The Singhania saga: What next for JK House?

JK House in Mumbai, expected to be the home of Raymond’s promoters Gautam Singhania and Vijaypat Singhania, has had a fair share of headlines in recent times. Among them have been comparisons to another billionaire residence as well as run-ins with the Brihanmumbai Municipal Corporation (BMC) over construction plans. The latest, however, has come by way of minority shareholders of the company.

At Raymond’s annual general meeting on June 5, shareholders rejected the proposal for the sale of apartments in JK House to the company’s promoters and extended family at a substantial discount. As per a 2007 agreement, Singhania and father Vijaypat as well as Akshaypat (Singhania’s cousin), and his mother Veena Devi were set to get an apartment each in the redeveloped JK House at a price of Rs 9,200 per sq ft.

Asked about subsequent developments vis-a-vis the said apartments in the light of the vote, a Raymond spokesperson said, “Currently the matter is sub judice and it is the board of the company that will take decisions pertaining to the utilisation of the company assets."

There is no clarity if the apartments, which the four branches of the Singhania clan were set to occupy, will remain vacant in the meanwhile.

Ahead of Raymond’s AGM, Institutional Investor Advisory Services (IiAS), a proxy advisory firm, had recommended that shareholders vote against the proposal for the sale of apartments to the promoters at JK House.


At the recent AGM, shareholders rejected the proposal for the sale of apartments in JK House in Mumbai to the Singhanias. (Image: Agencies)

Amit Tandon, founder and MD, IiAS told ETPanache over the phone, “The underlying objective on which we advise investors to vote is that we don’t want the controlling shareholders to push through resolutions which benefit [them] at the cost of the shareholder. If they were to sell these to the promoters at Rs 9,200 when the market price is upwards of Rs 1 lakh, that’s a huge loss to the minority shareholder. The controlling shareholder and the family are benefitting at the expense of the minority shareholders."

Gautam Singhania, on his part, had also urged shareholders to vote against the resolution. However, Tandon felt that what has happened on the ground is “not consistent with his commentary at this stage".

According to Tandon, “There is a subtext to the whole thing. Of the four apartments, one is being bought by Mr Gautam Singhania, one by his father and two by his cousins. So, therefore, he was not in favour of his cousins getting the property. And there is some family dispute going on. That’s why he kind of got vocal on the whole thing."

Gautam Singhania or his company spokesperson did not comment on the allegation that the family property dispute was the reason to urge shareholders to vote against the resolution. No comment was given to the query if he felt the sale price of `9,200 per sq ft against the market price, said to be upwards of a lakh, is unfair.

A company spokesperson responded saying, “Mr Gautam Hari Singhania had gone on record stating that he is required to abstain from voting on the resolution being a related party. He had also said that if he were to vote, he would have voted against the resolution in the interest of shareholders and the company."

Tandon raises two key points in the context of the JK House apartment sale resolution: 1. How can this resolution come to shareholders to vote if Singhania was not in favour of it? 2. If he wasn’t in favour of it (the sale of the flats), how did the company spend `270 crore on the redevelopment of JK House?

Regarding the redevelopment of JK House, a company spokesperson said, “The building was constructed in the year 1967 and with the passage of time the structure had weakened. In 2006, the Municipal Corporation of Greater Mumbai (MCGM) communicated that the building was unsafe and should be demolished. Therefore, the said building underwent the redevelopment.".