The 5-tola bar will contain 58 grams of gold or just over 1.8 ounce of 99.90 fineness. RRL is engaged in negotiations with MMTC, STC and ABN Amro Bank for marketing of its products in the country.

According to Paul Streng, managing director of RRL, the South African company initially wants to target the rural market where 70 per cent of the gold is sold and the rural goldsmith would like to procure gold in small quantities like five tolas. RRL has assessed that Indian gold industry is facing a crisis as factory-made gold jewellery is penetrating rural areas, rendering village goldsmith without any work.

A major reason for this is that the village goldsmith is getting gold at a substantially higher premium than that levied by the government under Open Gold Licence Importation Scheme which is 7.2 per cent.

Accordinng to Johan Botha, marketing manager of the South African refinery, at present South Africa exports about 500 tonne of gold every year in the global market. Earlier, South Africa used to export about 1000 tonne of gold every year. But with the decline in gold output in the country, the exports now stand to 500 tonne per year. Exports to India alone is now about 250 tonne per year.

Botha expects to increase exports to India after launching of the 5-tola marketing scheme. He is of the opinion that despite other available areas for investment in the country, gold in the country will still remain as save haven for investments.

RRL first began 10-tola bar production in January 1997 and by the end of its financial year in September it produced 50,600 bars weighing about 6 tonne. By 1998 to 1999 financial year, RRL produced 1,456,243 tolas amounting to 247 tonne and virtually all of this production was consigned to India.

Earlier before the Reserve Bank of India easing restrictions on gold imports in November 1997, a lot of gold used to enter India unofficially through Dubai.