MMTC plans retail gold showrooms

The state-owned MMTC Ltd plans to set up about 20 gold retail showrooms, for jewellery and investment bars, under its brand Sanchi over 6 to 8 months.

According to chairman and managing director S D Kapoor, "We have just two showrooms as of today, including one in our corporate office. Our gold festivals, like the one currently on in Delhi, have received good response following immense trust in our brand. This is pushing us getting into showrooms."

On the proposed investment, MMTC officials said, "Details are yet to be assessed but it is unlikely to be huge. Further, we are likely to open several showrooms via franchisee route too."

Prior to the announcement by Clarity Gold into gold minting yesterday, MMTC was the sole quality gold mint in the country. It is also one of the leading canalising agents for gold imports.

The organisation's gold imports in 2005-06 is seeing a slowdown on year, said Kapoor. "In the first half of current financial year, we imported 46 tonne of gold. This is lower if seen vis-a-vis 126 tonne gold in 2004-05 (total)."

He disagreed to consider the drop in import figures as an indication of slowdown in gold demand. "Last year, the Reserve Bank of India had allowed one-year payment flexibility for imported yellow metal. This year, the facility has been partly withdrawn as the (payment) relaxation period has been cut down to 90 days. This policy change has affected our imports."

If demand would be hit owing to high prices, Kapoor said, "High prices do hit buying sentiment but then people also tend to realise that gold is likely to move to higher levels over the times to come." Gold has risen to current $470-480 (an ounce) levels from a low of $375 last year.

Further, he said, "The current high prices will not hit festival demand. Festive demand is seen aggressive and we also feel prices will only rise to higher levels, unless some (international) banks, which are contemplating to offloads some of their gold stocks, sell off some stock, say 30-40 tonne. Only that can pull prices down in the current scenario."

Global production of prime gold is around 2,000 tonne with another 400 tonne being recycled gold output. India, the largest consumer and importer of the yellow metal, accounts for 36 per cent of the global consumption.

On gold as an investment option, he said, "At current levels, there is no stability and its more of speculative buying. For a safe investor, this is not the right time to invest."