From a hole-in-the-wall Mumbai diamond cutting set-up to a global giant, Rosy Blue's rise has been meteoric. However, its Dubai-based chairman, Harshad R. Mehta, tells Shalaka Paradkar it's still a family operation at heart.
Harshad R. Mehta and post-independent India share the same age. The day he was born - August 15, 1947 - was also the day India broke free of colonial rule.
"It confirms that I am an extremely independent person," he says, the twinkle in his eye giving the dazzle in is palm (cupping diamonds) a run for its money.
We are sitting in his Dubai Airport Free Zone office, surrounded by stacks of paper and plenty of diamonds - spilling out of little envelopes, sitting with glittering silence in velvet pouches, some still, others polished, many already a part of glittering bracelets and ear pendants.
A distractingly breathtaking necklace in pink diamonds engages your mind with unrelenting pull.
One of the leading émigré diamantaires of the Indian diaspora, Mehta has more than 40 years of experience in the diamond industry.
Coming from a modest, middle-class background, Mehta inherited a family business that ran with the help of a single diamond-cutting wheel in a hole-in-the-wall operation in Mumbai.
Mehta, along with other family members, turned that modest business into one of the biggest diamond companies in the world.
Although India produces no diamonds of its own, it dominates the business as the world's largest diamond cutting and polishing centre. And at the heart of this is a small, tightly-knit and extremely orthodox Palanpuri Jain community, hailing from the small town of Palanpur in Gujarat.
In India, Palanpuri Jains are well known for their lavish intra-community wedding receptions in the diamond hub Antwerp, where Bollywood film stars are flown in to entertain guests and the choicest vegetarian cuisine conforming to their strict dietary restrictions is served.
Palanpuri Jains were the first to take the skills of this business outside of India, setting up operations all over the world, resulting in an industry valued at $85 billion.
One such company is Rosy Blue, which recently set up operations in the UAE, headed by chairman, Harshad R. Mehta.
Last year, Rosy Blue recorded $1.7 billion in diamond sales in over 15 countries and is the largest De Beers-DTC sightholder. (De Beers-DTC, the biggest force in diamond mining, controls diamond prices by selling rough diamonds to an exclusive club of 'sightholders'. More than half of its 85 sightholders are Indian.)
Mehta is known as the 'Diamond King' for his vast experience and keen understanding of the industry.
He is also a board member of the Gold and Jewellery Group in Dubai, vice- chairman of the Dubai Diamond Exchange, past president of the Rotary Club of Bombay Metropolitan and past chairman of the Gem and Jewellery Export Promotion Council.
Mehta is the honorary consul of the Republic of Armenia for India, a position he won on account of his family's 30-year association with the Arslanian family of Antwerp.
Rosy Blue factories in Armenia have created wealth and employment - the Lori factory has exports worth over $50 million a year and Talin employs more than 500 workers processing over 6,000 carats per month.
Together, the two factories produce more than $75 million worth of polished diamonds annually.
A keen sportsman and philanthropist (he donated $1 million to the philanthropic efforts of Rotary), Mehta is getting ready to hand over the reins of the business to his son, Rehan.
"It's somewhat of a disadvantage for Rehan, because he cannot say he has built something on his own," he says. "Unlike in my case, where I was able to build a company from scratch."
I
I have missed out on many things in life, such as a formal education. But, as I always say, I was born a positive person and can still make up for what I have missed (out on). There is a lot more to do!
I love cricket! I am a decent spinner. In fact, I love all kinds of sport. I spend quite a lot of time in the gym; I also play squash and swim.
I am a simple person. I like Gujarati food and miss it when I am travelling. I prefer simple food for breakfast and lunch but dinner is a grand affair with a choice of at least four vegetables! I spend my leisure time listening to music and reading Gujarati literature.
I have not spent much time with my children, but (whatever has been spent) has been quality time.
But thanks to the wonderful parenting by my wife, my children have turned out to be successful and confident individuals. I like spending time with my grandchildren whenever I can and love to indulge them.
I do not like travelling much but, unfortunately, I end up doing it most of the time.
My technical knowledge about the trade I owe to my uncle, Bhanuchandra Bhansali. He was one of the best cutters in the business. He has a formidable reputation for being able to estimate the price of a diamond and (determine) which shape will look the best for a diamond.
Me
Me and my childhood:
As a child, I was very mischievous and hurt myself a lot while growing up. Many of my injuries needed stitches and I have stitches at seven places all over my body.
I was an average student at school and liked taking part in all activities, especially sport. I always made friends easily and am in touch with some of them even today.
We belong to the Palanpuri Jain community. We are strict vegetarians, and the first time I tasted cheese was when I was 14.
