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The Journey to Demystify Gold for the Indian Consumer


Arjun Raychoudhury, MD, MMTC PAMP, discusses the company’s engagement with Indian consumers and jewellers through various initiatives. While his company intends to expand its network of purity verification centres across India in one hand, on the other, it intends to offer gold through digital means through Gold Accumulation Plan. He also opines how various ways banks could be incentivized under GMS and thus making the scheme successful.


As New Managing Director of MMTC-PAMP, India’s only LBMA accredited refinery, what will be your priorities?


In 2008 we embarked on a journey to integrate India with the global trade in gold. Attaining LBMA GD accreditation was our first milestone. Consistently getting Industry leadership recognition was the next. But our B-to-B focussed journey now has a  fellow passenger, viz. our B-to-C quest of reaching out directly to the Indian consumer and, in a sense, demystifying gold. We intend to significantly expand our network of purity verification centers across India, bringing to the customer the convenience of verifying gold purity in the presence of the customer within a short span of 45 minutes. This is supplemented by our digital, e-platform based Gold Accumulation Plan which introduces customers to the ease of maintaining metal accounts akin to a Rupee savings account, the ability to transact gold for as low as One Rupee. Traditionally seen as a saving, as an asset of last resort, we expect products such as our GAP to change the way the consumer visualizes gold. With e-market place swiftly overtaking traditional brick-and-mortar stores, our business model aims to seamlessly integrate the two, thus providing the consumer a myriad choice when it comes to decision making on gold.


2. Often we see disruptions in Indian market. For example, last year nationwide strike on excise duty, or today we have problem of cheap gold entering through FTA route etc. As a refiner of your scale having high fixed overhead costs, how do you tackle these situations and remain competitive in the market?


We face two challenges when the market is in discount. The first is managing Dore supplies against our long term contracts. Fortunately we have the ability to divert supplies to our Swiss parent refinery, which comes as a great relief to mining companies who abhor supply / payment disruption. But this switch takes time, so we are saddled with unsold inventory, work in progress and Dore supplies in transit. Since a refiner’s ability to pay is linked to ability to sell refined output, the ninety-day limit for remittance overlooks that Dore is a raw material. The RBI has been most understanding in granting us extended duration for remittances, thereby assuring supplier-funded remittances, albeit with an increased incidence of interest. We handle such situations with extreme sensitivity, and till date have absorbed all overhead costs; we are proud to sate we have not laid off a single employee, nor had any contract default. It has however significantly  increased our blood pressure!


3. You started selling gold through digital way.  Structurally it is an innovative product. First, we would like to know about the response so far, and then, do you really believe more such investment grade products need to be developed in the market?


We believe in the adage “Make Haste Slowly” and that has guided the new product lines we are building. We have struggled with a host of issues, be it software development, regulatory framework, taxation, vendor-delivery management, etc. Much has been achieved; lots more remains to done. This is a journey of bringing change within India, and calls for patience and commitment. As always, we will retain our leadership role in all we do, and this is one such instance.


4. Responsible sourcing is one issue which needs to be highlighted in Indian refinery segment. As a responsible sourcing compliant, how do you do the due diligence every time whenever you source ‘dore’?


A condition of our LBMA Good Delivery accreditation is we undergo an annual  independent Supply chain Responsible Gold audit conducted by an auditor from LBMA’s audit panel. This requires due diligence of the highest order and we have been fortunate to be trained at our Swiss principal on methodology and procedures we follow. Our Responsible Gold policy features prominently on our website, and is accessible to one and all. We have been spearheading this in all Industry forums, conferences and seminars, and once again are taking a leadership role in the regulatory interface. Responsible Gold will be an integral part of the planned India Good Delivery Rules, an industry initiative spearheaded by IBJA.


5. On GMS what needs to be done to make it successful?


Whereas we have entered into agreements with most Banks operating GMS, and our expanded network of Purity Verification Centers facilitates GMS, we have been suggesting that RBI authorized banks operating GMS should have the option of deploying GMS gold towards meeting their reserve requirements within a Reserve Option Co-efficient set by RBI. Banks should also be permitted to deliver GMS gold to domestic accredited refineries for manufacture of Banks’ customized gold minted coins. The higher operating margin from coin sales will enable Banks incentivize GMS gold across all scheme. We have also  proposed that banks be given the freedom to lend GMS mobilized gold for longer durations, which will fetch better returns and incentivize banks to mobiliise more gold on deposit. A key will be for Banks to open customer metal accounts as add-on to INR savings accounts.


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