When the dust settles a bit on the Punjab National Bank scam surrounding luxury jeweller Nirav Modi and his uncle Mehul Choksi's Gitanjali Jewels, whose shares tanked through the week, we are likely to find that the disgraced companies being investigated by authorities for bank frauds and/or loan defaults may be sitting on hidden assets. I speak of intellectual property such as brands and designs, relationships with exquisite artisans who craft jewellery, and valuable staff who might have done no wrong while their masters made pots of money through dubious means.
Among the welter of jokes, memes, innuendos, explanations and scandalised messages that I received on the elusive Nirav Modi last week, one from a woman friend stood out: "Nirav Modi designs are too good. I love to copy them."
I have my doubts if this Wharton business school dropout himself did his designs, though his official website claims: "Nirav Modi is the only living Indian diamond jeweller lauded at international auctions at Sotheby's & Christie's. Our diamond jewellery designs have earned the distinction of being recognised as among the best in the world."
A bow-tie-clad Modi has been photographed with sultry models sipping champagne, and his name is plastered alongside movie star Priyanka Chopra's image in the hotspots of Delhi and Mumbai. However, apart from his family origins in the diamond business, what one sees is carefully crafted glitter that is more about the showy man than the jewels he sells. His name may now be a liability but his own letter to the Punjab National Bank, in which he has the audacity to accuse the fraud-hit bank of spoiling his business, reveals he has 2,200 employees, hundreds of who must probably be talented in design, craft or marketing.
Take a look at Gitanjali Jewels. Its website says the company "offers a dazzling bouquet of world's leading jewellery brands that include Nakshatra, Gili, D'damas, Asmi, Diya, Maya Gold, Parineeta, Collection G, Gold Expressions,.." et al. A deeper probe reveals that Gitanjali's promoter Mehul Choksi might have sold elegant choker necklaces but also specialised in choking whistleblowers in his group including franchisees and a former managing director who says the company sold fake or substandard diamonds to unsuspecting customers. Two of his key employees quit this week, including the company secretary who said her conscience would not permit staying on amid disclosure problems.
Nirav Modi has written to the PNB that authorities raiding his Firestar group firms seized assets estimated at Rs 5,649 crore that would have covered the money he owed to the bank. There are those who say that these assets, especially uncrafted diamonds, could have been multiplied by value through his skills. But look harder, and you will find the true expertise belong to designers and artisans. In the case of Gitanjali, even a good amount of the capital for investment came from franchisees.
In all likelihood, the Firestar and Gitanjali companies are headed for the cleaners and promoters may have to make way for the banks and the government to fix the future of the assets they leave behind.
While brand experts debate the future of the jewellery brands, it might make sense for us to look back at the erstwhile Satyam Computer Services Ltd, which was rescued in a government-led effort and folded into the listed Tech Mahindra after being hit by India's biggest accounting fraud. The sad part is that many employees at the core of the software company left in a maze of uncertainty - in a business in which people are assets.
I think designer jewellery also has a huge amount of unsung human capital, just like software. The PNB fraud may be a good opportunity to look beyond the crony-capitalist promoters and reward the real people who make it happen. My big idea: why not create the jewellery equivalent of Amul (for milk products) or Khadi (for village industries) and fold all the brands and remaining assets of the disgraced jewellery firms into an entity that may be truly world-class while helping artisans and designers?
The place of Tech Mahindra in the Satyam rescue act may theoretically be taken up by a rival like Titan Ltd (which owns Tanishq) or P.C. Jeweller Ltd. However, a third, more enchanting option, would be to create a cooperative of artisans and designers and put it in league with private equity companies and existing staff of Nirav Modi's Firestar group companies and Gitanjali group entities to form a new age company that rewards old-world talent.
Gujarat, where the origins of Modi and Choksi lie, is also home to Amul. Indian jewellery could do with a Verghese Kurien who can bring together artisans and reward them properly. From all indications, Choksi and Nirav Modi reaped dubious and disproportionate profits standing on the back of the sweat, inspiration and talent of thousands of artisans and designers, besides franchisees who sunk money into stores only to feel cheated. We need to reward the real hard work that went under their facades.
There are dozens of modern jewellery designers in India to match the traditional craft of artisans in and around towns such as Gujarat's Palanpur whose business families, including those of the Modis and Choksis, have made waves in the Belgian town of Antwerp, the global diamond hub. It is time to craft a new global company whose design matches the best of jewels and one that could shine in an ethical yet trendy manner, the way Amul has done at the top of a milkmen's cooperative movement.
It is a romantic idea for a corporate rescue but one that I think deserves attention. After all, Prime Minister Narendra Modi wants a big boost to "Make In India." Let us not confuse that with "Fraud in India."
(Madhavan Narayanan is a senior journalist who has covered politics, diplomacy, business, technology and other subjects in a long career that has spanned organisations including Reuters, Business Standard and Hindustan Times. He is currently an independent columnist, editor and commentator. He is listed among the top 200 Indian influencers on Twitter. He tweets as @madversity)
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)