Satyam Computers Corporate Governance Fiasco Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Satyam Computers Corporate Governance Fiasco Case Solution

Introduction

Satyam is the fastest-developing IT corporation in India that become hooked up in 1987 by way of B.RamalingaRaju, which give services within the information technology (IT) area. It soon flourished to grow into the indain 4th-biggest IT corporation even as having a loyalty-primarily based customer marketplace across sixty-six international locations. furthermore, the corporation is currently most of the top indexed companies that have mounted its presence in more than 30 countries with a revenue of around $2.1 billion and round 40,000 personnel. stocks of Satyam were traded within the Bombay stock exchange (BSE), national stock exchange (NSE), big apple stock alternate (NYSE), and Euronext (Amsterdam, Europe). Satyam turned into featured at 185 the rank inside the listing of Fortune 500 groups at the time of the fiasco (Adhariani, 2017).

The enterprise turned into included as a personal restrained organization in 1987 and in 1991 Satyam was recognized as a public restricted employer on the Bombay inventory alternate (BSE). but, the enterprise signs a joint assignment with DUN and Bradstreet for the services of statistics technology. in the equal year, the organisation forms a joint undertaking with TRW Inc as properly (Kumar, 2019).

Problem Statement

Satyam was included as one of the fastest-growing companies in India while has successfully developed a strong customer-based market across the globe. However, the company faced various issues and challenges due to which the growth of the company was suddenly reduced, and its customer market was affected adversely. The major issue that the company faced was the governance issues due to which the major shareholders of the company opposed the company and even started threatening the company as a result of which the company withdraw its acquisition Hence the lack of major decisions without convening any meeting with shareholders and bad governance system highlighted that the company is facing issues of a governance crisis (Athique, 2018).

Analysis

Evaluationof StayamCorpurate structure

Ownership structure

Even though it is a family owned company, the promoters’ ownership stocks had declined for a long time, main toward a more discreteproprietorshiporganization in the company. The foreign institutional buyers had the largest shareholdings, various among forty and 50 percent. but, the employer has a particularly high degree of possession in the hands of institutional investors in part due to Golden Peacock Award and different awards won through Satyam, there was an increase of their shareholdings, representing their self-assurance in Satyam’s businessascendencyedifice earlier than the clarifying of the catastrophe (Dodrajka, 2021).

The tracking mechanism of the employer isn't as well as that appears to be. it is possible that after something is going incorrect, the promoters have insider knowledge, in order that they reduced possession over time in no time. As the majority does no longer recognize the insider information (insider gap), overseas institutional investors are shopping for increasingly stocks (possession) over time. foreign institutional buyers do no longer have sufficient know-how, so they can't display the management adequately. It has an atypical, huge, and speedy decrease in promoters' shareholding inside 6 years earlier than the disaster. It become mentioned that the Raju family (promoters) reduced their proportion ownership from 20.74% to 8.seventy four%. This reflects an atypical trend which suggests the opportunity of fraud in the enterprise (Sardana, 2017).

Board Composition

In satyam’s board, there had been five impartial and 4 inner participants. This presented that greater than half (50 percent) of the members in board were unbiased administrators. The brother of Rajuhad been the most effective shareholdersedentary at the board collectively with another inner participants. The board shape complies with the regulations and pointers in india, permitting the board to workout exceptionally unbiased judgment and board selections. All the board participants have relevant qualifications and excessive profiles. A number of them are professionals of their fields, which incorporates harvard employer university professors, retired bureaucrats, and engineers. This suggests that the board become installed to characteristic price (Adhariani, 2017)...................

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