Shilpa Shetty and Raj Kundra buy defunct glass company in lieu to enter jewellery business

Mumbai's celebrity couple, Shilpa Shetty and Raj Kundra's recent acquisition of the Kolkata-based Hindusthan Safety Glass is actually an effort to enter the jewellery business by taking over the defunct glass company.

This month Bollywood actress Shilpa Shetty and her British born entrepreneur husband Raj Kundra acquired 51.51% stake in the Kolkata-based Hindusthan Safety Glass Industries Ltd from the clutch of investors and promoters at an aggregate price of Rs 1.88 crore.

Following this the couple - having acquired shares in their personal capacity - has now made an offer for the balance 26% equity capital at a price of Rs 12 a share, which if fully acquired would entail further investment of Rs 95.32 lakh.

The shares were acquired from the promoter Jagdish Agarwal and his family, and other companies like Arrowspace Commodities, Ocian Advisory and Talent Investment.

"The acquirers intend to build new businesses by diversification into bullion, gems and jewellery or acquisition of companies in such domains with the approval of the shareholders," the new owners of the company has disclosed in the open offer.

If two rich celebrity individuals wish to get into jewellery business, why acquire a safety glass business?

Hindusthan Safety Glass doesn't make any safety glass or for that matter anything at all.

Despite proudly mentioning in its website that the company is "currently" engaged in the business of manufacturing and trading of all kinds of articles prepared of glass with plans to enter infrastructure business to "boost the present position of the company", the company has remained non-operational for some time.

"Due to financial constraints and change in technology, the company couldn't take off its project as envisaged. Currently it is not carrying out any major business activities," the open offer disclosure said.

The company is listed on the BSE, but the stocks are not traded. The scrip is also listed on the regional Calcutta Stock Exchange, where trading has remained suspended for long before the promoters in August cleared all the dues.

Hindusthan Safety Glass has now in fact turned into a shell company, which is now being used by the new promoters to get into a new line of business without going through the hassles of creating a new company and getting it listed, said a corporate consultant.

"There are instances of promoters acquiring a shell company to either get listed or venture into new line of business that requires permits or licenses," the consultant, who refused to be named, said.

He cited instance of Sujit Kanoria (brother of Hemant Kanoria of Srei Infra) acquiring a similar defunct Peerless Abasan Finance and then changing its name to Shristi Infrastructure Dev Corp and ventured into a new line of business, and more recently Manappuram Finance acquiring a housing finance company Milestone Home Finance that had no operations but with approvals in place.