Fraud-hit Satyam inflated the number of employees working for the IT firm to siphon off cash, a prosecutor has said.
Prosecutor Ajay Kumar said at a court hearing that claims by former Satyam boss Ramalinga Raju that the firm employed 53,000 were exaggerated.
Mr Kumar said that Satyam's workforce was closer to 40,000 and said Mr Raju drew millions of rupees each month in the name of non-existent workers.
The prosecutor said that Mr Raju also forged documents.
At the hearing in Hyderabad, Mr Kumar asked the judge to extend the custody of Mr Raju and two other executives while investigations continued.
Earlier this month, Mr Raju admitted that he falsified Satyam's accounts, causing a huge plunge in the company's share price.
The Indian government has since appointed directors to the company's board to help devise a rescue plan.
The company is now struggling as clients cancel contracts.
KPMG and Deloitte have been hired to audit the company's account after Mr Raju said he had inflated assets by more than $1bn.