Another Diamond Firm With Rs 3,000 Crore Dues Declared Bankrupt

In yet another shock to the gems and jewellery industry, Eurostar Diamond Traders, one of the largest diamond companies in Antwerp has been declared bankrupt by the Antwerp Corporate Court. The manufacturing company, established in 1978 by Kaushik Mehta, said to have debts reaching up to half a billion dollars. Industry sources said that with yet another diamond company going bankrupt, bank finance in the industry is going to be tougher.

Anirudha Lidbide, diamond industry analyst said, “Diamond industry has lost its glitter after the series of bankruptcy and frauds committed by big diamond company owners. The bankruptcy process against Indian companies in foreign countries will make bank financing in diamond companies tougher.”Eurostar Diamond Traders, owned by Jain diamantaire Kaushik Mehta, owes an estimated $500 million (Rs 3,500 crore) to the banks and financial institutions. Sometime ago, the company lost its sightholder status with De Beers because of its financial problems.

Industry sources said that Eurostar company owns an office in the Bharat Diamond Bourse (BDB) in Mumbai and is member of the Gems and Jewellery Export Promotion Council (GJEPC). The company has close business relations in Surat and Mumbai and that most of the company’s diamond stocks was manufactured in Surat. Last month, the company had filed an appeal with the Antwerp court, requesting for protection from creditors. The court, however, rejected the request questioning some of the financial data presented before the court.

Earlier, the company had admitted in November 2018 that its diamond stocks were only worth $25 million, despite valuing them at $148 million in September 2018. The company lost the trust of its most important creditors and is indebted to them for huge sums of money.

A senior official of Bharat Diamond Bourse (BDB) seeking anonymity said, “After the banking fraud worth Rs 13,000 crore involving Nirav Modi and Mehul Choksi, the bankruptcy proceeding against Indian company in Antwerp will further tighten the bank advances in the diamond sector.”

Kirti Shah, diamond exporter said, “Banks have lost confidence in financing the gems and jewellery companies. We are facing lot of hardships for obtaining finance from the banks. Nowadays, we have to furnish 100% collaterals against the bank advance.”

Courtesy: ET Retail.com