‘Malabar Gold will see ₹10,000-cr investment over the next 3-5 years’

Before entering the jewellery business, we did a lot of research and realised a big truth: this business was prone to cheating. We told our customers that they’ll get gold for the money they are paying and full value for the gold while selling. To inspect the quality of gold, we got carat analyser machines. When 916 came, we became a strong votary of 916. In 2000, BIS hallmarking came and we introduced 100 per cent hallmarking of ornaments and stood behind quality.

We have about 1,700 investors who have invested ₹10 lakh, ₹20 lakh, ₹1 crore etc. Bank funding is also there; for every rupee invested by us, we take an equivalent bank loan. Our debt-equity ratio is 1:1.

Manufacturers know how to mix gold with other metals. Workers conceal gold powder/granules in their hair, under nails and steal. It’s a big loss. There is also a lot of duplication in diamonds.

Overcoming that is a big challenge because the business works on thin margins. The average net profit in the gold business is 1.5 to 2 per cent of the turnover.

No business runs on such thin margins. Gold is a thin-margin, high-volume business. If calculations and systems are not perfect, the business will suffer a massive loss.

My aim is to make Malabar the world’s top jeweller. We are in the top ten now on a volume basis. We will open two outlets in the US this year. Our annual turnover is about ₹27,000 crore. In two years, we are targeting growth of 40 per cent. We foresee an investment of about ₹10,000 crore coming into the gold business over the next 3-5 years. By 2022, we plan to have 500 stores, up from the existing 216.

We saw GST as a big positive and promoted it. It resulted in a 20 per cent rise in sales pan-India. We were one of the very few who said that it was a good move. Our biggest competitor is the unaccounted businesses. In gold jewellery, 70-75 per cent is unaccounted business. In Kerala, one-third of the accounted business is ours. But Malabar has only 5 per cent of the total sales in Kerala. With GST, the percentage of accounted business has increased by about 10 per cent.

Currency and trade wars are shaking up the value of paper currency. This will lead to a rise in gold prices as it is considered a hard currency. Globally, India has the highest stock of gold, not with the government, but with the public; some 30,000 tonnes.

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