First-ever gold multinational enters Sri Lanka with $ 50 m investment

Pure Gold, the reputed and award winning multinational jeweller based in Dubai, has arrived in Sri Lanka.

“We warmly welcome Pure Gold Group to Sri Lanka. Their entry strongly enhances our gold industry profile. Pure Gold’s initial investment here is $ 50 m,” revealed Rishad Bathiudeen, Minister of Industry and Commerce yesterday, after meeting with Firoz G. Merchant, Chairman of Pure Gold Group (PGG), Dubai, UAE.

Minister Bathiudeen previously announced the pending arrival of Pure Gold to Sri Lanka on 2 August saying, “Award-winning Pure Gold’s arrival can boost our gem and jewelleries sector exports. We will be able to link our jewellery sector’s value addition directly to exports.”

Sri Lanka’s current gold needs are totally met by gold imports and the annual gold imports are in the range of $ 30 m (upwards) and the more than six metric tons imported are used for domestic consumption as well as in export manufacture.

No clear estimates are found on the domestic retail sector value but the gold pawning industry in Sri Lanka is estimated to be (cumulative) around $ 52 m (Rs. 7 b).

Commercial Bank and Bank of Ceylon are among top importers of gold to Sri Lanka and the two banks have come to be known as suppliers to the domestic market and jewellery industry ‘at competitive rates’.

Of $ 10.9 b of Sri Lanka’s total exports in 2011, the diamonds, gems and jewellery sector claimed 4.9% at $ 531.57 m, registering a strong 30.04% growth in comparison to 2010 exports ($ 408.77 m).

Minister Bathiudeen, addressing Merchant, said: “In our goal of achieving $ 20 b exports 2020 as per the vision of President Mahinda Rajapaksa, our jewellery exports have started to make their own contribution by creating the highest value addition in the diamonds, gems and jewellery exports segment. In 2011 we exported $ 28 m in jewellery, which rose by 55% from 2010, with the US, Hong Kong and Belgium being our top three buyers out of 39 countries buying from us in 2011. We are pleased that Pure Gold is joining the supply chain for our jewellery export industry sector so that export manufacturers get their gold at competitive prices.”

Merchant PGG is an ISO9001:2008 certified retail jeweller of the Middle East, which has more than 100 stores across UAE, Oman, Bahrain, Kuwait, Qatar and India.  

Revealing his entry strategy, Merchant said: “We are planning to start immediately in Sri Lanka. Our first round investment proposal for Sri Lanka is $ 50 m to enter Sri Lanka’s gold retail sector first, followed by wholesale and manufacturing and manufacturing for exports thereafter. In Sri Lanka, we will be setting up 30 sales outlets by 2015/2016 – this includes duty free shops and shopping mall-based outlets. We will also be introducing our trademark Pure Gold 18 carat gold jewellery with diamonds, which is widely sold in the EU markets, to Sri Lankan market.”

Asked of the sources of his supplies, Merchant revealed: “We get all our supplies via just one country – Switzerland.” He did not elaborate further.

Explaining PGG’s profile, Merchant said: “We are a top supplier to the Dubai Duty Free. Also among the services offered are the ‘exclusive gold and diamond concessionaires’ at the prestigious Abu Dhabi International Duty Free as well as in Kuwait Duty Free at the International Airport in Kuwait. It is the only ‘exquisite gold and diamond jewellery store’ in the Duty Free of the Muscat International Airport, Oman. Pure Gold is also at the Queen Alia International Airport of the Duty Free of Jordan and at Hurghada Airport of Egypt. PGG will also be present at the Qatar airport when it will be opened at end of 2012.”

Merchant had already announced that PGG is on a $ 272 m expansion drive during the next five years and would enter Saudi Arabia, Sri Lanka, the Maldives and Malaysia with new stores.

Among awards won by PGJ are 2007/08 Best Service Performance Brand In Large Business Category, 2008/09 Best Service Performance Brand In Large Business Category, 2009/10 Best Service Performance Brand Award In Large Business Category, 2010’s Best in Customer Service as per Ethos Consultancy Survey, and the Best Service Performance Award 2011.