PNG Sons’ Foray into Bullion Business Propelled Profits to Cross the 10,000 Crore Milestone

Amit Modak, CEO of P.N. Gadgil & Sons (PNG Sons), reveals what sparked the new idea of venturing into the bullion trade, leveraging the legacy of over six generations in the retail business and building the confidence of bullion buyers

P.N. Gadgil & Sons, a regional jewellery retail chain from Pune with over 29 outlets in the western region, has been in the news for its strategic move of foraying into the bullion business that propelled its turnover to cross the Rs 10,000 crore milestone. In an exclusive tete-a-tete with Soma Bhatta, Amit Modak, CEO of PNG Sons, talks about breaking into the bullion industry and why the company is gaining a reputation as a bullion provider.

Edited Excerpts:

Soma Bhatta (SB): P. N. Gadgil & Sons (PNG) made headlines for crossing the Rs 1 billion turnover in FY 2022-23. How did the company achieve this growth in a short span?

Amit Modak (AM): In FY 2023, we completed a decade of independently operating PNG & Sons. The company was formed in 2012 after the parent company PNG & Co demerged. At the time of formation, we had two stores with a turnover of Rs 500 crore. We closed the first full financial year in 2013 with Rs 900 crore.

Growth has been phenomenal in the last two years when we went from Rs 2100 crore to Rs 3200 crore in retail. Part of it is due to the gold price rise.

We ventured into the bullion business in 2021. The Rs 10,000 crore mark combines Rs 3200 crore in jewellery plus Rs 6800 crore in bullion. But it is also remarkable for us because within a year-and-a-half from the start of the bullion business, we clocked almost 13-tonne sales. Bullion has catapulted the company’s growth 2.7 times.

SB: It’s not often that a jeweller ventures into the bullion business. What were the reasons for PNG & Sons’ foray into the bullion business?

AM: We are primarily gold jewellery retailers, which adds to our understanding of how the bullion market moves. During Covid, we got much time to explore possible growth opportunities. The backward integration seemed lucrative for many reasons- we had human resources strength, capital, and, most importantly, a strong orientation for the category.

“ In the bullion business, now more than ever, buyers need credibility and reliability; it has to be ethical, authentic and delivered timely. In doing business with our clients, we removed all the challenges we faced as bullion buyers ”

Amit Modak, CEO of P.N. Gadgil & Sons (PNG Sons)

SB: The bullion business is restricted to a few players. How did you make your way into it?

AM: The bullion business is primarily controlled by a handful of companies operating from Mumbai and Chennai. We easily entered the bullion industry because of our impeccable reputation. It is otherwise a cumbersome process; they do several checks on the company – bank references, compliances, and equity in the market. We reached out to the refineries, and much of their confidence came from our ‘Gadgil’ name, so we did not have to start from the beginning. Today, we work with the top 3-4 refineries in India.

SB: Every business needs a competitive edge to build its market. How do you score over other existing players who have been in the industry for far longer?

AM: As a regional player, we have a large buying capacity. But we used to face delays in sourcing bullion — even those we bought jewellery from faced similar issues.
In the bullion business, now more than ever, buyers need credibility and reliability; it has to be ethical, authentic and delivered timely.

In doing business with our clients, we removed all the challenges we faced as bullion buyers. We fully meet our commitment in terms of quality and delivery timelines. The bullion inventory for our retail business also supports our bullion deliveries in case of unforeseeable circumstances.

SB: The bullion business did phenomenally well, with over 13 tons in its first year. Did it make it easy to convert your gold jewellery suppliers into your buyers?

AM: Yes, it was easier for us to penetrate the market because of a strong supplier base. But, if you see the start of our business, our suppliers were not our clients. We started the bullion business in the open market. We gradually reached about 100-150 kg a month and started tapping into our supplier base. To begin with, a few of our suppliers started buying bullion from us.

“ It is remarkable that sitting in Pune, we are carrying the bullion business mainly concentrated in Mumbai, Chennai and Kolkata. More than reaching the Rs 10,000 crore mark, this sense of confidence amongst our buyers is making us proud ”

Amit Modak, CEO of P.N. Gadgil & Sons (PNG Sons)

It is known that much of the transaction in this business is highly cash intensive, but we refrain from such dealings. All our bills are bar-coded, allowing buyers to track their delivery. So this unique supplier-to-buyer model creates a seamless and mutually beneficial ecosystem. By eliminating intermediaries and establishing direct partnerships, we gained greater control over the supply chain, resulting in cost efficiencies and enhanced transparency. Due to the high level of service, our buyers have become our most prominent ambassadors.

SB: What is the group’s expansion plan in the bullion and retail business?

AM: In the last year-and-a-half, our buyers have gained more confidence in us as a bullion dealer. Our buyers have not received any queries from their bankers, legal or other regulatory bodies regarding their sourcing from us. We have gained the confidence of our buyers for being a reputable and reliable bullion provider. They are loyal and willing to pay a few rupees more instead of going to other dealers. It is remarkable that sitting in Pune, we are carrying out the bullion business mainly concentrated in Mumbai, Chennai and Kolkata. More than reaching the Rs 10,000 crore mark, this sense of confidence amongst our buyers is making us proud.

Retail Jeweller India Magazine