MJ Pharmaceuticals, a company owned in his personal capacity by Sun Pharmaceutical Industries Managing Director Dilip Shanghvi, has invested in five projects of Dosti Realty, a developer in Greater Mumbai. Surakasha Realty, controlled by Sun Pharma director and Shanghvi’s brother in law Sudhir Valia, too, has invested in these projects.
In one of these projects, MJ Pharma’s share in profit or loss is 30 per cent, while in the other four projects, it is 37.5 per cent. MJ Pharma’s equity investment in the Dosti projects was around Rs 110 crore at the end of March 2017, its filings with the Registrar of Companies show. MJ Pharma had a consolidated net worth of Rs 307.6 crore, invested in non-current investments to the tune of Rs 262.6 crore, which includes the Dosti partnership.
Meanwhile, MJ Pharma had raised Rs 600 crore by way of commercial papers, according to sources close to the development. It raised these corporate guarantees through Shanghvi Finance (SFPL), owned by Shanghvi, which has shareholding to the tune of 40 per cent and 49.65 per cent in Sun Pharma and Sun Pharma Advanced Research Company, respectively. Both are listed on the bourses and the value of SFPL’s holdings is over Rs 40,000 crore.
A Shanghvi group official said the borrowing of Rs 600 crore was fully repaid in December 2018. A rating given to MJ Pharmaceuticals by CARE Ratings on December 26 remains outstanding. Valia, too, had raised debt pledging his Sun Pharma shares to invest through Suraksha Realty. While raising funds, investors were told that SFPL's total borrowings against the pledge of Sun Pharma shares will not exceed Rs 7,250 crore, and that the ratio of the market value to total borrowings would not fall below five times at all times.
Sun Pharma promoters have come under sharp focus after two whistle-blower letters alleged corporate governance lapses in the firm. Sun Pharma has denied any. According to documents, MJ Pharma is owned by four investment firms of Shanghvi — Sholapur Organics, Bonaire Exports, Nirmit Exports, and Jeevanrekha Investrade. Three were also promoter companies of Sun Pharma till August 2018, when they were merged with SFPL.
These four companies owned 19.1 stake each in FY17 while the rest of the shares were held by other investment companies of the Shanghvi family.
In December 2018, when MJ Pharma planned to raised Rs 750 crore through commercial papers, it had disclosed that it had received unconditional and irrevocable corporate guarantee from SFPL.
Documents from corporate affairs ministry show MJ Pharma invested in Dosti Flamingo project in Parel Sewri with 30 per cent stake in profit/loss while Suraksha held 10 per cent. MJ Pharma held 37.5 per cent stake in Dosti Business Park and another 12.5 per cent stake was held by Suraksha. A similar equity structure was followed in Dosti Presidio project. MJ Pharma also holds 37.5 per cent stake in Dosti Pinnacle and Dosti Vihar.