Saturday, December 31, 2016

Where have the listed diamond companies gone?

 The following diamond / jewellery companies had hit the primary market in the last 8-10 years. All of them have taken the investors for a ride. 

a. Mini Diamond.
b. Suraj diamond.
c. Classic Diamond.
d. Shrenuj Diamond.
e. Shree Ganesh Jewellery and Diamond.
f. Parekh Platinum.
g. C.Mahendra Exports
h. Tara Jewellers
i. Goenka diamond and Jewels

The following are still traded on BSE.

1. Gitanjali Gems
2. Lypsa Gems
3. Alankit
4. Renaissance Jewellery

While analysing an diamond company's IPO, we had shared our views with investors. 

Do not invest in a business, one does not understand it - an adage. Diamond business is one such. Unlike gold, the diamond as a commodity is not standardized, in a way, that the man on the streets understands its intrinsic and true value. And most importantly, being a totally family and close circle business, there is complete lack of transparency in the business, with only the promoter manufacturers / traders knowing what is what, and the buyer is more often completely in the dark. Even the bankers who have been financing the trade for decades, concedes, valuation is a matter of concern. It has limited resale value, unlike gold and silver, and is illiquid in comparison. With the exception of some, the companies in this segment lack corporate governance and are subjected to Income Tax and Customs raid periodically. 

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