New Delhi: Two infrastructure companies have offered to take over the troubled Maytas Properties Ltd and complete its projects, corporate affairs minister Salman Khursheed said on Thursday without naming the companies.
Project stalled: Maytas Properties’ Hill County in Hyderabad.
Maytas Properties, promoted by the family of B. Ramalinga Raju, the jailed founder of Satyam Computer Services Ltd, is late by about two years in completing its maiden residential project, Maytas Hill County, on Hyderabad’s outskirts.
“Maytas Properties has enough value for its properties. What they lack is the cash flow,” said Khursheed. “We are looking at arranging that.”
He clarified the government was not looking to bail out the firm. Khursheed was addressing a seminar on property-related issues of non-resident Indians and persons of Indian origin at the annual diaspora event, Pravasi Bharatiya Divas (PBD), in New Delhi.
Maytas Properties’ government-appointed chairman Ved Jain had earlier said the firm had raised around Rs650 crore from customers for the Rs1,100 crore Hill County project.
A former senior executive with Maytas Properties, on condition of anonymity, said the firm’s management had parked most of the advances collected from Hill County customers as inter-corporate deposits with some of the family-owned non-banking financial companies (NFBCs).
“These funds could not be recovered after the fraud surfaced at Satyam Computer and its spillover problems for Maytas Properties,” the executive said.
These NBFCs recently served legal notices on Satyam asking that they be paid back the Rs1,230 crore the firm had borrowed from them.
Shortly before Raju confessed to an accounting scam at Satyam last January, he had proposed taking over Maytas Properties and Maytas Infra Ltd.
He dropped the plan after a backlash from investors and shareholders, but the fraud at the software firm tainted the two realty firms as well.
Maytas Infra has started recovering with Infrastructure Leasing and Financial Services Ltd (IL&FS) acquiring a majority stake in it, as has Satyam Computer, now Mahindra Satyam, after it found a buyer in Tech Mahindra Ltd.
Maytas Properties, however, is still struggling to find its feet.
“The government has been successful in settling issues of both Satyam and Maytas Infra. We will now devote time to Maytas Properties,” said Khursheed.
Maytas Properties had explored options such as partnering with Chennai-based Shriram Properties so it could complete the Hill County project, but it is yet to make an announcement on this.
Meanwhile, in November, a local court passed an order barring the company from using land as collateral for loans.
Two private equity (PE) firms, the Nimesh Kampani-owned JM Financial and Mauritius-based SRS Orion Investments, had moved the court alleging Maytas Properties had misused over Rs250 crore of their investment by transferring the money out and misleading them over the use of the funds.
The PE firms had invested Rs600 crore in Maytas Properties in early 2008.
At the seminar, representatives of Maytas Hill County Owners Association, a grouping of non-resident Indians who had paid money for a house in the project, sought the government’s intervention in resolving the issue.
“We all have paid Rs60 lakh to Rs3 crore for the $25 million (Rs113 crore) project, which was expected to be completed in 2008. Now the company is not even updating us about what is happening,” said Sujini Mariseti, an employee with a software firm in New Jersey, US.
He was among other association members who were at the seminar wearing black T-shirts with “Maytas victims” written on them.
C.R. Sukumar in Hyderabad contributed to this story.