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Friday 24 May 2019
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Shreenuj runs into financial trouble, Banks tighten their grip on the group

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The 100-year-old diamond house and one of the largest in the trade, Shrenuj has run into trouble as lenders tighten their grip on the group which has survived across four generations. Banks, with a combined exposure of around $450 million (INR 3045 crore), has obtained court order to repossess the inventory – stock of diamond lying with the company – and restrict travel of the promoters. The Debt Recovery Tribunal, which issued the orders, has restrained Shreyas Doshi, chairman and managing director of the listed company Shrenuj & Co, and group executive director Vishal Doshi from travelling outside India without the permission of the court. Lead by Bank of India, some of the other lenders in the consortium are ICICI Bank, Punjab National Bank, State Bank of Patiala, Standard Chartered bank and Andhra Bank. Around 21banks have exposure to Shrenuj group entities across markets. The slowdown in the diamond industry along with some of the company’s business bets such as diversification in Africa backfired.
Vishal Doshi did not respond to text messages and emails from ET till the time of going to press.
A senior banker said, This is a case of a company finding itself in difficult business environment. the situation looks tough. We have not found any evidence of fund diversion. We are willing to negotiate with the management and perhaps restructure the debt if promoters are willing to bring in around Rs 300 crore. The legal process is in full steam.” Banks have declared some Shrenuj accounts as sub-standard which in banking parlance refers to loan account where interest or principal has remained unpaid for a quarter. Shrenuj & Company’s net loss widened to Rs 38.32 crore in the quarter ended March from Rs 4.9 crore in the preceding quarter and against net profit of Rs 2.5 crore in the period ended March 2015.  Net sales declined more than 62 per cent to Rs 304.16 crore in Q4 March 2016 from the year-ago period. The company procures rough diamonds from overseas, cuts and polishes them and makes diamond jewellery.  Trade circles attribute the problems faced by the group to aggressive expansion overseas even as rough diamond prices kept soaring and polished diamond prices remained relatively muted after the financial meltdown of 2008-09.  So the company had to pay higher prices for raw material while finished goods prices took a hit. In the past decade the company set up cutting and polishing diamond facilities in Botswana and Johannesburg, in addition to existing ones in Mumbai and Patna. The troubles faced by the company are reflected in its share price movement on stock exchanges.  From a 52-week high of `65 on August 24 last year, the stock plunged to a 52-week low of `2.35 on May 30 this year. The company’s standalone debt was `1,648.6 crore at the end of fiscal year 2016.




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