Maytas Infra asked to shed flab

Even as fears of Maytas Infra Limited losing the Hyderabad metro rail project are looming large, banks have reportedly asked the company to comply with certain conditions to secure the corporate debt restructuring package.

The company had approached banks with a CDR request for about Rs 1,700 crore (Rs 17 billion). However, according to company sources, the banks felt that Maytas must shed the flab, which includes dilution of stake in the Bangalore elevated tollway to raise funds before the CDR is granted.

The company has also been reportedly told that it should disengage from various projects which it cannot take forward.

The elevated tollway project is being executed by Bangalore Elevated Tollway Limited, a special purpose vehicle created along with Nagarjuna Construction Company Limited and Soma Enterprises Limited. The build-operate-transfer project would connect the Silk Board junction to Electronic City.

Maytas Infra has a 29 per cent stake in the Rs 775 crore (Rs 7.75 billion) project.

According to company officials, the project, which is behind schedule by about nine months, is expected to be completed by September 30 this year and begin commercial operations from October 1. The revenues would come in the form of toll collected from the commuters over the concession period of 20 years.

Maytas' earnings from this project would be through dividend income and its share of the engineering, procurement and construction contract.

Maytas has receivables of about Rs 200 crore (Rs 2 billion) from the project and has so far received Rs 30 crore (Rs 300 million). The pending receivables and dilution of stake in the project would bring in some funds into the company, the sources said.

B Teja Raju, company vice-chairman and son of Satyam founder B Ramalinga Raju, had conveyed to the banks that he would raise about Rs 40 crore (Rs 400 million) in the next two years. But the banks asked him to raise that on a priority basis.

Meanwhile, it is not clear what efforts the company is going to prove its financial capabilities before the Andhra Pradesh government, which will review the Rs 12,100 crore (Rs 121 billion) metro rail project in a week or so.

With Maytas failing to achieve financial closure for the project in March, the government is now considering options like taking up the project on its own with assistance from the Centre or inviting the unsuccessful bidders to execute the project.

Maytas, promoted by the family members of Ramalinga Raju, had rejected the Rs 3,600 crore (Rs 36 billion) viability gap funding from the government and instead offered to give about Rs 30,000 crore (Rs 300 billion) to the government over 30 years.