Infrastructure, Leasing & Financial Services (IL&FS) will be the new promoter of Maytas Properties, the cash-strapped company owned by family members of disgraced Satyam founder Ramalinga Raju.
The Company Law Board (CLB) today approved a Maytas proposal to allow IL&FS to infuse Rs 20 lakh as equity into the company and become an 80 per cent shareholder. The Raju family will hold the remaining 20 per cent.
The decision allays the fears of hundreds of customers of Maytas’ prestigious Hill County real estate project over the fate of their residential bookings, as the CLB order stipulates the completion of the stalled project in 18 months. Over 900 families, including several non-resident Indians and persons of Indian origin, had booked flats and villas in the Hyderabad project.
IL&FS will mobilise Rs 150 crore in three months to put the project back on track. It will also be responsible for meeting the contractual dues of Maytas worth an additional Rs 150 crore under the Hill County project.
Announcing the CLB decision at a press conference here today, Corporate Affairs Minister Salman Khurshid said the government would seek periodic status reports from the new management to ensure the project is completed according to CLB’s stipulations.
The corporate affairs ministry intervened in the management of the privately-held company after the Satyam episode shook the confidence of investors in Hill County. The minister said the move was taken “proactively” to send a message to them that their investments are safe. Company Law allows for government intervention, even in private firms, if the business of a company under its existing management is seen to be against the interests of stakeholders.
It was on a petition from the central government that the CLB allowed one person of eminence to be appointed nominee director on the board of the company.
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The CLB’s latest order allows IL&FS to induct four members in a reconstituted Maytas board, upon which all Raju family members will resign from the board.
The government nominee on the Maytas board, Ved Jain (former president of Institute of Chartered Accountants of India), will continue as director for another three years.
Khurshid said IL&FS will have to retain a minimum holding of 40 per cent and hold management control for three years.
The attempt to find a strategic partner for Maytas began two years ago. SBI Capital Markets, the transaction advisor for the deal, shortlisted 28 potential investors and nine of them signed non-disclosure agreements. However, only two firms – IL&FS and GVK Group –submitted proposals.
The minister said that the decision to choose IL&FS was taken by an independent committee.
IL&FS had already taken over sister firm Maytas Infra, which was also promoted by the Raju family, through a competitive exercise. In a stock exchange filing early this week, IL&FS had announced the change of this company’s name to IL&FS Engineering & Construction.
Satyam Computers, the flagship of the Raju empire, was earlier taken over by Tech Mahindra and renamed Mahindra Satyam.