Maytas Properties writes to angry clients

Hyderabad July 23, 2009


Maytas Properties, hit by both the recession in real estate and the Satyam accounting scam, has written to angry clients to give it more time.

Vice-Chairman B Rama Raju has written to the Hill County Home Owners Welfare Association, the body of clients in its prestigious project here which is now stuck for want of money. The customers, all of whom have paid a huge amount for a promised luxury home, are threatening prosecution.

“I am committed to do the project,’’ he promised in the letter, adding assurances of positive developments soon.

The police have registered cases against Rama Raju and Maytas Infra vice chairman Teja Raju, both sons of Satyam Computer Services’ founder B Ramalinga Raju, following a complaint from two members of the association for delaying the project.

“Several conditions, both internal and external, have contributed to the challenges that the company was facing in raising the funds to complete the Hill County project”, Rama Raju stated in the letter, a copy of which is available with Business Standard.

Maytas Properties is one of the two companies the Satyam founder had made an abortive bid to acquire in December last year to cover the huge scam that he finally couldn’t keep hidden. Maytas ran into problems after it failed to keep its promise of delivering the homes at the Rs 1,100-crore Hill County project in March 2008. Hill County, located at Bachupally on the city outskirts, was to have 840 apartments and 326 bungalows. These were priced between Rs 50 lakh and Rs 2.5 crore.

The company had collected Rs 654 crore from property buyers, who says they are paying monthly installments of Rs 50,000 upwards, though the flats and independent houses are yet to be ready.

Rama Raju says the current economic conditions, including the slowdown of demand in real estate, lack of investor interest and tightening of credit by financial institutions have made the company’s pursuit for funds a lot more difficult.

“In addition, what appears to be a never-ending pursuit by investigating agencies had to be dealt with immediately, thus diverting our attention” from the core issue of raising funds, he said. Adding that the company was now in discussion with some investors and financial institutions to complete the construction at Hill County.

He added the promoters have offered to provide additional collateral to realise the required funds. “Barring any unforeseen events, we are looking forward for a positive outcome soon.’’