The new owner is part of the IL&FS (Infrastructure Leasing and Financial Services Ltd) group, a seasoned player in infrastructure financing. It already owned a 14.5% stake in Maytas. Part of this was through foreclosure of pledged shares and it will foreclose more pledges to take its stake up to 37%. The Maytas Infra stock price is trading at a fifth of its 52-week high of Rs539. IFSL will stay on board for at least two years, with a minimum stake of 26%.

IFSL faces an uphill task. In FY09, based on consolidated financials, Maytas incurred a loss of Rs473 crore, depleting its reserves to Rs144 crore. Its net worth shrank to just Rs203 crore. It incurred a loss in the June quarter too. That lowers its ability to bid for large projects.

But IFSL’s first task will be to drive execution of current projects. It can use the IL&FS group’s brand equity to convince clients, lenders and state governments to give Maytas a second chance. Projects on hand are a respectable Rs7,500 crore. Once key projects are completed, its financials and confidence will both improve, and it can bid for new contracts. IL&FS will also jointly bid for projects, leveraging its balance sheet size till Maytas recovers.

Completing projects will, however, require cash for operations. The Company Law Board order prescribes that IFSL bring in Rs55 crore as liquidity support. Maytas will also get some relief from the debt restructuring package that has offered Rs100 crore of loans and Rs200 crore of non-fund support. These will give short-term relief but Maytas will need fresh equity to shore up net worth. It’s a long road ahead, but is better than the current state of affairs, where the company was drifting from one setback to another. The stock is stuck at the upper circuit and will stay there for a while, till the open offer price becomes known.

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