Maytas Approves Accounts, Convenes EGM to Induct Strategic Investor
Hyderabad, June 29, 2010: The Board of Directors of IL&FS Engineering and Construction Company Limited (MIL) approved the financial accounts for the year ended March 31, 2010. The Board also approved accounts of the Company for the quarters ended September 30, 2009, and December 31, 2009. It may be recalled that the new promoters of the Company – Infrastructure Leasing & Financial Services Limited (IL&FS) – had earlier sought extension of time for finalizing accounts upto June 30, 2010 after taking over the helm of affairs of the Company on September 29, 2009
Pursuant to the irregularities detected at Mahindra Satyam in January 2009, the operations of MIL suffered considerably, given its imputed association with Satyam. With the freezing of bank lines and cancellation of all lines of credit, the operations of the Company ceased in their entirety in the first semester of the year. After taking charge of MIL, IL&FS arranged for priority debt and non fund based facilities, and re-activated work on construction sites all over the country. IL&FS also reached out to joint venture partners in Construction and BOT Projects, as also Banks, Financial Institutions and Customers. Steps have been taken to re-strengthen the management team with the induction of Mr Vimal Kaushik as Managing Director, and the recruitment of professionals at all levels from the construction industry
Given the foregoing circumstances, turnover of the Company contracted in the year ended March 31, 2010 to Rs 1,150 crores as against turnover of Rs 1,719 crores achieved in FY 2009. The Company incurred an operating loss of Rs 276 crores during this period, as against the loss of Rs 407 crores incurred in the preceding year. After accounting for extra ordinary items and provisions, the loss for the year amounted to Rs 252 crores versus Rs 474 crores incurred in the preceding year
With the Corporate Debt Restructuring scheme approved by Lenders on June 26, 2010, the Company is now in a position to avail of additional credit facilities and gradually ramp-up operations in the current year.
The Board of Directors has already approved convening an Extra Ordinary General Meeting of the Shareholders of the Company in Hyderabad on Monday, July 19, 2010 to approve:
Given the Preferential issue of Equity Shares as detailed above, IL&FS and the SBG have launched an Open Offer to acquire an additional 20% of the paid up capital of the Company in accordance with SEBI guidelines. The Company is also setting up a construction joint venture in Jeddah in partnership with SBG, where the Company would hold 55% of the paid up equity capital. The foregoing initiatives, including preferential issue of Equity Shares to the SBG, are expected to be completed over the next 90 days pursuant to receipt of statutory approvals. The partnership with SBG is expected to enable the Company re-capitalize operations, as well as access opportunities to undertake world class construction projects in Saudi Arabia and other Middle Eastern countries.