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Journey into the heart of one of India's biggest corporate scandals - the Satyam Computer Services fraud. Once hailed as a technology titan, Satyam was listed on both Indian and New York stock exchanges, boasting a market cap of over $10 billion at its zenith in 2006. But behind this facade of success lurked a web of deceit spun over a decade by its founder, Ramalinga Raju, and his family.
In this video, we dissect the rise and dramatic fall of Satyam, whose fraudulent practices led to a staggering $1.5 billion discrepancy in the company's balance sheet, culminating in the destruction of billions in shareholder value and a 90% plunge in stock price. We unravel the complexities of this sophisticated scam, shedding light on the events that led to Raju's arrest and the largest corporate fraud in Indian history. Witness the unfolding of this riveting saga, which serves as a stark reminder of the dark side of corporate ambition.
Email us: Wallstreetmillennial @gmail.com
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0:00 - 2:04 Intro
2:05 - 5:15 The rise
5:16 - 8:43 The fraud
8:44 The aftermath
All materials in these videos are used for educational purposes and fall within the guidelines of fair use. No copyright infringement intended. If you are or represent the copyright owner of materials used in this video and have a problem with the use of said material, please send me an email, wallstreetmillennial.com, and we can sort it out.
#Wallstreetmillennial #india
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Terms and Condition: https://www.moomoo.com/us/support/topic3_490
Journey into the heart of one of India's biggest corporate scandals - the Satyam Computer Services fraud. Once hailed as a technology titan, Satyam was listed on both Indian and New York stock exchanges, boasting a market cap of over $10 billion at its zenith in 2006. But behind this facade of success lurked a web of deceit spun over a decade by its founder, Ramalinga Raju, and his family.
In this video, we dissect the rise and dramatic fall of Satyam, whose fraudulent practices led to a staggering $1.5 billion discrepancy in the company's balance sheet, culminating in the destruction of billions in shareholder value and a 90% plunge in stock price. We unravel the complexities of this sophisticated scam, shedding light on the events that led to Raju's arrest and the largest corporate fraud in Indian history. Witness the unfolding of this riveting saga, which serves as a stark reminder of the dark side of corporate ambition.
Email us: Wallstreetmillennial @gmail.com
Support us on Patreon: https://www.patreon.com/WallStreetMillennial?fan_landing=true
Check out our new podcast on Spotify: https://open.spotify.com/show/4UZL13dUPYW1s4XtvHcEwt?si=08579cc0424d4999&nd=1
0:00 - 2:04 Intro
2:05 - 5:15 The rise
5:16 - 8:43 The fraud
8:44 The aftermath
All materials in these videos are used for educational purposes and fall within the guidelines of fair use. No copyright infringement intended. If you are or represent the copyright owner of materials used in this video and have a problem with the use of said material, please send me an email, wallstreetmillennial.com, and we can sort it out.
#Wallstreetmillennial #india
––––––––––––––––––––––––––––––
Buddha by Kontekst https://soundcloud.com/kontekstmusic
Creative Commons — Attribution-ShareAlike 3.0 Unported — CC BY-SA 3.0
Free Download / Stream: http://bit.ly/2Pe7mBN
Music promoted by Audio Library https://youtu.be/b6jK2t3lcRs
––––––––––––––––––––––––––––––
During the 2000s, the technology consulting firm Satyam Computer Services was one of the largest and most successful companies in India. It was listed on both Indian stock exchanges and the New York Stock Exchange achieving a market capitalization of more than 10 billion dollars at its peak in 2006.. Satyam was one of the largest technology companies in India and was benefiting tremendously from the country's rapidly growing I.T Services sector due to its impressive Revenue growth and profitability. Domestic and foreign investors alike were buying the sock Handover fist.
But as it turned out, the facade of success was created by a highly sophisticated and almost decade-long fraud perpetrated by Founder Romulinga Raju and his family. The House of Cards came crumbling down in 2009 when a 1.5 billion dollar hole was exposed in the company's balance sheet. The stock price fell by more than 90 percent, wiping out billions in shareholder value. Founder and Chairman Rommelinga Raju was arrested and sentenced to seven years in prison for masterminding this game.
