Lobbying begins for Maytas Infra board seats

19 Feb 2009,

HYDERABAD: Hectic lobbying for board seats in Maytas Infra has begun, a day after the government decided to move the Company Law Board (CLB) to oust the current board of Maytas Infra. IFCI, which holds 17% stake in Maytas Infra, on Wednesday pitched for a seat on the new board of Maytas Infra, whenever it is reconstituted. “The existing management faces a crisis of confidence, and we are keen on getting a representation in a non-partisan board not aligned with any interest,” said a senior IFCI official.

IFCI, along with IL&FS and Maharashtra government-run Sicom, hold close to a majority stake in the firm. The three financial institutions came to own the stake of the promoters, who pledged their shares and were unable to meet margin calls.

Last month, IL&FS too had sought a representation on the board citing concerns over the orderly running of Maytas Infra, a firm linked to the disgraced promoter of Satyam Computer Services B Ramalinga Raju. The proposal was backed by banks that have a huge exposure in Maytas Infra. But these institutional lenders will not be able to off-load their stakes till stability is restored in the company, said sources.

Maytas Infra is strapped of funds after Icra downgraded the ratings it had assigned to the debt programmes and bank facilities of the firm. Lenders are desperately looking at ways to protect their exposure to the company. A consortium of banks are on course to set up a supervisory committee to oversee the functioning of Maytas Infra, said a senior banker.

A consortium of 19 banks, which includes two of the country’s largest banks — State Bank of India and ICICI Bank — have lent over Rs 5,000 crore to the company. A senior official from a large bank said their primary focus was to ensure that the clients of Maytas do not cancel contracts midway. Secondly, they also want to ensure that Maytas Infra completes the projects on hand within the stipulated time.

Bankers to Maytas Infra are also considering the appointment of an independent auditor to re-assess the company’s balance sheet. “Maytas Infra does not have much of assets and liabilities on its books. They have spun off different special purpose vehicles (SPVs) for different projects.

There are over 50 SPVs, as they have won at least 62 contracts in various sectors. If we have to get back our money, we have to see to it the clients do not walk out of Maytas mid-way, and the existing contracts are completed. For this, we need a committee to oversee the operations of SPV,” said a senior banker in the consortium.

Last week, the Bombay High Court had dismissed a joint ICICI Bank-IDBI Bank appeal seeking an injunction on the various parties dealing with Maytas Infra. Bankers wanted a status quo, apprehending that clients of Maytas may terminate their contracts and guarantees given by banks would be invoked.

ET Bureau