Gold buyers should look beyond ornaments: GoldSikka

Buying gold on Dhanteras and Diwali is considered as bringing good fortune to the home. This festive season is likely to witness new trends in purchasing the yellow metal. Many young buyers may look beyond the ornaments to invest in digital gold with as low as Rs50 to start their investment journey into the gold bars/ coins. In an exclusive interview with Bizz Buzz, Syed Taruj Ahmed, Co-founder and Managing Director of GoldSikka, explains how digital gold has been pulled up as a new asset class. He shares his plans to launch gold-backed credit cards and gold loans to monetise the precious metal lying idle at households

People can scan QR code to gift gold starting from Rs100. Based on the accumulated value, we will deliver that much worth gold to the recipient anywhere in the country. We are also coming up with one more solution called Temple Swarna, which allows devotees to make contribution to the temples

We will soon launch a gold-backed payment wallet - PaySikka. We also have plans to bring gold-backed credit cards and gold loans in a big way to monetise the precious metal lying idle in the lockers of households and banks. We are working out a system to convert such gold into equity

How do you sell gold? What is the business model?

Basically, we sell 24-carat physical gold on a digital platform. The customers put amounts starting from as low as Rs50 on a regular basis - daily, weekly or monthly to invest in yellow metal under an accumulation plan on our web or mobile app platform. They can redeem 999.9 purest gold coins or bars whenever they want after accumulating the worth of minimum 5 gm.

The customers get the gold delivered at their registered address through our logistic partners across India. This is a smart way to invest in gold. It is ideal for the young buyers who want multiple benefits such as savings, investment and possession of physical gold. It is also a fair and transparent way of purchasing gold with all taxes including GST.

At present, there is no regulatory authority over digital gold. How do you assure the quality of gold delivered to your customers?

Though there are no regulations guiding the digital gold, we follow the procedures to provide a seamless buying experience to the customers. We don't source our gold from the streets of any city. We get it only from authorised suppliers registered by the Government of India or a notified importer under the Reserve Bank's list.

In our country, digital gold is sold by very few entities, including MMTC-PAMP, which is a joint venture between the Government of India undertaking MMTC Ltd and PAMP SA of Switzerland. GoldSikka is an authorised retailer of MMTC-PAMP for minted gold and silver coins. Customers have nothing to worry as we sell authentic 999.9 pure gold coins/ bars on our digital platform.

Are you planning to add more products in the catalogue?

Currently, we are selling only gold and silver coins/ bars. Later, we may include diamonds and precious stones in our product catalogue. However, we don't have plans to include platinum because it's a rarely consumed precious metal in our country. Other than the buying and selling modules, our platform also has gifting options for special occasions.

People can scan quick response (QR) code on the app during the special occasions to gift gold starting from Rs100. Based on the accumulated value, we will deliver that much worth gold to the recipient anywhere in the country. We are also coming up with one more solution called Temple Swarna, which allows devotees to make contributions to the temples.

When are you going to launch this solution? Did you receive all the approvals for it?

Till now, only the rich persons could offer gold to God. The middle-class and poor people desire to give gold to the deity, but they couldn't afford to do that. Though gifting gold is a very pious thought, a minimum of 1gm gold comes at Rs4,000 and above. GoldSikka is bringing that thought into a reality, where everyone can contribute gold to the deity in micrograms.

Our teams are still working on this. They are in talks with various temple authorities and the endowments department. The technology platform is getting ready and it is being tested now. Once it is done, we will approach the governments to allow us to paste the QR code at each temple so that the devotees can scan it through our app and give even Rs50 worth gold.

Whatever amount is accumulated in a particular account over a fixed period, we will deliver that much worth of gold to the respective temple authority. If the devotees give cash offerings or gold jewellery, there is a chance of misusing the funds by unscrupulous elements. In this case, it is impossible as we directly deliver to the endowments department or the temple trust.

What is the current turnover of the company? What is the target ahead?

Three years ago while establishing Gold Sikka, we had set an ambitious target to sell 100 kg gold per day by the end of financial year 2020-21. But, Covid-19 has hampered our plans. Due to pandemic-led restrictions, we were unable to reach the set goals. Though we have attracted investors and upgraded the tech platform, our business was shut down in the pandemic period.

We couldn't reach more people and we were unable to publicise our products. Now, we are back on track increasing our marketing team. Presently, we are selling 5-7 kg gold per week on our digital platform. As things are improving and vaccination is in place, we are hopeful to reach towards the set target in another 12 months if there is no third wave of Covid-19.

We are looking forward to gold markets to boost up. Till date, our investment in the company is only through internal accruals. We are planning to go for listing Initial Public Offerings (IPO) by mid next financial year. We also have plans to invest in American Depositary Receipts and get listed in the New York Stock Exchange by 2024.

Let us know about the company's expansion plans.

Currently, we are strong in the business-to-consumer (B2C) category with huge customers registered on our app and website. We are adding more associates to ramp up the business-to-business (B2B) market. We are starting 'Project Jaguar' to add great numbers in terms of volumes to have a wider presence through more associates.

At present, we are operational in Telangana alone, but have a delivery system pan India. We have customers from Ahmedabad, Jaipur, Aligarh, Bengaluru, Kolkata and many other cities. We will soon foray into Andhra Pradesh and Maharashtra. We are planning to set up Gold Hubs in tier-1 and tier-2 cities where we are trying to have a last mile solution for gold availability.

We will soon launch a gold-backed payment wallet - PaySikka like other e-wallets. We also have plans to bring gold-backed credit cards and gold loans in a big way to monetise the precious metal lying idle in the lockers of households and banks. We are working out a system to convert such gold into equity. However, it's too early to define the business metrics.

What is the market size of digital gold in India?

We had a huge consumer market. India imports 900 tonnes of gold annually. I believe that an equal number of gold is coming from porous borders. To cut down illegal import of gold from porous borders, the Union Finance Minister has also reduced the import duty from 12.5 per cent to 7.5 per cent. A lot of gold is coming from regulated channels now.

Indian households have 255 lakh tonnes of gold by 2021. If we monetise that and bring into the main economic grid, the value of Indian rupee against the US dollar will be reversed. This is a logical dream. Maybe, my next generation will see the power and potential of India's gold, a majority of which is still in the unorganised market.