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Half a decade ago, PC Jeweller's meteoric rise in the stock market was the stuff of dreams, with its shares surging from ₹50 to ₹500 between 2014 and 2018. The company's founders, Padam Chand Gupta and Balram Garg, transformed it from a single store in Delhi to a pan-India player with over 84 stores. However, a series of events in 2018 marked the beginning of its downfall.

Vakrangee's Stake: A Turning Point

The first blow came when it was revealed that a software company called Vakrangee had acquired a 0.51% stake in PC Jeweller. This seemingly innocuous move turned alarming due to Vakrangee's ongoing investigation for share manipulation by market regulator SEBI. Investors panicked, fearing a connection between the two companies, causing PC Jeweller's shares to plummet.

Gifted Shares and Governance Concerns

Subsequently, news surfaced that the founder, Padam Chand Gupta, had gifted shares to relatives in an off-market transaction. This raised concerns about corporate governance and transparency, eroding investor trust further. PC Jeweller tried to reassure investors by announcing a share buyback and emphasizing its commitment to the company, but later retracted the plan due to banking concerns and debt obligations.

SEBI's Investigation and Trust Erosion

SEBI's investigation into potential insider trading added to the company's woes. The trust essential for jewelry businesses was eroded, and even potential customers became wary amid reports of the MD's possible arrest. With the backdrop of the Nirav Modi scam, banks tightened lending, exacerbating PC Jeweller's financial troubles.

Debt Burden and Default Crisis

*Debt, accumulated from its capital-intensive operations and rapid expansion, became a critical issue as sales declined sharply due to the allegations and reputational damage. With sales dropping from ₹10,000 crores in FY18 to ₹3,000 in FY21 and a ballooning interest burden, the company struggled to turn inventory into cash. Cash flow problems were worsened by delayed payments in its B2B export transactions.Ultimately, PC Jeweller defaulted on a ₹3,400 crore bank loan in 2022, triggering legal action by SBI in the bankruptcy court. As the court's decision looms on August 21, the fate of the once-promising 18-year-old company hangs in the balance.3