Stock based financing for Gems & Jewelry industry

21 Jul '07

2 min read

The Sri Lankan Gem and Jewelry industry is in negotiations with the country's treasury department, to initiate a financing scheme based on their working capital, which is Gems and Gold.

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In an exclusive interview with Fibre2fashion, Chanaka Ellawela Chairman of Sri Lankan Gem and Jewelry Association said, "The nature of this industry is such that its working capital intensive and value is in our stock".

In the Gem mining industry one can never be sure when the next jewel may be found or what it would cost after proper treatment which requires a high cash flow, while uncut gems can be traded quite quickly.

Yet one of the challenges faced by the industry is carrying large amounts of cash without having a set plan.

Now banks in Sri Lanka do not have specific plans of lending to the Gem and Jewelry industry, and they do not usually provide cash based on the value of Gems.

Chanaka Ellawela, also shared, "I have been drastically advocating the treasury to consider lending based on the value of Gems and now the treasury is moving towards making a decision, I think it would happen soon".

According to Chanaka, since banks do not have expertise to make accurate valuations of Gems, they find it difficult to provide financial support but the Gem and Jewelry authority is capable and are in the process of providing a set of standards to assist banks.

Sri Lanka is well known for it its rich sources of Gems especially the authentic Ceylon Sapphire.

Fibre2fashion News Desk - Sri Lanka