Splitting of family run real estate businesses appears to be a growing phenomenon . The three low-profile brothers of the Rs 3,000-crore Sheth Developers Pvt Ltd (SDPL) have reportedly split and the separation is said to have been amicable.
Industry sources said the parting was a result of differences in business vision of the three brothers-Ashwin , Vallabh and Jitendra Sheth.
While Ashwin, managing director of SDPL, and Vallabh , director, denied the split, they confirmed the setting up of two firms. They said it will not affect the firm’s existing projects. “We are jointly completing all the projects at hand and only acquiring new projects separately,” they said in separate communications. Jitendra, too, is a director in the firm.
This is how the business has been reportedly bifurcated . SDPL, the parent company where the brothers hold 33% stake each, will continue to exist till the ongoing projects are complete. The brothers have set up two realty firms, which will bid for new projects and land acquisitions separately.
Ashwin, eldest of the three, has set up Seth Corp, which he will operate jointly with son Chintan. He has an office in Vile Parle. Ashwin’s brothers, Vallabh and Jitendra , have set up Sheth Ventures , and they currently operate from Kandivli.
In SDPL, the roles of the brothers, who hail from Saurashtra in Gujarat, were clearly etched. Ashwin focused on land acquisitions, Jitendra on finance and marketing, and Vallabh, youngest of the three, on construction aspects.
Industry insiders said the first cracks appeared in 2009 following the global recession and property market slump. The firm is believed to have lost “a good amount of money ” in Dubai where the company had launched five residential and commercial projects worth $545 million (Rs 2,545 crore). “When the huge returns did not materialize, the blame-game began. That’s when the brothers thought it was time they separated,” said an industry source.
Private equity firms say SDPL claims to have assets in the form of huge prime land such as the erstwhile Borosil Glassworks property at Andheri , Voltas land at Thane and Cynergy building at Prabhadevi . Industry insiders said the company has sold a majority of its projects such as Beaumonde at Prabhadevi and Polaris at Goregaon West.
Ashwin entered the real estate sector as a broker. In the late 1980s, he constructed a small single building in Kandivli and soon spread out to other suburbs.
The brothers got involved in the business and their first big break came in 1997, when they set up Vasant Nagri, a 1.15 million-sq-ft township in Vasai. Most of their funds came from investments by Vaishnav trusts and high net worth individuals.
Anatomy of a split
Rs 3,000-crore Sheth Developers Pvt Ltd (SDPL) will continue to exist till ongoing projects are complete All three brothers hold an equal 33% stake in SDPL The three have set up two realty firms, which will bid for projects and land acquisition separately Ashwin Sheth, the eldest brother, has set up Seth Corp which he will operate jointly with son Chintan Vallabh and Jitendra have set up Sheth Ventures
Grim Realty: Some Other ‘Disputes’
At the heart of the dispute are allegations of violations in a business association agreement signed between Niranjan Hiranandani and daughter Priya Vandrevala in 2006. They floated a company, Hirco, in London and launched its subsidiary, Hirco Developments, to develop townships in India. In 2009, Priya alleged that new acquisitions were not translating into profits for her. The case is under arbitration.
Raheja denies differences
The patriarch of Mumbai’s real estate industry, G L Raheja, is reportedly facing differences over the division of the family’s substantial wealth. Son Sandeep is said to have voiced his discontent over the business division allegedly tilted in favour of his sisters – Sabita R Narang and Sonali Arora. Sandeep, an architect and also MD of K Raheja Constructions, though denied any differences with his father. “It’s a false propaganda,” said Sandeep.