Maytas Properties, a closely-held firm run by the son of disgraced Satyam founder B Ramalinga Raju, has tied up with Bangalore-based Shriram Properties to develop a prime property in Chennai.

It hopes to get loans from banks by pledging the sale proceeds of the developed property as collateral and raise money from banks to complete the upmarket Maytas Hill County project.

“The deal will ensure funds flowing into the company in small amounts now and the major portion starting in six months when sales begin at the Chennai project. We have also discussed with the banks to let them have rights over those funds which will give them confidence to provide immediate funds as additional loans,” said Ramalinga Raju’s younger son Rama Raju in a letter to the customers of Maytas Hill County.

Shriram Properties is an arm of the Shriram Group and has projects in Bangalore, Kolkata, Chennai, Coimbatore and Vijaywada. Both companies will develop around 14 acres of prime property in Chennai.

The Hill County project has been in a limbo for over a year now. The company faced execution problems after Ramalinga Raju confessed to perpetrating a Rs 7,000-crore fraud at Satyam Computers. Maytas needs around Rs 150 crore to complete the project.

Rama Raju Jr has been facing the ire of several customers who have not been handed over the property. A criminal complaint has been launched against him for defrauding customers.

Besides, the promoters are under pressure to sell their stakes in projects or even exit the business as they have failed to honour commitments made to customers. The company has also denotified one of its three Special Economic Zones in the city outskirts.

Two other projects — Jubilee Hills Landmark and Jubilee Hills Park View — have also been halted due to the credit crunch.

While Maytas Properties hopes to win customers’ confidence, the move has seemingly irked many of them. According to a few customers, the deal adds to the existing certainties as they will have to wait till the company reaps profits from the project.

Source: Economic Times