Gitanjali Gems is headed for liquidation because the committee of lenders has voted to end the resolution system bringing up time over-run. The Mehul Choksi-run company owes over Rs 12,550 crore to 31 economic creditors and is a key player within the Rs 14,000-crore PNB scam.
In simply six years, Gitanjali Gems went from being one of the maximum well-known jewelers in India to facing liquidation. The promoter Choksi is at the run. He is presently in Antigua, facing extradition.
Senior bankers instructed Business Standard that no different opportunity seemed achievable. “Resources (cash) are precious to us, and no person would like to throw precise cash after awful. There isn’t any point in preserving a resolution professional and different infrastructure in the area for a case like this,” one of the bankers stated. Some creditors have already filed claims in diverse boards for recoveries.
Moneycontrol couldn’t independently verify the news.
Gitanjali Gems was founded using Chinubhai Choksi in 1966, and it becomes one of the high jewelers of Mumbai. Mehul took over the enterprise in 1985. Top Bollywood stars, including Aishwarya Rai, Kareena Kapoor, and Bipasha Basu, endorsed the logo. A year earlier than September 2018, whilst Gitanjali became suspended from the exchanges, the employer stock turned into buying and selling at a constant Rs six hundred. The organization’s market capitalization becomes at Rs 6,000 crore.
However, in a year, the enterprise’s inventory nosedived via 90 percent, and the marketplace cap really worth Rs five 000 crores vanished. In March 2018, a special PMLA court issued non-bailable arrest warrants (NBWs) against Choksi and his nephews, Nirav Modi and Neeshal Deepak Modi. They were suspected of colluding with employees of Punjab National Bank (PNB) inside the Rs 13,500 crore fraud, the largest scam within the Indian banking records.
Choksi has muddled in a securities rip-off probed early on via the Enforcement Directorate (ED) and the Securities and Exchange Board of India (SEBI). In 2012, he allegedly rigged stocks within the organization with a Mumbai-primarily based brokerage, Prime Securities, and different firms. At the side of Prime Broking Company (a subsidiary of Prime Securities), he became banned from trading on the NSE in 2012.
It also alleged that he ran numerous shell companies that siphoned finances from the organization for use in illegal trading practices, just like what his nephew Nirav Modi did.
Choksi invested lots of money in manufacturers; that’s what led to the downfall of Gitanjali, in line with Atul Merchant, a former consultant at Gitanjali. The merchant was concerned in more than one role at the employer. “If your study lowers back to the start of the company in the 1960s, Gitanjali’s strong point became diamond buying and selling, now not production and that’s the location that has gotten Choksi into hassle due to the fact he simply did not have the mindset for it,” he informed the paper.
According to Choksi, it turned into the stern policies of the authorities and now not his enterprise strategy that took down the business enterprise. He desired to build many luxury brands in India like Louis Vuitton and Gucci and released 30 distinct manufacturers without delay. This covered Gili, Maya, Asmi, Nakshatra, and Gitanjali. Most of these brands did now not ultimate past 2013. According to Gitanjali’s filings with the exchanges, it has a debt of around Rs 12,558 crore in the shape of operating capital loans and external business borrowings (ECBs).
The Investor Education and Protection Fund (IEPF) Authority has efficiently compelled the Peerless General Finance and Investment Company Limited to switch deposits well worth about Rs 1,514 crore to IEPF, a statutory body under the Ministry of Corporate Affairs.
“Depositors’ money changed into pending with the organization for the final 15 years. The count came to the awareness of the Authority lately, and within a short time because of the proactive motion of the Authority, the said sum has now been transferred to IEPF,” the ministry of Finance stated in a press launch. “The records submitted with the aid of agency exhibits that fifty.77 percent of the overall quantity was taken in the shape of deposit certificate of cost of Rs. 2000 or less. Number sensible such certificate form 85.32 percentage of the overall variety of certificate issued. The majority of those investors are common citizens belonging to the decrease and center profits group,” it stated in a statement.