Chronicling Shahid Balwa's astounding rise to one of the richest men in the country

DB Group managing director Shahid Usman Balwa came into the limelight when Forbes magazine named him in its November 2009 issue, as the 50th richest man in India, estimating his net worth at $ 1.2 billion.

Ever since, his net worth has continued to be a topic of constant discussion by the financial community, and with good reason. "Even the CBI will find it difficult to calculate his personal net worth accurately at this point.



If you remember the case of Ramalinga Raju, you would have noticed how difficult it is to do so immediately.

The CBI will get its answer only after toiling for six months, that too with active support from forensic accountants.

At this juncture, we do not know how many unlisted front companies he has, how many such front companies are incorporated in tax havens such as Isle of Man or Mauritius, whether he has pledged his shares for any loan, or made unaccounted money through insider trading," a prominent financial analyst told MiD DAY, requesting anonymity.

Going strictly by Shahid Balwa's personal shareholding in DB Realty Ltd, it would seem that he holds only a paltry 74,340 shares, which comes to merely 0.03 per cent of locked-in shares. But nothing could he more misleading, because hardly anything is known about his stakes in unlisted subsidiary companies.

However, going by the figures indicated by the shareholding pattern, analysts have estimated his personal wealth to be a little more than Rs 1,978 crore, after his company's share price crashed due to his arrest.
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"His net worth must have been Rs 2,423 crore before the stock price crashed, which means he lost around Rs 450 crore," a financial analyst said.

But clearly, it's much more complicated than that. Balwa has a fleet of four odd aircrafts ufffd two business jets and two choppers which he rents out through an air charter company called Eon Air Pvt Ltd when he does not use them for personal trips.

A look at the balance sheets and annual reports of DB Group and its subsidiary companies show unsecured loans borrowed by a subsidiary from another.
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"We must keep in mind how Kusegaon Realty Ltd loaned the Morani brothers owned Cineyug Films Pvt Ltd, the money which was allegedly passed on to Kalaignar TV, owned by Tamil Nadu CM Karunanidhi's family members. We can expect several such deals channelised and hidden through a maze of companies, both in India and in tax havens abroad.

We must also expect several crossholdings between unlisted front companies as well as other entities, which will be extremely hard to unravel easily. If we consider how easily money can be hidden in land holdings, the task becomes all the more difficult," the analyst observed.

It is easier to understand the complexity of the task if merely one factor is taken into account - the number of companies over which Shahid Balwa and the promoter group exercises influence. The DB Group's draft red herring prospectus itself declares that at least 62 subsidiary and group companies!

"Some subsidiary companies' documents say that Shahid, his promoter group and relatives control other companies and entities. Of course, we have not taken into account investments made by companies as well as individuals.

Nor have we attempted to find out how much money has been siphoned off and salted away abroad.

But if we take all these factors into account and also the fact that the real estate sector itself is notorious for its lack of transparency, then we may be looking at merely the tip of the proverbial iceberg," the analyst concluded.

Other analysts who spoke to MiD DAY also said that as Morani brothers' stake holdings in DB Realty as well as other stake holding companies with interesting names such as Bollywood Mauritius Holdings and Walkinson Investments come under scrutiny, there are much more that will come to light.

"The Mauritius factor has complicated things further. It is possible for any dubious firm to channel money to Mauritius through the hawala route or round tripping it across several tax havens.

Such players are known to purchase what are known as participatory notes or P-Notes, which enable them to play the Indian stock markets from Mauritius, without revealing even their identities.
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The Indian government allows such dubious investments and this policy has now come back to haunt them.
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When CBI pursues the money trail, it should be least surprising when it runs into a smokescreen of difficult to track identities of such players as well as the opaque rules of tax havens where such money is usually parked," revealed another prominent analyst. --Bobby Anthony

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