After a bout of illness, I was sent to recuperate to Pondicherry, a town in southern India that was once ruled by the French. I stayed at the house of a Vasantbhai, a family friend. That was when I tasted cheese for the first time at his house.
At first glance, it looked like soap but then someone told me it was cheese and I could eat it. Vasantbhai's house and its luxuries - including a stereo - created quite an impression on my young mind.
I resolved that one day, I would have a better house than his. When I returned to Mumbai, I shared my resolve with my family members. Whenever I buy a new house and we start doing it up, my family members remind me of that statement.
After school, I enrolled at Mithibai College in Mumbai, intending to graduate in science. But I gave up my studies in less than a year. I decided I would rather be in business than academics.
At the time (the early 1960s), the diamond business in India was a small world, dependent entirely on the domestic demand. There was no glamour and hardly any exports. But it was still an interesting business and suited someone like me - with an appetite for risk and adventure.
Our family business was then known as B. Arunkumar & Co. It started in 1958 with four people sitting at a small cutting wheel. My uncle Bhanuchandra Bhansali was one of the partners who started the company.
The diamond industry then was not about processing raw diamonds into finished gems. Rather, it was about giving new facets to stones that had already been cut.
Most people were looking at good factories to turn their old gems into stones with 65 facets, which was the popular fashion then.
Our factory was situated near Pydhonie, central Mumbai, in a small, dingy building with no amenities. The diamond industry in India started with small factories such as these.
The trading in diamonds started after the Sino-Indian war in 1965 when domestic demand dried up. The crunch in foreign exchange forced the Indian Government to facilitate imports of rough diamonds and machinery.
In the 1960s, a few Palanpuri Jains moved to Antwerp, Belgium (the hub of the global diamond trade) to sell cut and polished diamonds produced in Mumbai and Surat and to source rough diamonds for their Indian operations.
Rosy Blue was established in Antwerp as the first step in the international expansion of the group. Rosy Blue primarily served as B. Arunkumar's satellite office for rough procurement and polished distribution.
The first time I went to Antwerp was in 1969. It was also my first plane ride anywhere. When I landed in Belgium, I was taken aback by its beauty and the sheer size of the diamond market. There was also a lot of modern machinery and innovation.
After that, I travelled every three months to Belgium. When international plane connections started and there was traffic between India and foreign markets, the international industry quickly realised that the Indian way of cutting and polishing stones was three times cheaper than what was being done then in the established markets of Belgium.
It also made more economical sense because of the devaluation of the Indian rupee. A boom ensued with production lines getting more organised within Indian factories.
Me and my influences:
One of the biggest influences on my life has been a friend of my father's, Popatlal Shah. When I was about 8, I got caught stealing some petty cash to buy a kite. It became a big issue in my family.
When Popatlal Shah dropped in that evening at our place, he was also informed about my misdemeanour. He spoke to my parents, then took me to a Jain Pathsala - a school where we are given faith-based instruction.
He made me promise that I would never lie or steal again. I was made to understand my mistake and learn what was right conduct. I was deeply grateful to him for having protected me from my father's wrath. The way he explained the error of my conduct to me left an indelible impression on my mind.
Me and my family:
I married my wife, Naina, in April 1969. As is the custom in Indian families, our marriage was arranged by our families. I knew Naina's brother and one day he called me and introduced me to her.
After three days, her parents called me with the proposal. I had always been fond of her family and wanted to marry a Gujarati girl who was not typically Gujarati.
Since Naina grew up in Singapore and graduated from Mumbai's Sophia College, she fitted the bill. She is a Palanpuri Jain like me, and was the first and only marriage proposal I received!
When we got married, Naina could not speak much Gujarati. She was not entirely familiar with the rituals and customs of our culture. Our marriage has been a very happy association of over 37 years.
She has been a devoted mother. Naina is a homemaker, my backbone and a source of tremendous support at all times. We are blessed with two daughters and a son.
Both my daughters are happily married and settled with children. Priti, our eldest child, has twin boys; Soignee, our other daughter, has a daughter and a son; and Rehan, our youngest, married recently.
My wife and I decided to send our children to a school where the medium of instruction would be English. Now that was a jolt to our traditional family, where children studied in Gujarati schools. But it was my decision and it has paid off in the long run.
Rehan has joined the business. He went through training in all the departments and processes of the diamond business. He has the mental make-up of a champion athlete - as a young boy of 13, he swam across the English Channel in a record time of 11 hours and 34 minutes.
My father was a partner in a different company, R. Dalpatlal, also in the diamond business. They were more of a brokerage firm, buying and selling diamonds. He saw my brother do well in my uncle's business and decided that was the one to support.