In this video, we'll take a deep dive into Sodium Computer Services and see how it became the largest fraud in Indian history. Today's video is brought to you by MooMoo the stock brokerage app that goes beyond the ordinary. Are you tired of using a brokerage that falls short on delivering comprehensive, fundamental data? Look no further. MooMoo provides you a wealth of information including historical Revenue net profit and free cash flow for any stock you want to explore.
Not only that, but you also gain access to consensus earnings estimates, short interest data, an analysts Buy sell ratings and Mubu is not holding back when it comes to rewarding new users. Deposit one hundred dollars and you'll receive five free stocks, a 100 cash reward, and a free share of the artificial intelligence company C3ai. Boost your deposit to 1000 and you'll unlock an additional 10 free stocks. And for those looking to take it even further, a five thousand dollar deposit will land you a free share of either Tesla or Google.
That's right, with MooMoo, you can earn up to 17 free stocks along with a 100 cash reward, all subject to terms and conditions. If you want to take your investing experience to the next level, click the link in the description below. Foreign had three major business segments: Business process Outsourcing ID Consulting and software Development Business Process Outsourcing Was a booming business in India during the 2000s and remains an important industry for the country today. Before the internet, large companies especially Banks and accounting firms had to hire tens of thousands of employees to handle all the paperwork for every mortgage application financial transaction Etc Because these records were primarily done on paper, these clerical employees needed to be located near the company's front office location such as Bank branches for banks in the U.S and other developed countries. This was a massive expense Because Wagers were relatively high With the Internet, these processes could be outsourced to developing countries where wages were much lower. India Quickly became the most popular choice due to its large population of educated and English-speaking workers. Sodium was one of the largest Indian companies involved in this booming industry. The second segment is IT consulting.
Whenever a corporation starts using a new software, especially large income applicated software such as Enterprise Resource Planning systems, the employees need significant training to learn how to use it. Companies would hire Sodium for consulting services to strategize on how to implement new software in the most efficient way possible, as well as training their employees to use it. Most of stadiums Consultants work remotely from India again, giving them a cost advantage and finally, they provide software developments and maintenance services. Satyam would develop and maintain custom made software for Niche purposes.
For example, in 2008, Satyam was a lead software partner for both the FIFA World Cup and the Beijing Olympics. They created the websites for both events, including a system to update game scores live by all accounts, Stadium was a real company. They had tens of thousands of employees, provided valuable services, and legitimately generated billions of dollars in Revenue. Nobody suspected anything was fraudulent, so as their revenue and profit surged, so too to their share price, making them one of the most valuable companies in India.
In fact, Sodium was so well respected that in 2008 they were given the Golden Peacock Award, which is one of the most prestigious Awards in the Indian business. Community The award specifically told the company's excellence in corporate governance. Within less than a year, the fact that Sodium was given any award for corporate governance would become laughable. Things started to get weird in December of 2008 when Sodium unexpectedly announced that they would be acquiring two real estate firms, Mitos Properties and Mitos infrastructure.
Mitosis is a strange name for a company, as it is not a real word in English Hindi or any other language for that matter. if you look closely, my toss is an anti-gram of Sodium. it's Sodium spelled backwards. As it turns out, both Mike house companies were founded by Rama Raju the brother of Sodium founder Romalinka.
Raju The Mitos companies own hundreds of millions of dollars worth of land and other real estate in India If you're thinking it's odd that an I.T consulting firm would want to acquire a real estate holding company, you're not alone. Investors were immediately suspicious of the deal and sent the company's share price down by 55. The day it was announced. Facing the threat of investor lawsuits, Sodium almost immediately called off the ill-conceived acquisition. This raises the obvious question: Why did Ramalingo Raju want to acquire his brothers real estate companies? Thank you! Well, Sodium was a real company. It was not nearly as profitable as his financial statement suggested. Sodium used in accounting and payroll software called on time Raju secretly planted a bug in the system which created a super user role using his super user account. Raju was able to create fake invoices for services that had never been provided to generate Revenue that never existed.
