Change is constant for the Lodha Group founded by the sitting BJP MLA of Maharashtra representing the elite constituency of Malabar Hill in Mumbai.

Notwithstanding the lack-luster performance of three listed subsidiaries, Lodhas are now floating the holding company public with a mega fresh issue of Rs 2500 cr that too at a time when the company has suffered a major setback in the face of COVID-19.

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How inept is our capital market regulator in disseminating the facts of the issuers can be gauged from the disclosure made by the Mumbai-based Lodha Group in their latest offer document. After filing the Draft Red Herring Prospectus (DRHP) in April 2018 not only has the company changed its name from Lodha Developers Ltd to Macrotech Developers Ltd (MDL), but it has also dropped the “founder and chief mentor” from the promoters’ list! Changing the company’s name may not be a serious matter for the investing public. But, the company certainly owes an explanation for changing the main promoter’s name. If the market regulators can’t enforce this, whose interest are they serving?

The Red Herring Prospectus (RHP) filed by MDL on March 31, 2021, presents Abhishek Mangal Prabhat Lodha, Rajendra Narpatmal Lodha, Sambhavnath Infrabuild and Sambhavnath Trust as promoters of the 1995-registered company. However, the DRHP filed by the company three years ago claimed that Mangal Prabhat Lodha, Abhishek Mangal Prabhat Lodha, Sambhavnath Infrabuild and Farms Private Ltd and Mangal Prabhat Lodha Family Discretionary Trust were the promoters.

According to the 2018 DRHP, Mangal Prabhat Lodha, a law graduate from the University of Jodhpur, was the company’s founder and chief mentor and he started the business in 1980 after moving to Mumbai. The DRHP also claimed that Mangal Lodha had single handedly inspired the company to its current position as India’s largest real estate developer by residential sales and he provided strategic guidance to the company’s business activities. In addition to his business achievements, he has been Member of the Legislative Assembly from Malabar Hill in Mumbai since 1995 and he was also member of the national executive of the Bharatiya Janata Party.

Nevertheless, the latest offer document claims that the Lodha group has been involved in the real estate business since 1986 and “Abhishek Mangal Prabhat Lodha is an original promoter”. Why the politician-businessman, who is the founder of the Lodha Group, is completely sidelined? The offer document does not reveal the reason. Winning six consecutive terms from the same constituency surely would certify Mangal Lodha is a very successful politician overwhelmingly enjoying the confidence of his electorate. But, as a businessman, will he live up to the expectation of the investing public? The financial track record of the Lodha Group’s three listed companies does not exude much optimism. Despite the Lodha group’s high stake (74%), National Standard, Sanatnagar Enterprises and Roselabs Finance have failed to put up credible financial performance, leave alone rewarding the public shareholders.

In real estate business, Lodha Group may be an undisputed leader. But, it scores very poorly in corporate governance. Many a decision of the group seems to have been taken without application of mind. For instance, MDL was promoted in 1995 as a private limited company and was converted to public in 2009. Four years later it was converted back to a private limited company. What’s more, in 2018, it was once again converted to public. Also, initially MDL’s share had a face value of Rs 100 which was subdivided into Rs 5 in 2009. In 2017, this was consolidated into Rs 10.

On December 1, 2003, the registered office of the company was changed from 216 Shah & Nahar Industrial Estate, Dr. E. Moses Road, Worli, Mumbai 400 018 to 412, Vardhaman Chambers, Cawasji Patel Street, Fort, Mumbai 400 001. Very next day, the registered office was shifted back to Shah & Nahar Industrial Estate. In February 2015, once again the registered office was shifted to Vardhaman Chambers! All these changes were effected for “administrative convenience”!! Ironically, the largest real estate company does not own its registered office!!!

Despite being an MLA, Mangal Lodha was appointed as an Additional Director of the company on April 13, 2015. Within four months, he resigned from the board due to “pre-occupation” only to stage a comeback in March 2016. He was elevated to the position of whole-time director/executive chairman in June 2016 which he relinquished three months later, in September 2016, once again due to “pre-occupation”.

As regards the group’s credibility in the stock market, the shares of MDL’s subsidiaries, namely Sanathnagar Enterprises and National Standard were suspended from trading on the recognized stock exchanges in India due to certain non-compliances with the listing requirements, and the securities of Roselabs Finance have been placed under Graded Surveillance Measures Stage-3 by BSE.