Maytas Infrastructure: Weak foundation

22 Feb 2009

MUMBAI: The Maytas Infrastructure story began the moment the announcement was made to merge it with Satyam Computer. Two companies were involved in that process, the listed Maytas Infrastructure and the unlisted Maytas Properties.

That was in December last year and since then Maytas Infra has had no reprieve. Its share price has seen a free fall from Rs 485 on December 16 to Rs 51 on February 20. Margins were not paid for the shares that have been pledged by the promoters with institutions.

If the lender IL&FS transfers these shares in its name, then it could result in IFCI, IL&FS and Sicom owning a majority stake in the company. Media reports, in the recent past, have said that these institutions have expressed a desire to have a seat on Maytas’ board.

That’s not all. A large number of bank lenders have an exposure of about $1 billion, (Rs 5000 crore) in the form of loans and bank guarantees. Most of this are locked in special purpose vehicles created by Maytas. Understandably, the lenders are a worried lot.

Here’s the situation at Maytas today. The government has now moved the company law board (CLB) to oust the board of Maytas Infra. As per a Maytas Infra spokesperson, Maytas Infra Limited, had filed a Caveat before the Company Law Board against the ministry of corporate affairs (MCA) petition.

In pursuance of the Caveat, the ministry of corporate affairs has to serve a copy of the petition filed before the Company Law Board to Maytas Infra Limited before it is being heard. The Company Law Board has directed the counsel appearing on behalf of the government to serve a copy of the petition on Maytas Infra Limited, and has listed the matter for hearing on February 14. However, on request of Maytas Infra, the CLB has adjourned the hearing to February, 26, 2009.

A decision on this will be taken on February 24. “The government is totally within its right to move the CLB in the interest of the public and gain control of the company,” says Akil Hirani, Partner, Majmudar and Co.

The projects on hand

Maytas Infra, run by Ramalinga Raju’s son, Teja Raju, has several projects across sectors like water, transportation, energy and irrigation. This is in addition to the Hyderabad metro and airport projects and a large number of projects for which it is working in partnership in the BOT (Build, Operate and Transfer) category.

Maytas Infra had an order from JSW Steels, Bellary in Karnataka to build an industrial township, valued at Rs 54 crore. JSW Steels since then has dropped Maytas form the project. In response to a query from ET a Maytas Infra spokesperson replied, “Maytas Infra has not received any official communication from JSW in this regard.”

Infrastructure Development Department (IDD), government of Karnataka had selected a consortium of Maytas Infra, NCC Infrastructure Holdings Ltd (NCC) and VIE India Project Development and Holding LLC to develop and operate airports proposed at Gulbarga and Shimoga on a BOT basis at a cost of Rs 240 crore each.

ET Bureau