Rough Slowdown Weighs on Asian Star

RAPAPORT... Sales and profit slumped at Indian diamond manufacturerAsian Star in the second fiscal quarter as weak rough demand prompted it to reduceits trading activities. The Mumbai-based company supplements its core cuttingbusiness by reselling rough through its subsidiaries, Pranav Kapadia, AsianStar's chief manager for accounts and tax, explained to Rapaport NewsMonday. Revenue from that segment declined during the three months endingSeptember 30 due to pressure on the manufacturing sector, he added. As a result, group revenue fell 27% year on year to INR7.98 billion ($111.2 million) in the three-month period, while net profitdropped 66% to INR 130.8 million ($1.8 million), the company reported in astatement last week. Excluding subsidiaries, revenue slipped 5% to INR 6.67billion ($92.8 million), while profit declined 16% to $1.3 million (INR 94.7 million), reflecting a more moderateslowdown in its diamond- and jewelry-manufacturing operation. "Demand has been slow because of a lot of inventory inthe pipeline," Kapadia said. "Manufacturing was low, so the rough-tradingopportunities were very minimal. The opportunities that were available were notthat profitable. If you look at our manufacturing business, which is our corebusiness, that has done [relatively] well." Results are likely to improve in the coming months asinventory levels have stabilized, Kapadia added. The company, a sightholderfocusing on smaller goods, has continued to buy from De Beers and other minersat normal rates, instead reducing its supply from the open market, he continued.Manufacturing margins have been stable versus a year ago, as the company choseto walk away from deals rather than compromise on profitability, he reported. Image: Rough diamonds. (Shutterstock)