SURAT: Diamond connoisseurs can be expecting additional fall within the prices of polished gem stones within the subsequent three to four months. Reason: Companies making polished diamonds in Surat and Mumbai have started liquidating their inventories by way of providing reductions ranging from 30-40% for settling the loan accounts with the banks.
Diamond companies had been given the ultimatum to settle their exceptional loan accounts ahead of March 31. Following the bank frauds reported within the remaining two years involving leading diamond company homeowners, the banks have lowered their credit exposure to their existing shoppers within the trade by way of almost 50 %. The collateral has been additionally greater as much as 100% to keep away from defaults.
Given the liquidity disaster, the diamond companies have started selling their inventory hurriedly so that they are able to get sufficient cash to pay off their loans by way of March 31 cut-off date. The inventory is being sold at discounted charges to the dealers and traders in Surat and Mumbai.
Diamond firms have annual credit traces with the nationalized and personal banks for getting tough diamonds from the mining companies like De Beers. Since the tough diamond prices have remained unchanged and in some circumstances greater by way of almost 15%, these companies have to pay off in full quantity. On the opposite hand, the polished diamond prices have lowered by way of 20-25% within the remaining two years, eroding the profit margins of the corporations.
In the remaining two years, the polished diamond prices have long past down in all of the categories with the very best fall of 30% registered within the low-quality or small diamonds manufactured in Surat. On the opposite, the tough diamond prices have remained unchanged, developing heavy power at the diamond makers to earn desired profit.
Navya Patel, a 30-year-old bank professional who not too long ago went to buy a diamond engagement ring, stated, “The gold ring was studded with a unmarried stone weighing 50 cents and priced at Rs 1.50 lakh. I used to be urged to look ahead to three to four months to get the same ring beneath Rs 1 lakh because the marketplace is flooded with polished diamonds at discounted prices.”
Aniruddha Lidbide, diamond trade analyst stated, “The diamond companies have no choice however to liquidate their polished inventories to pay off their bank loans latest by way of March 31. Even if the real price of the diamond inventory is Rs 100 crore, company owner must liquidate it on the marketplace price which might fetch him not up to Rs 60 crore. Simply put, the diamantaires are looking at large losses to pay off the banks.”
Diamond companies had been given the ultimatum to settle their exceptional loan accounts ahead of March 31. Following the bank frauds reported within the remaining two years involving leading diamond company homeowners, the banks have lowered their credit exposure to their existing shoppers within the trade by way of almost 50 %. The collateral has been additionally greater as much as 100% to keep away from defaults.
Given the liquidity disaster, the diamond companies have started selling their inventory hurriedly so that they are able to get sufficient cash to pay off their loans by way of March 31 cut-off date. The inventory is being sold at discounted charges to the dealers and traders in Surat and Mumbai.
Diamond firms have annual credit traces with the nationalized and personal banks for getting tough diamonds from the mining companies like De Beers. Since the tough diamond prices have remained unchanged and in some circumstances greater by way of almost 15%, these companies have to pay off in full quantity. On the opposite hand, the polished diamond prices have lowered by way of 20-25% within the remaining two years, eroding the profit margins of the corporations.
In the remaining two years, the polished diamond prices have long past down in all of the categories with the very best fall of 30% registered within the low-quality or small diamonds manufactured in Surat. On the opposite, the tough diamond prices have remained unchanged, developing heavy power at the diamond makers to earn desired profit.
Navya Patel, a 30-year-old bank professional who not too long ago went to buy a diamond engagement ring, stated, “The gold ring was studded with a unmarried stone weighing 50 cents and priced at Rs 1.50 lakh. I used to be urged to look ahead to three to four months to get the same ring beneath Rs 1 lakh because the marketplace is flooded with polished diamonds at discounted prices.”
Aniruddha Lidbide, diamond trade analyst stated, “The diamond companies have no choice however to liquidate their polished inventories to pay off their bank loans latest by way of March 31. Even if the real price of the diamond inventory is Rs 100 crore, company owner must liquidate it on the marketplace price which might fetch him not up to Rs 60 crore. Simply put, the diamantaires are looking at large losses to pay off the banks.”
Ahm: Cos liquidate stock to repay loans
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Reviewed by Kailash
on
March 27, 2019
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