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“The slowdown, worse than 2008, is here. Forget pricey gifts, we’ll prefer to ensure ‘ rozi roti’ (livelihood) for our 6,000 workers this Diwali.” These are the words of Surat billionaire diamantaire Savjibhai Dholakia, best known for showering gifts of flats, cars, and jewellery on his employees during Diwali.
“This time we have a bigger responsibility to survive. Can’t afford extra spend,” Dholakia, Chairman of Hari Krishna Exports, told BusinessLine, underlining the stress in the once-shining diamond industry of the city.
The industry has seen at least 15,000 lay-offs in the past few weeks, while more than one lakh have lost jobs since December with the business becoming financially unviable. “We haven’t laid off anyone and don’t intend to,” he added.
Reward for loyal staff
In 2012, Dholakia first gifted cars to the best performing employees with three of his diamond polishing workers qualifying for what he calls, a “reward for his loyal employees.”
In 2013, this number touched 72 and in 2014, he made headlines by gifting flats, cars, gold and diamond jewellery worth about ₹50 crore to 1,200 of his employees.
The trend continued the following years and reached its pinnacle last October, when Prime Minister Narendra Modi himself handed over car keys to a few employees and gave a video address to the others.
“In a normal year, we see a cyclical trough of about four months when the business remains dull. But, this time, the entire last year was bad and a revival is not in sight even till Diwali,” Dholakia said. The weakness in the market is attributed to unabated rise in the price of rough diamonds, even as prices of polished stones have stopped moving up because of the dip in overseas demand. Market players have charged the top five global diamond miners with jacking up prices ignoring the stagnation in the prices of polished diamonds.
“This has made the business unviable,” said Dholakia, adding that he has never seen such a one-sided price trend in rough diamonds in his 35 years in the business.
Duty hike impact
On prevailing challenges for the industry, Babubhai Gujarati, President, Surat Diamond Association (SDA), said that government measures such as hiking the Customs duty on gold imports have had an adverse impact. Also, over 90 per cent of the business happens overseas and that market has also slumped on lack of demand.
“We can’t deny the lay-offs. But we are trying to convince unit owners to retain staff and provide some work to everyone. We can’t help if the unit owners fail to strike a balance,” he said.
Dholakia, however, believes that the buzz over lay-offs is hyped. “There is no doubt that the industry is stressed. But work is always available for those with skills. In a slowdown, work goes only to the skilled as, for the factory owners, too, every penny counts. Those lacking in skills will naturally lag in this scenario,” he said.
The first-generation entrepreneur remains optimistic about the future. “Those having the ability to manage their costs and sail through these challenging times, will see unimaginable returns when the market revives. But when will that happen, that is still uncertain,” he said.
“There is no indication of a revival by Diwali or even by Christmas,” he added.
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