Maytas Infra seeks fresh funds to stay afloat

6 May 2009, ET Bureau


NEW DELHI: Maytas Infra, a firm 85% owned by Satyam’s disgraced founder B Ramlinga Raju’s family, said it needed to raise fresh funds — mainly debt — to run its daily operations.

The infrastructure construction firm is seeking corporate debt restructuring (CDR) for its total borrowings of Rs 1,700 crore, as it faces cash crunch and finds it increasingly difficult to recover dues worth Rs 500 crore from clients.

“The customers have not been paying in time. That’s why we have asked banks to lend us to tide over short-term financial crunch,” Maytas Infra chairman K Ramalingam said at a press meet. The company has initiated legal proceedings against some customers over recovery of dues. Talking about equity infusion in the company, another company director, Ved Jain, said the company was “neither foreclosing the option nor exploring it” at present.

Following revelations of accounting fraud at Satyam and allegations of wrongdoing at Maytas Infra, the government recast Maytas Infra board appointing four new directors. These included former head of Airports Authority of India, K Ramalingam as Maytas chairman, besides Ved Jain, OP Vaish and Anil K Agarwal.

Mr Ramalingam didn’t specify the exact fund requirement, but another Maytas director, Anil K Agarwal, said the process of CDR is being initiated, which should lead to rescheduling of loans as well as some fresh lending by banks.

The Hyderabad-based company has roped in SBI Capital as consultant for the CDR process, which would involve 17 banks and may take at least two months for implementation. ICICI Bank and the SBI are two leading lenders to Maytas with an exposure of Rs 400 crore and Rs 200 crore, respectively.

Maytas, which employs 1,800 staffers, has also seen 5-6 construction orders — mainly road projects — worth Rs 300 crore getting cancelled after the controversy surrounding the company became public, Mr Jain said.

Maytas has confirmed orders worth Rs 8,500 crore to be executed in two years. It excludes the Rs 15,000-crore Hyderabad Metro project which was awarded over a year ago, but is facing problems in securing funds.

Mr Jain said Maytas has sought six-month extension from Andhra Pradesh government for the financial closure of the metro project that was supposed to be achieved by March 18, 2009. The government’s inability to complete certain formalities and acquire land for the project has delayed the financial closure, he added.

The company didn’t say by when its accounts for FY09 will be published, but indicated it would be done only after government completes its investigation.