Hyderabad/Chennai: Maytas Infra Ltd, which on Tuesday lost the Hyderabad Metro Rail contract after failing to raise finances, has run into trouble in Tamil Nadu (TN) as well, with some of its projects likely to be delayed by up to nine months.
Southern Railway has issued several notices to Maytas in the past few months to expedite Rs250 crore worth of mass rapid transit system (MRTS) projects in Chennai, a top railway official said.
“We are worried over the delays in execution of the works awarded to Maytas Infra, which seems to have landed in some financial troubles early this year,” R. Ramanathan, chief administrative officer (construction) at Southern Railway, said over the phone on Wednesday. “The works are not progressing at the expected levels and we are disturbed over the delays.”
The Hyderabad-based infrastructure firm has lost several contracts in recent months after its main promoter, B. Ramalinga Raju, confessed to India’s largest accounting fraud at Satyam Computer Services Ltd in January. His son B. Teja Raju is Maytas Infra’s CEO.
On Tuesday, Maytas lost its biggest contract, the Rs12,132 crore Hyderabad Metro Rail project. The Andhra Pradesh government scrapped the award after Maytas failed to achieve financial closure even three months after the deadline expired.
As to the TN projects, Ramanathan expects delays of at least three-four months in the elevated Metro extension and modernization works in Chennai and up to nine months for laying double tracks on the Chengalpet-Villupuram route.
Southern Railway had awarded seven projects to Maytas—four relating to MRTS in Chennai and three track laying works on the Chengalpet-Villupuram route. Maytas won contracts to extend Chennai’s elevated rail line by 5km from Velachery to St Thomas Mount, between January and April 2008, and the track laying project in December.
Southern Railway can terminate and re-tender the works awarded to Matyas Infra, but is not keen on exercising that option. “We are worried that re-tendering and subsequent legal issues may further delay the works, which we are not interested, keeping in view the inconvenience to commuters,” Ramanathan said. “That’s why we are pressurizing the company to expedite the works and are constantly reviewing the works.”
A Maytas spokesperson, who didn’t want to be named, blamed the delays on incessant rains, transport strikes and non-availability of land.
The firm expects to complete the Metro extension project by September and the track laying works by July 2010—“as per the timelines sanctioned by railways”, he added.
The deadline for doubling the tracks on the Chengalpet-Villupuram route is April 2010, Ramanathan said. Maytas, he added, was given 18 months for the Rs72 crore Metro extension project, but the firm would now be able to complete work on two of the three stretches only by June.
Maytas had to drop out of the third stretch, worth Rs30 crore, as it wasn’t given land by the state government, he said. Another Southern Railway official said a re-tender has been called for the last stretch.
The firm is also constructing an MRTS station in Chennai and carrying out modernization works at other existing stations.
Following the fraud at Satyam, Maytas Infra landed in trouble with the Karnataka government, which cancelled two airport projects in Shimoga and Gulbarga, worth a combined Rs200 crore, it had awarded to a consortium led by the firm. (On Monday, the state government decided to award back the contract to Maytas.)
Soon after, London-listed Vedanta Resources Plc. cancelled a contract with Maytas Infra citing slow progress of work and failure to pay contractors. The agreement was for building a township for staff at the group’s mining operations at Jharsuguda in Orissa, valued at Rs232.69 crore.
State-owned Power Grid Corp. of India Ltd also revoked several rural electrification contracts, worth Rs395 crore, it had awarded to Maytas Infra under the Rajiv Gandhi Grameen Vidyutikaran Yojana.
Following a representation by the lenders of the infrastructure firm, the Company Law Board on 5 March appointed its nominees on the board of Maytas Infra, who have since then successfully negotiated with lenders and obtained a debt restructuring package for the firm.