How DB Realty staged a stunning comeback as Valor Estate

At the helm of the ambitious, 4.5 million sq. ft mixed-use development project, pegged to be south Mumbai’s largest, are Prestige Group and Valor Estate Ltd. In its earlier avatar, the latter was known as DB Realty, a name that became infamous after the promoters got embroiled in the 2G spectrum scam case a decade and a half ago.

Like many slum rehabilitation projects in Mumbai that went cold due to the complexities involved, the Jijamata Nagar project in Worli, conceived nearly two decades ago, was stuck. DB Realty had stepped into the project around 2010 and was to jointly execute it with Lokhandwala Infrastructure. But it remained a non-starter. With Bengaluru’s Prestige buying out Lokhandwala’s stake and coming in as an equal partner with Valor, the project is finally set to take off now.

In Mumbai, where building regulations and approvals are not easy to navigate, the partnership works well. Valor brings its strength in slum clearance and procuring approvals to the partnership, while Prestige brings development and execution bandwidth to the table.

After Valor Estate’s promoters, Vinod Goenka and Shahid Balwa, were accused in the 2G telecom spectrum scam, the company faced a complete stoppage of its projects. Today, the real estate firm counts some of the country’s largest developers as partners in prime projects. Armed with over 500 acres of land in a city known for its notoriously scarce land at skyhigh prices, and its expertise in slum redevelopment, the company slowly got back into the game.

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Like Valor, the promoters of Unitech, once India’s second-largest real estate developer, were also accused in the 2G case. But Unitech’s troubles were multi-fold. In 2020, the Supreme Court took over the company’s management after it faced accusations of money laundering and fund diversion impacting thousands of homebuyers.

So, how did Valor Estate turn its fortunes around?

The rise and fall

Even before DB Realty was founded, Goenka and Balwa, both college dropouts, had a real estate connection. After joining his father’s construction firm, Goenka went on to launch Dynamix Group, a real estate company. Balwa’s father Usman Balwa had a hospitality business. The two went to form Dynamix Balwas Group, and eventually, DB Realty, the listed entity.

Before the 2G issue, Valor’s rise as a real estate developer in Mumbai, arguably one of India’s most challenging property markets, was nothing short of meteoric. The company’s ₹1,500-crore initial public offering in February 2010 at ₹468 a share, continued expansion even when the markets were down after the 2008 Lehman crisis, and large-scale projects, stunned the industry.

But then came the 2G case.

Swan Telecom (later known as Etisalat DB), a relatively new company in the telecom business, was one of the many entities embroiled in the 2G case. Balwa and Goenka were among its directors. Both were arrested after the company faced accusations of being favoured in the spectrum allocation.

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“From 2011, all our projects came to a grinding halt. We had a lot of land but no financial backing from any bank. There were serious cash flow issues,” recalled Goenka, the chairman and managing director of Valor Estate.

With the case going on, DB Realty was in a state of paralysis. “Around 2014-15, Shahid (Balwa) and I decided we can’t be just sitting on all these prime lands we had,” Goenka said.

But because of the 2G case, the DB Realty brand had been battered. The promoters realized it would be impossible to develop projects on their own let alone sell them. “So, we thought, why don’t we partner with a good developer brand, which has the financial backing and the capability to execute and sell,” Goenka explained.

Because of the 2G case, the DB Realty brand had been battered. The promoters realized it would be impossible to develop projects on their own let alone sell them.

The first such deal, signed under the partnership model, was for the Arradhya project with Man Infra in 2015. Subsequently, multiple developers came on board. But the 2G taint remained and it wasn’t easy. “To convince developers was difficult. The fear was: what if our properties were attached in the future or there was legal impact with the (2G) case going on,” said Goenka.

Then came some good news. After almost seven years and a long legal battle, all the accused, including DB Realty’s promoters, were acquitted due to lack of evidence in 2017 by a trial court.

“Things changed after that,” Goenka said.

The promoters registered the company’s new name, Valor Estate, in March 2024. The name was chosen with vaastu and numerology in mind. Even so, the 2G case continues to haunt them. In early 2022, for instance, when Godrej Properties Ltd (GPL) announced that it was planning to acquire a stake in DB Realty and set up a joint venture platform for redevelopment projects, its stakeholders and minority investors pushed back. The next day, Godrej pulled back saying that given the feedback it had received, it was not proceeding with either investment.

Meanwhile, the legal case continues. The Central Bureau of Investigation (CBI), India’s crime investigating agency, appealed against the trial court’s judgement and the matter is now pending before the Delhi High Court. The next hearing is scheduled on 18 November this year.

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The second innings

Fifteen years after facing various development setbacks, Ten BKC, a residential redevelopment project near Mumbai’s prime business district, Bandra Kurla Complex (BKC), recently started handing over homes to buyers.

Valor Estate had originally entered into a development agreement for the project in 2010. After the 2G fiasco, it needed a white knight. Enter Radius Estates & Developers, which struck a joint venture with Valor to revive the project. But, Radius later defaulted on loans and faced insolvency. Eventually, Adani GoodHomes Pvt Ltd, a group company of Adani Properties, stepped in and acquired Radius’ stake through the National Company Law Tribunal (NCLT) to develop and execute the project.

Valor Estate’s turnaround, to a great extent, has thus been in finding the right developer partners to revive its stuck projects or monetize prime land that it could not have developed and sold on its own.

“Our model is very simple. We have the land or development rights for a land parcel. We get the approvals. A developer partner comes in, with whom we have a revenue, area or profit sharing arrangement,” Goenka explained.

