts in India have termed the Satyam scandal as India's own Enron scandal. Immediately following the news, Merrill Lynch (Now with Bank of America) terminated its engagement with the company as Credit Suisse suspended its coverage of Satyam. It was also reported that Satyam’s auditing firm PricewaterCoopers will be scrutinized for complicity in this scandal.
RAJU’S RESIGNATION:
The New York Stock Exchange has halted trading in Satyam stock as of January 7, 2009.India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX Nifty 50-SHARE index from january 12. Ramalinga Raju resigned as the company chairman after confessing to a Rs.40 billion ($823 million) fraud that was going on for years.
Satyam was the brand image of Andhra Pradesh, Hyderabad was identified with this company, and its founder-chairman B. Ramalinga Raju was a hero to youngsters. But overnight, arguably the biggest fraud in India's corporate history has reduced the chairman and his company to a big zero. The man who spent three decades in IT services and built Satyam into India's fourth largest IT services firm, was described as a visionary, a global business leader and a thinker. Now, the angry shareholders want him to be put behind bars. The man who was once described as pride of Telugus, is today the target of their wrath.

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