Going.. Going.. Gone! Scarcity of small diamonds

First of all lot of workers have left the industry as they can earn more working somewhere else. Secondly, high prices of rough diamonds and low demand of small diamonds addition to falling rupee and inflation has boosted this scarcity, says Shirish Poonglia (Nikku), Partner, Concorde International gauging the reasons for this scarcity of small diamonds. Manufacturers are suffering the most as rough diamond dealers and miners are making abnormal profits due to high prices of rough diamonds. Hence there is very low profitability for the manufacturers. Highlighting the growing threat of un-natural diamonds, Shirish Poonglia added, “One of the major reasons for the downfall of small diamonds is CVD (Chemical vapour Deposition) or Synthetic diamonds gaining popularity amongst consumers. The natural diamond is under immense threat due to these synthetic diamonds; people are losing trust on natural diamonds as an investment value object. It is very difficult to judge the synthetic diamond due to the advanced technology used for their creation. Diamond is losing its shine due to the unnatural synthetic diamonds in market.”

“I feel the reason for this scarcity of small diamonds is expensive labour and increase in prices of rough diamonds. But manufacturers are facing lack of profitability for small diamonds and thus they are minimising the production for small diamonds. Combination of high prices of rough diamonds, low demand, weak rupee and inflation is to be blamed for this situation. Competition has increased and also due to the fluctuations in foreign exchange the profits have fallen down, which has reduced production,” states Ashish P. Gandhi, Director, Osia Gems Pvt Ltd.

Explaining a different point view altogether, Ghanshyam D. Dholakia, Managing Director, Hari Krishna Exports Pvt Ltd.says, “According to us there is no scarcity of diamonds below 20 pointers. There are plenty of goods available in this range (below 20 pointers). There is scarcity of buyers rather than scarcity of goods. Scarcity of buyers has been witnessed since last two years, now. We feel that in the coming years the profitability and demand for small diamonds will reduce due to increase in rough prices and subsequent decrease in demand. Shooting prices of rough diamonds, low demand, fragile rupee and rising inflation is majorly responsible for this condition.”

Mehul Dungrani. Managing Director at Varni gems concured with Dholakia and stated, “I would not like to agree with the term ‘scarcity’ but I agree there is fluctuation in this segment. This started after last Diwali. These diamonds are used mostly in jewellery and especially watches. As the marriage and Diwali season is around the corner, I foresee that the situation will become better. Unless and until the rupee-dollar rate stabilies and the government policies are made favourable, this situation will not see the expected result.”

“This scarcity is been felt since one and a half year but now it seems to be worsening.The demand for small diamonds is low due to the global situation and recession especially VVS and VS goods. The future seems to be more dark as the demand is too low,” shares Shirish Poonglia (Nikku).“When rupee crossed 55 / dollar mark, there had been noticeable start in this phenomenon, it all started then. Definitely there is a good demand for small diamonds below 20 pointers. I am not sure of the present situation in this scenario, and future is far beyond expectation, but I just hope that it ends soon,” says Ashish P. Gandhi.

“Though the future of small diamonds seems to be bright as they continue to be part of majority of the jewellery; currently there is a lot of risk involved in manufacturing the same due to increased rough prices. Manufacturing small diamonds may not be viable business now but people are trying to maintain the cost-profit ratio. The overall diamond industry has transformed itself into a more systematic and professionally operated business now. The next generation is also doing well, especially after moving to the Bandra Kurla Complex. If we focus our heart, mind and soul in one business and invest on the services offered to our customers, the diamond business is the best to be in and we can surpass this phase too,”positively wraps upGhanshyam D. Dholakia.