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.
'P K Madhav, the whole time director and chief executive officer of Maytas Infra Ltd, tendered his resignation from directorship as well as CEO of the company owing to personal reasons,' Maytas said in a filing to BSE. Maytas Infra, promoted by the family of disgraced Satyam founder B Ramalinga Raju, has been hitting headlines ever since the IT firm announced a deal to acquire the company, which was later called off following strong opposition by investors.
Maytas Infra Ltd will again petition the Company Law Board to allow it to induct the Saudi Binladen Group (SBG) as its strategic partner, according to IL&FS and Maytas' chairman, Ravi Parthasarathy.
Maytas was awarded the Rs 4.8 billion contract for commissioning of sub-stations, transmission and distribution lines in the Ahmadnagar, Beed and Latur districts in September last year. Maharashtra Chief Minister Ashok Chavan said, "After the fraud committed by Raju came to light and the connection between Satyam and Maytas became evident, I have ordered Mahavitaran to cancel the contract and start bidding process afresh."
Maytas Infra, the listed company promoted by the family of Satyam founder B Ramalinga Raju, is looking to rationalise its employee strength. Consequently, there would be some job cuts and inductions.
The fact it is promoted by kin of disgraced Satyam founder Ramalinga Raju is continuing to haunt Maytas Infrastructure, although it has a healthy order book of Rs 8,000 crore (Rs 80 billion) and is no longer run on a day to day basis by Teja Raju.
Hyderabad-based Maytas Infra has issued a legal notice to Vedanta Aluminum for "fraudulently and illegally" encashing two bank guarantees worth Rs 64 crore
The Ramalinga Raju family promoted Maytas Infrastructure on Thursday said its chairman and non-executive director R C Sinha has tendered his resignation.
Maytas had moved the court challenging termination of its contract by Utility Energytech and Engineers last month. Maytas had also sought a temporary stay to the termination, but Justice Anup Mohta of Bombay High Court last week refused to pass any interim order.
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.
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.
Referring to the various infrastructure projects being executed by Maytas and its joint venture partners in the state, the chief minister said: "If we have genuine doubt about their capabilities, we will look at alternatives. If work can go without any problem, we will continue. We will only see that there is no risk to the government."
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.
B Teja Raju, the elder son of Saytam Computer chief B Ramalinga Raju, on Saturday took over additional charge of chief executive officer of Maytas Infra in place of P K Madhav, who was arrested on December 16, 2008 in connection with the Nagarjuna Finance depositors' case.
The difference, however, lies in Satyam over-stating its revenue, cash position and profits, while Maytas Infra under- stated its profit in April-June quarter and the discrepancies were 'duly accounted for' in the company's books later. While the role of auditors in Satyam fiasco is questionable as of now, it was statutory auditors of Maytas Infra who pointed out the under-statement in its books.
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 government had removed all directors related to the Raju family from the board of Satyam before it was handed to the Mahindra group.
More trouble is brewing for Maytas Properties Ltd, the unlisted company promoted by the family of Satyam Computer Services Ltd founder B Ramalinga Raju.
Three financial institutions--IDBI Bank, ICICI Bank and IL&FS Ltd--that have lent money to Maytas Infra informed the Company Law Board on Friday that they are not interested in board membership in the Hyderabad-based firm.
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.
In what could bring some respite to Maytas Infra, which is caught in a controversy after Satyam aborted its bid to acquire it, the Andhra Pradesh government refused to see the Satyam issue as a factor that would impact the Rs 12,000-crore (Rs 120 billion) Hyderabad Metro Rail (HMR) project, which is being executed by a Maytas-led consortium.
Central Bank of India said on Tuesday it has an exposure of Rs 49 crore (Rs 490 million) to Raju-family owned Maytas and is 'willing' to lend to Satyam Computer Services if the company approaches it with a viable proposal. Central Bank of India has a total loan book of Rs 81,000-crore (Rs 810 billion), out of which nearly 27 per cent was contributed by its corporate portfolio.
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.
