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30 july 2012

Cycling around Surat in the mid-1960s, Dilip Mehta, a gangly teenager learning the ropes of the diamond trade, had little inkling of the globe-trotting road that the stones would take him on, Pallavi Aiyar writes on www.business-standard.com. It would be a fairy-tale-like journey that would see this college drop-out from Mumbai appointed a Baron by the king of a faraway country called Belgium. But this was no fairy tale.

Baron Dilip Mehta is CEO of what is possibly the world’s largest diamond manufacturing company, Rosy Blue — a name that commands instant respect on Hoveniersstraat, the legendary diamond quarter of Antwerp, where the $1 billion company is headquartered.

The diamond trade is the most global of industries linking the mines of war torn Africa to the luxury stores of western metropolises via polishing factories dotted across Asia. But it is also a trade that lacks faces or instantly recognizable names.

Over the last few decades, Gujarati Indian diamond merchants have emerged as the high priests of the Antwerp trade. Eighty per cent of the world’s rough diamonds and half of all polished stones change hands in this Belgian port city. Yet, amongst all the Shahs and Mehtas who dominate the trade here there are few equivalents to big names in other industries like Ratan Tata or Mukesh Ambani.

Leaning forward on the round conference table in his office on Hoveniersstrat, Mehta smiles shyly when asked about his relative anonymity. “We are mostly family-run businesses, private companies. Diamonds are about generations of a family rather than any one individual.”

This may be true but Mehta was thrust into the limelight when awarded the title of Baron by the Belgian King in 2006 for services rendered to the country, the only Indian diamantaire ever to have been thus honoured.

He giggles boyishly when revealing how there was a two-year gap between the announcement of the award and his being able to accept it.

“You see, they (the Belgian authorities) needed my wedding certificate to complete the administrative formalities. But even though I’ve been married to my wife since 1971 we never had a formal certificate. It took me two years to organise one.”

Mehta moved to Antwerp in 1973 following in the footsteps of his father and uncle who had set up shop in the city in the mid-1960s. Theirs was one of the first Indian families to have sought their fortune in Antwerp, starting at the bottom of the business with low quality roughs that were of little interest to the established diamantaires. These stones were sent to family members back in India for cutting and polishing, where labour costs were a fraction of Antwerp’s.

In those days it was the city’s orthodox Jewish community that reigned supreme in the business. The Mehtas and Shahs were the struggling upstarts; the minions to names like Epstein and Finkelstein who dominated the business with bearded gravitas.

Mehta had not had much success as a student, having been thrown out of college in the second term of his very first year.

Dilip Mehta was subsequently dispatched by his family to Surat, then an up and coming polishing centre, working on factory floors.

“I had no car, just a bicycle and would cook for myself every night. A few years ago I took my son to see where I used to live there. He started crying in shock. ‘Papa you were so poor,’ he said to me. But of course our concept of luxury was very different in those days,” reminisces Mehta.

Summoned to Antwerp a few years later, the future Baron married a girl from his community and began to make a living buying low-quality rough diamonds, sending them to Surat for polishing and finally selling the finished products back in Antwerp again.

“It was just me and a cousin in a two-room office,” recalls Mehta. “We would go door to door with our stones. I’ve always held that no matter how big you are in this business you are still a salesman and a salesman should have no ego.”

Mehta’s success over the next two decades mirrored that of the Indian diamond trade more generally. Cheap labour, large families and a willingness to work harder than the competition combined to make Indian family-run firms the most successful in the business.

“For most of the world India is synonymous with outsourcing but for us it was all about home-sourcing,” Mehta quips. The costs of polishing and cutting diamonds in factories in India were up to a tenth lower than in Europe.

Building on the profits made from years of operating on the low end of the business, Rosyblue today has factories in India, China, Thailand, Sri Lanka and Armenia. It is present in every major diamond trading hub including New York, Dubai, Mumbai, Hong Kong, Tokyo, Tel Aviv, and South Africa and employs some 10,000 people globally.

“The advantage we Indians have in diamonds is our large, extended families. This is a global business but trust is the most important element. We are able to have a nephew or cousin in every one of the 14 offices we have worldwide. This gives us a competitive edge over others,” explains Mehta.

But at the same time he adds that although family-oriented traditions have advantages, these can also become a liability.

“As Indians, we still live in our own ghettos. We left India 30-40 years ago but we still carry the same values. We need to get out of this time warp and modernise.”

“It’s tough,” he continues, “but we must find a balance between being Roman in Rome, while at the same time being proud of who we are, even though I don’t drink I can still attend a cocktail party. That’s important.”

And modernising must be extended to the way that diamond firms are structured as well.

“What we need in the business is a cross-breed between professionals and family because if it’s only your brothers and cousins then everything becomes too personal. You can’t tell your brother you think he’s an idiot,” Mehta laughs out loud.

There is a knock on the door and an employee walks in carrying a huge stone. Mehta leaps up with enthusiasm and examines it with a jeweler’s loupe.

“I rarely get to handle a stone these days,” he whispers excitedly. “It’s always such a thrill.”

The interview winds down. Mehta’s next appointment is already waiting outside.

“My only regret,” he says, showing this reporter out, ‘is that I’ve ended up as a company-oriented person rather than a family-oriented person. Business drives me, but I can never get rid of that guilty feeling for being away from my family so much.”