Business Today

Families step in to rescue DB Realty from going under

Even as uncertainty grips the fate of two of its promoters - Shahid Balwa and Vinod Goenka - arrested for their alleged involvement in the 2G scam, their fathers were appointed as additional directors in DB Realty.

Lalatendu Mishra   Mumbai     Last Updated: April 26, 2011  | 11:56 IST

During times of acute crisis, families tend to close rank. This has come true in case of DB Realty which is embroiled in the 2G spectrum allocation scam.

Even as uncertainty grips the fate of two of its promoters - Shahid Balwa and Vinod Goenka - who have been arrested for their alleged involvement in the scam, their fathers Usman Balwa and Krishna Goenka, respectively, have stepped in to save the company from sinking.

Other members of the family, including the youngsters are also chipping in to bail the company out the present mess.

A hunt is on to rope in new directors.

The senior Balwa and Goenka, who have decades of experience in running their hospitality and real estate businesses, have joined the board of DB Realty as additional directors since independent and other directors are leaving in droves.

The unavailability of the company's managing director Vinod Goenka has added to its woes.

"Both of them have vast experience, maturity and business knowledge, which will immensely benefit the company," DB Realty informed the stock exchanges in a regulatory filing about the two board level inductions.

FAMILY COMES FIRST

Usman Balwa and Krishna Goenka, fathers of the two tainted promoters - Shahid Balwa and Vinod Goenka - arrested for their alleged involvement in the scam, have stepped in to save the company from sinking

Other members of the family, including the youngsters are also chipping in to bail the company out of present mess

The senior Balwa and Goenka, who have decades of experience in hospitality and real estate businesses, respectively, have joined the board of DB Realty as additional directors

Hunt is on to rope in new directors and the unavailability of the company's MD Vinod Goenka has added to the company' problems

SORRY STATE OF AFFAIRS

In the past two months, five directors have resigned from the company giving rise to many concerns among investors and customers

The other four directors who have resigned post-scam include Sundaram Rajgopal, MD, Starwood Capital; Shahzaad Dalal, V-C, IL& FS Investment Managers; Chandan Bhattacharya, former MD, SBI and MD Shahid Balwa

The Balwas are well known restaurant owners in Mumbai and also run hotels, including many that are under construction. The senior Goenka had started Conwood Construction decades ago, which has undertaken several projects in Mumbai, apart from his dairy business at Baramati.

In the past two months, five directors have resigned from the company giving rise to concern among investors and the company's customers.

Michael McCook a director representing Trinity Capital on DB Realty's board was the latest to have stepped down. Trinity has 4.66 per cent stake in the firm.

The other four directors who have resigned from DB Realty after the scam broke out include Sundaram Rajgopal, MD, Starwood Capital; Shahzaad Dalal, vice-chairman ( V-C), IL& FS Investment Managers; Chandan Bhattacharya, former MD of State Bank of India and managing director ( MD) Shahid Balwa who put in his papers after denial of bail in February this year.

Vinod Goenka is continuing as the MD as he expects to be released on bail soon. However, the day-to-day operations of the company are being handled by managers who are looking at the timely execution of projects, mainly residential real estate.

Four months ago the company had hired N. Sridhar as group director (strategy & finance) who is now at the centre stage due to the absence of the MDs and other key officials of the company.

Asif Balwa, the chief financial officer (CFO) and Rajiv Agarwal, the chief operating officer (COO) of the company were also arrested in connection with the scam. This had created a void but Vinod Goenka had been holding forte. His unexpected arrest has called for urgent steps to prevent the company from going down.

Meanwhile, the company is also looking out to rope in additional directors to fill the vacant slots. As of Monday, including senior Balwa and Goenka, DB Realty has five directors. These include chairman Karun C. Srivastava, a former Maharashtra cadre IAS officer; Mahesh Gandhi and Vinod Goenka.

"Apart from this, we will shortly be inducting new independent directors on the board," an official said.

However, analysts say there has been no concern about project execution for now. But DB Realty's shares have been suffering since the scam broke out.

On Monday, the stock closed with a loss of 0.99 per cent at Rs 104.50.

Courtesy: Mail Today

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