The recently announced second rough diamond sourcing group in India, though still in the incorporation stage, has set itself a target investment of US$2 billion, according to www.israelidiamond.co.il. The group, Surat Rough Diamond Sourcing (India) Limited (SRDSIL) is not holding back and is said to have already signed a $100 million a month diamond supply agreement with Obert Mpofu, the Minister of Mines of Zimbabwe. In exchange for this supply, the Indian Diamond Institute is due to train 1,000 Zimbabwean youths in diamond cutting and polishing.
The establishment of SRDSIL, which is being registered in Surat though is not limited to companies from the locality, comes four years after the establishment of the first rough diamond sourcing Indian group – namely Diamond India Ltd. (DIL) which was established back in 2006.
Nirav Jogani, the spokesperson for the SRDSIL, granted the Israel Diamond Institute the opportunity to learn a little more about the group. Jogani explains that the idea behind the SRDSIL is not necessarily to create something similar or something different from DIL, making clear that the SRDSIL has its own purposes and objectives. “We have not studied the model of DIL in detail,” explains Jogani.
The one difference between DIL and SRDSIL that Jogani could point to involves the membership of the group, which will sell the diamonds it acquires by tender. “We shall be issuing shares to all eligible companies at par and we do not have any limit to the number of members. Probably, this is also one differentiating factor vis-a-vis DIL,” explains Jogani. Inclusive participation is one of the declared goals of SRDSIL.
Establishment of Diamonds India Limited
The establishment of DIL a few years ago came partly in response to the changing supply of the Diamond Trading Company (DTC) as diamond mining countries and companies began to market their diamonds directly to manufacturers. Due to large scale investment requirements Indian diamond business houses had not yet entered into any mining contracts and were dependent on the international trading centre for supply of rough diamonds.
As it became imperative for diamond manufacturers establish direct business relations with mining companies and countries, the founders of DIL felt that forming a consortium of diamond manufacturers with the support of the government of India could achieve its desired goals.
Diamond India Limited, which describes itself as a ‘bridge between miners and Indian manufacturers’ has stated that it is also willing to enter into a joint venture in diamond mining operations.
SRDSIL, which has received expressions of interest from about 100 companies according to Jogani, defines its primary vision as improving the competitive positioning of the Indian diamond industry by sourcing rough diamonds globally in a cost efficient manner. The method to achieve this goal is by improving the supply chain by aggregating rough diamonds sourcing requirements. “It saves time, energy and costs for all the members since they shall not have to individually engage into sourcing,” explains Jogani.
Rough Diamond Sourcing
As for which countries the SRDSIL will attempt to source diamonds from, the only limit imposed relates to the legitimacy of the source. “All and any country or direct mining company situated anywhere in the world provided it is through legitimate source with proper documents and KP certification,” specifies Jogani, referring to where the SRDSIL will source diamonds from.
SRDSIL, which is being registered as a Special Purpose Vehicle limited liability company, comprises major Indian diamond manufacturers and traders to be managed as a cluster. The Founding Directors of SRDSIL are the Chairmen of the following companies: Blue Star & Arjav Diamonds Group (Ashitbhai Mehta), KP Sanghvi (Babubhai Sanghvi), Sanghavi Exports (Chandrakantbhai Sanghavi), Shree Ram Krishna Exports (Govindbhai Dholakia), Karp Impex Ltd (Kishorbhai Virani), and K. Girdharlal International Ltd. (Kishorbhai Shah).
The group is committed to complete transparency to all shareholders, and engaging in a totally legal and ethical business. It also seeks an appropriate governance mechanism to avoid conflict of interest – which is essential due to the tender sales system.
SRDSIL’s Ambitious Goals
In addition to sourcing rough diamonds, SRDSIL has expressed its interest in creating a diamond trading hub in India, and providing a platform for global mining companies to come and sell their diamonds directly in India by providing outsourced tender services.
SRDSIL also seeks to engage in providing education and training in gemology, jewelry making, diamond manufacturing or grading, branding as well as perform any other activity or business which is in the interests of the Indian diamond industry.
DIL had similar goals – the DIL envisaged setting up infrastructure facilities such as special economic zones for gems and jewelry manufacture, export and trading, and setting up training institutes in the gems and jewelry sector.
Colored Gemstones
The DIL also endeavored to create a world famous colored gemstone brand and build consumer preference for colored gemstone jewelry. DIL has a strong marketing network for colored gemstones and is expanding its network with a joint venture with a Thai company for marketing Thai rubies and other colored gemstones in India. India is one of the leading exporters of colored gem stones in the world, accounting for over 12% of the world export market.
