Case Study on Corporate Governance: Satyam Scam

Satyam Computers services limited was a consulting and an Information Technology (IT) services company founded by Mr. Ramalingam Raju in 1988. It was India’s fourth largest company in India’s IT industry, offering a variety of IT services to many types of businesses. Its’ networks spanned from 46 countries, across 6 continents and employing over 20,000 IT professionals. On 7th January 2009, Satyam scandal was publicly announced & Mr. Ramalingam confessed and notified SEBI of having falsified the account. The essential facts associated with the case are as follows: On 27 June 1987, Ramalinga Raju founded Satyam Computer Services along with his brother-in-law. At first, there were as little as twenty employees, but the organization determined itself as a large-scale player in the country’s IT sector, concentrating on the services concerned with software outsourcing. In 1991, the company made a successful first public appearance on the Bombay Stock Exchange. In four Continue reading

Commercial or Financial Profitability

In order to assess the operational efficiency of a project and its  profitability most of the industrially advanced countries  employed various technique for the purpose of financial  profitability analysis. Profit is the primary objective of an enterprise. The word profit implies a  comparison of the operations of business between two specific dates  which are usually separated by an interval of one year.  The maximization of profit within a socially acceptable limit implies that a  proper regard for public interest has been shown. Really it is the growth  of profit which enables a firm to pay higher dividends to its ordinary  shareholders. According to the Economists point of view profit is the reward for  entrepreneurship.  Various  factors influence the profit variations. They are as follows. The volume of sales plays a tremendous part in profit making. So  long as a sustained maximum volume continues at the top of  capacity curve, break Continue reading

Features of a Sound Capital Structure

Capital structure is a business finance term that describes ‘the proportion of a company’s capital, or operating money, which is obtained through debt and equity or hybrid securities’. Debt consists of loans and other types of credit that is to be repaid in the future, usually with interest. Equity involves ownership interest in a corporation in the form of common stock or preferred stock. Equity financing does not involve a direct obligation to repay the funds which is in contrast to debt financing. Instead, equity investors are able to exercise some degree of control over the company as they become part-owners and partners in the business. The goal of a company’s capital structure decision is to maximize the gains for the equity shareholders. The optimal capital structure is the one that maximizes the price of the stock and simultaneously minimizes the cost of capital thus striking a balance between risk Continue reading

SWOT Analysis of Red Bull GmbH

Red Bull has created a strong brand image, using colorful icon with two bulls in opposition and a memorable tag line; ‘Red Bull gives you wings’. Through creative marketing and sponsorship it has linked itself with extreme sports, innovative music and art, all aimed squarely at the youth market. Red Bull is a European success story. The product was launched in 1987 in Austria. It faced opposition from the Food and Drink Administration (FDA), who refused to clear it for distribution but despite this it became an underground success through clubbers and snowboarders. This anti-establishment stance found synergy with consumers, even after it was cleared for sale. It quickly spread into neighboring countries and into the US market. By 2004, it had gained 40% share of its market sector and 70% in Europe. However, the brand still faced problems; it was banned in Denmark and France following unsubstantiated rumors that Continue reading

Group Insurance

Under the  Group Insurance Scheme, the principle involved is more or less same as in the case of Life Insurance but  the scheme is taken for a group of persons employed in an undertaking. In this scheme, the contract of life  insurance can be summed up as an undertaking to pay specified amounts of money on the happening of  certain contingencies in exchange for a previously agreed series of payments called premiums. This  contract is between an employer and the Insurance Company and the contingencies where the death of  employee in service or on survival to the retirement date. In the latter event the employer would possibly  want some pension to be given for the post retirement life time of the employee. To offer cover of death  risk, the system is to cover risk year by year. The employer is asked to pay the premium in advance and if  death Continue reading

Foreign Institutional Investors (FII’s) and Indian Economy

Introduction to Foreign Institutional Investors (FII’s) Since 1990-91, the Government of India embarked on liberalization and economic reforms with a view of bringing about rapid and substantial economic growth and move towards globalization of the economy. As a part of the reforms process, the Government under its New Industrial Policy revamped its foreign investment policy recognizing the growing importance of foreign direct investment as an instrument of technology transfer, augmentation of foreign exchange reserves and globalization of the Indian economy. Simultaneously, the Government, for the first time, permitted portfolio investments from abroad by foreign institutional investors in the Indian capital market. The entry of FIIs seems to be a follow up of the recommendation of the Narsimhan Committee Report on Financial System. While recommending their entry, the Committee, however did not elaborate on the objectives of the suggested policy. The committee only suggested that the capital market should be gradually Continue reading