Additionally, he and his brother conspired to create a web of more than 300 shell companies that would secretly borrow money from Saigam's accounts. Even more egregiously, they created 6 000 salary accounts for employees that did not exist. The money that was used to pay these fake employees was siphoned into the pockets of the Raju family. Finally, the cash that they raised from their IPO on the New York Stock Exchange never made it into Sodium's bank accounts.
It was instead siphoned to the Raju family. They used this money to found Maitas Properties and Mitos infrastructure in Raju's brother's name. According to: Raju, the fraud started off small, but the artificially strong results on their financial statements created overly optimistic analyst expectations, which he had to continue creating fake revenues and profits. To me, he said it was like riding a tiger not knowing when to get off without being eaten.
Over the years, he tried to increase the actual revenue of the company to close the gap between the company's real operations and those depicted in their financial statements, but all those efforts ended in Failure because a large portion of the company's Revenue was fake. The difference between the cash reported on their balance sheet and what they actually had in their bank account was growing and by the end of 2008, they were on the verge of running out of the proposed Mitos acquisition was a final Hail Mary attempt to solve this problem. Maitas had real property assets. The idea was that Sidon would buy Mitas's properties using the fade cache as payment.
This would fill up the hole in the balance sheet and make things right once and for all. When the acquisition failed, Raju came to the realization that his house of Cards had come crumbling down, so he took full responsibility for his actions. at least he pretended to. He sent a five-page letter to the board of Directors admitting that of the 53 billion rupees of cash on the balance sheet, 50 billion, a shocking 95 percent did not exist.
Additionally, they had about 17 billion of liabilities that were not stated on their financial statements. In total, the whole in Sodium's balance sheet was 70 billion rupees, equivalent to about 1.5 billion dollars at the time. In the most recent quarter, their revenue was overstated by 27 percent. They reported an operating profit margin of 24, but in reality the margin was just 3 percent. While he did take responsibility for manipulating the raise financial statements, he didn't fully come clean. He said neither me nor the managing director who was his brother took even one rupee or dollar from the company and have not benefited in financial terms on account of the inflated results. We now know that this was not true as they siphoned off hundreds of millions of dollars from the company and to find his brothers real estate companies. He also claims that the company was forced to carry additional resources and assets to justify the revenue, which significantly increased costs.
He's implying that Sodium had to hire unnecessary workers to be consistent with the inflated Revenue. These unnecessary workers increased the cost and reduced the company's real profitability. Sodium indeed hired 6 000 unnecessary workers. What he failed to mention was that these workers existed only within the rigged payroll software and he siphoned off the salaries himself.
Both Ramalinga and Rama were arrested and both were sentenced to seven years in prison. Foreign was smaller and less profitable than its prior financial statement suggested. It was still a large company and slightly profitable. The stock price initially tanked by more than 90.
Following the revelation of the fraud, the giant Indian conglomerate Mahindra and Mahindra took advantage of the fall in the share price to acquire a majority stake in Sodium. A few months later, the company was rebranded as Mahindra Satyam Mahindra was able to stabilize the business and clean up all the accounting fraud in 2013. Mahindra acquired the remaining portion of Sodium and integrated it into their technology subsidiary Tech Mahindra which continues to operate to this day. Tech Mahindra has been a huge success and currently has a market cap of 1 trillion rupees, equivalent to about 12 billion dollars.
The legacy of Sodium also lives on through the massive I.T consulting firm Cognizant Technologies which currently has a market cap over 30 billion dollars. Cognizant was formed as a joint venture between Sadio and an American company called Dun and Bradstreiton. It was spun off as an independent company in 1994.. the fact that the ram evidence of Sodium Computer Services live onto this day in the form of two highly successful companies shows that despite his fraud, Ramalinga Raju was a brilliant businessman capable of creating valuable businesses.
