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Diamond in recovery times

The movie posters on the walls of the diamond units in Varachha tell the turnaround story of the industry.

india Updated: Dec 08, 2009 01:18 IST
Prasad Nichenametla

The movie posters on the walls of the diamond units in Varachha tell the turnaround story of the industry.

Seven months ago, it was Have maare heera nathi ghasva (Now I don’t want to polish diamonds); the latest movie playing at the local cinema in the Surat diamond hub is Rangilo Ratnakalakaar (Carefree colourful diamond worker).

“Compared to the situation a year ago, when even orders that were placed were cancelled, we are now in a phase similar to the pre-slowdown rush. In comparison with the June-July period, there is about a 25 per cent increase in orders,” said Ganeshbhai Ghevariya (54), owner of Jai Gopal Diamonds, a medium-scale unit, off Varachha Road.

Varachha is in Surat, about 275 km south of Ahmedabad.

The story of diamond in Surat is the story of the turnaround in the Indian economy. Growth in the July-September quarter has been 7.9 per cent. And industrial growth has been above 9 per cent for September.

“Though the markets had been improving for the past few months, buyers worldwide were cautious about placing orders. But now (with signs of recovery and Christmas and New Year ahead), there is this sudden rush of orders,” said Chandrakant Sanghavi, regional chairman, Gem and Jewellery Export Promotion Council.

“Compared with August-October, November itself has seen about 40 per cent increase in orders,” he told HT.

Ghevariya’s is one of the hundreds of units that were shut down in Surat last year following the slowdown. With no orders and polished diamonds worth hundreds of crores of rupees in stock, the units had no option but to down shutters and retrench workers.

On average, every year Surat exports diamonds worth about Rs 50,000 crore. The lowest point was in January, when the industry was operating at just 20-25 per cent of its capacity.

Shailesh Nanji (26) is a kaarigar (skilled workers) who went for the Diwali break in 2008 (the diamond industry takes about four weeks’ break during Diwali) to his village Dediapada near Rajpipla (about 200 km south-east of Ahmedabad) but with the closure of the unit he worked in, he had to stay at home.

“I was left with no option but to look for another job. I worked in an ice-cream factory in Bharuch (a town about 200 km south of Ahmedabad) for some time. That did not suit me. And then I got back to my village and took to farming,” said Nanji, now back in his regular job.

“Unlike others, this is not an industry that runs on a pure demand-supply equation. On the one hand, miners in African countries selling rough diamonds at low prices led to a crash in the market value of polished diamonds, and on the other hand, lack of knowledge of the units here compounded the problem,” Aagam Sanghavi (26), director of Sanghavi Exports, which also owns Sangini Diamonds, told Hindustan Times.

“We did not retrench even a single worker of the 3,000 staff on our rolls,” he said.

Several unit owners who left the business or diversified into other sectors like embroidery are fast returning. “I am still operating the embroidery machine on commission but with the positive trends, I came back to diamonds,” said Mahesh Maviani (39), who left the industry and set up embroidery units but has now returned.

Not all workers have returned, however. According to Rohit Mehta, president of the Surat Diamond Association, about 3,000 of the 4,500-odd units are working now (at 60-70 per cent of capacity) and the labour available is around 300,000 while the usual force is about 500,000.

“Everyday, our owner asks us to find some workers but we cannot get any as those we know are engaged in textiles now,” said Praful Gohil (38), a kaarigar in Mini Bazaar (Varachha) whose monthly income went down to Rs 3,500 a month during the downturn (earlier it was Rs 9,000) and now has gone up to Rs 8,000 (and more). “With no other option, our seth (owner) himself is polishing on one ghanti (a circular machine),” Gohil said.