Andhra Pradesh police's Criminal Investigation Department on Thursday informed the court that Satyam's founder Ramalinga Raju had inflated employee numbers by at least 12,000, by which he drew Rs 20 crore a month towards staff cost.

Raju told CID officials that there were only 40,000 employees working with the company, whereas the documents were showing over 52,000 employees, the public prosecutor informed the 6th additional chief metropolitan magistrate.

The court extended the police custody of Raju and Satyam's former CFO Vadlamani Srinivas so that the investigators could confront them with documents seized during raids at various places.

Raju's lawyer Bharat Kumar, however, categorically denied the charges that employee numbers were inflated. "There has been no such activity," he said, adding that the allegations were absolutely without ground or basis.

In the petition seeking extension of custody of Raju and Srinivas, the CID submitted that in addition to fudging the company's books of accounts, the IT company's founder appears to have cooked employee numbers too.

On the basis of the inflated employee numbers, he was drawing Rs 20 crore monthly from the bank towards staff cost, the prosecution submitted.

Raju was arrested on January 9, two days after he disclosed that he had engineered a Rs 7,800 crore financial fraud in the company.

The court allowed the police to keep the two in its custody till 1600 hrs Friday.

The court had earlier remanded Raju, his brother Rama Raju and Srinivas to police custody for four days from January 18. Rama Raju has been sent to judicial custody till Friday.