Over a 4-decade old Indian diamond company with a global network spread across five regions, might face bankruptcy, says a market source. The market sources anticipate the outstanding to be Rs. 500+ crore to a consortium of banks and private lenders. However, exact figures are still awaited. The company which is into polished diamond supply and diamond jewellery manufacturing.
Lead bank from the consortium of banks has already sent a letter to the company regarding recent developments in the company and business that took place without intimating to the banks. The letter has stated that consortium of banks is the first charge holder over all the company’s assets, book debt receipts, cash flow both present and future. It has further mentioned that “…under no circumstances the assets charged to us like the inventory and receivables of the company should be used to settle dues with any unsecured creditors by way of payment, set off or any other form till the outstanding with the consortium member banks are completely paid off and zeroed. Any deviation will trigger proceedings against you as willful defaulter in keeping with the law of the land like RBI guidelines on Bankruptcy and Insolvency Code, 2016.”
We, at Diamond World, tried to get in touch with the company, but there was no answer.
In the recent past, there have been reports of either bankruptcy or diamond companies defaulting on payments worth crores of rupees. A business going kaput is not new to the diamond industry but the frequency, at which the reports have started coming in, is quite alarming. What is really going wrong in these businesses? Is it the time the diamond industry needs to change the way it does its businesses?