PNB Rs 114-bn fraud: Diamond industry could give more headache to banks

The industry is now technically insolvent, with the market capitalisation of many companies now lower than their debt outstanding

Punjab National Bank’s financial trouble with the Nirav Modi jewellery firm could be the beginning of banks’ trouble with the industry. The finances of the listed diamond jewellery companies suggest the industry is in deep financial trouble with no immediate respite in site.

The industry’s combined net sales were down 15.9 per cent year-on-year (y-o-y) during the first half of the current financial year while their net profit (adjusted for exceptional items) was down 18.9 per cent y-o-y during the period. The industry’s financial liabilities, however, continue to grow with interest expenses up 8.3 per cent y-o-y while total borrowings were