Asian Star: reaching for the sky

Updated: Aug 1 2005, 06:45am hrs
Incorporated in 1971, Asian Star Company Ltd. (ASTL) is one of the largest exporters of CPDs and jewellery. Its business comprises of diamond manufacturing and also jewellery manufacturing and retailing. The company has processing facilities at Goregaon, Mumbai; Mandvi and Gopipura in Surat, Gujarat; and Thala (Chikli) in Gujarat. In May 1996, ASTL made an initial public offering (IPO) of 2.67 million equity shares of Rs. 10 each at a premium of Rs. 65 per share aggregating Rs. 200.25 million.

Exports of CPDs ASTL's accounted for 98% of sales turnover of Rs. 9,680 million in FY2004. While CPD exports in volume terms have increased from 0.43 million carats in FY2000 to 0.71 million carats in FY2004, sales value of CPDs have increased from Rs. 5,290 million to Rs. 9,499 million. However, per carat (p/c) realisations of CPDs have increased at a slow pace-from Rs. 12,379 in FY2000 to Rs. 13,441 in FY2004. Realisations were adversely impacted by the appreciation in rupee during FY2004. Increased competition, higher raw material costs, and slow increase in prices have resulted in ASTL's operating margins declining from 7.7% in FY2002 to 3.8% in FY2004. However, prudent financial management has resulted in lower interest cost. Net margins also declined from 3% to 2%. ASTL's sales increased 9.7% during FY2005 to Rs. 10,620 million. Although raw material costs increased, control on other expenses resulted in a 44.3% increase in operating profits. Operating margins improved from 3.8% in FY2004 to 4.8% in FY2005. While net profits increased 12.3% in FY2005 to Rs. 220 million, net margins increased from 2% in FY2004 to 2.1% in FY2005.

The world jewellery business offers decent growth opportunities in the coming years. ASTL plans to concentrate its resources in developing new markets, expanding global reach and increasing customer satisfaction. The company also expects to continue its efforts at widening its customer base across various countries, thereby reducing dependence on major customers.