The Congress-led government in Andhra Pradesh has approved a substantial allocation of Rs 121 crore to Maytas Infra, a decision made just two days following the unsuccessful attempt by B Ramalinga Raju, founder and chairman of Satyam Computer Services, to acquire the infrastructure firm owned by his son, Teja Raju.
On Saturday, state officials issued an order granting funds for a significant road project located in Kadapa, the home constituency of Chief Minister YS Rajasekhara Reddy. The official order stated that Maytas Infra was chosen for the project on a nomination basis, with funding provided by the state’s irrigation department.
Intriguingly, this project, a 30-kilometre road connecting Mangapatnam to K Sugumanchipalli on state highway 31, does not involve competitive bidding. The intention behind this roadway is to ensure connectivity to an irrigation initiative being undertaken by Maytas Infra.
Principal Secretary of Irrigation SK Joshi commented, "I am not aware of the details of the government order," while a company representative indicated that Maytas Infra’s role is to construct a new road that will replace the existing one. This ambitious project is expected to wrap up by June 2009, as articulated by the spokesperson.
The timing of this funding sanction to Maytas Infra could potentially ignite controversy, especially given that it follows closely on the heels of Satyam’s thwarted attempt to acquire a 51% stake in the company. Unverified reports from last week revealed that Satyam had pursued this acquisition after certain promoters and their investment firms were facing margin calls from lenders tied to stock borrowings.
In a previous statement, VV Raju, Chief Financial Officer of Maytas Infra, confirmed that the company is not grappling with any working capital challenges and has no pressing capital expenditure needs at this moment. Notably, Maytas Infra is also a consortium partner in the ambitious Rs 12,000-crore Hyderabad Metro Rail project, for which it established a special purpose vehicle in September last year to facilitate construction efforts. However, this project has faced scrutiny after comments from Delhi Metro Rail Corporation’s chief E Sreedharan, who called it “a future political scam” while questioning its operational feasibility. Subsequently, the Hyderabad Metro Rail has severed ties with its principal consultant, the DMRC.
On a related note, it is worth mentioning that PK Madhav, the president and CEO of Maytas Infra, was apprehended last week concerning alleged financial fraud charges that are unrelated to the operations of Maytas Infra.