Jewellery retailer Damas mulls quitting India

Jewellery retailer Damas is mulling quitting India, the world's biggest gold market, drawing curtains on its plans to float a major joint venture and open 100 stores across the subcontinent.

Responding to media reports to this effect, a company spokesperson said statements have been made with respect to the company's ongoing operational restructuring.

"However, Damas is still considering its options at this time and no conclusive decisions have been made yet," the spokesperson said.

So far, no further details have been announced as the company wants to disclose the same "via a market announcement".

Damas had planned to take advantage of India's lucrative $ 900 billion market by opening 100 stores across the country over three years in a joint venture it signed with the retailer Gitanjali Group.

But the plans were stalled since March last year when the Dubai Financial Services Authority (DFSA) fined Damas and banned the jewellers founding family from executive positions.

"We are looking at our business in Pakistan and India, our relationship and the way we entered the country," said Ibrahim Belselah, the chairman of Damas.

"Within our new corporate governance, it's not the best route to do business because we want to be absolutely transparent," he was quoted by the local media as saying.

Gold demand in India has grown 25 percent despite 400 per cent appreciation in the value of rupee in the last decade, making the country a key driver of global gold demand, the World Gold Council research recently revealed.

It said that by 2020 cumulative annual demand for gold in India will increase in excess of 1,200 tonnes or approximately Rs 2.5 trillion at current price levels.

The council expects an increase by over 30 percent in real terms.

The country's continued rapid growth, which will have significant impact on income and savings, will increase gold purchasing by almost 3 percent per annum over the next decade.

In 2010, total annual consumer demand reached 963.1 tonnes.

As seen in the last decade, Indian demand for gold will be driven by savings and real income levels, and not by price, the council said in a statement.