Had it not been for his fraud, he would likely be remembered as one of India's most brilliant entrepreneurs. But selfish Creed proved too seductive and his name is now written in the history books as one of India's greatest scammers. All right guys, that wraps it up for this video. What do you think about Sodium? Computer Services Let us know in the comments section below. As always, thank you so much for watching and we'll see you in the next one! Wall Street Millennial Signing out.
These paid advertisements are getting annoying. Ten minute video and we have 12 minutes of ads. One built into the video and 3 minutes ad for the first 1/2.
Cut those down my man; I do not watch for more advertising than content.
You can Do better.
All these market cap evals are total head in the clouds evals. Also I'm not sure if any of these large companies accounting reports can even be trusted unless verified by multiple third party accounting firms.
i am a fan of your videos, but i hate your sponsors. Moomoo? Are you serious? you educate ppl to not fall for scams, but you promote one yourself. their website doesnt have an impressum. the company claims to operate from singapore and has at least 5 subsidiary companies. just look at their names. this is so suspicious … :/
so what happened to the embezzled money?
Back then frauds were get arrested , can’t even expect arrest speaking against fraudsters is now antinational .. I don’t want to be vishwaguru can I just get congress democracy , back in 2010 I use to feel I can slap manmohan Singh and get by but now thinking it is scary , meanwhile China is not getting scared as it is 7 km inside our borders .
7 years in prison for the billions stolen? the reward greatly outweighs the risk
Does Modi know about this? Quite a black mark on the economic environment that controls the legitimacy of corporations within the nation's financial realm. Almost makes it look like the American crooks and scammers that are always popping up in the US… Ha! 😳
I would do it too if I only received 7 years.
Has Moomoo been outed as a scam yet?
if you hear indian voice on support better get another agent to talk to you make sure its not a scam
This is why you first conquer your greed , they were already billionaires with their legally earned wealth but nope they had to be obsessed with money .
Lol this guy tried to play the victim. Oh woe me , I’ve created scams I can’t control
Bharat India is dirt poor and crime infested despite 1947 transfer of power to Brahmin vaishya cult hindus by their master British India. India aka Bharat since 1947 has been looted robbed by Brahmin vaishya hindus who rule and also run India inc. China has raced to become a superpower by curbing corruption but Bharat govt run by Brahmin vaishya thugs continue to nurture Brahmin vaishya India inc corruption. Ramalinga Raju isn't alone the list of Brahmin vaishya fraudsters begin with Adani, Ambani , videocon, Harshad mehta , ketan parikh , mehul choksi, nirav modi Lalit modi to list a few
Indians, the newest and up-and-coming scammers 😂
This is what the media shows you, what they don't talk about is the role of Narayan Murthy & Infosys in shutting down Satyam. Satyam was far better than garbage Infosys.
This must be a super scam because India has every kind of scam that a person can think of. They scammed the scammers
95% of the cash was fake ???!!!!
Come on bro, know when to quit 🤦🏾♂️🤦🏾♂️
Moral of the story? Steal billions and get 7 years in a summer camp, steal small and you get life without parole.
Those old UPA regime days, full of scams daily, satyam, coalgate, cwg, 2g, commom during those days
All of India is a scam
What most of the people don't know that… he was politically compeld and pressured by then cm ysr and his son to dirvet this funds…into mytus real estate that was the turning point…
1stly learn to pronounce a Sanskrit name correctly it's not sudyam it's pronounced Sath yum ( no equal in English for Sath sound) that said. Satyam means the truth. In Sanathan dharma it's the ultimate attribute of the concept of Brahman ie the truth of Brahman is om. So if you name ur company on a term such as this & do filthy things you will suffer for ur karmic dirty deeds. That's the way I see it as to why this company died.
sad.
My dad used to work for Satyam when it collapsed. Luckily he was on notice period when this happened. He said he saw people in the company crying their eyes out because they had taken out huge loans and had no income source.
I worked briefly for them in business development in US. I left after I think 2 months (despite a great salary) because it quickly became obvious they were shady AF in business practices and the numbers.
Hindhu are good at cooking the books, fraud and conning the world just like Adani Group