It's over a year now since Naresh Mehta, secretary of Pancharatna Cooperative Housing Society, the diamond hub of Opera House, saw off a large order of cut and polished diamonds to the US. In normal circumstances, he should have got his payment in six months. Mehta is still waiting for his money. And, he says, “Orders from the US are just 30 per cent of what they were last year.”
Hardik Hundiya, a trader and expert in the diamond business, says many diamond brokers and small traders have lost heavily because of the economic slowdown. “A broker or trader who was earning Rs 2 lakh a month is now getting only Rs 25,000,” says Hundiya. Small players are hit harder because they don't have enough cash reserves to survive without payment for months on end, he explains.
Pradip Shah, a manufacturer of diamond jewellery, who buys finished stones from traders or brokers, estimates that their business is down by over 50 per cent. He says the first blow came when the Sensex started spiraling down early this year. Then came the meltdown. And with it, the depreciating rupee. The cumulative effect has been disastrous, he says.
Low-level diamond traders deal with small quantities (20 to 50 carats) of polished diamonds that they buy from sellers in Surat and then export all over the world. “There is simply no export demand,” says Shah.
Even worse hit are brokers who source stones from multiple traders and sell them to buyers who don't have the time to scour the market. In these tough times, the middle-men are often the first to be eliminated.
Even the big players are treading cautiously. “Traders are doing business only with customers where payment is guaranteed and shying away from doubtful ones,” says Vasant Sanghavi of Sanghavi Exports, a prominent diamond manufacturer and exporter which owns the popular Sangini brand. Only the big boys can afford to play now.