How ‘Bad Boy Billionaire’ R Raju Fooled Satyam Computers Investors

The story of Raju, now in news because of a forthcoming Netflix web series, has multiple layers.

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(Disclaimer: This piece is Part-I of a series of articles by The Quint on Netflix's upcoming documentary 'Bad Boy Billionaires: India', which is set to release on 2 September. The documentary covers the lives of four Indian billionaires — Vijay Mallya, Subrata Roy, Nirav Modi and Ramalinga Raju. The first piece can be accessed here.)

Where should we start? From 7 January 2009, when a confessional statement from the then chairman of Satyam Computers (subsequently acquired by another firm) B Ramalinga Raju, resulted in an unprecedented 78 percent drop in the company’s share price in a single day?

Or from the fact that for at least 20 quarters in a row, the then fourth-largest software company of the country kept announcing inflated profit, margin and revenue numbers? And it remained undetected for such a long period.

Or from the widely known fact now that despite being the chairman and CEO of a software company, Raju was interested more in creating a land bank rather than an IT giant?


The story of Raju, now in news because of a forthcoming web series, has multiple layers. Let us try to make sense of some of them.

It’s a story of a monumental corporate fraud, one of the worst we have had in the country. Based on findings of multiple agencies that probed the scandal, here are some of the highlights:

  1. Raju made a transition from textile to software business by founding Satyam Computers in 1987. The ensuing outsourcing boom helped the company carve a niche for itself in no time. The company went public in 1992 and kept expanding to more than 60 countries through the 1990s.
  2. Instead of being inspired by formidable rivals like Infosys, TCS, and Wipro – the companies that worked on the same space around the same time – Satyam found the competition too much to handle. Through the 1990s and in subsequent years, companies like Infosys and TCS kept reporting record surge in profit and revenue, putting pressure on Satyam to match the performance.
  3. Unable to match performance, Satyam, under Raju, resorted to accounting manipulation to show impressive growth. In 2008-09, for instance, the company reported sales of Rs 5,200 crore against the actual number of Rs 4,100 crore. While the actual profit margin was a mere 3 percent, the company reported 24 percent profit margin which was at par with its illustrious peers.
  4. Fake invoices, recruiting way more than what was required were other means to present an all is well picture. The company kept reporting a cash balance in excess of Rs 5,000 crore, which was non-existent.
  5. The inflated numbers kept boosting the share prices of the company. However, spending beyond means to present a rosy picture became unsustainable after a while.
  6. Weeks before the January 2009 confession, Raju took some questionable decisions that did not go down well with the investors. One such decision was the acquisition of Maytas Infra and Maytas Real Estate, two of the firms promoted by the Raju family, by Satyam Computers. The day the acquisition decision was announced, the company’s ADR fell by a whopping 51 percent, followed by a more than 30 percent drop in share prices on Indian bourses.
  7. Faced with pressure from all quarters, Raju had no option but to go public with accounting manipulation stories. He had to admit that the company earned a lot less than what has been announced all these years. He had to admit that the story of cash balance was a fiction and the company was struggling to take care of operational expenses.
  8. In April 2015, six years after the fraud came to light, Raju was sentenced to seven years of rigorous imprisonment and was fined Rs 5 crore.
  9. What is shocking in the whole episode is the fact that neither auditors nor regulators had a clue of what was happening at Satyam Computers all these years.

How Raju Amassed Lands While Investors Faced an Unprecedented Wealth Destruction

Now, the question is why did Raju resort to such blatant fraud? Was it because of the pressure to look successful in the face of tough competition? Did he find it difficult to reconcile to the fact that he did not have it in him to match his illustrious peers, like Nandan Nilekani of Infosys, Azim Premji of Wipro or professional CEOs of TCS? Or was he bent on committing a fraud anyway?

The exact answers to all these questions will likely elude us. However, we get a sense of his motive once we see the two facts that came out of investigation in conjunction.

It is estimated that Raju and his family own around 6,000 acres of land. The size of his land bank kept growing even as his shareholding in Satyam Computers kept falling. It looks like his family would use proceeds from sale of shares to buy land. For this to happen, it was imperative that share price of Satyam Computers remained at an elevated level.

A bull run in a company’s share price can be ensured only through a consistently good performance, quarter after quarter. Since actual performance kept eluding the company, the promoters resorted to boosting accounts.


The manipulation of accounts helped Raju and his family buy thousands of acres of land. But investors like you and me saw wealth destruction on an unprecedented scale in the bargain. For instance, if you owned shares worth Rs 1 lakh in Satyam Computers on the morning of 7 January 2009, it was worth only Rs 22,000 by the same evening.

Can we afford to forget the damage the accounting fraud did to the portfolios of scores of investors? Can we say with certainty that someone like Raju is not resorting to similar tactics in some other company?

While watching the web series, we should be mindful of the enormity of the fraud that shook our confidence not so long ago.

(Mayank Mishra is a senior journalist who writes on Indian economy and politics, and their intersection. He tweets at @Mayankprem. This is an opinion piece and the views expressed in this article are that of the writer’s own. The Quint neither endorses nor is responsible for the same.)

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