IL&FS acquires Maytas Infra

Nearly four months after losing Satyam to the Mahindras, the Rajus have lost Maytas Infra to Infrastructure Leasing and Financial Services (IL&FS). The change of guard was announced on Monday by company affairs minister Salman Khurshid after Company Law Board (CLB) passed the order allowing IL&FS to take control of Maytas Infra. With IL&FS taking charge, Ramalinga Raju’s elder son Teja Raju, who was the promoter and vice chairman of Maytas, has been ordered to step down from the board along with a family retainer B Narasimha Rao. Ramalinga Raju had been building Maytas Infra for Teja Raju and wanted to bequeath the company to him as a father’s gift. But the Maytas story turned sour long time ago, away from public gaze. The Rajus had pledged a whopping 62% of their nearly 85% stake holding in the company with various financial institutions, including IL&FS, much before the Satyam scam broke out. Maytas Infra was listed on the bourses on October 25, 2007, and the Rajus started pledging their shares soon thereafter. The pledging was done to raise funds, which were used for various activities of the Rajus. The CLB, which in March had refused to allow the government to take over Maytas, changed tack after being told that the company faced an acute financial crisis which could halt its operations. After the Satyam scam, Maytas lost several projects, including the prestigious Rs 12,132 crore Hyderabad Metro Rail project in July this year. This not only reduced its orders in hand to worth Rs 7,332 crore as of July 31, 2009, but also forced the company to start offloading its stake in various joint ventures for road project to stay afloat. Maytas Infra, which announced its delayed results for 2008-09, reported a loss of Rs 490 crore on Saturday. But even before that speculation had been rife that Maytas was up for grabs and even Teja Raju was willing to induct a new owner. But it is learnt that his efforts proved fruitless. The government-appointed board is understood to have started the process to scout for an eligible suitor for Maytas after the corporate debt restructuring package of Rs 600 crore was approved in early July 2009 by the company’s lenders. Interestingly, the banks refused to disburse this relief package so long as the Rajus continued as promoters.