A graphical representation of the Trump Towers in Delhi-NCR. (Source: Trump Towers Delhi NCR)

How The Singh Brothers Enriched A Builder Developing The Next Trump Towers

“Magnificence in the Trinity of Men, Materials & Money”— that’s how real estate developer M3M describes itself on its website. It’s an apt description for the other trinity this Delhi-based company is part of. One that involves the Singh brothers and the spiritual leader of one of India’s leading religious sects—the Radha Saomi Satsang Beas.

A BloombergQuint investigation finds that of the Rs 7,315 crore that Malvinder and Shivinder Singh made when they sold their family firm Ranbaxy Laboratories Ltd., at least Rs 1,100 crore was invested via a series of real estate transactions that served mostly to enrich Basant Bansal and Roop Bansal—the brothers who founded M3M Group.

The Bansals started their flagship company M3M India Ltd. in 2007 and have since become a leading developer of luxury residential and commercial real estate in the Gurgaon—Haryana area. They are also developing a Trump Tower in the area, at a reported cost of Rs 1,200 crore.

The Singhs funded companies associated with Shabnam Dhillon—wife of their spiritual guru Gurinder Singh Dhillon. These entities, in turn, funded companies owned or associated with the Bansals, and then bought them back at astonishing valuations.

These transactions, details of which were traced via filings with the Registrar of Companies, enriched the Bansals by over Rs 1,100 crore, as per BloombergQuint’s calculations.

It All Began in 2008-09…

Rewind to a decade ago, in 2008 when the Singhs were flush with cash having just sold their controlling stake in their family-founded Ranbaxy Laboratories Ltd. to Japanese firm Daiichi Sankyo.

In financial year 2007-08, Dignity Buildcon Pvt Ltd., a real estate company owned by the Bansal family, bought land in Sector-66 Gurgaon for Rs 22.21 crore. The Bansals had invested just Rs 1 lakh as equity capital in Dignity. To finance the land purchase the company obtained unsecured loans of Rs 22.38 crore from RHC Holdings Pvt. Ltd --- a holding company owned by the Singh brothers. The funds were routed via a third company—Sharan Hospitality Pvt Ltd.

  • RHC Holding → Sharan Hospitality →Dignity Buildcon

A year later, RHC Holdings and its subsidiaries gave further loans to Sharan Hospitality to acquire 100 percent of Dignity Buildcon for Rs 588.92 crore. At the time, Dignity had just one major asset, the land it had acquired the previous year, using the Singh family money.

The Singh brothers paid 29 times more money for an asset, the purchase of which it had financed just a year ago. And the Bansals, who had invested Rs 1 lakh in Dignity, walked away with Rs 589 crore.

Interestingly, the company that played middle-man, Sharan Hospitality, had on its board Shabnam Dhillion.

And, Yuvraj Narain Gorwaney and his wife Sangeeta Narain were common directors of Sharan Hospitality and Dignity Buildcon at the time of the transaction. Both were residents in the ‘Radha Swami Satsang’ campus, according to filings with the RoC.

Also, in April 2011, Sharan Hospitality sold its 100 percent stake in Dignity to Prius Real estate for Rs 612.6 crore. Prius was then owned equally by Gorwaney and Narain.

What Happened Next?

The Bansals’ get-rich-quickly relationship with the Singhs and the Dhillons continued. Richer by Rs 589 crore from the sale of their company, they invested the amount in their group companies such as M3M India Ltd.

As on March 2011, the M3M India Ltd. extended Rs 176 crore via advances to RS Infrastructure Ltd., a company wholly owned by the Bansals. At the time the total equity capital of RS Infrastructure was Rs 80 lakh. RS Infrastructure used the funds to purchase and develop land.

Enter Lowe Infra and Wellness Ltd., a company owned jointly by Shabnam Dhillon (84 percent) and Gorwaney (16 percent) in 2011-12. Between 2011 and 2013, Lowe raised Rs 740.65 crore from the Singh entities via optionally convertible debentures. In that same period, it paid Rs 520.40 crore to buy out RS Infrastructure. It also subscribed to Rs 206 crore worth of debentures issued by RS Infrastructure.

RS Infra used the money to pay back the the money received from M3M group.

As a result, thanks to loans extended by the Singhs, a Dhillon owned company acquired a Bansal company. The Bansals recovered their Rs 176 crore advance and were paid Rs 520 crore for a company in which they invested just Rs 80 lakh.

Net, net in just four years, the two transactions earned the Bansals Rs 1,109 crore on an investment of Rs 81 lakh. All at the expense of the Singhs and routed through companies associated with or owned by Shabnam Dhillon.

Queries emailed to M3M Holdings, Dignity Buildcon, Sharan Hospitality, R S Infrastructure, Lowe Infra and Wellness, Prius Real Estate and Singh family entities remained unanswered.

While BloombergQuint has simplified the narration of these transactions so that the net outcome is easier to understand, the complexity and layers add mystery to the already confusing deals.

Why would the Singh family impoverish itself to enrich a builder?

And even if the Singhs wanted to give away their money, why would they route these deals via companies associated with their spiritual guru?

Who was the real ultimate beneficiary here?

(Corrects an earlier version that misstated the first name of Basant Bansal)