Maytas plans foray into oil, pipelines, roads

Maytas Infra, which has been trying to wriggle out of a collateral damage caused by Satyam accounting fraud, would move in a new direction shortly.

Though it is unlikely to come out of red this year, the company is all set to shed the old baggage and look for a new direction, the company’s senior officials said.

Maytas currently has about Rs 7,000-crore order book with most of it in the irrigation sector, particularly in the form of projects in Andhra Pradesh. However, the new management under the IL&FS would now find a model to move the company into other sectors.

“We are looking at other sectors such as oil and gas, pipelines, roads, etc. I can’t say that we will completely exit irrigation. But, the focus is definitely going to change,” Arun K Saha, chairman of the company’s executive committee of the board told DNA Money.
Though the company is expected to move into profits in the next 12 to 18 months, the focus would be more on executing the projects on hand before attempting to bag fresh projects.

“If there is an opportunity, we will bid. Balance sheet size or net worth is not a problem since IL&FS would lend its strengths to Maytas. But, the focus is on completing the projects on hand,” he said.

Though there are no absolute projections for the current year available at this point, current financial year would not be very different from the year ended March 2010. In FY10, the company recorded a turnover of Rs 1,150 crore and a loss of about Rs 252 crore.

“The Saudi BinLadin Group (SBG) is going to provide us with new opportunities. We will look at construction opportunities in the Middle East. Similarly, the SBG too is keen on tapping the opportunities in India and Maytas will facilitate that for the group,” Saha said. Maytas recently roped in the SBG as a strategic partner. The Saudi group will hold about 20% equity in Maytas by investing about Rs 300 crore.

Similarly, the company is also getting rid of some of the sticky projects by moving them into an independent Maytas Investment Trust. “The Trust comprises primarily of the lenders. We have transferred assets and investments worth Rs 575 crore to the trust. The liabilities equal the assets that have been transferred. Maytas, as a company, has nothing to do with the Trust and it will be managed by the lenders on board. But, we will provide the necessary support to make good of these investments. Most of the investments in the trust are in the form of SPVs formed to execute some of the projects,” he said.

While the numbers are still being computed, the one-time settlement scheme with the banks is expected to relieve the company of major debt burdens.

As per the OTS agreements concluded with four banks and being negotiated with two more banks, the company will pay 50% of the outstanding as on January 1, 2009 and the balance till date would be waived off. “We are talking to other banks as well and the total liability would be in the range of about Rs 200 crore,” he said.

“Our focus currently is on executing the existing orders in an orderly manner and manage the liabilities properly,” Saha said.