Andhra Pradesh chief minister YS Rajasekhara Reddy said on Sunday public projects being implemented by Maytas Infra in the state, individually or as part of consortia, were being closely reviewed. Andhra Pradesh chief minister YS Rajasekhara Reddy said on Sunday. The total value of the projects awarded to Maytas and its joint venture partners amounts to Rs 3,800 crore (Rs 38 billion).
The government decided to withdraw its two nominees from the Maytas Infra board following the Company Law Board order handing over the reins of Maytas Infra, promoted by kins of disgraced founder of Saytam, R Ramalinga Raju, to IL&FS.
The accounts of scam-hit IT firm Satyam are in the process of being restated after Raju, its founder chairman, disclosed to fudging accounts for years.
The company had approached banks with a CDR request for about Rs 1,700 crore. However, according to company sources, the banks felt that Maytas must shed the flab, which includes dilution of stake in the Bangalore elevated tollway to raise funds before the CDR is granted. It has also been reportedly told that it should disengage from various projects which it cannot take forward.
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.
In a filing to the Bombay Stock Exchange, Maytas Infra said a meeting of the board of directors of the company will be held on Thursday to appoint Vaish and Jain as directors of the company in accordance with the order of the Company Law Board. Former ICAI president Ved Jain and noted tax lawyer O P Vaish were named as new board members of Maytas Infra following CLB directing the government to appoint four nominee directors, including a chairman, on the company's board.
Maytas Infra will now have to submit a Rs 240 crore bank guarantee and will get a 60 day breather by paying a penalty. "The global recession and the consequent credit squeeze in national and international capital markets has created a force majeure situation. Besides, the ongoing PIL (filed by an NGO) is having an extremely deleterious effect on our ability to achieve the financial closure," said the company.
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.
Andhra Pradesh Finance Minister K Rosaiah said the government would not cancel the projects awarded to Satyam sister concern Maytas Infra or blacklist the company. Instead, it would prefer to tackle each project individually. There would be legal complications and a price the government would have to pay if it calls off a project awarded to a company and vice-versa. Also, the re-tendering of the same work may be costlier due to the variation in prices, he said.
The loan was offered to Maytas by a consortium of banks to fund one of its infrastructure projects that has an execution period of few years. However, BOI has not given any direct credit to Maytas, a BOI official said. Maytas Infra came under the scanner of regulators and other agencies probing Satyam fiasco after Hyderabad-based IT giant plunged into a crisis on account of gross manipulations committed by its former chairman B Ramalinga Raju.
Shares of Maytas Infra hit its lower circuit just after opening, to halt trading at Rs 105, down 4.99 per cent on the Bombay Stock Exchange. A similar fate was faced on the National Stock Exchange, where the scrip touched an intra-day low of Rs 105.40, down five per cent. A total of 971 shares got traded on both the bourses.
According to sources, the family has pledged majority of its shareholding and real estate assets to various institutions. Two institutions, Maharashtra government's financial arm, Sicom, and IFCI, confirmed that Maytas promoters had pledged shares around a year ago to raise resources. IL&FS too has similar exposure to Maytas, said sources. However, this could not be confirmed.
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 Andhra Pradesh government will review the concession agreement it has signed with Maytas-led consortium for developing the Machilipatnam Port as the winning bidder for the over Rs 1,500-crore (Rs 15 billion) project has failed to tie up funds within the stipulated time.
Maytas Infrastructure Limited has reported a net loss of Rs 251.86 crore for the year ended March 31, 2010, compared with a net loss of Rs 473.54 crore last year. Its net revenues declined 33.19 per cent to Rs 1,098.87 crore from Rs 1,644.65 crore in the previous year.
The CLB principal bench, headed by chairman S Balasubramanian, has suggested the Maytas' board should retain its current board and also have government-nominated independent directors. The bench also hinted giving board representation to its lenders, IDBI Bank and ICICI Bank. However, it was against giving a board seat to IL&FS, as the financial institution had given loans to the promoters against pledging of shares.
While the board had 'unanimously' passed the resolution for the $1.6 billion acquisition of two Maytas firms, run by Satyam founder Ramalinga Raju's family, many of the five independent directors raised concerns over the deal. The concerns related to the valuation, actual benefits to the shareholders being a related party transaction and assurance about board being used as a 'rubber stamp' and the company moving away from core business of IT.
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