Sales and profit slumped at Indian diamond manufacturer Asian Star in the second fiscal quarter as weak rough demand prompted it to reduce its trading activities.
The Mumbai-based company supplements its core cutting business by reselling rough through its subsidiaries, Pranav Kapadia, Asian Star’s chief manager for accounts and tax, explained to Rapaport News Monday. Revenue from that segment declined during the three months ending September 30 due to pressure on the manufacturing sector, he added.
As a result, group revenue fell 27% year on year to INR 7.98 billion ($111.2 million) in the three-month period, while net profit dropped 66% to INR 130.8 million ($1.8 million), the company reported in a statement last week. Excluding subsidiaries, revenue slipped 5% to INR 6.67 billion ($92.8 million), while profit declined 16% to $1.3 million (INR 94.7 million), reflecting a more moderate slowdown in its diamond- and jewelry-manufacturing operation.
“Demand has been slow because of a lot of inventory in the pipeline,” Kapadia said. “Manufacturing was low, so the rough-trading opportunities were very minimal. The opportunities that were available were not that profitable. If you look at our manufacturing business, which is our core business, that has done [relatively] well.”
Results are likely to improve in the coming months as inventory levels have stabilized, Kapadia added. The company, a sightholder focusing on smaller goods, has continued to buy from De Beers and other miners at normal rates, instead reducing its supply from the open market, he continued. Manufacturing margins have been stable versus a year ago, as the company chose to walk away from deals rather than compromise on profitability, he reported.
Image: Rough diamonds. (Shutterstock)