Banking Summit 2019 gives valuable insights for liquidity crunch in gems and jewellery industry

The fourth edition of Banking Summit for gems and jewellery sector organized by GJEPC was held on 31^st July, 2019 in Mumbai. An inclusive platform bringing together bankers, jewellers, traders, exporters and manufacturers of the gems and jewellery industry, the summit was a great success. The summit began with the lighting of the lamp followed by welcome address by GJEPC Chairman, Pramod Agarwal.

Addressing the audience he said, “Inspite of India not having a diamond mine within its borders, India is the leading exporter of diamonds. This is the perfect example of ‘Make in India’ initiative. The new government is both dynamic and supportive and we have been working closely with them to bring reforms into the industry.”

The Summit consisted of three panel discussions outlining the current state of the industry, challenges faced and the importance of compliance within the industry. The first panel discussion on the state of the industry included Nimesh Patel, CFO De Beers, Ajesh Mehta, Member- Trade, Dilip Shah, Co Convener, BITC, GJEPC, Manish Jivani, Convener, MSME, GJEPC, Ghanshyambhai Dholakia, Member-Trade, Sabyasachi Ray, ED, GJEPC. All panelists agreed that India has huge potential for growth and needs to work together for improvement of industry.

Ghanshyambhai Dholakia, Member- Trade said, “The gems and jewellery industry is lacking in trust. The entire industry needs to join hands and increase trust value. In the last ten years, there has been a lot of internal growth within companies but the industry as a whole has not grown. We should now take measures to help the industry grow.”

Nimesh Patel, CFO, De Beers commented, “The issue we are currently facing is a short term and recurring issue. We have been in this situation before and have managed to come out of it successfully. Due to US government shutdown in December 2018, the peak season saw a sharp decline. Stock market volatility caused uncertainty in the global market. In 2019 the US China trade war adversely affected the gems and jewellery industry. More recently, Hong Kong protests further aggravated the situation. But our history and experience will allow us to see this through.”

The next panel discussion covered how innovation could be a powerful catalyst for propelling exports. The panel included PN Prasad, DMD, SBI, Bijayananda Pattanayak, Executive Vice Chairman, Induslnd Bank, Russell Mehta, Advisor to Chairman, GJEPC, Sanju Kothari, Convener, BITC, GJEPC and Evgeny Augreev, Director, Alrosa.

Members of the Indian gems and jewellery trade agreed that Indian nationalized banks were very supportive of the industry and have tried their best to support them. However private banks and international banks have not shown too much support.

PN Prasad, DMD, SBI commented, “Policy level strengthening is required for the gems and jewellery industry. There should be a consensus on margin and security requirements and basic standards like corporate governance, collateral and amount of capital needs to be met. It is a work in progress.”

Evgeny Augreev, Director, Alrosa revealed, “The banking sector in India is not ready to provide finance easily to gems and jewellery industry. The US China trade war has also thrown up additional problems. Miners will have to decrease rough prices significantly and also reduce volumes of rough. Alrosa is trying to bring flexibility in prices and allocations.”

The final panel discussion topic was on repositioning business through compliance. The panelists included Rupa Dutta, Economic Advisor, MoC&I, VG Kannan, Chief Executive, IBA, Colin Shah, Vice Chairman, GJEPC, Suresh Surana, Partner, RSM Astute Consulting and Suman Chowdhury, President- Ratings, Acuite Ratings and Research.

 The discussion focused on the importance of self regulation and whistleblowers who should flag defaulters within the industry. They also noted that blockchain has a huge potential in the market and if used correctly it could revolutionize the entire industry. Technology should be leveraged to increase faith of bankers for the industry.

VG Kannan, Chief Executive, IBA said, “Bankers would have more faith in the gems and jewellery industry if the bad apples were weeded out much earlier. All frauds have been committed on the receivable end and this makes it a big grey area. If the industry ensures that in the next 2 years, there will be no defaulters, things will definitely change.”

Suman Chowdhury, President-Ratings, Acuite Ratings and Research concluded, “While giving a good rating to any company, the first thing one looks at is the transparency of the organization. A strong, clear balance sheet will always have a higher rating. Apart from that, diversity and size of organization plays a key role.”