Gitanjali Gems, once a pinnacle jewelry chain, faces liquidation: Report
Gitanjali Gems is headed for liquidation because the committee of lenders has voted to cease the decision technique mentioning time over-run. The Mehul Choksi-run firm owes over Rs 12,550 crore to 31 economic creditors and is a key participant within the Rs 14,000-crore PNB scam.
In simply six years’ time, Gitanjali Gems went from being one of the most famous jewelers in India to facing liquidation. The promoter Choksi is at the run. He is presently in Antigua, dealing with extradition.
Senior bankers informed Business Standard that no different alternative regarded viable. “Resources (cash) are treasured to us and nobody would really like to throw precise cash after bad. There isn’t any factor in preserving a resolution expert and different infrastructure in the region for a case like this,” one of the bankers stated. Some lenders have already filed claims in various boards for recoveries.
Moneycontrol could not independently confirm the news.
Gitanjali Gems turned into based by Chinubhai Choksi in 1966, and it changed into one of the high jewelers of Mumbai. Mehul took over the company in 1985. Top Bollywood stars consisting of Aishwarya Rai, Kareena Kapoor and Bipasha Basu endorsed the logo. A year before September 2018, when Gitanjali turned into suspended from the exchanges, the company stock changed into buying and selling at a regular Rs 600. The enterprise’s marketplace capitalization turned into at Rs 6,000 crore.
However, in a yr’s time, the organization’s inventory nosedived through 90 percent and the marketplace cap well worth Rs five,000 crores vanished. In March 2018, a special PMLA courtroom issued non-bailable arrest warrants (NBWs) in opposition to Choksi and his nephews, Nirav Modi and Neeshal Deepak Modi. They have been suspected of colluding with personnel of Punjab National Bank (PNB) within the Rs thirteen,500 crore fraud, the most important rip-off inside the Indian banking records.
Early on, Choksi got muddled in a securities scam being probed by way of the Enforcement Directorate (ED) and the Securities and Exchange Board of India (SEBI). In 2012, he allegedly rigged stocks in the corporation with a Mumbai-based totally brokerage, Prime Securities, along with other corporations. He, in conjunction with Prime Broking Company (a subsidiary of Prime Securities), changed into banned from trading at the NSE in 2012.
It became also alleged that he ran various shell businesses that siphoned finances from the corporation to be used in illegal buying and selling practices, similar to what his nephew Nirav Modi did.
Choksi invested a whole lot of cash in manufacturers, which is what caused the downfall of Gitanjali, in step with Atul Merchant, a former representative at Gitanjali. The merchant turned into worried in more than one roles on the business enterprise. “If you research again to the start of the firm in the 1960s, Gitanjali’s area of expertise became diamond buying and selling, no longer production and that’s the area that has gotten Choksi into trouble because he simply did not have the mindset for it,” he instructed the paper.
According to Choksi, it becomes the stern guidelines of the authorities and not his enterprise strategy that took down the organization. He desired to build many luxury manufacturers in India like Louis Vuitton and Gucci and released 30 exceptional manufacturers right now. This blanketed Gili, Maya, Asmi, Nakshatra, and Gitanjali. Most of those manufacturers did now not ultimate past 2013.
As in step with Gitanjali’s filings with the exchanges, it has a debt of around Rs 12,558 crore inside the shape of running capital loans and external business borrowings (ECBs).