Mumbai: Century-old diamond house Shrenuj and Co., which had the late Maharani Gayatri Devi of Jaipur as its brand ambassador, is facing insolvency proceedings.

State-owned Bank of India has approached the bankruptcy court against the company for defaulting on 226 crore.

The counsel representing the consortium of 17 lenders, Pooja Karadia, told the Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday that Shrenuj’s debt of 1,113 crore had turned bad on 31 March 2016, and there is an admitted liability.

“Bank of India is the lead banker to whom the company owes over 226 crore and to the consortium of 17 banks, most of them are nationalized, the company owes over 1,113 crore," said Karadia, adding that the company was given enough opportunity to give representations, but they have not even filed their response in the tribunal.

The banks have proposed the name of Hiten Parikh as interim resolution professional in the matter. While countering the lenders’ argument, advocates representing the company sought time to file its reply.

The presiding officer, M.K. Shrawat, directed the parties to produce the company’s audited accounts before the court and said that Shrenuj can file its reply to the insolvency plea filed by the lenders by 6 September, the next date of hearing.

Email queries and phone calls to Shrenuj and Co. did not elicit any response till press time.

“Typically, when it comes to recovery from diamond companies, the major recovery will come from the inventory and its trade receivables," said Pinakiranjan Mishra, partner and national leader, retail and consumer products, EY.

Shrenuj’s solitaire jewellery brand ‘Arisia’ had Gayatri Devi as its brand ambassador between 2007 and 2009, when she died at the age of 90.

The Shreyas Doshi- and Vishal Doshi-promoted century-old company was among the first diamond houses to be listed on the stock exchanges in 1989.

However, the company was delisted from the bourses on 8 August 2018.

According to Bloomberg data, the company had reported a standalone revenue of 1,789.21 crore and loss of 40.13 crore for the year ended March 2016.

“The recession of 2008 led to a slowdown in demand of diamond globally and the company was not insulated from it," said a veteran diamond merchant, requesting anonymity.

“Also, the company’s business bets, including diversification in Africa, backfired and that resulted in losses in primary business as well."

At its peak in 2009, Shrenuj had formed a joint venture with Israel’s SWA Trading Ltd for developing and marketing sports diamond jewellery to woo football lovers globally.

The joint venture was making special diamond cuts for soccer club fans such as Manchester United, Real Madrid and Barcelona, who collectively had a fan following of over one billion people worldwide.

Interestingly, in 2012, the company had appointed Botswana’s former President Festus G. Mogae as an independent director. Mogae was known for leading the African country towards stability and democracy.

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