Satyam CEO and founder B. Ramalinga Raju has resigned after admitting to falsifying company accounts by around a billion dollars.
The massive fraud over several years at India's fourth-largest IT services firm has rocked the tech outsourcing sector and stock market in what observers are already calling "India's Enron".
Raju has admitted that the IT outsourcing company's September-end balance sheet showed inflated cash and bank balances of around 50.4 billion rupees ($1.03 billion).
'The gap in the balance sheet rose purely on account of inflated profit over a period of"&brkbar; several years,' Raju said.
Satyam had intended to buy out Maytas Infrastructure for around $1.6 billion, but the deal fell through earlier this month when investors baulked at the plan.
Raja has now revealed that the Maytas acquisition was a "last attempt to fill fictitious assets with real ones."
He said neither the board members, managing directors nor most of the company's senior executives had any knowledge of the situation.
He said he had not personally profited from the fraud. "Neither myself nor the Managing Director sold any shares in the last eight years - excepting for a small proportion declared and sold for philanthropic purposes," he said.
"I am now prepared to subject myself to the laws of the land and face the consequences thereof."
Satyam's share price has collapsed following the announcement, falling by 77% to close at 39.95 rupees.
According to Satyam's new interim CEO, Ram Mynampati, the flailing company's immediate priorities are to protect the interests of its shareholders and the careers of its 53,000 associates.
"We recognize that our associates have committed a significant part of their careers to build Satyam. We will pursue all avenues to secure their future in the company," he said.
In a recorded message to shareholders, Mynampati said the board of directors will hold an emergency meeting on January 10 to discuss damage control.
"I am shocked and distressed by the disclosures coming from the organization. I can certainly understand and empathize with the pain that every one of you would be going through based on the events of today," he added.
The Indian Securities and Exchange Board of India has launched a probe into the scandal.