Muthoot to add 10 gold recycling centers

The company's precious metals arm hopes to recycle 20 tonnes of scrap gold by FY17

Muthoot Exim Private Limited, the precious metals division of the Muthoot Pappachan Group (MPG), will open 10 more gold point centres in FY2016-17 to recycle 2 tonnes of scrap gold by 2018, in line with the government's policy to unwind the household stock in the country.

The move will take the total number of such centres to 17, said Keyur Shah, CEO of Muthoot's precious metals business. The company opened its latest outlet in the Borivali suburb of Mumbai on Tuesday. In the current fiscal year, three centres -- one each in Andhra Pradesh, Telangana and Gujarat -- will be added, with plans to open re-cycling centres in Kerala and Punjab later.

Shah told Business Standard that according to the World Gold Council (WGC), 150-200 tones of scrap gold is recycled in India every year but all of it happens in the unorganised sector, causing losses to consumers. There are only a handful of players in the organised sector for this process, he said, which has prompted Muthoot's plans to tap the market in a transparent manner.

There is a potential for re-cyciing 200 tonnes of scrap gold in the long run, which will reduce the import bill to a great extent, he added. India imports 750 -900 tonnes of gold annually.

Industry estimates put the amount of idle gold with Indian households at about 20,000 tonnes. If even one per cent of this is brought into the market, gold import can be reduced by 20-25% annually, Shah said.

Under its recycling plan, the company will give cash or gold bars to the customers and will fully conform to KYC norms. He said that cash payment will be made up to Rs 20,000 and dealings above this will be through banks only.

After the initiative was launched in last November, the company has recycled 45 kilogrammes of old gold so far, and is looking to recycle 70-80 kg in FY16 through the four centres currently operational.

Thomas Muthoot, executive director of MPG said that the company will buy old and used gold items from the customers at its centres and reprocess, refine and supply refined bars for domestic consumption.