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Gitanjali Gems, Nirav Modi stores shuttered across India, employees await their dues

The future of the Gitanjali Gems and Nirav Modi firms and their employees remains uncertain

business Updated: Feb 22, 2018 16:30 IST
Sapna Agarwal and Yunus Y Lasania
PNB fraud,Nirav Modi,Gitanjali Gems
ED personnel conduct raids at a Gili jewellery store in Viviana Mall, Thane on Monday.(PTI File Photo)

The sight of the Nirav Modi store at the Flagship Kalaghoda store in Mumbai is pitiful—a watchman’s uniform, a pair of dark blue denims and a blue shirt are slung on hangers right under the brass name plate at the entrance of the store which has been shuttered since 15 February, under section 281B of the Income-Tax Act, 1961, while three bored-looking watchmen squat on the front porch doing nothing.

Nirav Modi is the main accused in the Rs 11,400-crore Punjab National Bank fraud case.

In Thane’s Viviana Mall, a white facade has been put up in front of Gitanjali Gems-owned Gili store. This is the mall’s usual practice when there is renovation work or change in ownership taking place, said a spokesperson for the mall.

Enforcement Directorate (ED) seize cash, jewellery and bonds worth several crores after a raid at Gili jewellery in Viviana Mall, Thane. (PTI)

Modi’s boutique store on Lavelle road, Bengaluru, also wears a forlorn look.

The story is worse for some of Gitanjali Gems Ltd’s franchises for whom the problem has been persisting for some years now.

For instance, the store on Cunningham road in Bengaluru wears a dark, deserted look despite being in the middle of one of the most bustling business corners of the city. The franchise has cut short its staff strength from around 10 in 2015 to three people right now, as per a store manager, who did not wish to be named. The three have not been paid by the franchise owner for the last three months. The franchise has some Rs80 lakh dues pending which Gitanjali has not paid since 2015, said the store manager, who spoke on the condition of anonymity.

| Read: Nirav Modi letter to staff after PNB fraud: Look for other jobs, can’t pay you now

On 19 February the Enforcement Directorate officials raided the store from 6pm to the next day 4am, according to the store manager.

The Gitanjali store manager refused to give details of the franchise owner, saying they are told not to share his contact details with the media. Mint couldn’t independently reach out to him immediately for a comment.

Another franchise from Nagpur closed his store in February 2017 after seven years of operations. The reason was irregular supplies, said the store owner, on the condition of anonymity. “The first three years were good. But as they (Gitanjali Gems) started expanding and diversifying, the service levels dropped and we decided to give up the franchise,” said the franchise owner, who still has close to Rs60 lakh to be cleared from the company but thinks it’s better to write it off and move on as it “is futile” to chase the company for payments.

Executives at a Gitanjali showroom in the national capital said the business has been down ever since the news of the loan fraud broke. At present, there are only three standalone showrooms of the company in Delhi; several Gitanjali showrooms have been closed by the company over the last few years, according to the executives, who did not want to be named.

The news of the fraud has also impacted consumer walk-ins. “There is an impact on customer walk-ins as well as on the overall image of the brand,” said one of the franchise owners in Delhi, asking not to be named.

The news of the fraud has also impacted consumer walk-ins. “There is an impact on customer walk-ins as well as on the overall image of the brand,” said one of the franchise owners in Delhi, asking not to be named.

Elsewhere in India, close to 100 franchise owners for Gitanjali have shuttered their stores in the last 2-3 years as they face irregular supplies from the company, according to another franchise owner from Nagpur. Close to a dozen have also filed police complaints in the last 2-3 years, said a former franchise owner, who did not want to be named. According to this franchise owner, there have been many complaints made at different forums, including the Registrar of Companies, capital market regulator Securities and Exchange Board of India (Sebi) and even with the Prime Minister’s Office (PMO), but they fell on deaf ears.

| Read: PNB fraud: Nirav Modi’s Rolls Royce Ghost, Porsche among assets seized by ED

According to media reports, franchise Hari Prasad S.V. had informed PMO about the alleged fraud by Nirav Modi in July 2016. He had also approached ED, CBI and several other bodies against the accused but to no avail.Mint was unable to reach out to him.

“I met (Mehul) Choksi at least 50 times, but he was not interested in returning the money and doing business. Finally I sent him a legal notice and also filed a police complaint,” alleged the franchise owner, who filed his case at MIDC Andheri East in January 2017.

The repercussions though are much wider. The entire gems and jewellery trade has been impacted because of the negligence of a few bankers. “Today when I went for my morning walk at PDP (Priyadarshini Park in South Mumbai), a person pointed a finger at me and sneered you are a jeweller right,” recounted a jeweller, who did not wish to be identified, from Zaveri Bazaar.

It’s not just the image of the industry but also its credibility that’s been hampered. “The bank scrutiny has tightened and the requirements for getting loans has increased. This will impact the export revenues and even the small and medium businesses,” said another jeweller from Zaveri Bazaar, who did not wish to be identified.

| Also read: Wary of Nirav Modi, Mehul Choksi for years, say diamond traders

Choksi and his firms are also named in the PNB fraud case.

The company now has about 40 franchise stores and 5-6 company operated stores across India, said a former Gitanjali employee from Mumbai. Mint was unable to independently verify the exact number of stores. Close to half a dozen addresses in Mumbai that were listed as Gitanjali Jewel stores on Google in locations like Parel, Santacruz, Borivali and Ghatkopar do not exist any longer, as found during site visits for this story.

Meanwhile, the future of the two firms remains uncertain.

About 600 workers in Hyderabad, whose families have lost their jobs due to the closure of Gitanjali Gems Park, owned by Choksi, last week have been staging a protest demanding for alternative employment since 19 February.

Workers, led by local trade unions and local leaders have been staging dharna since Monday, demanding that the state government intervene and provide them employment. Gitanjali Gems Park was raided and seized by the Enforcement Directorate (ED) in connection with the PNB scam.

“Fewer people have been coming in to work”, said a guard at Gitanjali’s factory in Andheri East, Mumbai.

Even employees at Gitanjali’s corporate office from Mumbai were unsure of their future.

“Personally I have not received a relieving letter,” said one employee, while describing the recent events that have caused a panic situation.

Another employee at its Mumbai office said while he had not received a relieving letter yet, all the employees were likely to be relieved by the end of the week.

Gitanjali Gems had posted ads on professional networking site Linkedin as recent as three weeks ago for openings in cities like Mumbai, Thane, Pune, Aurangabad and Bhopal.

(With inputs from Nidheesh M.K., Harveen Alhuwalia, Arushi Kotecha, Ami Shah and Maulik Vyas)

First Published: Feb 22, 2018 16:09 IST