DB Realty Has No Connection With Etisalat?
DB Realty is claiming that it has no stake in DB Etisalat. Investors thought that there was a connection between the two companies and started selling the shares of DB Realty. The share price of DB Realty started dropping in the stock market and hence the company was forced to clarify. Earlier, Etisalat had decided to exit from its Indian telecom business. DB Realty is a real estate company. The promoters of DB Realty had invested in their individual capacity in the shares of DB Etisalat. Technically speaking this is true and investors should consider that the two companies are separate in the eyes of the law.
Connection with Raja
DB Realty saw a sharp drop in the consolidated net profit in Q3 ended 31.12.11. The net profit dropped to Rs.11.73 crore from Rs.108.69 crore in the corresponding period of the previous year. In the 2G spectrum case, DB Realty’s executive Vijender Kumar made contrary statements before the CBI special court enquiring into the case. He contradicted his earlier statement as witness and stated that he was now aware that Associated Hotels was connected to DB Realty in any way. R K Chandolia, former private secretary to the former telecom minister A Raja had allegedly rented a housing property in Delhi. Earlier Vijender Kumar had stated that Associated Hotels was a group company of DB Realty.
Kapil Sibal Says Raja Is Innocent
DB Realty’s credibility has been lost because of its involvement in the 2G spectrum scam and its close association with Raja. Kapil Sibal, the present telecom minister says that Raja is innocent and he has not done anything wrong. But the whole world knows that it was Raja with the active connivance of the Prime Minister Manmohan Singh, who siphoned money in the 2G spectrum scam. Investors should realise that DB Realty is a controversial company and it is better to avoid investing in it. In Q1 also DB Realty reported a drop in its net profit by 33% to Rs.41 crore.
Cancellation of the Project
Pimpri Chinchwad New Town Development Authority had cancelled the award of the township project to DB Realty. It was awarded to DB Realty in 2009. Telecom scam is taking a toll of the company in every aspect of its existence. It can affect valuations also including the share price. Vinod Goenka is the promoter of DB Realty. Two independent directors of the company have resigned. CBI had arrested two executives of the company following the telecom scam. Sharp drop in the share price of DB Realty had forced the promoters to pledge 8% more of their stake with the pledgees in order to cover margin drop. Earlier, Shahid Balwa resigned as the Managing Director of the company following the 2G scam. It was reported that the company was negotiating with Oberoi Realty for the TDR ssles.
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