The last word on diamantaire Nirav Modi and his Rs11,400 crore bank fraud is yet to be written. The jeweller to the stars—who markets precious jewellery under the Nirav Modi brand—has been accused of defrauding India’s second largest public sector bank Punjab National Bank and has since fled the country.
According to a Mint report, after the scam came to light, law enforcement agencies scrutinized several shell companies and benami assets and raided dozens of properties belonging to the absconding jeweller and his uncle and Gitanjali Gems promoter Mehul Choksi, who is also named in the bank fraud.
The Enforcement Directorate (ED) conducted searches at multiple locations belonging to Modi and Gitanjali Group managing director Choksi who sells jewellery under a clutch of brands including Gili, Nakshatra, Asmi and Sangini. Gitanjali is one of the largest branded jewellery retailers in the country.
To be sure, Nirav Modi first trained under Choksi and then set about opening offices for his wholesale business.
In 2010, he launched the brand Nirav Modi. Nirav Modi boutiques were opened both in India and abroad in cities like Delhi, Macau, New York, London, Singapore and Beijing. His brand was advertised in upscale glossy magazines and dressed up film stars like Kate Winslet and Priyanka Chopra.
According to a recent Press Trust of India report, Nirav Modi, in a letter to Punjab National Bank, said: “…your actions have destroyed my brand and the business…”
Branding experts agree that jewellery brand Nirav Modi has most definitely been harmed by the scam. They say that the perils of naming a brand or company after the founder are far greater than the advantages (if at all there are any). If the person falls from grace, the brand takes the blow since it is very difficult to distance one from the other.
“Let’s just say this is Nirav Modi’s ‘Weinstein’ moment. What happened to Harvey Weinstein and the Weinstein Co., is now happening to him. No matter how big you are, it is extremely difficult to salvage this sort of a mess. Remember Amitabh Bachchan and ABCL?” says Sanjay Sarma, co-founder and chief executive of Design Worldwide, an integrated strategic branding and creative solutions company.
Yet others say that the issue of the brand being impacted as a result of the scam is an interesting one, especially in the current cultural context of a country like India, where corruption, fiscal irregularities and scams take place routinely.
“There are many instances of politicians and businessmen whose financial misdemeanours are common knowledge but whose popularity remains undented, and indeed sometimes even enhanced,” says Samit Sinha, managing partner, Alchemist Brand Consulting. However, it would take an extremely cynical point of view to believe that brand Nirav Modi will not be negatively affected by a scam of this magnitude, especially now that he has fled the country, an indication of his culpability.
“While it is tempting to compare this latest absconder with Lalit Modi and Vijay Mallya, we must remember that though associated with IPL (Indian Premier League) and Kingfisher respectively, their names were not synonymous with the names of their brands. That is not so with Nirav Modi, where it will be impossible to separate Nirav Modi the person from Nirav Modi the jewellery brand,” points out Sinha.
The financial fraud will certainly affect brand Nirav Modi in a big way. The aura he created around his name, the exclusivity, the myth, stand exposed. His clientele belongs to the upper echelons—royalty, industrialists, politicians, celebrities and film stars. “They are the top 1% across the world. And they are mighty sensitive to such bad press. The cosy clique has been somewhat disturbed and unfortunately, he may not find much support from his powerful clients,” says Sarma.
The rich and famous live under public scrutiny and are most likely to distance themselves from both the brand and the person behind it. Agrees Sinha: “Regardless of how people might feel in private, after such a scandal, I doubt if many erstwhile, current and potential Nirav Modi customers will blatantly flaunt the brand in the future out of concern of social ostracism. And if they can’t flaunt it in public, why would they covet it? That’s why I believe that as a brand, it will sink as rapidly as it ascended.”
On the other hand, Mehul Choksi’s retail brands such as Nakshatra and Gili may be protected to an extent as retail customers are not concerned with ownership patterns as long as the brands carry their own equity. “Moreover, these brands are available widely across all jewellery stores. In India, customers are generally loyal to their jewellers, and there is an inherent trust in the relationship from both sides. And Nakshatra, for instance, has a very strong equity,” Sarma says.
But Nirav Modi’s swish set could definitely shift to other brands. His real clientele will probably be able to afford Harry Winston, Van Cleef & Arpels or Mikimoto, perhaps. The aspiring ones may settle for less, Sarma feels.livemint