Policemen outside Hyderabad’s Chanchalguda prison where B Ramalinga Raju is being held. (Reuters)

Hyderabad, Jan. 11: Feeling “very, very bad” and “sad”, the YSR government in Andhra has stepped up efforts to distance itself from the Rajus who were at the helm of the Satyam empire till last week.

Payments to former Satyam chairman B. Ramalinga Raju’s family firms had had been held back since the group’s troubles came to light last month, sources revealed on a day chief minister Y.S. Rajashekhara Reddy said the ability of the companies to execute projects would be verified afresh.

In all, Rs 488 crore due to the Maytas firms has been stalled, including project payments of Rs 178 crore last month, the sources said. Now, the government has held back earnest money — security paid by developers — of Rs 125 crore for completed projects and bills of Rs 185 crore, they said.

Before that, the Maytas firms had been picked for a range of infrastructure projects worth over Rs 30,000 crore being set up by the government. One of the plans, a port in Machilipatnam, has a Calcutta company as partner.

Chief minister Reddy, accused by the Opposition of having favoured the Raju family firms, today ordered the “review of their capabilities” but defended the past allotments to Maytas Infra and Maytas Properties, headed by Raju’s sons Teja and Ram. Shareholders had last month rejected a plan by chairman Raju to invest Satyam’s cash in the Maytas companies.

“I have asked the chief secretary to review all projects allotted to Maytas in the wake of the Satyam fraud to find out their (Maytas’s) ability to complete the projects on time,” Reddy told reporters today.

The chief minister hoped the Satyam fraud wouldn’t hinder the infrastructure and irrigation projects under Maytas Infra, saying other partners were “jointly responsible”.

“There is no doubt that it is a big blot on our image. Now, our credibility has to be established by acting tough,” Reddy said.

Replying to a question, the chief minister said he personally felt “very, very bad” about the scandal. “I was really sad. It was unimaginable. He (Ramalinga Raju) appeared so suave and committed towards society and uplift of the downtrodden,” Reddy added.

Maytas Infra, which has completed projects of Rs 1,748 crore but hasn’t started work on plans worth Rs 17,000 crore, has taken a “mobilisation advance” of Rs 210 crore — a sum paid by the government to developers to purchase machines and vehicles before construction begins.

Most of the completed schemes are in irrigation, an area in which the government has invested heavily since it came to power four and half years ago.

The Calcutta firm partnering Maytas Infra is the Srei group, which owns a 38 per cent stake in the Rs 4,200-crore Machilipatnam port project. The Rajus hold 40 per cent.

Reddy refused comment on whether the government planned to take away projects from Maytas if they failed to progress or arrange funds, called financial closure. The Hyderabad Metro is likely to achieve financial closure by March. The port could take around six months.

Reddy said the government wasn’t aware of details of the 6,900 acres purportedly owned by Maytas and shown as assets in mortgages with banks and financial institutions. “Much of the land is in benami titles.”

Homes searched

Sleuths searched the homes and offices of Raju and his family members today, the evidence-hunt coinciding with the arrest of chief financial officer Vadlamani Srinivas.

“We will file petitions before the economic offences courts tomorrow for police custody of Ramalinga Raju, Rama Raju and Srinivas,” said CID inspector-general V.S.K. Kaumudi, who led the search-and-seizure drive mounted jointly with Sebi, the Registrar of Companies and the Serious Fraud Investigation Office (SFIO) of the Centre.

Officials said the searches, going on till late tonight at 11 locations, would continue tomorrow.

The documents, hard disks and DVDs will be scanned after which former directors and other senior officials of Satyam will be “quizzed”, Kaumudi said.

The homes and offices of CFO Srinivas, remanded today in judicial custody till January 23, and that of his relatives were searched.

Metropolitan magistrate D. Ramakrishna rejected a request from Bharat Kumar, Srinivas’s lawyer, for hospitalisation on the ground that the CFO had high blood pressure. The magistrate asked the doctor in Chanchalguda jail to take extra care of Srinivas.

IN THE BAG

Maytas’s infrastructure projects in Andhra

• Irrigation projects worth Rs 13,000 crore
• Rs 12,000-crore Hyderabad Metro Rail project
• Rs 4,200-crore port development in Machilipatnam
• Jobs worth Rs 809 crore in project to divert Godavari water to Hyderabad
• Flood flow canal in Nalgonda worth Rs 33.46 crore
• Rs 120-crore road project in Kadapa
• Total: Rs 30,162.46 crore