How Satyam’s Ramalinga Raju was derailed by the Hyderabad Metro Rail

mangaloretoday News Network

Hyderabad, 26 Nov ,2017 :  As the Hyderabad Metro rail gets ready to chug on November 28, with Prime Minister Narendra Modi as its first official passenger, a gentleman in Jubilee Hills would wince at the sight of the visuals that would be aired live on television.

 

For it was the Metro Rail project in the city that played an important part in exposing Ramalinga Raju, chairman of Satyam Computers, close to nine years ago. For all you know, if it had not been for his audacious decision to bid for the Hyderabad Metro rail project and win it, Raju’s journey may never have been derailed and he would still have been the toast of India Inc.

It was sometime in April 2008 that Raju logged on to the metro rail project (pegged at that time at Rs 12,212 crore) even though his group had no expertise in executing a project of this size. It was no surprise that eyebrows went up and Hyderabad started speaking in hushed whispers about why the IT giant was venturing into an alien space. To negate criticism, Ital Thai, that had built the Bangkok metro was roped in to become part of the Navbharat-Maytas consortium. Maytas (Satyam spelt in reverse), floated as a construction and real estate entity, was run by Raju’s sons.

But it was when Raju beat the others during the bid process that those in the know, began to understand what was going on in the IT czar’s mind. When the bids were opened in July 2008, Maytas won the bid by offering to pay Rs 1,350 crore to the government as license money for being awarded the project. This was completely out of the blue for the others had in contrast, sought Viability Gap Funding from the Union government. Anil Ambani’s Reliance Energy had asked for Rs 2,811 crore while the Essar group wanted Rs 3,100 crore.

As per the deal, the Maytas consortium would run the project for 35 years, which could be further extended by 25 years. It would get 269 acres of land from the government, much of it chunks in prime areas of Hyderabad. Maytas would also get to commercially exploit real estate around the Metro stations to generate revenue. Raju was looking at putting in the money now to reap huge benefits a few years down the line.


There were two reasons why Raju decided to board the Hyderabad metro rail. One, he owned through a maze of unlisted companies, sizeable chunks of land on the outskirts. The estimate according to agencies is that his family owned 6,800 acres of land in Hyderabad and also in Chennai and Bengaluru, valued at around Rs 6,500 crore. If the Metro rail routes terminated near those areas in Hyderabad, the real estate value would shoot up, benefiting Raju significantly. In Raju’s mind, the rail deal was essentially a way to improve the value of the land parcels he was sitting on and make a killing in the bargain.

Two, Raju all his life at Satyam competed with the Infosys, Wipro and TCS of the IT world, wanting to be seen in the big league of Indian industry. The metro rail was his big moment where he could appear to be giving a public interest project to the people of Hyderabad virtually for free, hoping no one would read the fine print. His PR machinery would then make him seem bigger than the other IT honchos.

Raju’s political clout meant that the YS Rajasekhara Reddy regime bent backwards to make the project happen. It took it upon itself to procure sites needed by Maytas within two months of the consortium depositing Rs 260 crore of performance security fee. It also undertook to pay a penalty of Rs 24 lakh for each day’s delay. Knowing how governments work and the fact that various departments of the central government too were involved, it was like giving away public money to Raju through the backdoor.



courtesy:Yahoo