Just days after US based Investment firm Blackstone and Bengaluru based realty firm Embassy Group agreed to purchase around 39% stake in the real estate arm of Indiabulls from its promoters Sameer Gehlaut and family for ₹ 2,700 crore, which would see Indiabulls exit the real estate business and focus solely on financial services business; its sister concern, Indiabulls Housing Finance, faces allegations of siphoning off loans. This allegation comes at a particularly uncomfortable time for Indiabulls Housing which is in the midst of a merger with Lakshmi Vilas Bank.
A plea was filed in the Supreme Court by a petitioner named Abhay Yadav, who is also a shareholder, seeking legal action against Indiabulls Housing Finance Ltd, its Chairman Sameer Gehlaut and directors for misappropriating an amount of ₹ 98,000 crore of public money for their personal use.
The plea further stated that Indiabulls created multiple shell companies to which they loaned huge sums of money under “bogus and non-existent pretexts”. These shell companies further transferred the loan amount to other companies which were controlled by Gehlaut, his family members and other directors of Indiabulls Housing. Further, the finger was also pointed at other usual suspects such as auditors, credit rating agencies and government departments without which none of the allegations would have been possible.
Indiabulls hit back terming the allegations as “bizarre” and said the petition is an attempt to malign the company’s reputation and create hurdles in its merger with Laxmi Vilas Bank. Senior Advocate A M Singhvi, appearing for the company, told the court that frivolous allegations have been levelled against the company in the petition and the plea was leaked to the media thereby causing a loss of ₹ 7,000 crore in market cap. The company said that the total loans on the books are roughly ₹ 90,000 crore. The allegations of siphoning off ₹ 98,000 crore are bizarre and unsubstantiated.
Whether or not these allegations hold any weight, the shares of Indiabulls Finance continue to reel under pressure and the company has lost 1000’s of crores in market cap in the last few days. The shares are currently trading just above ₹ 620 per share, its lowest levels in months.