CBI case against Nirav Modi, who came from nowhere and rose in Mumbai

Modi came back to India and cut his teeth in the diamond business under the tutelage of his jeweller uncle, who was running Gitanjali Gems

For a billionaire who emerged from nowhere and planted his flag on the Mumbai landscape, the question on everyone's lips was who is Nirav Modi? It was a valid one, given the sudden emergence of his luxury diamond brand and the multiple bilboards around prominent neighbourhoods, such as South Mumbai and Bandra, featuring model Lisa Haydon started popping up in 2015. In his own words, the story Modi portrayed to the public then was that he was born to Indian parents.

His father, also a diamond jeweller, had migrated to Belgium to set up a trading business there, and Nirav had to unexpectedly drop out of college (Wharton) when his father's business started to stutter, and he had to come back and take charge.

Consequently, Modi came back to India and cut his teeth in the diamond business under the tutelage of his jeweller uncle Mehul Choksi, who was running the listed company, Gitanjali Gems, which has in recent years also come under the scanner for allegations of fraud. 

The 46-year-old Modi has always had two operations — a diamond trading concern called Firestar Diamond and the other which is a retail brand called Nirav Modi, which he had harboured ambitions for building into a global luxury label —the first of its kind from Asia, he once said. 

Source: Capitaline; PBIT: Profit before interest, depreciation and tax; Compiled by B S Research Bureau

To that extent, Modi opened up international stores on 5th Avenue in New York, London in old Bond street in Mayfair, and in Hong Kong and Macao. To date, the bilboards remain with one change — Haydon was replaced by A-lister Priyanka Chopra. 

The art collection in his Kamala Mills office, which includes an Rs 100-million Amrita Sher-Gil oil painting near his desk, the vintage Bentley car, using international actresses and models as brand ambassadors, hiring former Facebook India executive and country head Kirthiga Reddy as an international board advisor and the penchant for all things luxurious, seemed to indicate Modi was serious about building an international quality label. Except for one small detail that didn't entirely add up for a newly started business. 

Where was the money coming from? If the accusations made by the Central Bureau of Investigation (CBI) in a Press Trust of India news report are true, then it was from the banks. The news report said Modi and his partners in Diamon R US, Solar Exports and Stellar Diamonds were accused of cheating Punjab National Bank (PNB) of Rs 2.8 billion. Consequently, the CBI had registered PNB's First Information Report (FIR) under Indian Penal Code sections related to criminal conspiracy, cheating and provisions of Prevention of Corruption Act, sources say.

While Firestar is a healthy firm financially (see table), its initial public offering plans might now be delayed, said investment bankers as investors would take a closer look at the numbers. 

Modi, who divides his time between New York and Mumbai, told Business Standard that his public relations firm would be issuing a statement which came later by e-mail and said: “This matter has no affiliation, legal or otherwise with Firestar International, which is the flagship enterprise of Nirav Modi.”

Over the past few years, Modi managed to build a brand with a cocktail of glamour, big-ticket boutiques and the right affiliations. 

Restoring confidence with his lenders and stakeholders before his IPO may be an uphill journey.