FEBRUARY 5: Like the diamond business in India, it's fast losing its appeal.When the foundation stone for the Bharat Diamond Bourse was laid in May, 1992 at the Bandra-Kurla complex, it was touted to be the world's largest and best-equipped diamond market. Today, almost six years later, it's not even half complete, huge cost overruns have pushed up the cost of office space in its eight self-contained towers, and the downturn in diamond trade hangs like a dark cloud over it.India has lost diamond business worth Rs 5,600 crore in the last two years at the rate of 20 per cent of the annual global exports (Rs 14,000 crore). Traders inability to sell polished diamonds made from imported rough diamonds and the restrictions imposed by the diamond giant De Beers, which has a monopoly over supply of raw diamonds, have dealt crippling blows to the business. Some of the traders are already thinking of calling it a day. They have two good reasons - a business that's not looking up and their offices in Opera Housearea that would fetch them huge sums if sold in open market. ``Most of the traders have seen their profits dipping in the last few years. They know they can make a fat sum if they sell off their offices. The commercial property prices in the diamond business area near Opera House is Rs 30,000 per square feet as against Rs 8,000 to Rs 10,000 in non-diamond business areas. There is no reason why they would not exercise this option,'' sources said. And while diamond traders quitting business is bad enough a news for the BDB, there is something that's even worse - the traders are privately wishing the completion of the bourse gets delayed further. ``If the Bharat Diamond Bourse is completed, they fear the real estate prices at Opera House will crash,'' revealed an insider.Out of an estimated 1,500 Indian diamond exporters, 1,409 have their offices in Mumbai, though their manufacturing facilities are scattered over nine states Gujarat, Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, MadhyaPradesh and Rajasthan. Over 95 per cent of these traders have their offices in three buildings at Opera House - Prasad Chambers, Pancharatna and Parekh Market.The traders' waning interest in the diamond bourse is hardly surprising then. Only 40 per cent of the 2,600 exporters who had agreed to acquire office spaces in BDB have paid their annual membership fees of Rs 1000 in the last two years. They have frequently defaulted in paying their installments also. While Rs 570 crore have already been spent on the project, an equal amount may be required to complete the project by the year 2000. This would mean a cost overrun of around Rs 550 crore and a delay of four years. And that's not all. The cost of office space in this multi-storey complex has risen from Rs 3,140 per square feet to Rs 5,000 per square feet in the last few years when the real estate price at Bandra-Kurla complex were crashing.``We don't have funds to complete the project. The last budget in September 1995 revised the project cost to Rs750 crore. Since then there has been no progress,'' said a senior BDB official. ``IDBI refused to lend us Rs 150 crore for the next phase of the project. We are now negotiating with some other banks,'' he said.While some blame the cost overruns on the mismanagement of funds by the 16-member managing committee in charge of the construction, officials deny these charges. ``It's a cost-sharing project and there are several reasons for the cost escalation. Delay in any project has its own costs. Nobody has undertaken such a mega project in India earlier.the initial estimates were only assumptions,'' said an official. ``Part of the cost escalation is due to the depreciation of the rupee against dollar. We have estimated the import cost at Rs 30 per dollar. While a fair amount of payment is made at Rs 34-36 per dollar,'' a spokesman added.There is little hope then for this diamond in the crown of Bandra-Kurla complex, for if experts are to be believed the Indian diamond exports are not going to grow in thenear future.
