Muthoot Exim Pvt. Ltd., the precious metals division of MPG, the pan-India diversified business conglomerate, announced the ambitious foray into economy-friendly multi-crore retail gold aggregation and recycling business segment. MPG, with the objective of catering to the burgeoning individual household need to recycle unwanted, old and used gold jewellery, launched'Muthoot Gold Point', a chain of retail outlets which buy scrap, old and used gold items directly from the customers.

India is one of the most important markets for gold, since it is an integral part of the culture to purchase gold for various occasions such as weddings and festivals every year. And while the amount of gold requirement is rising each year, there's no gold mining done within the country at present. Currently, the country has only one government mine, from which a meagre quantity of 2-3 tonnes is extracted. This has resulted in a huge deficit in the market, while import duty is getting higher. In order to tackle this issue, MPG thought of foraying into the retail gold recycling segment last year.

Jubilee Cardozo caught up with Keyur Shah, CEO - Precious Metals Business, Muthoot Pappachan Group (MPG), to learn more on the same. Edited excerpts:

What will be Muthoot Exim's role into this multi-crore retail gold aggregation and recycling business segment?

Muthoot Exim would subsequently reprocess, refine and supply refined bars for domestic consumption, thus help reduce the over dependence of imports. The company is planning to launch three such retail outlets in South India during the financial year. The first Muthoot Gold Point has already been inaugurated at Raja Street Road, Coimbatore. This is the first such center from an organised sector wherein scrap such as old and used gold items are bought directly from end customers. We will aim to provide high levels of customer satisfaction via standardisation and transparency through scientific assessment/valuation of the domestically garnered gold. We have tied up with Mumbai-based Infinium Precious Resources Ltd. for attaining technical training and also refining the scrap gold.

We believe there is a huge potential to recycle unused gold to put the asset to productive use. Trust, transparency and accountability have been the three chief attributes of MPG and with the Group's unstinted support, we intend to revolutionise the retail recycled gold segment with greater transparency and accountability.

Please enlighten us on the newly launched'Muthoot Gold Point'.

The launch of'Muthoot Gold Point' has a strategic significant importance, as it aligns with government's objectives and supreme priority of keeping current account deficit under control, by garnering and channelising domestic unused gold to productive use. It is for the first time in India that a major national player in the organised segment is making an effort to recycle retail gold jewellery. India being one of the largest importers of gold in the world, already has an estimated stock of more than 25,000 tonnes of gold in the custody of private households and temple trusts. It is estimated that out of the 25,000 tonnes of gold stocks in the country, only 200-300 tonnes get recycled annually leading to a very high dependency on imports.

Furthermore, currently the aggregation and recycling of gold is mainly conducted by the unorganized sector without any standardization or transparency in the system.

What are the challenges faced while procuring scrap and used gold items and how do you plan to overcome these?

Traditionally, gold has always been a preferred asset class and an essential part of every Indian household mainly because of cultural reasons ignoring the fact that the high imports are exerting avoidable financial strain on the current account deficit (CAD). In order to control the CAD, the government had raised the customs duty on gold from 4 percent to 10 percent in 2013. Besides, the RBI also enforced 80:20 rule to ensure that at least 20 percent of the imports are exported before bringing new stocks in to the country.

What is being done to bring in customer loyalty while buying gold?

Muthoot Exim, the precious metal vertical of the MPG, specialises in innovative products and offerings in the precious metal space. Customers have access to quality products that meet the highest standards, at an affordable price. MPG, the 127-year-old conglomerate has been providing solutions, services and expertise to lakhs of customers across the country in various domains like financial services, automotive, property, hospitality, and alternative energy. Over the years MPG has grown to become a significant entity in the Indian business landscape. MPG's customer-centric approach and innovation in terms of new products that cater to changing customer needs have helped in winning the loyalty of innumerable customers, as well as attracting new ones. The Group adapts the latest technology and new ways to serve the customers, with an uncompromising stand on values, principles and ethics.

What are your plans of spreading across other verticals in the Indian market?

Muthoot Fincorp Ltd., the flagship company of MPG, is one of the largest non-banking financial companies (NBFC) in India, registered with the Reserve Bank of India. Muthoot Fincorp is a provider of mass finance in the form of gold loans. Decades of dedicated research and experience in rural strongholds have enabled the company to provide quick and customised finance options and investment schemes for millions of customers who do not have access to mainstream commercial banks. Muthoot Fincorp is amongst the largest Gold Loan companies in India and has an average of 50,000 walk-in customers per day. The company has a diverse mix of retail offerings catering to the various needs of its customers including loan products, money transfer, foreign exchange, insurance services and wealth management services.