A South Mumbai house is going at 90% discount. Sadly, you can't buy it

JK House, a prime property in South Mumbai's tony Breach Candy area is up for sale with a 90 per cent discount. But don't get too excited just yet. The property, owned by Raymond Ltd, is being offered only to promoters of the firm, the Singhania family.

Touted as the second tallest private residence after billionaire Mukesh Ambani's Antilia, the newly-built JK House has been proposed for sale to Singhania family at just Rs 9,200 per square feet. However, the prevailing market rates in the area are well above Rs 1,10,000 per square feet.

In a report titled 'Raymond Ltd: The Complete Rip-Off', proxy advisory firm Institutional Investor Advisory Services (IiAS) India Ltd has urged shareholders to reject the proposal when it comes up for voting at the company's annual general meeting (AGM) on June 5.

IiAS warned that if this transaction goes through, it will result in an opportunity loss of more than Rs 650 crore for the company and its shareholders. "In our opinion, the board has failed to protect the interests of the minority shareholders. The company and its directors must prepare themselves for shareholders seeking recompense," the report said.

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"Raymond Limited's own valuation report states that the residential property is valued at Rs 1,17,000 per square foot (built up), putting a value on the entire transaction at Rs 710 crore," it added.

Meanwhile, in a statement, Gautam Singhania said Raymond adheres to the 'highest level' of corporate governance. "All relevant facts pertaining to this matter have been set out in the AGM notice for shareholders to take a considered view. Needless to say, the promoters, being interested parties, will abstain from voting on this matter."

IiAS added that Raymond had spent Rs 270 crore, not including the cost of land, on rebuilding JK House. "IiAS believes the board has failed to protect the interests of the minority shareholders. The quality of board oversight at Raymond Limited is of concern if the board is unable to separate the interests of the company and its promoters," the proxy advisory firm said in the note.

In an AGM notice filed on 15 May, Raymond had said it will seek shareholders' nod to sell JK House. The company had bought the property in 1945 for 'residence of its directors'. It houses four duplex flats, a Raymond's showroom on the ground floor and a museum.