Page 18 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 1: Entrepreneurship: A world of Opportunity

Notes
I had all the enthusiasm and passion to do something… of being an entrepreneur. A friend
told me about part-time teaching opportunity at the Administrative Staff College of India
(ASCI). This really appealed to me. But, in late 1977, over dinner one night, my father told
me, ‘It is always important to stay focused and to avoid distractions’...’’
All is Not Well with Raju
While Raju had been praised over the years for his vision and leadership, which were the
driving force for Satyam’s success, he also received some adverse media coverage. It was
reported that he had taken a loan of ` 5.2 million from the Andhra Pradesh Industrial
Development Corporation (APIDC) way back in 1982, to set up Satyam Spinning Mills.
Raju’s Fall Begins
On December 16, 2008, Raju announced that Satyam planned to use the cash reserves to
acquire two companies - Maytas Infra and Maytas Properties. Maytas Infra was a public,
listed infrastructure development company that had been operational for more than two
decades.
Maytas Properties was involved in developing residential townships and urban
infrastructure. For the six months ended September 30, 2008, Maytas Infra reported revenues
of ` 7.37 billion and a net profit of ` 0.37 billion.
Raju Confesses to Fraud
However, before Raju could take a breather, on January 06, 2009, DSP Merrill Lynch
announced that it was terminating its advisory agreement with Satyam. In its
communication, it said, “We have terminated our advisory engagement with Satyam
Computer Services Ltd. for considering various strategic options on January 06, 2009...’’
The Aftermath
After Raju announced that the accounts had been fudged, analysts were able to piece
together the real picture behind the abandoned Maytas acquisition. They realized that
Maytas’ acquisition was an effort to save Satyam, and replace fictitious assets with real
ones.
Questions
1. Comment on the ethical part of Ramalinga Raju.

2. How can Satyam to be saved? Comment.
3. Make a plan from your side to save satyam out of the crunch.
Source: Lall.Madhurima, (2009), “Entrepreneurship and Business Plan” Excel Books Pvt. Ltd.

1.6 Summary

The word ‘entrepreneur’ immediately conjures up images of business tycoons like L.N.
Mittal or Bill Gates. While these rich, famous and successful individuals can be inspirational
for some, most of us would find it difficult to associate our own lives, personalities or
abilities with them.
Entrepreneurship is the process of creating something new, with value, by devoting the
necessary time and effort, assuming the accompanying financial, psychic, and social risks,
and receiving the resulting rewards of monetary and personal satisfaction and
independence.

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