DB Realty eyes major shake-up: Board to mull corporate restructuring on Feb 9

6 Feb 2024 , 10:25 AM

The board of listed real estate company DB Realty stated on February 5 that it will convene on February 9 to examine the current corporate structure, which is divided into business areas for real estate and hotels/hospitality.

According to the company’s release, in order to spur growth and value creation for all stakeholders, the board will examine the current corporate structure and request the board’s permission in principle for corporate restructuring, which may include, but is not limited to, the demerger of the hotel and hospitality businesses.

Once regarded as one of the leading real estate firms, DB Realty had difficulties following the 2011 revelations surrounding the 2G spectrum controversy.

Vinod Goenka and Shahid Balwa, the firm’s promoters, were imprisoned but were later found not guilty following a seven-year judicial battle on the grounds of insufficient evidence. But in the midst of this, a number of the company’s projects stalled, and lenders turned away.

For the past few years, the corporation has been attempting to reinvent itself through partnerships or asset sales. The company announced its results on January 31, 2024, and mentioned that it had agreements with Godrej, Adani Property, Prestige Estate, and Man Infra for the continued development of 16 million square feet of residential, hotel, and commercial properties, among other things.

The group also has a stake in the hotel and hospitality industries. In Q3FY2024, it bought 500 important hospitality assets, bringing in an additional ₹ 96 crore in operational revenue. In comparison to a loss of ₹632 crore in Q3FY23, the consolidated net profit for Q3FY24 was reported to be ₹463 crore.

In the past few quarters, we have changed our strategy in a number of ways, including by lowering debt, increasing equity capital, and forming long-term alliances with reputable real estate companies. Vice-Chairman and Managing Director of DB Realty Shahid Balwa said in a statement on January 31 that ‘We will continue to work to have a very strong balance sheet, increase land bank and property development options, and deepen and broaden our partnerships with large real estate developers.’

In the meantime, the business declared in September 2023 that, in accordance with the Securities and Exchange Board of India (SEBI), it had raised ₹1,544 crore through the preferential issuance of ₹25.75 Crore convertible warrants to investors who were neither promoters nor non-promoters in two phases in February and March 2022.

According to SEBI regulations, all convertible warrants have been converted into equity shares, according to a statement released by DB Realty on September 18. The press release stated, ‘Apart from Promoter Group viz. Goenka Family Trust and SB Fortune Realty Pvt Ltd, non-promoter investors were allotted equity shares of the company at the relevant time and their holding on a fully diluted basis on conversion.’

17.94 % equity shares were awarded to Pinnacle Investments, a partnership entity established in India that is represented by its Managing Partner, Razack Family Trust, through its trustee, Irfan Razack. Venkata Narayana Konanki and Razack Family Trust are partners in the company. Moreover, two % of the shares were given to Rekha Jhunjhunwala and RARE Investments.

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