Shrenuj engages De Beers over sight suspension
Brian Benza | Friday December 2, 2016 16:01
The company has frozen local operations after its business was affected by headwinds at its head office in India, which resulted in De Beers suspending its international and local allocation of diamonds.
In Botswana, Shrenuj scaled down operations and terminated employment for all its 340 workers at its cutting and polishing as well as its jewellery factories.
“We are in conversation with De Beers to revive our sights so that we can scale up the operations in Botswana at the earliest. We are hopeful that we shall be able to resume normal operations in early 2017 in Botswana.
“We have finalised the roadmap to grow our business and currently it is been shared with the key stakeholders for execution,” general manager, Kim Lanny said.
According to the company, in the recent months, they have been facing strong headwinds in business, largely due to external factors, including rising input costs, weakening of Indian rupee, and stagnation in demand in some of their key markets. While the company has downscaled operations, it says it has adequate management bandwidth and access to additional resources to overcome these issues.
“We have invested significantly in Botswana over the past seven years and have total undeterred commitment to beneficiation, despite the challenges.
“We also wish to state that despite all the challenges, our bankers have been patient, receptive to our plans and supportive during these testing times,” he said. Before downscaling operations, Shrenuj Botswana operated a diamond cutting and polishing factory, which employed 270 workers, while its jewellery factory, the only jewellery manufacturing plant in Botswana, had a staff complement of 70.
The company also operated a jewellery retail outlet where it has a supply contract with Massmart through the Game Stores.
Reports from India indicate that in June this year, Indian banks, with a combined exposure of around US$450 million, obtained a court order to repossess stocks of diamonds lying with the company and also restrict travel of the promoters.
The court order restrained Shreyas Doshi, chairman and managing director of the listed company Shrenuj & Co, and group executive director Vishal Doshi from travelling outside India without the permission of the court.
Around 21 Indian banks are said to have exposure to Shrenuj group entities across markets including Bank of India, Punjab National Bank and Standard Chartered bank.
Industry insiders attribute the problems faced by the group to aggressive expansion overseas even as rough diamond prices kept soaring and polished diamond prices remained relatively muted following the financial meltdown of 2008-09.