Cash crunch may hit Maytas' infrastructure projects

25 Feb 2009, ET Bureau

HYDERABAD: Maytas Infrastructure, the construction company promoted by B Ramalinga Raju (the jailed founder of Satyam Computer Services and his family, has decided to scale down activities at three of its verticals, oil & gas, water and transportation.

Succumbing to a cash crunch, coupled with the ongoing investigation and the realty slump, Maytas Infra has decided to scale down its operations significantly in these areas. However, when contacted, a Maytas Infra spokesperson denied this saying: “Funds requirement is a universal need and we will continually explore best possible modes.”

The spokesperson added: “There are no projects currently in hand for oil & gas sector. Transportation and buildings & structures (B&S) verticals have numerous ongoing projects. We are currently focusing on our ongoing projects.” The company declined to provide details on its current order book.


In the past, Maytas has executed orders close to Rs 1,500 crore in the oil & gas sector, Rs 319 crore in water sector and Rs 800 crore in the transportation vertical. An insider at Maytas Infra told ET, “Maytas Infra has been struggling to raise funds to execute its ongoing projects across verticals. The three verticals have been pruned and the staff working on site have been laid off.”

While irrigation and power are the only two operational verticals, the B&S vertical is battling to keep afloat due to cost and time overruns, the insider said. The company, which is functioning on a shoestring budget, has decided not to bid for new projects, as it is hardpressed for cash.

The revoking of bank guarantees by two of its major clients, Vedanta Alumina and Chennai-based Hirco, has also hit the company’s cash position. The progress of the irrigation projects has been impacted due to its inability to raise funds.

Maytas Infrastructure’s projects include the prestigious Hyderabad Metro (Rs 12,000 crore), 1,050-mw thermal power plant in Orissa (Rs 5,000 crore), Machilipatnam Port (Rs 1,650 crore) and Godavari Drinking Water Supply Scheme (Rs 810 crore). The Metro rail project and Machilipatnam port project are virtually off the table as the state government has decided to review all the projects awarded to the firm.

Maytas Infra’s proximity to Satyam has been the reason for its fall from grace, prompting the Union government to move to replace its board with a government-appointed one.