Business Today

2009: Satyam Scandal

At nearly Rs 8,000 crore, the Satyam scam was among the biggest in corporate India and tarred the image of the snow white IT industry.

     Print Edition: Jan 9, 2011

At nearly Rs 8,000 crore, the Satyam scam was among the biggest in corporate India and tarred the image of the snow white IT industry. The perpetrator: the soft-spoken founder and Chairman of Satyam Computer Services, B. Ramalinga Raju. In January 2009, when Raju confessed to cooking the books of then India's fourth-largest software services company, investors in Satyam shares lost a whopping Rs13,600 crore within a month and the company faced an avalanche of lawsuits. Clients dropped off and many in the Raju clan were arrested, and the external auditors came under fire. However, with parliamentary elections a few months away, the Union government intervened, dismissing the company's board and appointing a new one in its place. In the bidding process for the company, the Mahindra group beat Larsen & Toubro to acquire it, less than four months later in April 2009. The scandal raised questions about the state of corporate governance and the role of independent directors in India. Since then, Raju has been in and out of custody, even as he continues to fight a protracted legal battle. Satyam has been rebranded as Mahindra Satyam and is attempting to regain its past glory.

Tata Nano Launch
More than a year after unveiling the car at the Auto Expo in Delhi, Tata Motors rolled out the first Nano in July 2009. The "standard model" cost `1 lakh without taxes, which made it the world's cheapest car. The Nano's ride, since then, has not been smooth. Some cars have caught fire, forcing the company to make safety fixes. In November 2010, Nano's sales plunged to an alltime low of 509 units from a peak of 9,000 units in July this year.

Unravelling of the Retail Sector
After almost a decade of heady growth, the modern retail sector began to fall apart. Subhiksha Trading, started by R. Subramanian in 1997, was the first one to collapse under the weight of spiralling costs, rising debt and lack of fresh funding. The following year, Delhi-based Vishal Retail was sold off to private equity firm TPG Capital and Chennai-based Shriram Group. Other retailers such as Reliance Retail, Aditya Birla Retail's More, and the Essar Group's The Mobile Store, either scaled back their expansion plans or shut down stores. Some like Koutons are still struggling with debt.

Did you know?
The Tatas began working on an affordable small car in 2003. Over 500 engineers worked on the Nano for four years. The entire body was designed twice and the engine designed three times in a span of four years before the launch.

Quote of the year
It was like riding a tiger, not knowing how to get off without being eaten.
Ramalinga Raju, in his confession letter dated January 7, on why he continued to cook the books for years

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