Maytas

Maytas ("Satyam" read backwards) refers to a group of companies founded by B. Ramalinga Raju. It includes Maytas Properties and Maytas Infra Limited.

Maytas Properties

A property development company founded in 2009. The Ernst & Young is the statutory auditor of CS Properties.[1] It was run by B. Ramalinga Raju. In January 2009, Raju resigned as chairman of company admitting to a massive fraud in the company. Raju was arrested on the same day and was later imprisoned. Subsequently, the Company Law Board had cleared the decks for IL&FS to acquire the company in 2011. In August 2013, The name of Maytas Property Limited (MPL) has been changed to Hill County Properties Limited (HCPL) by its new owner IL&FS.

Maytas Infra Limited

An infrastructure development, construction and project management company. Maytas Infra was originally run by Satyam Computer Services founder B Ramalinga Raj. It came under the scanner due to its association with B. Ramalinga Raju. Various agencies, including the state Crime Investigation Department, probed the Maytas affair after B Ramalinga Raju admitted to serious financial scam in Satyam Computer. Also, there were allegations that funds from Satyam were diverted to Maytas, causing the Government agencies to verify the infrastructure company’s records as well. Maytas Infra later requested for an extension of its quarterly results due to these investigations.

In August 2009, IL&FS replaced B Ramalinga Raju as promoter of Maytas Infra.[2]

Acquisition attempt

In 2008, the Satyam board approved a US$1.6 billion acquisition of the Maytas Infra ($300 million) and Maytas Properties ($1.3 billion). The acquisition attempt was seen as an attempt by the Raju family to exploit Satyam's cash resources, as the transaction would have left Satyam in a debt of around $400m.[3] After protests from the institutional shareholders, the deal was abandoned.

In 2009, B Ramalinga Raju resigned as the Satyam CEO, admitting to an accounting scam to the tune of 7136crore rupees. Raju stated that the aborted Maytas deal was actually a last attempt to "fill the fictitious assets with real ones".

After the 2009 Satyam accounting scandal

After B Ramalinga Raju admitted Satyam scam, the Maytas stock slumped to a 52-week low on 9 January 2009.[4]

In wake of the Satyam scam, the Citizens for a Better Public Transport in Hyderabad (CBPTH) demanded a CBI inquiry into the process of how Maytas won the Hyderabad Metro Rail project. The CBPTH convener C Ramachandraiah alleged that the state government had been favouring Maytas for infrastructure projects.[5] The Economic Times reported that the Andhra Pradesh government has had paid Rs. 1,800 crore to Maytas Infra towards works under the irrigation department's Jalayagnam project. The major irrigation minister Ponnala Lakshmaiah said that works totalling another Rs 11,000 crore had been sanctioned to Maytas Infra, since Y S Rajasekhara Reddy took as the chief minister in 2004.[6] Maytas Infra-led consortium failed to achieve financial closure and give performance guarantee, the state government of Andhra Pradesh was on Tuesday forced to end its unprecedented generosity and cancel the concession agreement with the group on the Rs 12,132-crore Hyderabad Metro Rail project.[7] On July 21, 2009, a case was registered against the promoters of the company by the Hyderabad police under Section 406 (breach of trust) and Section 420 (cheating) of the Indian Penal Code[8]

In January 2011, The Company Law Board has cleared the decks for IL&FS to acquire a controlling stake in Maytas Properties, a privately held company promoted by the family of B Ramalinga Raju, the founder of erstwhile Satyam Computer .[9]

IL&FS will hold 80% of the total equity in Maytas Properties (MPL), as per the order issued by the CLB on Thursday. "The IL&FS group will reconstruct the capital of the company by investing Rs 20 lakh in equity share capital of the company to be issued at par whereby the total paid-up capital of the company stands increased to Rs 25 lakh," corporate affairs minister Salman Khurshid said.

"I hope that this can be seen as the end of the saga of Satyam," said Mr Khurshid, welcoming the order. Maytas Properties has been facing a severe liquidity crunch for the last few years due to which many of its real estate projects, including the Hill county residential project in Hyderabad, got stalled.

Maytas was promoted by the family of Ramalinga Raju. In 2009, Raju sensationally confessed to inflating profits and revenue at his company was jailed. Thursday’s announcement concludes the government's nearly two-year-long search to find another owner for all the three companies and stabilise their operations. Thursday's order strips the Raju family of control in the firm.

References

  1. ↑ "Not engaged by Satyam to value Maytas Properties: E&Y". The Economic Times. 11 January 2009. Retrieved 2010-06-19.
  2. ↑ IL&FS new promoter of Maytas Infra. The Economic Times. Retrieved 2 September 2009.
  3. ↑ Joe Leahy (8 Jan 2009). "The $1bn black hole at the heart of company's finances". Financial Times.
  4. ↑ Mandar Nimkar (9 Jan 2009). "Satyam plunges over 50%, Maytas hits 52-week low". The Economic Times.
  5. ↑ "'Probe metro rail award to Maytas'". The Economic Times. 10 Jan 2009.
  6. ↑ "Maytas has Rs 12,800 cr projects in state". The Economic Times. 10 Jan 2009.
  7. ↑ "Maytas out of Metro Rail project". Times of India. 8 July 2009.
  8. ↑ "Criminal cases against Maytas Properties promoters". Business Standard. 2009-07-22.
  9. ↑ "CLB nod to IL&FS taking control of Maytas". Economic Times. 2011-01-14. Retrieved 2013-04-27.
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