Two Hyderabad players to take over Maytas Infra

13 Feb 2009, ET Bureau

BANGALORE/HYDERABAD: Two little-known Hyderabad-based investors have emerged as surprisingly strong contenders for taking control of Maytas

Infrastructure, the beleaguered firm whose association with B Ramalinga Raju of Satyam Computer caused its business to implode in the past few weeks.

People close to the development said that the two investors are now doing due diligence of Maytas’ books and its various projects. A final decision is likely to be taken as early as next week. Infrastructure Leasing & Financial Services, the Mumbai-based lender, is helping investors in the process.

Rithwik Projects, one of the investors doing due diligence, already has experience of building irrigation projects, roads, bridges and flyovers across Andhra Pradesh, and other parts of the country. It is headed by CM Ramesh, the chairman and managing director. The other investor is believed to be one of the founders of SEW Infrastructure, another Hyderabad-based company. At this stage, it is not known if the investment in Maytas will be made by SEW or by its founder.


The development is intriguing and surprising for several reasons. For one, the two investors are relatively unknown players nationally and their sudden appearance on the scene has surprised people involved in the process. The promoter of one of the firms is believed to be close to a well-known Andhra Pradesh-based political party, and this is causing speculation over a backroom deal involving politicians.

Secondly, the takeover of Maytas by the two investors will take place through infusion of funds into the company.

The amount is estimated to be about Rs 200 crore. As of Thursday, Maytas has a market cap of about Rs 336 crore. For this price, the investors are likely to get a large company involved in prestigious projects such as the Hyderabad Metro.

This fund infusion is expected to dilute the holding of IL&FS and other investors, who now own more than 25% in Maytas. The Maharashtra government institution, Sicom, has already indicated that it will sell its stake.

The Raju family, which had pledged most of its holding in Maytas to IL&FS, is not expected to get anything. A person close to the talks said that IL&FS could maintain a reasonable stake in the company. Its executive chairman, Ravi Parthasarathy, is expected to also participate in the running of Maytas, along with representatives of the two investors. Mr Parthasarathy, who is in Singapore, did not reply to an e-mail questionnaire sent by ET on this issue.

IL&FS and other lenders got to own shares of Maytas after the promoters, who had pledged the shares, failed to pay margin calls after a steep drop in the company share price. IL&FS and other lenders have also provided about Rs 6,000 crore to Maytas for implementing its various projects. A few days ago, most of the lenders, including IL&FS, had approached the government seeking a representation on the board of Maytas.

In the proposed scheme of things, the new investors are asking the lenders to soften some of the loan conditions and waive some of the interest to be paid on the loans. The lenders are expected to take a hit, but the exact amount could not be ascertained.

Last month, rating agency Icra suspended the ratings it had assigned to the debt programmes and bank facilities of Maytas citing the financial scandal at Satyam. Banks have been concerned about the fate of the projects. Their woes have been compounded as a few clients (of Maytas Infra) have also invoked bank guarantees. “A change in management control appears imminent and prospective suitors are likely to look at their order book position which is good,” said an analyst with a global audit firm who did not wished not to be named.