Maytas Infra Ltd, promoted by the first family of Satyam Computers Lt, seems to be in for more trouble. Mumbai-based real estate developer Hiranandani group has cancelled a sub contract work awarded to the company for an integrated mega township project in Chennai. The project is valued at Rs 400 crore, according to Maytas Infra?s official website.
Developed by Hirco Plc, the UK subsidiary of the Hiranandani group, the township project called Hiranandani Palace Gardens is spread over 600 acres of land with an outlay of over Rs 1,600 crore for constructing six residential high rise towers. ?The cancellation of contract is a fall out of the whole Satyam episode. Companies are getting wary of associating with Maytas because of the credibility factor,? sources close to the development told FE.
When contacted, Aniruddha Joshi, executive director of Hirco confirmed the development. He said, ?We signed the letter of intent with Maytas Infra in August 2008 and signed the agreement with them in November 2008. We have been following all the events that are happening and to protect the reputation of the company and the financial interests, we decided to terminate the contract on January 12.?
In fact following the Satyam accounting scandal, all projects of Maytas Infra Ltd, which is promoted by Teja Raju, the elder son of former Satyam chairman B Ramalinga Raju have come under the regulatory scanner. The Andhra Pradesh government is reviewing all the projects awarded to the company including the Hyderabad Metro Rail Project, Machilipatnam Port project and other irrigation works. It is also one of the eight subsidiary companies that are being investigated by the ministry of corporate affairs.
Hirco had already paid some mobilisation advance to Maytas Infra and had taken bank guarantees. The company moved some equipment and manpower. But now, after assessing the cost of the work done at the site by Maytas Infra, Hirco has invoked the bank guarantees for the balance amount.
But a spokesperson of Maytas Infra said that ?the termination was due to Hirco?s internal problems. It is due to its financial problems and reverse merger issues.?
Maytas Infra was served a termination letter under ?optional termination clause? for its convenience without a proper notice which is a condition precedent for such termination under the contractual terms, the spokesperson said.
Maytas Infra now plans to dispute the termination as fraud and will pursue legal recourse, he added as Hirco had recently informed the company about its satisfaction with the performance of Maytas on the project.