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Maytas Properties To Close 4 Divisions
Posted by Pradeep Sadanapalli | January 27, 2009 | 665 views
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Loading ...With cash flows threatening to dry up and debt hard to get, Maytas Properties’ ambitions to be among the top five realty companies in India on “fast track” are coming crashing.
Maytas Properties, led by Mr Rama Raju Jr., the younger son of Mr B. Ramalinga Raju, the former Chairman of Satyam Computer, was the target (at $1.3 billion), along with Maytas Infra, for the failed $1.6-billion acquisition plan of Satyam.
The Hyderabad-based company has been pushed into a crisis, with reports of sacking and winding up of new business verticals floated last year emerging in the past week. The unlisted entity has virtually decided to close at least four divisions – hospitality, warehousing, affordable housing and retirement communities.
According to sources, this decision has also led to the company issuing “pink slips” to scores of employees.
The company, which boasts of a land bank of 6,800 acres, had planned many projects, including SEZs and large township projects, with massive investments.
Top-level exits
During the last month, the realty company saw the exit of three senior-level management executives and announced a cap on further expansions. In its hurry to become a big realty player, the company had acquired land and was contemplating projects in Visakhapatnam, Vijayawada, Bangalore, Chennai, Nagpur and Kochi.
The company also went in for private equity and raised Rs 600 crore from Infinite India Investment Management, a joint venture between the US-based SRS Investment and JM Financial Group, through divestment of minority stake in February 2008.
Killer blows
However, the economic downturn and slump in real estate have hit the company hard. The December 16 Satyam board decision to acquire Maytas Properties, in retrospect, was a bailout.
Interestingly, Mr K. Thiagarajan, CEO of Maytas Properties, informed the board meeting that the company had not leveraged PE funds despite the huge land bank. The company also clarified to members that land and developments were given as guarantees to bank.
Mr V. Srinivas, CFO, argued in the controversial meeting that the company had a land bank of 6,800 acres and can construct 245 million sq ft, which is one-third of DLF’s properties.
Land banks
At the ground level, while the company boasts of a huge land bank and several projects that it has bagged, the fact remains that in Hyderabad, only two big projects are in an advanced stage of completion – the Maytas Hill County and the Phase-I of the SEZ, adjoining it, according to sources. The company has at least 25 entities with the prefix Maytas owning its land bank.
The company announced three SEZs in Hyderabad. The SEZ for IT/ITES with investment of Rs 2,500 crore on a 74-acre plot also got Wells Fargo as the first client.
It also wanted to take up SEZs at Gopannapally and Mysamguda – each of 75 acres.
SOURCES:
Business Line
Topics: Economy, Property Matters, Business News |
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