| Ref. No. | IIMC-CRC-2016-01 |
| Authors |
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| Length | 25 pages + teaching note. |
| Data Source | Secondary research. |
| Setting | Financial statement analysis to help an investor. |
| Abstract | The case presents dilemma of an investor in buying the shares of Satyam, the fourth largest Indian IT company, during a time when the company had to shelve its proposal of acquiring two non-core, related party businesses, in the face of severe investor activism. On one hand the company had earned numerous laurels for Best Earnings Release, Financial Disclosures, Corporate Governance, and Corporate Social Responsibility; and was reflecting strong financial growth over the years. On the other hand, it was also in the limelight of controversies, lawsuits and bans. There were questions raised about the valuations used for the proposed acquisitions. Four of the directors had resigned from its Board after the deal was called off. The top executives were selling off its stock. The founder and chairman of the company was a person with political influence and passion for charity. Mr. Parekh, an investor must decide whether the fundamentals of the company were strong enough to justify his investment in the company. |
| Keywords | Financial statement analysis; Quality of Earnings; Ratios; Red flags; Valuation. |