Things went from bad to worse since December 2008 for people who purchased bungalows, villas and apartments at Maytas Hill County, promoted by Maytas Properties Limited (MPL) -- the company run by B Rama Raju (Jr), the younger son of Satyam Computer Services founder and former chairman B Ramalinga Raju.
This is to ensure that the amount paid by its customers was not used for other purposes, according to customers who have invested in company projects. The customers wanted the company to execute the Maytas Hill County project at the earliest. The delay was causing inconvenience to them due to soaring interest rates, they said, adding that a lot of people had paid the amount in full.
The Company Law Board (CLB) on Thursday allowed infrastructure finance company IL&FS to take over Maytas Properties, a company promoted by the family members of disgraced Satyam founder Ramalinga Raju.
Maytas Properties, which has a turnover of a mere Rs 22 crore (Rs 220 million) and does not own any land, was valued at Rs 6,523 crore (Rs 65.23 billion) by audit firm Ernst &Young and the valuation was done in a day, the counsel said.
The arguments were made by the government before the CLB, which is considering a petition by the government for removal of the board of Maytas Properties. The CLB is likely to pass the order later. The government also alleged that the valuation of Maytas Properties by the consultancy firm was done in a day.
While the other two companies in the group--Satyam Computer and Maytas Infrastructure--are back to business-as-usual with new promoters, Maytas Properties (MayProp) is yet to get its house in order. This is despite the passage of more than a year after the founder-promoter, B Ramalinga Raju, confessed to a big accounting fraud.
The government has already ordered inspection by registrar of companies, Hyderabad, into eight subsidiaries of Satyam Computer and Maytas Infra and Maytas Properties, the companies promoted by the kin of disgraced Satyam founder B Ramalinga Raju.
The government had removed all directors related to the Raju family from the board of Satyam before it was handed to the Mahindra group.
Satyam founder Ramalinga Raju admitted to a Rs 7,800-crore (Rs 78-billion) fraud in the IT company on January 7, weeks after a bid to acquire the two Maytas firms failed. Raju said that he had been cooking the books for years and the Maytas acquisition bid was an attempt to fill fictitious assets with real ones.
Maytas Properties and Maytas Infra are promoted by Raju's family and have interests in realty and construction. Noting that there is no problem with the Maytas accounts, Bhatt said all the exposure are collateralised and accounts are regular.
"We were not given to understand by any party, explicitly or implicitly, during the valuation exercise about Satyam's plans to acquire Maytas Properties," an Ernst & Young spokesperson informed Business Standard by e-mail.
Maytas Properties and its promoters are totally committed to complete the project and protect the interest of its key stakeholders, the company said on Thursday.
On January 11, E&Y had said in a statement that 'we would like to again clarify that we were not engaged by Satyam Computer Limited or any of its subsidiaries to conduct the valuation of Maytas Properties and learnt of the proposed Maytas/Satyam transaction after it was announced publicly."
More trouble is brewing for Maytas Properties Ltd, the unlisted company promoted by the family of Satyam Computer Services Ltd founder B Ramalinga Raju.
Minister for Corporate and Minority Affairs Salman Khursheed may have done a superb job of handling the Satyam fiasco, but he was put in a spot on Thursday by angry NRIs who wore T-shirts reading: Victims of Maytas.
Within hours of Company Law Board orders, the government on Thursday appointed its nominees on the boards of Maytas Infra and Maytas Properties, the companies promoted by the kin of disgraced founder of the Satyam Computer Services B Ramalinga Raju.
During the course of the meeting last month, Satyam's then chief financial officer Vadlamani Srinivas informed the board that the valuation of Maytas Properties was done by Ernst & Young, but the global accounting firm disputed the claim. According to the minutes, members noted the imperative of infrastructure foray, particularly based on leveraging on the brand of Satyam to become an eminent player in infrastructure as well.
The government is understood to have ordered a probe into Satyam Computer Services' controversial decision to buy two group-promoted companies and then reversing the deal within a few hours under pressure from investors.
The government on Tuesday moved the Company Law Board to remove the current directors of Maytas Infrastructure and Maytas Properties from their respective boards and declare them ineligible for appointment as directors of any other company. The CLB will consider the matter on February 24.
Satyam Computer Services on Wednesday announced that it is not going ahead with its proposed acquisition of Maytas Properties and Maytas Infra, in light of the feedback received from the Investor community.
Satyam Computer Services, India's fourth-largest software services provider, today came under fire from institutional investors after the company announced its acquisition of two companies -- Maytas Infra and Maytas Properties--for $1.6 billion (around Rs 7,680 crore).
He went on to explain that it is standard practice for developers to have development agreements under which the land-owner cannot sell his land to any other entity or individual.
As of date, the company has 449 employees on its roll, a company spokesperson said, adding it would be difficult to say off-hand the number of non-critical employees removed from the service.
It made sense to acquire an infrastructure company. Maytas does have same work culture and philosophy and hence the merger will be smooth.
Following is the chronological summary of events which saw IT major Satyam Computer Services, founded in 1987, on its path to disaster:
"Now it is more of a corporate governance issue projected by the investor community and the media. Whatever we have done, is well within the powers of the Board of Directors," NYSE listed Satyam CFO Srinivas Valdamani told PTI. The deal was touted as something that would help Satyam diversify its business, especially when there was slowdown in the IT business in key markets such as the US and Europe.
The inspection would be conducted as per the provisions of section 209A of the Companies Act, corporate affairs minister Prem Chand Gupta told reporters on Thursday.
Satyam Computer Services founder B Ramalinga Raju had made trips to the Indian School of Business in Hyderabad, to Visakhapatnam and even the United States, to convince the independent directors on the his board for acquisition of Maytas Infra and Maytas Properties, the two companies promoted by his family members.
Satyam Computers' independent directors are mounting pressure on founder B Ramalinga Raju to reveal details of the controversial board meeting that proposed the acquisition of two promoter-related companies, after a director resigned yesterday owning moral responsibility.Directors want Satyam's founders to make public the minutes of the meeting at which around Rs 5,500 crore of the company's cash was proposed to be paid to acquire Maytas Infra and Maytas Properties.
Satyam Computer Services did not consult Mendu Rammohan Rao, dean of the Indian School of Business and an independent director on the board of India's fourth largest IT services provider, when it called off the deal to acquire Maytas Infra and Maytas Properties following shareholder protests. Rao had chaired the board meeting that endorsed the company's proposal to buy the two firms linked to the family of Satyam's founder and chairman B Ramalinga Raju.
The housing finance regulator National Housing Bank on Thursday said it was collecting information from housing finance companies about their exposure in group entities of the scam-tainted Satyam Computer Services.
By entering into related-party deals without shareholder approval, the firm has done irreparable damage to India Inc's reputation. Minority shareholders of Satyam Computer have every reason to feel short-changed. Without so much as by your leave, the management has decided to enter into related party transactions using the company balance sheet.
On February 17, 2009, Satyam case was handed over to CBI.
The tribunal posted the matter for further hearing in December, when it will decide whether to admit the pleas of the Raju brothers and others against Sebi order.
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