Kiran Gems to Suspend Production for 10 Days

Kiran Gems is pausing production for 10 days and giving its manufacturing employees an extended vacation in response to the Indian market’s inventory imbalance. 

The company, which claims to be the world’s largest manufacturer of natural polished diamonds, will suspend all cutting activities from August 18 to 27, global director Dinesh Lakhani told Rapaport News on Tuesday. 

“We want to follow the demand and supply conditions,” Lakhani said. “That’s why we have to bring our production in line with the current demand.” 

Ongoing weak Chinese demand and mixed conditions in the US have led to an oversupply of polished in the midstream in India. This has prompted manufacturers to reduce production and miners to limit their sales of rough. 

On Tuesday, Petra Diamonds announced it would defer a tender of goods from its South African mines that had been scheduled to take place in August and September. De Beers also added extra flexibility at its July sight. 

August is already a quieter time for India’s manufacturing sector because of Independence Day on August 15 as well as other holidays. In a normal year, workers take around five days of vacation during this period, Lakhani noted. 

Whether or not employees will be paid during their time off is determined by the manufacturing departments in Surat and not by the Mumbai head office, a company spokesperson said.

Kiran Gems has already reduced production by 50% year on year in July and August, he added. The current focus of its manufacturing is on goods under 0.18 carats, which are moving better than larger items, the executive explained. However, production of this category will also stop during the vacation. 

“Demand is still there, but compared with last year it’s less,” Lakhani continued. “Also, historically these are sluggish months. If manufacturing is cut in line with the demand, in [a] couple of months, [the] industry will be more comfortable with inventory levels.” 

Kiran Gems employs more than 50,000 people, including at a marketing office in Mumbai and at a manufacturing facility in Surat.

Update, August 7, 2024: Additional information about payment during the vacation has been added to this story.

Image: The Kiran Gems manufacturing facility in Surat, India. (Kiran Gems)