Somewhere in Surat....

The Amul model of cooperatives has worked wonders for the country’s milk industry. Now, the same model will take Indian diamond industry to levels where even the might of companies like De Beers and Rio Tinto will be under threat. Besides, it may also threaten the supremacy of Antwerp where a clique of Jewish and Gujarati businessmen battle it out for the control of the global diamond trade. Faced with shortage of roughs and growing competition from China, Indian diamantaires are uniting to form a company to source raw material. After some brainstorming over the week-end, it has been decided that about 1,500 small, medium and large diamond merchants will float a company, Surat Diamond Sourcing (India) Ltd (SDSL), which will directly source roughs from mining companies across the globe and sell it to its members — all equal stakeholders — through a tender system. Already, about 60 to 70 per cent of the rough diamonds mined across the world come to Surat. The move could raise the market share and also eliminate brokers, thus reducing costs. To be formed under Companies Act by September-end, SDSL will set up liaison offices in key mining countries — Australia, Canada, South Africa, Botswana, Namibia, Tanzania and Zimbabwe — to facilitate direct sourcing of roughs.The company will have an initial capital of Rs 1,000 crore. For membership, large manufacturers and rough dealers will contribute Rs 1.08 crore each. Over 1,000 small and medium manufacturers will contribute Rs 54 lakh each. Though SDSL can sell diamonds to any company in the world, registered members in Surat and India will get preference. While 200 diamond manufacturers have already become members, the process of raising money from another 1,300 members will be completed over the next few weeks. “The new company will follow the ‘Amul’ pattern. We want to begin our operations with the direct sourcing of rough diamonds from Zimbabwe. The Zimbabwe government has a stockpile of $2 billion worth of rough diamonds and we want to purchase it all,” said Ashit Mehta, founder member of SDSL and chairman of Blue Star, a leading diamond company. “SDSL intends to compete with other players by becoming a sightholder or client of big mining companies like De Beers, Alrosa, Rio Tinto and BHP Billiton. With a strength like this, we can buy any amount of roughs put up for sale,” said Parag Shah, managing director of K Girdharlal. According to Chandrakant Sanghavi, chairman of Sanghavi Exports, almost all DTC sightholders are keen to join the new company.