Suashish Diamonds to invest Rs 150cr in new facility

Suashish Diamonds Ltd is planning to invest about Rs. 150 Crores in setting up a new state-of-the-art manufacturing facility at Mumbai’s Santacruz Electronic Export Processing Zone (SEEPZ). The investments will be made through the company’s wholly owned subsidiary Suashish Jewellery Ltd.

Out of this the Rs. 82 Crores is being invested in the first phase in setting up a 16,000 sq.ft. manufacturing facility. This facility will become operational in August 2008. It will add an estimated 500,000 jewellery pieces of capacity to Suashish Diamonds’ already existing annual capacity over 10,00,000 pieces of jewellery.

“The first phase of the facility is expected to achieve Turn Over of Rs.180 Crores in a full year of operation. We are looking at investing the remaining Rs. 68 Crores in second phase in next 2 years. Once the full resources are committed, and both the phases become operational, we expect the SEEPZ operation to achieve Turn Over Rs. 400 Crores annually,” Mr. Ashish Goenka, Managing Director of Suashish Diamonds said.

“We have a strong balance sheet with total assets of Rs. 1467 Crores and reserves of Rs. 588 Crores. Our revenues for FY 07-08 (15 months) were Rs. 1223 Crores and PAT was Rs. 82 Crores. Given this, we do not see raising resources for the capital investment as a problem” Mr. Goenka said, adding that the company will look at a mix of internal accruals and equity capital to fund the new investments.

The Manufacturing facility will be equipped with latest technology, which will ensure production of high quality jewellery for quality conscious market in European countries and other similar countries.

Interestingly, the expansion plans and green field project comes at a time when the rest of the Indian diamond industry has been going through a down turn with reduced margins and sales thanks to a downturn in the US markets, the rising cost of inputs like gold. What has added to the woes of these companies is the reduction in the number of Indian companies who have been granted sight holder status – which ensures a committed supply of rough diamonds at lower costs – by the Diamond Trading Corporation.

Suashish on the other is well placed, being the only Indian company having been granted two sights by DTC; the second one being for its manufacturing operations in Botswana.

“We have consciously tried to follow a strategy that is different from others. We already are a supplier to five of the world’s ten largest jewellery chains. In the last few years we have worked assiduously to extend this relationship by offering several value added services like extensive market research, innovative product development, bin stocking etc. We have also invested in a state-of-the-art CAD/CAM that enables its designers to develop new designs in collaboration with our offices overseas,” Goenka says.