Within a few weeks of its launch, the Bharat Diamond Bourse (BDB), the country’s only exchange for diamonds, is under fire for sale of offices on its premises.
On November 16, the exchange cancelled auction of around 70 offices, as members raised doubts over credentials of the bidders and select committee members of BDB.
Spread over 20 acres at Mumbai’s Bandra-Kurla complex, BDB has over 1.8 million square feet office space for diamond merchants. While around 2,000 offices were sold a few years ago to bring the seed capital to start the bourse, BDB decided to raise Rs 150 crore more to pay debts through auction of 168 offices. It has a debt of around Rs 90 crore and plans to use the rest of the money to introduce state-of-the-art technology.
The last date for submitting the bid was October 23, but the BDB committee accepted bids on October 24 too. Nearly 1,500 bids were received for 113 offices. Out of this, over 800 were received on October 24. The members objected and BDB had to cancel the auction of nearly 70 offices.
According to members, the 800 bids were received from 80 companies belonging to a single person. Also, these bids did not fit the criteria set by the exchange. Interestingly, the price difference between the highest bids on October 23 and October 24 was not much. Diamond trading houses had bid around Rs 30,000 per square feet.
BDB Vice-Chairman Satish Shah told Business Standard: “There was some mistake in accepting bids, due to which we had to temporarily cancel the auction of some offices. The bidding date was extended as there was a long queue on October 23 and many could not submit their forms till late evening. Still, we will raise around Rs 145 crore through auction of offices for which proper bids were received. An internal inquiry is on in the rest of the matter to know what went wrong, but the bidding process will be fair.”
Hardik Hundia, an industry analyst who brought the matter to the notice of the BDB managing committee, said, “Proper legal procedures have not been followed in the bidding process. After this incident, the criteria should be published and the eligibility of bidders checked.”
BDB President Anup Mehta did not answer to messages.
The top bid criteria required companies to be members of BDB or the Mumbai Diamond Merchant Association or the Gems or the Jewellery Export Promotional Council for three years or show exports for at least three years. Otherwise, the companies were required to show a diamond business turnover with certificate from a recognised chartered accountant.
In the past, a square feet space at the premises has been sold for between Rs 35,000 and Rs 50,000. Some of the country’s top diamond traders like B Arun Kumar of Rosy Blue, Bharat Shah, Blue Star and Shairu Jemes, among others, have offices here.
Of the 2,500 offices in nine towers, 2,400 have been allotted to diamond exporters and trading companies. BDB has invested Rs 11,000 crore to develop the land, which was given on an 80-year lease for Rs 215 crore by the Mumbai Metropolitan Region Development Authority.
