At a time when sharp increase in yellow metal price is posing a challenge to the gold jewellery companies, Malabar Gold and Diamonds, has been able to cushion its impact by cutting costs, through automation, and attracting new buyers. The price volatility, has not prevented the company from pursuing its global expansion plans.
The healthy trend of viewing gold as a hedge against inflation has helped keep the demand strong amid escalating prices, says M P Ahammed, chairman, Malabar Group. The high prices may detract price-sensitive customers away, but he pins his hopes on the digital-savvy new generation to invest more in the gold.
How is the gold price surge is impacting the industry in terms of production cost and consumer demand?
In 2023, the price appreciation was around 15 per cent. Gold price in 2024 has moved from levels of Rs65,000 at the start of the year to Rs72,000 per 10 grams for 24k gold as of the first fortnight of April.
Such a movement indicates challenges as well as opportunities. Cost-optimization, automation, and management initiatives have helped Malabar minimize the impact to production costs.
While higher gold prices deter price-sensitive consumers, it also helps motivate new buyers. Consumers perceive gold as a safe haven during times of economic uncertainty. During periods of price escalation, a reasonable uptick in demand is hence observed.
In the rising prices, there is a heightened demand for gold recycling. What level of demand are you experiencing for gold recycling?
Gold recycling is always driven by gold price movements. Of late, we have been witnessing growth in gold recycling demand from a section of customers at our stores in India due to gold price rise. From April to December 2023, 48 per cent of the gold was recycled. Over the last three months, we have observed that 50 per cent gold has been recycled across our branches in India.
Recycling gold is not only an environmentally-safe practice but also a pragmatic approach to cost-efficiency. Malabar Gold & Diamonds has always been committed to sustainability.
We’ve invested in state-of-the-art recycling facilities to meet the growing demand. This trend aligns with our broader industry’s shift towards more sustainable practices, reflecting both consumer preferences and regulatory pressures.
What is Malabar’s India and global expansion plan?
Malabar Gold is guided by the mission of ‘Make in India, Market to the World’. As on date, Malabar Gold & Diamonds operates 350 stores across 14 countries. We are targeting 100 new stores in existing markets such as the US, Canada, UK, and Australia within the next year. There are plans to open new stores in New Zealand, Egypt, Turkey, South Africa, Bangladesh, and more locations across Europe.
There seems to be a growing inclination among the new generation towards investing in yellow metal. Can you give some insights?
The new-age digital savvy generation has favoured gold. In addition to new designs and popular investment schemes, the young generation leverages their access to information. They understand the value of gold. Rising inflation and the cultural value of gold has also influenced younger investors into gold.
How does Malabar cater to the demand of new gen towards gold?
The e-commerce and online experience at Malabar Gold enable customers to browse and purchase jewellery from the comfort of their homes. Our online platforms offer a seamless shopping experience, complete with detailed product information, secure payment options, and hassle-free delivery services. Our design team incorporates contemporary elements into jewellery designs. We also offer customization services to allow personalization according to unique preferences.
How has the integration of automation systems impacted the productivity and quality of your jewellery manufacturing process?
Automation has revolutionized the efficiency and productivity in jewellery manufacturing. Malabar also leverages automation to deliver a consistent and uniform quality across products. The integration of Mecademic robots and automation systems is an example of how Malabar has improved the efficiency in chain-making and polishing operations. We have achieved a cost reduction of 50 per cent from traditional processes thanks to automation.
Could you elaborate on the company’s commitment to responsible sourcing and ethical business practices, particularly in terms of ensuring purity and upholding transparency in global operations?
At Malabar Gold & Diamonds, we are committed to ethical business practices, particularly in ensuring the purity and transparency of our jewellery. Our partnership with Rand Refinery, a globally recognized gold and silver refiner accredited by the London Bullion Market Association, allows us to source 100 per cent traceable ‘RandPure’ gold.
This gold is exclusively procured from Securities Exchange-listed mines and undergoes meticulous processing, resulting in jewellery that bears a distinctive ‘RandPure’ mark and a ‘Certificate of Assurance’ detailing its origins. Our dedication to ethical sourcing and transparency ensures that our customers can trust the quality and integrity of every piece they purchase.
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