The Hindu Business Line : AP to review Maytas Infra implementation of Hyderabad Metro

Hyderabad, Jan. 7 The Rs 12,132-crore Hyderabad Metro Rail Project, being implemented by the Maytas Infra-led consortium, is to come under review of the Andhra Pradesh Government.

Following the revelations and stepping down of the Satyam Computer Chairman, Mr Ramalinga Raju, on Wednesday, analysts feel there would be an impact on Maytas Infra, which is headed by his son, Mr Teja Raju.

The company, which was a failed take-over target of Satyam Computer, is also faced with its CEO, Mr P.K. Madhav, under arrest for his alleged role as Director in Nagarjuna Finance Ltd (NFL), a few years ago.

CM’s directive

The Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, has directed the State Chief Secretary to look into all aspects related to the Metro project, including Maytas Infra’s capability to implement a project of this size in the backdrop of recent developments.

He told newspersons in Delhi that “based on the developments and the findings, we will decide on the project.”

Maytas Infra holds 26 per cent stake in the consortium that includes Nava Bharat Ventures and IL&FS and the State Government. The project was won with the consortium actually announcing that it would pay back Rs 30,311 crore over 35 years of the project.

‘Independent co’

Reacting to the developments during the day, Maytas Infra spokesperson said the company is a publicly listed, separate independent company run by a strong professional management team. “Developments at Satyam do not impact operations of Maytas Infra and it is business as usual,” the company spokesperson said.

Several industry watchers are sceptical about the company’s capability to implement such a large project and more so, achieve financial closure given the current market conditions.

Financial closure

According to the arrangement, Maytas Infra has paid Rs 11 crore to the Government after securing the mandate to implement the project and later also furnished a guarantee. However, market-watchers are of the view that it would not be that easy to achieve financial closure by March 2009.

However, when contacted, the company officials maintained that they would be able to achieve financial closure where IL&FS is leading the syndication work.

Meanwhile, according to officials in Hyderabad Metro, it is for the State Government to take a call on the entire issue and analyse its implications on the project implementation.

Maytas Properties

The realty company headed by another son of Mr Ramalinga Raju is also facing severe funds crunch to implement several projects, including SEZs (Special Economic Zones).

The unlisted entity promoted by the Raju family was to have been bought by Satyam Computer for a valuation of $1.3 billion – a move ostensibly to pump in funds for Maytas Properties to carry ahead its ‘big ticket’ projects.

In recent months, the company has seen the exit of at least three executives from the top rung and a freeze on recruitment and capex on new projects, sources said.