An MKS PAMP GROUP Company

Gold in IndiaAn Industry at a crossroadsBarcelona, October 2017

MMTC-PAMP

India’s love affair with gold is of great import for global markets

2

Physical gold is the key savings vehicle for 200+mn Indian

households, and this demand straddles all sections of society

At any time, India accounts for around 25% of the

global demand for gold

MMTC-PAMP

The consumer proposition for Gold is simple and well understood…

3

Gold is a well understood product fulfilling at least 3 key needs• Consumption: Traditional gifting, religious, weddings, adornment• Investment returns: Familiarity with gold price trends• Insurance/ safety net: Through selling / taking a loan against gold

• Mainly through local jewelers, who are as of now the only successful high value distribution channel in India

• Jewellers outnumber bank branches by 3x

• Rural, traditional urban• 80% in unorganized sector• Transactions through cash

WHY

HOW

WHO

MMTC-PAMP

Market uncertainty

…while the business environment is unpredictable and consequently volatile

2016: Demonetisation

2012: Banks permission to sell gold coins revoked

2016: 1% excise duty shuts down markets

4

2014: 80:20 scheme

2017: GST rate on Gold and Jewellery

2017: Arbitrage of customs duty via FTA

2017: Jewellery to be considered under ambit of Prevention of money laundering with stringent KYC

Systemic changes during the last 5 years

MMTC-PAMP

IncredibleIndia

5

India has seen transformative change over the last decade – How will change affect this paradigm?

Simple consumer proposition

WhoHowWhy

Unpredictable business

environment

× Customs duties× Consumer taxes× Restrictions on cash× KYC

Gold in India is perhaps best characterized by a see-saw

MMTC-PAMP6

Make In India1

Key actions What it means

Good Governance

Financial Inclusion

2

4

Government vision

Digital India3

• Tax transparency from import to sale• Full traceability on consumer

purchases

• Direct payments to all banks in India via existing bank mobile app. Bypasses cards, net banking, e-wallets and cards

• Goods and services tax• Universal bio-metric ID (adhaar

card), covering 99% adult pop.

• National Payment corporation of India creates “United payments interface”

• 2 payments banks in operation with customer base of 500m+, focused on providing basic financial accounts

• Approved new bank category called payments banks, issued 11 licenses

• Good delivery standards• Spot exchange• Gold Board?

• Formation of gold committee under Niti Ayog, significant industry interaction with 8 sub-committees

We have witnessed four tectonic shifts in business environment…

MMTC-PAMP

340

650

850

90220

350140

300450

0

200

400

600

800

1000

2015 2020 2025

7

Who? How? Why?

Avg. age in 2020 29 years

40% of consumption

by 2025

Elite (>30k HHI)

Affluent (15-30k HHI)

+Urban population to account for 60%

of consumption in 2025.

Online ShoppersInternet users Digitally influenced

Digital ecosystem enabled via material investment in logistics infrastructure. Private providers currently service

75% of all locations

Growth in basic savings accounts held by mainly poor and rural in India.

Similar growth anticipated for pensions, insurance and mutual funds

300m

5m

…Coupled with dramatic changes in consumer base…

MMTC-PAMP8

How do we adapt to complexity? How do we engage government?

Are we at a tipping point?

2020

Increasing complexity in product proposition

× Who: Rural consumer to young urban× How: Mobile driven, increased ease

with non-physical× Why: Reduced dependence on gold as

financial penetration increases

Ease of doing business

Drive to transparencyNo cash - digitalisation Full KYC and tax trail Centralised policy

MMTC-PAMP

Looking ahead

9

MMTC-PAMP

Reimagining the product is important…

Instant sell back at live feed price

MMTC-PAMP11

Make In India1

Gold as of today Gold of tomorrow

• Gold is a drain on current account

• Gold is an economic powerhouse, Export/Import substitution

Good Governance

Financial Inclusion

2

4

• Smuggling, Tax avoidance and • Money laundering

• Industry to engage tax authorities more effectively to reinforce clean business guidelines

• Gold is currently a substitute for the financial system

• How can we make this a strong compliment to Financial System

What India Wants

Digital India3 • Mainly in physical and cash form • Product innovation to satisfy local demand in a non-physical form with high traceability.

In addition, it is critical to leverage the regulatory tailwind

MMTC-PAMP

In the next few years, we may end up seeing binary outcomes

12

Reimagine products and work with govt. to take advantage of

the regulatory tailwinds

Migrate to unorganized sector, reducing industry

long term growth potential

MMTC-PAMP27

THANK YOU