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Malvinder and Shivinder Singh are stuck in a Rs 2,025-crore quagmire.
A BloombergQuint investigation shows that the brothers invested nearly one-third of the Rs 7,315 crore they got from the sale of their family firm Ranbaxy Laboratories Ltd. in three real estate firms—Dignity Buildcon Pvt Ltd., RS Infrastructure and Prius Real Estate.
The first of a two-part investigation showed that Singh brothers routed at least Rs 1,100 crore via a series of real estate transactions to acquire companies from Basant Bansal and Roop Bansal—the brothers who founded M3M Group—by issuing loans to entities associated with Shabnam Dhillon, wife of their spiritual guru Gurinder Singh Dhillon.
The second part shows that the brothers’ involvement in two of those three companies went beyond the initial investments. The duo pumped an additional Rs 920 crore—Rs 206 crore by subscribing to the debentures of RS Infrastructure and Rs 710 crore by subscribing to the preference shares of Prius Commercial Projects. These firms are now suffering losses, crippling debt, and other issues such as cancellation of licence.
Meanwhile, Japan’s Daiichi Sankyo Co. last month submitted in Delhi High Court that the brothers allegedly diverted nearly Rs 2,800 crore to real estate through their holding companies.
Here’s a look at the financials of the three companies where Singh brothers’ Rs 2,025 crore is stuck.
RS Infrastructure’s Tower Project
RS Infrastructure has a commercial development licence for a tower project, and it has invested Rs 247 crore till March 2017.
It was acquired by Lowe Infra and Wellness Pvt Ltd. through loans issued by Singh entities, for Rs 520 crore from a partnership firm of the Bansals in 2011-12. The company received funds from the Rs 206-crore worth of debentures subscribed by Lowe Infra—a Shabnam Dhillon owned entity—and a Rs 243-crore bank loan, for which it pledged its own and Singh brothers’ assets worth Rs 947 crore.
Shares of Religare Enterprises Ltd. and Fortis Healthcare Ltd. were pledged by Fortis Healthcare Holding Pvt Ltd., RHC Holding Pvt Ltd. and RHC Finvest Pvt Ltd for getting these loans, according to the annual report of RS Infrastructure.
It also mortgaged its own immovable properties for the loan. Several shares of Religare and Fortis were liquidated in the last one year as the Singhs lost control of listed flagships. It is unclear whether the shares sold were linked to hypothecation by lenders.
Over and above this, RS Infrastructure has also given guarantees for a third-party loan worth Rs 1,299.5 crore.
Dignity Buildcon’s Licence For Cyber Park
In 2007-08, Dignity Buildcon received a licence for developing a cyber park in Sector-66, Gurugram, Haryana. In June 2009, Dignity Buildcon was acquired by Sharan Hospitality—backed by loans from Singh entities for Rs 589 crore. Till March 2017, the company, owning 9.45 acres in Sector-66, spent Rs 827 crore towards the project, according to its annual report filings with the Registrar of Companies.
But according to the website of Town and Country Planning Department, Haryana, the licence for 5.63 acres has been withdrawn.
The development of the project was funded by debt, and Dignity Buildcon’s total debt stood at Rs 848 crore as of March 2017. Standard Chartered, its biggest creditor, with an exposure of Rs 721 crore, has charge of the company’s land and capital work in progress—an ongoing construction of a plant or other equipment that will generate revenue for the company.
Prius Commercial Projects
Prius Commercial is jointly owned by Shabnam Dhillon and Yuvraj Narain Gorwaney. The company received a Rs 709.95-crore investment through preference share subscription in 2011-12 via Singhs’ Prius Real Estate Pvt Ltd.
Prius Commercial had a consolidated loss of Rs 692.52 crore as of March 2016. It’s yet to file its financial statement for 2016-17 and 2017-18 with the RoC. The company had a net worth of Rs 127 crore at the end of March 2017, according to its recent RoC filing.
Standard Chartered declined to comment on BloombergQuint’s emailed queries. Emails and subsequent reminders sent to Dignity Buildcon, Haryana urban and town planning authority and RS Infrastructure were not answered.
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