Jeweller Damas opens Dubai production plant

Damas designs and produces over 40 per cent of its jewellery through the Nad Al Hamar facility. Pawan Singh / The National

Damas has opened its first production facility in Dubai as the gold and jewellery company expects to ramp up the number of retail units in the UAE and Saudi Arabia.

The cost of the machines at the 20,000 square feet factory in Nad Al Hamar area alone is Dh15 million, according to the company. The factory employs 200 people.

The Dubai facility will produce about 40 per cent of its needs, with the capacity to ramp up to 80 per cent by 2020. The factory can handle 3 tonnes of gold a year and 180,000 pieces of non-gold jewellery annually.

“The decision is to focus all our attention in terms of our supply chain and manufacturing on this facility in the UAE,” said Anan Fakhreddin, the chief executive of Damas.

“That is because of quality assurance, when you have full control over the operation, full access to the manufacturing process, it ensures that it meets the standards.”

He declined to give the revenue figures for Damas but said that growth this year is likely to be flat because of speculation around gold prices ahead of the US Federal Reserve interest rate announcement. Two-thirds of Damas’ revenue come from the UAE.

Gold prices tend to fall when interest rates rise.

Damas, which was founded in 1907 with a small factory in Syria and set up its first retail shop in Deira Gold Souq in 1959, now has 144 retail stores in the UAE, excluding franchise outlets. It has 100 more in the Arabian Gulf region. It expects to open about five more in the UAE by the end of the year. In Saudi Arabia, where it has 33 stores, it expects to add 12 by the end of the year.

Currently it outsources around half of its production to some 200 facilities across the globe, including those in Hong Kong, India and China, while it has terminated some contracts in countries including Lebanon. In the UAE, it has a workshop in Jumeirah Lakes Towers, where its design hub is also based, beside Deira Gold Souq.

The company has earmarked Dh100 million to revamp its retail network over a period of three years that started late last year. It invests Dh600m each year in its operations.

The gold jewellery sector in the UAE is becoming crowded. India’s Kalyan Jewellers has opened two production facilities in the UAE since it entered the market in 2014. Malabar Gold and Diamonds also operates two factories in the UAE through its division Al Nazha Gold Jewellery Factory.

“There is not a brand in Asia or India or the West that is not present in Dubai. We see that as a sign of a mature market,” said Mr Fakhreddin. “Consumer tastes also evolved because of exposure to international trends.”

Damas is owned by Qatari conglomerate Mannai Corporation, which acquired it wholly in 2014.

During the first half, Mannai’s net profit was down to 219.6m Qatari riyals from 276.3m riyals in the same period the previous year.

The drop was attributed to “softness in jewellery sales in the Damas subsidiary in the UAE which has been impacted by the strong dollar, low consumer sentiment and reduction in high-end visitors to Dubai”.

Mannai gained control of Damas in 2012. In 2010, the Dubai Financial Services Authority banned the former owners Abdullah brothers -- Tawfique, Tawhid and Tamjid -- from running the company for large unauthorised withdrawals of the company’s money and gold even after it went public on Nasdaq Dubai in 2008. Mannai delisted it.

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