No takers for Nirav Modi's 1st lot assets

Mumbai: Believe or not, there were no takers for gold and diamond jewellery items seized from fugitive Nirav Modi who duped banks to the tune of Rs 12,000 crore, when they were put up for auction here on Saturday.

On March 25, the first lot of movable assets belonging to Nirav Modi’s companies - Firestar Diamond International and Firestar International, had been scheduled to be auctioned. All of the items put up for auction were gold jewellery.

Out of 30 parties that evinced interest for their participation in the bidding initially, only 25 were found to be eligible by the liquidator. Among the 25 prospective bidders, only 11 parties had filed Earnest Money Deposits (EMDs) on the basis of data of the assets shared with them. Thus, an amount of Rs15 crore was received by the liquidator from the 11 prospective bidders.

However, on the eve of the auction, the reserve price of around Rs30 crore was announced by the liquidator for the jewellery items put up for sale. This reserve price was said to have gone much beyond the expectation of the bidders. As a result, none of the 11 eligible bidders came forward to participate in the final bidding. Rising gold prices are believed to be one of the reasons for the poor response. It may be mentioned here that gold price is now hovering around Rs6,000 per gram at the moment from Rs5,500 until a month ago.

Talking to Bizz Buzz, the court-appointed liquidator to handle the bankruptcy proceedings, Santanu T Ray from AAA Insolvency, said: “This auction was not successful though 11 interested parties had submitted their EMDs. However, they did not submit binding bids.”

So the same inventory with some additional inventory will be auctioned again on the dates which will be announced after consultation with stakeholders. The details will be shared once we work them out, he said.

This auction formed part of the several rounds of auctioning lined up to raise the Rs12,000-crore the fugitive diamantaire owes his lenders, several public-sector banks (PSBs) among them.

Efforts are being made to get most out of the auctions of the seized assets of the diamantaire, such as jewellery, property, luxury cars, priced paintings, etc. The proceeds of these auctions will go to the lenders. Among the state-owned banks, that extended credit to Nirav Modi, are Punjab National Bank (PNB), Canara Bank, IDBI Bank and Union Bank of India (UBI).

Though there was no permission to physically examine the assets up for auction, all the 25 prospective bidders had been given data room access. So, the bidders were able to virtually see the items on offer and their certification done by the Gemological Institute of India (GII), which is promoted by Gem and Jewellery Export Promotion Council – the apex body supported by the Union Ministry of Commerce and Industry. The GII certification is based on test results of the ornaments, built on parameters such as authenticity, carat and quality. The liquidator, in consultation with the different stakeholders, roped in GII, to ensure transparency in the process and assure participants on the authenticity of the products. The jewellery in the line-up included neck pieces, rings and bangles made of diamonds, platinum, gold and silver.

Other lots of auctioning will happen as and when the GII certification and valuation for the inventory are completed. To date, the liquidator has completed the e-auctioning of the immovable properties of Firestar International and Firestar Diamond, raising Rs15 crore from the sale of small office spaces at Prasad Chambers in Mumbai’s Charni Road and the Bharat Diamond Bourse in the Bandra-Kurla Complex, office equipment and some machinery. The value realised was higher than the reserve price.

Now, the liquidator is looking to auction the large furnished offices of Firestar Diamond International at Mumbai’s Kohinoor City, Kurla. Despite its prime location, four attempts at auctioning the property have been unsuccessful in the past and a 5th auction date has been fixed for April 4.

These, incidentally, are just the properties released by the Enforcement Directorate (ED) to the liquidator so far. Many other assets await that clearance.