Blue Diamonds Jewellery Worldwide PLC is attempting to chart a recovery path at a time when Sri Lanka’s jewellery sector remains under sustained economic pressure. The company has confirmed that it is engaged in discussions with a potential strategic investor from within the jewellery industry, a move aimed at rebuilding its weakened capital base and restoring long-term viability.
The Board’s decision follows the recognition that the company’s net assets have fallen sharply below legally required levels. As at the end of March 2024, net assets amounted to Rs. 114.56 million, less than half of its stated capital of Rs. 252.04 million. This decline, categorised as a serious loss of capital under the Companies Act, compelled the company to formally inform shareholders and convene an Extraordinary General Meeting.
Financial disclosures paint a stark picture. Blue Diamonds recorded a substantial annual loss of Rs. 138.68 million, with accumulated losses nearing Rs. 198 million. Management attributes this downturn to prolonged unfavourable market conditions, shrinking profit margins, high fixed overheads, and ongoing working capital constraints. These pressures have been compounded by the costs associated with regulatory compliance and maintaining a public listing during a period of limited revenue growth.
In response, the company has outlined a multi-pronged remedial strategy. Central to this plan is the proposed entry of a strategic investor, subject to due diligence, regulatory clearance, and the resolution of outstanding non-compliance issues with Colombo Stock Exchange listing rules. If negotiations conclude successfully, Blue Diamonds intends to pursue a capital-raising exercise, pending approvals from the CSE, the Securities and Exchange Commission, and shareholders.
The anticipated benefits of such an investment include capital restoration, improved liquidity, stronger working capital management, and access to established jewellery markets. Management believes that partnership with an experienced industry player could help reposition the company for sustainable profitability.
Parallel to investor talks, the Board has committed to rectifying governance and compliance shortcomings. These include submitting delayed audited accounts, addressing audit qualifications, regularising board composition, amending Articles of Association where required, and settling outstanding statutory and professional dues. Such steps are critical if the company hopes to regain regulatory standing and resume share trading.
Trading in Blue Diamonds shares has remained suspended since December 2024, reflecting unresolved compliance and financial concerns. The prolonged halt has limited liquidity for shareholders, even though the company’s non-voting shares retain a public float of nearly 56%.
While the outcome of investor negotiations remains uncertain, the company insists it is acting transparently and in the best interests of shareholders. The coming months will be decisive in determining whether Blue Diamonds can convert its strategic value into a credible turnaround—or whether its struggles will become another example of the sector’s ongoing consolidation under economic strain.
The post Blue Diamonds Seeks Lifeline amid Investor and Compliance Challenges appeared first on LNW Lanka News Web.
