A $3.6B Indian jewelry chain tripled in size in 6 years — and lost it all in the last few months

PC Jeweller lost $2.8B in a few months -- and, according to them, they have no idea why it happened. What’s really going on here?


May 8, 2018

PC Jeweller, a 13-year-old jewelry company from New Delhi, lost 77% of its market value since Jan. 19 — about $2.8B off of a $3.6B valuation at the beginning of the Q — after a series of questionable trades sent shareholder confidence spiraling.

Now, PCJ is battling rumors of the arrest of its managing director, Balram Garg, while desperately buying back shares to keep its stock from crashing further.

They started as the “Sunglass Hut” of India… 

And became nearly 3x bigger than Warby Parker.

PCJ launched in ’05 as a single shop in Delhi’s popular market, Karol Bagh. Since then, the company’s brother-founders Pramod Chand Gupta and Balram Garg have grown it into a 90 outlet, 70 city operation — nearly tripling revenue since 2012 to about $1.2B last year.

But now, thanks to plummeting share prices, their necklace empire is back in “Hut” territory once again…

So what triggered the drop?

According to Quartz, the trouble started this year when a Mumbai tech company, Vakrangee, bought shares in PCJ without listing who they bought them from.

Vakrangee was flagged for investigation by the Securities and Exchange Board of India (SEBI), bringing PCJ into the fray by association (though PCJ says Vakrangee no longer holds stake in the company) and sending shares tanking.

Then after shareholders demanded more transparency last month, PCJ disclosed that promoter Padam Chand Gupta “gifted” some of his shares to family members through “off-market transactions.”

To cap it all off, last week reports surfaced of raids at multiple PCJ locations and of Garg’s arrest.

What does PCJ have to say for themselves?

As they wrote in their April letter to shareholders, PCJ “is not aware of reason of sudden decrease in prices of equity share.”

AKA, who’s to say, really.

“There is nothing fundamentally wrong with the company… Everything is going well,” PCJ CFO Sanjeev Bhatia told Livemint. Meanwhile, Garg told Zhee the rumors of the arrest are totally baseless and that he has no idea where they’re coming from.

So, either there’s some really shady biz going on behind the scenes at PCJ — or, as Bhatia suggests, “someone is just playing around.”

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