The Indian diamond industry has been hit by a fresh wave of shockwaves as a Bangkok and Hong Kong-based diamond company has declared bankruptcy, leaving behind a trail of unpaid debts and trapped funds for over 150 companies in Surat and Mumbai.
The company, whose name has not been publicly disclosed, filed for bankruptcy with a staggering $7.8 million debt. The devastating impact falls heavily on Surat, where approximately 150 small and big diamond companies in Surat and Mumbai are now struggling to recover their dues, with their money seemingly trapped in the abyss of the bankrupt firm.
The nightmare unfolded when companies that had supplied goods to the now-defunct company learned about the bankruptcy. Their worst fears were confirmed when it was revealed that the company had no inventory left to cover the debts. While the company declared having $1.7 million worth of goods in stock at the time of bankruptcy, none of it was available for creditors.
Adding to the woes, the company further revealed a staggering $6 million debt, leaving little hope for full recovery for the affected Surat companies. The situation is particularly concerning as many of these companies are small and medium-sized enterprises, making them highly vulnerable to such financial blows.
The news has sent shivers down the spine of the already struggling Surat diamond industry. The industry has been grappling with several challenges in recent times, including a global economic slowdown, rising prices of rough diamonds, and increasing competition from lab-grown diamonds. This latest development has further eroded confidence and added to the existing financial strain.
The incident has also raised concerns about the lack of transparency and accountability in the diamond trade. Questions are now being raised about the company's financial practices and the possibility of foul play. The Surat Diamond Association, the apex body representing the diamond industry in the city, has called for a thorough investigation into the matter.
