Mumbai: An Indian jeweller that saw its market worth reach $3.6 billion at the start of the year is now floundering at less than a quarter of that value after one of its founders gifted some shares to family members, raising concern about the company’s governance.

PC Jeweller Ltd slumped by more than half after the company said last week that one of its founders P.C. Gupta made the gifts through off-market transactions.

PC Jeweller shares has plunged 77% from a record on 19 January, taking its market capitalization to Rs5,250 crore ($787 million). It climbed 9.4% to Rs132.80 as of 9.24am in Mumbai on Friday.

There’s concern that family members may be selling shares in the open market, said Devansh Lakhani, director at investment advisory firm Lakhani Financial Services Ltd. “Investors are concerned about the quality and timeliness of the company’s disclosures."

The claims were baseless and the founders were “very much invested in the company as they still hold 58% stake," PC Jeweller chief financial officer Sanjeev Bhatia said in an interview. “We have done everything and said everything. There is nothing extra that I could say about this."

In response to questions from investors, the company said in the 25 April filing that it wasn’t aware of any reason for the sudden plunge that day in the stock’s price. It denied that any founders had sold shares on the market, but revealed Gupta had made the gift of an undisclosed number to “his family member (s)." The company makes timely disclosures when required and its fundamentals remained strong, it said.

PC Jeweller has suffered once before this year after Vakrangee Ltd., which had been a shareholder, was reported to be under regulatory investigation. Vakrangee said at the time that it hadn’t received any official communication from the regulator.

The company no longer holds stake in PC Jeweller, Bhatia said.

Fidelity International’s FMR LLC is among investors that have reduced exposure to the jeweller, having cut holdings to 7.04% from 8.23%, according to a May 2 disclosure. An April filing had put FMR’s stake at 9.5%.

Jewellers in India are having a tough year. The industry has come under a cloud with two companies under investigation for an alleged banking fraud of $2 billion. This comes even as the World Gold Council estimates that physical demand for jewellery slid 12% in the first three months of 2018. Bloomberg

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