India's Most Influential Business and Economy Magazine - A Planman Media Initiative 
 Search  
  Other Sections
  
  • Home
  
  •  Cover Story
  •  B&E This Month
  •  B&E Indicators
  • B School
  • B&E This Fortnight
  • BE Corporation
  • Policy
  • Politics
  • Scrutiny
  • Stratagem
  • Testimonial
  • Voyage DAffaires
 


Share |
Stratagem
 
Go to Page Number - 1   2   3   
INSIDE VIEW
In knots over family & legal wrangles
The Hiranandani family has been in the news recently more for the wrong reasons than right. A running family feud and other legal travails could well put the skids on the family’s many business ventures, if not settled imminently and amicably.
Issue Date - 30/05/2012
 
Family feuds breaking out in well-known business houses are not uncommon. But the ongoing legal run-ins of the Hiranandanis and Mafatlals certainly take the cake, the plate and the trimmings. Often, at the core of the dispute is that hoary old chestnut, property, over which ties of blood and kinship have been known to fray and fall apart. The dispute between Mafatlal scion Atulya Mafatlal and his socialite wife Sheetal before the Bombay High Court and the legal battle between Darshan Hiranandani and his sister Priya Hiranandani-Vandrevala present unedifying examples of the public spectacles that family feuds in business houses commonly degenerate to. Another family drama to have spilled into the public domain in recent times was the rift between the Ambani brothers. The two siblings, with probably higher business stakes up for grabs in the course of their bitter feud than any other warring members of the business tribe in India, did eventually bury the hatchet, which gives rise to the hope that even the Hiranandanis and Mafatlals would prefer to settle for an amicable resolution of their problems rather than slug it out in the courts.

Of course, the Mafatlal case has become juicy fodder for the tabloids. Despite the efforts of the HC-appointed mediator to bring the estranged couple to agree on the contentious issues, media reports suggest that any conciliation in the matter looks improbable and not within easy sight. On the other hand, the tussle between construction magnate Niranjan Hiranandani’s two children – son Darshan and daughter Priya, a chartered accountant based out of London – came out into the open in 2009 after Priya accused her father and brother of violating a non-compete agreement signed among them in 2006. The agreement required that all business transactions to develop and acquire property be undertaken exclusively with each other for the first seven years. The profits were to be shared equally between Priya and the Hiranandanis. Priya claims that her father and brother entered into projects without her knowledge, either independently or with others in the real estate sector, despite signing the agreement to do business exclusively with her.

Does he feel bitter or disappointed at his daughter’s demeanour? “Younger people have high ambitions but little tolerance,” says Hiranandani, speaking to Business & Economy. “They want everything fast... Earlier, senior members of the family controlled affairs; now everyone wants to take their own call.” When asked about the rumours that the realty group started in 1978 by him and his brother Surendra, and known today for its realty projects in and around Mumbai, Chennai, Bangalore, Hyderabad and Dubai, could be headed for a split, he vociferously discounts any such possibility, “It’s natural to have differences between family members. But there is no such possibility of any split happening in the group’s realty business.”

 
Hiranandani – who ranked 41st in the Forbes list of richest Indians for 2011 with wealth of $1.27 billion – manages realty, social infrastructure and hospitality businesses of the Hiranandani Group. Of late, the group has diversified into new areas such as special economic zones, education, hotels, hospitals and power. The group is developing a power project in Maval, Pune, and building a liquefied natural gas (LNG) terminal at Dighi port in Maharashtra. Son Darshan handles overseas realty operations of the group and the upcoming power venture. He was instrumental in executing the group’s Dubai project, 23 Marina, which till recently, was the world’s tallest residential tower. Daughter Priya has co-control of Hirco Plc, which is listed on the Alternative Investment Market of the London Stock Exchange. She first came into the spotlight in 2002 upon founding a business process outsourcing firm Zenta, which she helped turn around before selling it for $100 million in 2005. But despite plenty of business acumen to show for, Priya always had the reputation of being a maverick and a somewhat stormy petrel. “I was always a rebel. I wanted to do things my way,” she once declared in a newspaper interview. She could not be reached for her comments despite many attempts made by this correspondent.

At the heart of the controversy are commercial rights to real estate projects valued at a little under Rs.30 billion. Apart from a property in Dubai, the disputed assets include 28 other projects spread in and around Mumbai and Pune, bought under the name of Hirco PLC, a company which was started in London in 2006, as the investment arm of the Hiranandani Group. Hirco had listed on the London Stock Exchange’s Alternative Investment Market in 2006, raising £383 million in one of the largest real estate IPOs on AIM that year. In 2007 and 2008, it earned profits of £107 million and £75 million, respectively. However, the company posted losses of £17.75 million and £13.56 million in 2009 and 2010, respectively, coinciding with the phase when the relationship soured between Priya and the Hiranandanis. Priya’s contention is that her father and brother have deprived her of profits by not utilising the money raised by Hirco in accordance with the terms of the agreement. The loss to her is estimated to be around $300 million.

In October 2010, Priya filed arbitration proceedings against the Hiranandanis, claiming that new land bought by the Hiranandani Group was not translating into profits for her. The arbitration plea attracted widespread notice for the high profile names on the panel – Cherie Blair, wife of former British Prime Minister Tony Blair, heads the panel whose other members include Ajit P. Shah, former chief justice of Delhi High Court and Lucy Reed, a queen’s counsel from UK, as is Blair herself. The arbitration hearings were scheduled to take place in December last year, but have been deferred to June this year as the Hiranandanis claimed ignorance of the terms and conditions that are alleged by Priya to have been violated. Currently, the two sides are framing their respective strategies.

          

Share |
 
Go to Page Number - 1   2   3        Next
 


      
Comments   
   
      
Leave your first comment

   


     Leave Comments to this story    
     
Name:  
Comments:  
Email id:  
City:  
 
 
Busines & Economy is also associated with :
©Copyright 2008, Planman Media Pvt. Ltd. An Arindam Chaudhuri Initiative. With Intellectual Support from IIPM & Malay Chaudhuri.