My mother was instrumental in drilling the importance of ethical business practices into us from an early age. She and her brother (a partner in Rosy Blue) had a few strong ideas about how business should be done.
For instance, we have never poached talent from our competitors. Many of the people in our company have worked for more than 40 years with us. We value loyalty and trustworthiness in our employees. We cherish family-oriented employees and try to make our workplace feel like family.
Me and my industry:
I started my career working with smaller diamonds. As you become more technically qualified and start understanding how to see and shape the stone, you move on to working with bigger diamonds.
I became quite skilled in three months. Generally, it takes two years, as it did for my son. He started with glass stones, learning how to cut them without breakage. Once we were confident of his skills, he was moved to real stones. Cutting a diamond can be a complicated task.
You have to take into account its valuation, the best shape, where to start and when to start cutting. I missed having that formal knowledge, so I encouraged my son to go for technical qualifications to supplement on-the-job training, so he would be well equipped to handle diamonds and not just remain a businessman.
Myself
As DTC's biggest sightholder, give us a peek into the process of 'seeing the rough'.
The term 'sightholder' describes the series of annual appointments we have with the DTC, when they allow us to 'sight' boxes - a collection of uncut diamonds.
Before showing us the rough stones, DTC gives us a date and an allocation. If you are happy with the allocation, you are told to remit the money. After they receive the money, they confirm the dates for the sight.
Rosy Blue is one of the biggest sightholders and we have a special room where we can view the goods. We go in with an expert to look at the goods (rough diamonds).
The DTC gives an average price for the goods, not a parcel-to-parcel breakdown. You don't have to buy everything on offer. But if you refuse some goods, you have to have very good reasons for refusal.
If they are not convinced about the reasons for rejection, they might shrink the size of diamond allocation next time. They keep you on your toes! I used to take three to four days to go through the box. These days, I see people going through a box in a few hours.
The business has changed from technical to marketing. Not as much importance is given to how diamonds are cut. The computer helps in cutting, but you still need skill to get it do the right thing. People's skills are still indispensable.
How do you see Dubai's potential as a diamond hub?
Many of the people here are immigrants who work hard and create a better standard of living for themselves. As a result, they earn more and spend more.
We also have wealthy UAE nationals, who also enjoy spending and giving valuables to their family and friends. I agree with the thinking that the GCC will soon be the third biggest market after India and China.
By 2007, we hope to have 20 per cent of our business being conducted out of Dubai. Most of the 300-odd Indian diamond companies operating from Antwerp have offices here and many of the Indian firms from Mumbai have a base here too.
Dubai already has a good amount of rough trade. It is a strategically located business hub that links the East to the West. Logistics and time zones are in its favour.
My brother Arun came to Dubai four years ago.
He would travel here for business every three months and was close to retirement age, but he didn't want to settle here. When I came here a few months ago, I liked Dubai very much.
Also, it was essential that one of us from the family should be based here, so I moved to Dubai.
What have been your biggest business lessons?
In 1964-65, I trained under my friend Kishore Mehta, in a garage located at the back of his building. From him I learned how to maximise the yield from a rough diamond. I would say that was some of my finest learning.
In the business of diamonds and jewellery, one must know the real cost of raw materials used and the labour cost of manufacturing, and then create a final product that is competitive in price and quality.
To this day, I follow this lesson learnt early in my life - whether it's applied to rough diamonds or to our branded jewellery range.
There has been criticism of India's diamond cutting industry for employing children. What is your response to this?
When I was the chairman of the Gem and Jewellery Export Promotion Council (1994-1996), an apex trade body sponsored by the Ministry of Commerce responsible for promoting exports of gems and jewellery, there was a major concern about child labour engaged in the diamond trade in India.
In order to find out the true picture, we engaged the research agency, A. Fergusson, to carry out extensive surveys on the Indian diamond industry. The findings of the survey indicated that child labour has come down in almost all the important diamond centres in India.
The estimated percentage of children to the total number of artisans in the large, medium, small and tiny sector is around 0.02 per cent, 0.18 per cent, 0.55 per cent and 1.9 per cent respectively.
The percentage of child labour in the industry as a whole has declined from 0.89 per cent in 1998 to 0.53 per cent in 2003. This has further reduced due to the awareness campaign carried out by the Gem and Jewellery Export Promotion Council.
We found that one of the reasons for the presence of child labour is that some artisans prefer their children to continue in their traditional profession. It is these artisans who introduce their children to the industry, to continue
the family business and supplement their income.
Nowadays, many employers are aware that child labour is illegal and refrain from employing children. The trade is also keen to abolish this practice.
If any company is found to employ child labour, then it will be blacklisted and slapped with a heavy fine.
As such, I am confident the Indian diamond industry is determined to eradicate child labour from the industry.
