Surat diamond industry to float Rs1,000-crore company to buy raw diamonds

The Rs65,000-crore Surat diamond industry which is gaining momentum after the global economic downturn plans to form a Rs1,000-crore company for the purchase of raw material for its units directly from the mining sources, thus doing away with the role of brokers.

The new company which will be known as Surat Diamond Sourcing India Limited (SDSIL), will procure diamond roughs, the raw material for the cutting and polishing industry directly from the mines abroad, a top body of traders said yesterday.

"The proposed company is likely to have a corpus of over Rs1,000 crore with contributions of Rs1.08 crore each from nearly 500 members, who shall be the founder shareholders, and another 1,000 members who will pay Rs54 lakh each," Surat Diamond Association president Rohit Mehta said.

Mehta said the company will be soon incorporated under the Companies Act and registered with the Registrar of Companies. The shareholders will be issued shares of Rs10 each. The founder-shareholders shall have voting rights, while those paying Rs54 lakh will enjoy all benefits of being a shareholder except voting rights.

At present the diamond industry is getting the raw material from the world's rough diamond hub Antwerp in Belgium, and Dubai. The Surat traders believe that they often get cheated by the middlemen during the deals.

SDSIL will directly bid for procurement of rough diamonds from mining firms in Canada, Russia and Africa, and will sell it through a tender system to its members. With this SDSIL hopes to compete with other players by directly dealing with global majors like De Beers, Alrosa, Rio Tinto, BHP Billiton and others.