IL&FS will take a year to steady Maytas

A day after getting the nod to take control of Maytas Infra, Infrastructure Leasing and Financial Services (IL&FS) on Tuesday said it would take at least a year to stabilise the operations of its new acquisition.

 “Maytas is still going through difficulties. It would a year at least to restore stability in the company,” Ravi Parthasarathy, chairman, IL&FS, said. The company is suffering from a serious liquidity problem apart from the credibility related issues, he said.

“There has been no incremental credit given to Maytas from the banking system. Receivables are not being collected. There is an immediate need to restore the credibility of the stakeholders. Lenders were not confident of the Raju family,” he said.

“We have about three months to complete the open offer formalities. Under the open offer we have to acquire 20%. With this, the total holding would go up to 57.1%,” Parthasarathy said.

IL&FS is planning to allocate about Rs 130-150 crore for the open offer. It would also immediately infuse about Rs 55 crore into Maytas as debt.

Interestingly, with most of the shares of the company lying with the institutions, the response to the open offer, too, has to come from the lenders to the Rajus.

“We don’t know. On our part we will be making the open offer and any shareholder is eligible to subscribe to that,” Parthasarthy said.

Though the open offer is not expected to bring in any additional liquidity into the company, IL&FS is working on other plans to raise money.

“There are many international players which are keen on investing in the company for the long term. We also have a QIP plan,” he said.

Maytas has a debt of about Rs 3,500 crore including Rs 1,700 crore debt, Rs 1,100 crore guarantees and the balance in the form of vendor credit.

“Our consortium has about 33 banks and most of the banks that had lent to Maytas are with us. So, there is no problem with funds,” Parthasarathy said.

However, analysts have been observing that the infrastructure funding company has no direct exposure in managing a company though it is good at fund management in infrastructure sector.

On this, the IL&FS chairman said, “There is a very thin line between what we have been doing and what we intend to do at Maytas. We are currently executing projects worth Rs 15,000 crore. We are also executing a 6,000 megawatts power project. We are building three ports. There is no problem in managing a company.”

Though analysts feel that IL&FS would exit Maytas after two years, Parthasarathy said there is no such plan at this point. “We are just entering the company. We can’t talk about exit now,” he said.

Interestingly, Maytas still hopes to get the money it had lent Raju family-owned concerns in the form of inter corporate deposits. Maytas had earlier lent about Rs 390 crore to 14 private outfits of B Ramalinga Raju family.

Also, a new promoter coming on board would not have any impact on the Maytas’ petition against the Andhra Pradesh government for scrapping bid for Hyderabad Metro.

As per the new structure, once the Sebi formalities are complete, the IL&FS will bring in four directors including the chairman and the government will call back two of its nominated directors leaving two others too continue on the board.