 "Surat diamantaires' co-operative dream lies shattered")
What could have been a successful replication in the diamond processing industry of the Amul cooperative model now lies in abeyance.
Surat Rough Diamond Sourcing (India) Ltd (SRDSIL), set up by a group of diamond polishers and traders to source rough diamonds (‘roughs’ in industry parlance) from abroad, is now non-functional, with one of the founders buying the company.
According to industry sources and founding members-cum-investors, several challenges at policy, cost and revenue levels led to the cooperative being suspended. Industry sources stated Ashit Mehta, founder-chairman, had since bought the company from the other founding investors for an undisclosed amount.
“We had some policy level issues with the government at that time to import roughs from other countries, mainly from Brazil. Moreover, higher distribution cost also made it unviable and the investors decided to close the company last year,” said Chandrakant Sanghavi, chairman of Sanghavi Exports and founder-director in SRDSIL.
However, Mehta says there are plans to revive the company, “SRDSIL has been bought over by a few of the diamantaires and we are waiting to see how it can resurface in this industry with the same principles on what it was established,” he told Business Standard.
At the time of formation, seven big investors had invested Rs 5.55 crore each and 28 small investors about Rs 50 lakh to Rs 1 crore each in SRDSIL.
“The aim was to bring in a cooperative movement in diamond polishing and eliminate traders from the value chain. That aim could not be fulfilled and all the investors decided to drag back the investment in last year,” said Govindbhai Dholakia, chairman of Shree Ram Krishna Exports and a founder-director of SRDSIL.
The company could not make much headway, putting a question mark on this unique initiative. Initially, efforts were made to secure roughs from mines in Zimbabwe and Russia. A delegation of representatives from Surat had visited the two countries to discuss the price, quality and quantity, beside the terms for payment.
The first auction was conducted in July 2011, in which roughs worth Rs 86 crore were sold. A second one was in February 2012 but this time the sale was only Rs 15 crore. In between, on January 21, 2012, SRDSIL conducted its first online auction of roughs.
It had put 38 roughs in lots of various size and quality on auction. However, this did not attract much participation, too, as many traders were unaware of the e-auction.
On the other side, the management of SRDSIL seems to have been slow in taking decisions on securing roughs. There were also various legal hurdles on buying from Zimbabwe.
A person earlier connected with SRDSIL said a certain amount of mismanagement had led to the decline in its functioning.
Surat Rough Diamond Sourcing (India) Ltd (SRDSIL), set up by a group of diamond polishers and traders to source rough diamonds (‘roughs’ in industry parlance) from abroad, is now non-functional, with one of the founders buying the company.
According to industry sources and founding members-cum-investors, several challenges at policy, cost and revenue levels led to the cooperative being suspended. Industry sources stated Ashit Mehta, founder-chairman, had since bought the company from the other founding investors for an undisclosed amount.
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“The company could not sustain its operations due to several reasons such as high import cost and decline in interest among investors. Lately, the company had stopped functioning, which led to the decision to close it down. However, the founder chairman offered to buy the company from the rest of the investors but SRDSIL still remains non-functional,” said a Surat diamond industry source.
“We had some policy level issues with the government at that time to import roughs from other countries, mainly from Brazil. Moreover, higher distribution cost also made it unviable and the investors decided to close the company last year,” said Chandrakant Sanghavi, chairman of Sanghavi Exports and founder-director in SRDSIL.
However, Mehta says there are plans to revive the company, “SRDSIL has been bought over by a few of the diamantaires and we are waiting to see how it can resurface in this industry with the same principles on what it was established,” he told Business Standard.
At the time of formation, seven big investors had invested Rs 5.55 crore each and 28 small investors about Rs 50 lakh to Rs 1 crore each in SRDSIL.
“The aim was to bring in a cooperative movement in diamond polishing and eliminate traders from the value chain. That aim could not be fulfilled and all the investors decided to drag back the investment in last year,” said Govindbhai Dholakia, chairman of Shree Ram Krishna Exports and a founder-director of SRDSIL.
The company could not make much headway, putting a question mark on this unique initiative. Initially, efforts were made to secure roughs from mines in Zimbabwe and Russia. A delegation of representatives from Surat had visited the two countries to discuss the price, quality and quantity, beside the terms for payment.
The first auction was conducted in July 2011, in which roughs worth Rs 86 crore were sold. A second one was in February 2012 but this time the sale was only Rs 15 crore. In between, on January 21, 2012, SRDSIL conducted its first online auction of roughs.
It had put 38 roughs in lots of various size and quality on auction. However, this did not attract much participation, too, as many traders were unaware of the e-auction.
On the other side, the management of SRDSIL seems to have been slow in taking decisions on securing roughs. There were also various legal hurdles on buying from Zimbabwe.
A person earlier connected with SRDSIL said a certain amount of mismanagement had led to the decline in its functioning.