Visakha Bullion Corp on recovery path

Visakha Bullion Corporation (VBC), which had resisted closure compulsions due to heavy losses as a fallout of the September 11, 2001 terrorist attacks on the US, is now treading a recovery path.

At present, hundreds of gold merchants from Nellore, Prakasam, Guntur, Krishna, East Godavari, West Godavari, Khammam and Warangal districts queue up before VBC in the city everyday to purchase 100-gram gold bars as per their requirements.

Though the VBC headquarters is located at Visakhapatnam, 95 per cent of its business comes from the Vijayawada branch.

VBC directly imports gold bars from London through the overseas branch of the State Bank of India (SBI) and the Metals and Minerals Trading Corporation (MMTC) of the central government. SBI and MMTC store the gold bars and VBC gets delivery of bars on payment of cash.

VBC's requirement depends upon its customers' advance orders. It sells a 100 gram gold bar at around Rs 57,200. VBC sells 100 gold bars worth Rs 57,20,000 on a dull business day and 700 bars worth Rs 3,86,40,000 on a peak trading day.

Chinababu, managing partner of VBC, said that though the turnover appeared staggering, margins were thin and VBC was making just enough profits more than what is required to run the show.

The corporation had to close down its Nellore and Narasapur branches as a fallout of the September 11, 2001 terrorist attacks. Other gold bar sellers such as the Andhra Bullion Corporation, the Vardhaman Bullion Corporation, the Bombay Bullion Corporation and the Maharashtra Bullion Corporation too had downed shutters.

Apart from the fact that VBC was able to survive the September 11 terrorist attacks, the liberalisation of gold imports had almost finshed the business off.

A few gold merchants, tried to scuttle the liberalisation process by selling smuggled gold bars at rates lower than that of the international market.

However, more and more gold merchants have now opted to the open buying and selling of gold with full transparency. This process inculcated among them a new business confidence and ethics.

The stopped hankering after the Rs 500 illegal profit that they earned per gold bar through unauthorised business, wherein no bills were issued.

Part of the reform process was unwittingly aided by the railway police which allegedly, from Chennai to Visakhapatnam and up to Itchapuram, harassed the travelling gold merchants.

This forced the gold merchants to unite and fight for their right to fair business practices under the new banner of the Bullion and Jewellery Manufacturing Merchants' Welfare Association (BJMMWA).

The merchants met the state director-general of police (DGP) and higher-ups in the railway police and brought to their notice their sufferings in the police hands.

They first took up all the harassment cases to the notice of the higher-ups and helped many merchants come out of police detention along with the seized metal or cash.

BJIMMWA leaders told the police that if they caught any travelling trader with precious metal without proper documents, they should hand over the metal to the Customs wing. If they found cash, they should deposit it with the Income Tax Department.

After struggling for 10 months and with the help of strict police officers, BJMMWA succeeded in giving protection to its members and checked police excesses against them.