Mumbai:News about financial trouble at New York-based M Fabrikant & Sons, the largest US importer of diamonds from India, has the country’s diamond industry worried. According to a report in Israel-based newspaper Globe, Fabrikant owes $400 million to creditors, of which $200 million is owed to US banks, and $200 million to suppliers. Fabrikant has an annual turnover of around $1 billion. While the Indian diamond industry pegged Fabrikant’s outstanding at around $75-100 million, Fabrikant’s Mumbai representative Shailesh Jhaveri says the figure is exaggerated. “As far as India is concerned, we have outstanding dues of only $30 million,” he said.

Nalini Rajan, V-P of Tara Jewels and Tara Ultimo in which Fabrikant has a 25% stake, admits that there is a ‘small problem’. But she says negotiations are on and the problem would be solved in a month. She adds rumours are a norm in the diamond industry and that every few days there are reports of collapse of one company or the other. Fabrikant’s suppliers cut across the diamond industry. In fact, the who’s who of Indian diamond industry supply to the company. If Fabrikant is in financial trouble, the impact would be felt across all the suppliers.

The Israeli newspaper in its Monday edition says Fabrikant is in danger of collapse and insolvency. The company is believed to have deferred payments for eighteen months and have got into cash flow difficulties, the paper says. The report adds that banks in the US have had to reduce credit lines to the company to a minimum, making it difficult for it to operate. Why is Fabrikant important to India? Since 1999, Fabrikant has consistently won awards from the Gem and Jewellery Export Promotion Council as the largest US importer of diamonds from India even though the value of imports has declined.

The Indian industry is now worried. A veteran diamond merchant says the merchants are worried on two counts. “If Fabrikant collapses, where will we find a powerful replacement for Fabrikant? I am not saying that there are no buyers. But nothing in the league of Fabrikant. Also, if Fabrikant files for bankruptcy, the company’s creditors will face problem as their money will be stuck for some time,” he says.