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2016 has indeed been an eventful year - one that will not be forgotten in a hurry. Two events that dominated global headlines were the surprise election of the republican candidate as the President of the USA and the unexpected result of the referendum in the UK to opt out of the European Union, popularly known as BREXIT. Both these events are bound to impact not only global geo-politics, but also economy in the years ahead.
Amidst these upheavals, the world economy continued to hover around the 3 percent growth mark. The US economy continued its positive momentum as confidence returned, while in China, the economy grew by 6.7 percent, marginally lower than 6.9 percent in 2015. The Indian economy continued to surge ahead with another year of over 7 percent growth in GDP. The demonetisation in the month of November 2016 affected growth across industries and sectors, but is expected to be a bold and decisive step in the right direction. GST is another such step that will create a unified market and level the playing field in days to come.
As far as the gems and jewellery industry is concerned, demand in the US remained mostly subdued though the holiday season elicited moderate response. In China, there was an overall decline in demand in 2016, but 2017 began positively with a strong Chinese New Year as the effects of the government’s anti-corruption campaign on gold jewellery faded. This led to a rise in seasonal re-stocking demand, which in turn, led to recovery for most Indian cutters in the last quarter of the financial year after the initial shock of demonetisation. While there was a decline in consumer demand post demonetisation in India, festive sales in the month of October 2016 were robust due to attractive gold prices. On the supply side, most miners liquidated excess rough inventories of 2015 during the year and also ramped up production in 2017, leading to an output level similar to that of three years ago.
At Asian Star, we have been focussed on our long-term growth strategy: consolidating our edge in manufacturing, focussing on quality, leveraging design as a differentiator in diamond jewellery and expanding our global presence to cover new geographies. While the operating environment continues to remain challenging, our focussed strategy has ensured we deliver consistent performance.
For the year 2016-17, our Consolidated Turnover increased to Rs. 3,493.86 crore, up from Rs. 3,302. 20 crore in the previous year, an increase of 5.8 percent. PAT for the year was Rs. 66.13 crore against a PAT of Rs. 74.32 crore in 2015-16. The moderate decline was due to pressure on prices as a result of challenging economy and market conditions.
Good corporate governance and financial discipline continue to remain firm pillars at Asian Star. We strictly monitor our working cycle and enjoy high ranking with our bankers. We are 293 in Dun & Bradstreet’s Top 500 companies in 2017. Our uncompromising focus on quality has resulted in the Company becoming approved manufacturers of CANADAMARK and AUSTRALIAN DIAMONDS, which will go a long way in establishing us as an ethical and responsible diamantaire.
The outlook for business remains largely challenging, and yet, there are distinct signs of optimism. We are excited about further accelerating the growth momentum in our diamond jewellery business from an impressive 21 percent this year. Another interesting growth opportunity is in new and hitherto unexplored markets like The Netherlands, Mexico and Poland where we have already started working with leading jewellers. We have also started a new marketing arm in South Korea to focus on this fast emerging new growth hot-spot in Asia. As far as our diamond business is concerned, we remain cautiously optimistic and expect demand to pick up in the US and China.
I thank you for your continued support and assure you that we remain committed to delivering value for all our stakeholders.
Vipul P. Shah
CEO & Managing Director