In an unprecedented move, Kiran Gems, the world’s largest natural diamond manufacturer, has announced a 10-day holiday for its 50,000 employees in Surat, scheduled from August 17 to 27. This decision comes in response to the declining demand for polished diamonds, a consequence of the ongoing global economic challenges and geopolitical tensions.
Chairman Vallabhbhai Lakhani attributed the industry’s current struggles to a global recession and the aftermath of the Russia-Ukraine conflict in 2022. The US’s restrictions on Russian-origin diamonds and the G-7 nations’ embargo have further strained the diamond industry, causing significant disruptions. In an interview with the Indian Express, Lakhani acknowledged the difficult phase the diamond business is enduring, describing it as a “bad patch.”
Lakhani emphasized the importance of supply management to stimulate demand and stabilize the sector. “We have declared a 10-day holiday so that the production of diamonds can be controlled,” he explained. This strategic move aims to regulate supply and potentially increase prices, deviating from the traditional practice in Gujarat, where diamond firms typically extend breaks around Diwali. This is the first time such a decision has been made in the company’s history.
Despite the production cutback, Lakhani assured that all employees would receive their salaries, although some amounts might be withheld temporarily. “All workers will receive their salaries at this time even though certain amounts will be withheld,” he confirmed to PTI. This assurance highlights the company’s commitment to supporting its workforce during these challenging times.
Kiran Gems, a major buyer of raw diamonds from De Beers, reported an annual turnover of Rs 17,000 crore. The holiday announcement follows De Beers’ revelation of a 15% decline in rough diamond production in the second quarter of the 2024 fiscal year. With over 50,000 diamond polishers employed, including 40,000 handling natural diamonds and 10,000 specializing in lab-grown diamonds, Kiran Gems is a significant player in the global diamond industry.
The decision to initiate an early reduction in gem production reflects a strategic effort to address the industry’s current challenges. By managing supply more effectively, Kiran Gems hopes to boost demand and stabilize the market, ensuring the long-term sustainability of the diamond sector.
As the diamond industry navigates this turbulent period, Kiran Gems’ proactive approach underscores the importance of adaptability and strategic planning in the face of global economic uncertainties. This 10-day holiday serves as a testament to the company’s resilience and commitment to safeguarding the interests of its employees and the broader diamond market.
Surjitt Sahani
