One more director quits at DB Realty

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Mumbai, Mar 29: Sundaram V Rajagopal has resigned from the board of DB Realty, with effect from March 21, 2011. The company has accepted his resignation and filed the communication with the stock exchange.

Bollywood Mauritius Holdings had 4.66% stake in the realty company, which was promoted by Vinod Goenka and Shahid Balwa. Rajagopal was chosen as a nominee director by Bollywood Mauritius Holdings and he held the post till October 2010.

He is the third high-profile exit from the realty company's board. Last month, Shahzad Dalal, vice chairman and managing director of IL&FS Investment Managers, and former State Bank of India managing director Chandan Bhattacharya, had resigned, they were also directors of the company.

It was dramatic last month as one of the promoters and managing director of DB Realty, Shahid Balwa, was arrested by the Central Bureau of Investigation (CBI) with regards to 2G telecom spectrum scam.

Rajagopal, a non-executive director of DB Realty, was appointed as a nominee of Lehman Brothers, pursuant to their investment in DB Realty prior to the IPO. As per the SSA (share sales agreement), the right to appoint nominee directors by all such investors ceased to exist on October 1, 2010. Post his joining in Starwood Capital, his current schedule and commitments do not permit him to continue to be on board of DB Realty and, hence, he has taken the decision to resign from the board. DB Realty is in the process of "consolidating and reconstituting the board to make it focused," stated DB Realty in its official statement.

According to the prospectus offer of DB Realty's initial public offer in early 2010, the only independent director of the company left, is retired bureaucrat Karun Chandra Srivastava.

The consistent flow of bad news over the last few months have hit the company's share price. This has also forced promoters to pledge more shares for providing collateral for earlier pledged stake.

One of the senior official from an investment firm said, 'the promoters need to disassociate with management by bringing in a professional board. This will help the business with overall restructuring but also streamline the company operations.'

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