In recent years, Valor has teamed up with multiple developers. In January 2019, for instance, Shahid Balwa, vice-chairman and managing director of Valor Estate, was in Bengaluru for a round of meetings with top developers in the city. That was when Prestige Group chairman Irfan Razack first met him.

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Prestige had signed a couple of projects in Mumbai, including a niche, luxury project in Pali Hill, but it wanted to do more. The two sat across the table and got talking, without any deal in mind. By the end of the discussion, Razack and Balwa were shaking hands for two office projects: one was a stuck Valor project in Mahalaxmi and another in BKC. After due diligence, the term sheet was signed in the presence of Deepak Parekh, former chairman of HDFC, which was also a lender to Valor.

“We are quite happy with our association, and have a good relationship with Valor. Going forward, if there are opportunities, we could work together again,” Razack said.

Prestige is also a partner with Valor in a large mixed-use project at Aerocity in Delhi that will open next year.

Aside from Adani and Prestige, Valor has also formed partnerships with other developers, including L&T Realty, Rustomjee Group, Lodha Developers, and RMZ. And while Godrej Properties may not have purchased a stake in Valor, it is now jointly developing a project in Mahalaxmi with the company.

Lodha Developers, the city’s largest developer, has signed a 1.3 million sq. ft project with Valor in suburban Malad (west), under a revenue and area share arrangement, according to Valor’s latest investor presentation. The project’s gross development value (GDV) is ₹2,770 crore, and Valor’s share will be roughly ₹415 crore. In real estate, GDV is the estimated value of a completed project.

Valor’s potential share from six residential and commercial projects in the pipeline, in and around Mumbai, is estimated to be over ₹11,100 crore, according to the presentation.

In the April-June quarter, revenue from operations stood at ₹898.5 crore compared to ₹93.12 crore in the corresponding year-ago quarter. The company reported a net profit of ₹13.71 crore compared to a loss of ₹13.18 crore during the period.

“The joint venture partnership route has proved to be a very good model for the company given that the brand had taken a beating,” said Anuj Puri, chairman of property advisory Anarock Group. “It would have found it difficult to sell under the brand name. So, to tie up with developers with the ability to sell, like Prestige Group, is a win-win for Valor, the developer partner and buyers,” he added.

Despite the company coming back from the brink, however, stock market investors have not been overly impressed. Valor Estate shares closed at ₹168.50 on 15 September. While the company has beaten the benchmark index, Nifty realty, in the last three years, the share price is still far below its IPO price. The stock price tumbled in 2011-2012 after the 2G fiasco, and has inched up since 2019 or so, after the company got on the path to recovery.

Slumland millionaires

In Mumbai, redevelopment of aging housing societies and slum pockets is the main route to expand. The redevelopment route is lengthy and involves obtaining the consent of the tenants, providing them alternative accommodation or financial compensation. Despite the complexities, society redevelopment projects have attracted many developers in recent years. But Valor has steered clear, instead focusing its energies on redeveloping slums.

“We are not in the society redevelopment race and don’t want to compete with other developers. Slums are our forte, where we go in and clean up the land. In the past, we had serious competition from a few developers. But now, there are just a couple of us in slum redevelopment, which gives us an advantage,” Goenka said, adding that the company’s strategy is not to go and bid for a piece of clean land.

Top slum developers such as Housing Development and Infrastructure Ltd (HDIL), Omkar Realtors and Developers and others who dominated the scene once are a shadow of their past. This has put Valor Estate in an advantageous position.

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“Shahid Balwa’s ability to decipher and interpret the nuances of development plans and efficiently manage them in slum redevelopment projects has been a key strength of DB Realty. The company’s track record in this segment is impeccable, and its future pipeline remains promising,” said Gulam Zia, senior executive director, research, advisory, infrastructure, and valuation at property advisory Knight Frank.

Not surprisingly, many developers in Mumbai or those planning to enter the city are exploring tie-ups with Valor for slum projects. With many slum redevelopment firms either shutting operations or lying dormant, DB Realty today enjoys a strong hold on this business, Zia said.

“Given that slum redevelopment contributes nearly two-thirds of the new apartment inventory in Mumbai, DB Realty’s leadership position in this sector provides it with a distinct competitive edge among developers,” he added.

Bigger ambitions

The debt-ridden Lavasa project, in the Sahyadri mountains in Maharashtra, which was a dream project of Hindustan Construction Company chairman Ajit Gulabchand, and once touted as a private hilltop city, is in the middle of a multi-round aggressive bidding process, as creditors try to sell it to recover their dues.

In this ongoing takeover battle, Valor Estate is one of the foremost bidders, along with two others. Whether Valor Estate ultimately wins the bid or not, what is interesting is the company participating in the mega auction for a project of Lavasa’s scale.

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For the next three-four years, Valor plans to continue partnering with developers, but beyond that it has bigger plans—develop projects on its own, again.

Even the current model, where Valor is mostly a silent partner, could see some changes. “We are well-funded, almost debt free, and can deploy our own money to get land ready and give it to a developer to build. Now, we can actually choose who we want to partner with. The revenue or area share ratio we can command can also go up. We may also look at co-branding some of the new projects we take up with our developer partners,” Goenka said.

The company has also reorganized its verticals. This year, the hospitality business was demerged as Advent Hotels International, while Valor continues to focus on the residential and commercial business.

For any real estate developer, brand name and customer trust are key. While Valor has managed to get back into business in a new avatar, rebuilding its brand image and credibility will be crucial for a sustained recovery.