Fitch cuts Suashish Diamonds

Fitch Ratings said it downgraded Suashish Diamonds Ltd.'s national long-term rating to BBB(ind) from BBB+(ind), along with the short-term rating on its Rs. 5.25 billion fund-based working capital facility to F2(ind) from F2+(ind).

The outlook remains negative.

The downgrades reflect the significant pressure on the company's operating cash flows during 2009, primarily due to poor demand from key markets such as the United States and Europe, Fitch said.

Fitch notes that demand started to weaken from September 2008, resulting in an inventory buildup that has triggered production cuts across the industry, the agency said.

The drop in demand led to a sharp decline in diamond prices, causing the company to revalue its inventory, Fitch said.

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