Maytas Properties reins with IL&FS; Raju's stake at 20%

HYDERABAD: Faced with considerable public pressure for its failure to find a buyer for the troubled Raju family-owned Maytas Properties Ltd (MPL) for nearly two years, the government finally handed over its reins to infrastructure giant Infrastructure Leasing & Financial Services (IL&FS).The Company Law Board on Thursday ordered the IL&FS group to take over the Hyderabad-based realty company by picking up 80% stake by infusing an equity of Rs 20 lakh. This will bring down the stake holding of the Rajus in MPL, which was promoted by disgraced Satyam founder B Ramalinga Raju's younger son Rama Raju, to 20%. The existing directors — Rama Raju, D Gopalakrishnam Raju and D Venkata Satya Subba Raju will also have to step down from the board to give way to four IL&FS nominees.In his order, CLB chairman Justice DR Deshmukhdirected IL&FS to complete the Rs 400-crore Maytas Hill County projectwithin 18 months of acquisition. For this, the new Maytas Properties owners willhave to pump in an upfront Rs 150 crore within three months to kick-start theproject. They will also have to arrange the remaining funds to complete theproject within the stipulated deadline. Nearly Rs 617 crore investedby almost 900 families to book homes in the project have been stuck for the pasttwo years since the Satyam scam brought the project to a halt. While theacquisition will leave IL&FS saddled with a whopping Rs 1,700-croreliability by way of tax dues, disputes and contractual dues, CLB has authorizedIL&FS to recover the inter-corporate deposits of nearly Rs 220 crore thatwere given to Satyam during Raju's reign from MahindraSatyam.Interestingly, though the CLB has also allowed IL&FS toinfuse further investment by bringing on board a new co-promoter or investor,perhaps on the lines of Maytas Infra's induction of Saudi BinLadin group lastyear, IL&FS will have to maintain a minimum holding of 40% for the nextthree years.Talking about the delay in zeroing in on a buyer, VedJain, government appointed director on Maytas Properties and Maytas Infra board,said: "We had been trying to reach out to many players but could not find anyoneas there were many issues and a huge liability involved, which is why inSeptember 2010 SBI Capital Markets was mandated to find abuyer."Though SBI Caps had invited expressions of interest from 28players, only 9 came forward and after due diligence seven of them backed outleaving two in the fray, Jain said.According to sources, whatprompted IL&FS to buy MPL was the fact that Maytas Infra, which IL&FStook over in August 2009 and recently rechristened IL&FS Engineering andConstruction Company, was the main contractor for the Hill County project andhas to recover an outstanding of over Rs 150 crore from the realtyplayer.