After the erstwhile Satyam Computers and Maytas Infra, B Ramalinga Raju, the defamed founder of the IT firm, and his family could well lose control over Maytas Properties, a closely-held realty firm that claims to have a land bank of over 6,800 acres.
The company has said it hopes to rope in a strategic investor by the next month. We have got the boards approval and are in the final phase of discussions with the investor and bankers to achieve financial closure. The investor has completed legal due diligence and the technical due diligence is expected to be complete some time next month, according to a recent communication to customers of an upmarket residential project.
The promoters are under pressure to sell their stakes in projects or even exit the business as they have failed to honour commitments made to customers to complete projects, including a Rs 1,100-crore Maytas Hill County residential project. The company needs around Rs 150 crore to complete this project. A criminal compliant has already been launched against Ramalinga Rajus younger son Rama Raju, who runs Maytas Properties, for defrauding customers.
Maytas Properties ran into trouble after Satyams botched acquisition of the firm last December. Satyam was planning to acquire Maytas Properties for around Rs 6,400 crore, but the deal was called off after investor backlash. Within a few weeks, Raju confessed to fudging the books of Satyam to perpetrate a multi-crore fraud.
The valuation of Maytas Properties could be significantly lower now if the firms claims on land bank are proven to be incorrect. Investigating agencies suspect that the promoters siphoned off money from the beleaguered IT firm to Maytas Properties to finance land deals. Scores of realty deals were also done through several front companies floated by the promoter and his family.
Axis Bank has an exposure to Maytas Properties. A communication was warranted as customers were jittery over the fate of the residential project. We also needed to take all stakeholders, including banks, that have an exposure to Maytas Properties on board about the strategic investor, said a source privy to the development.
All options are open, Ved Jain, the government-nominated director on the Maytas Properties board told ET, when asked if the promoters will exit the business or sell their stake in projects. The company is executing three projects, including the Maytas Hill County Special Economic Zone. Only last month, Infrastructure Leasing and Financial Services was handed control of Maytas Infra.
Amid cancelled contracts and deep financial distress at a company which was once overseen by Teja Raju, the elder son of Ramalinga Raju.
The government decided to wind down its role in Maytas Infra after having run it for about six months, a period during which it failed to effectively arrest the cancellation of contracts that the company had won before the Satyam financial scandal erupted in January. Pune-based Tech Mahindra is the new owner of Satyam.