Standard India Gold Coin Somasundaram PR, Managing Director, India, - PowerPoint PPT Presentation

Standard India Gold Coin Somasundaram PR, Managing Director, India, World Gold Council 22 nd August 2015 22 nd August 2015

India gold market • 22 000 t 22,000 tonnes – 15% of world gold stock 15% f ld ld t k • 25% of annual global demand – 800-1,000 tonnes • Nature of demand – 50% for weddings and 60% from rural areas • Since 2003, demand has grown 7% on CAGR and 17% on value

Industry context – strong but under leveraged Strengths Weakness • G ld t Gold tradition diti • St Standardization d di ti • Household savings • Poor infrastructure • Jewellery and Handcrafting • Brands • • Large workforce Large workforce • • Perception Perception • Institutional loan against jewellery Opportunity pp y Threats • Latent demand from new savers. • Branded Luxury products • > 60% of population below 30 years • Skills may disappear of age of age • • Other Asian manufacturers Other Asian manufacturers • Demand power under leveraged in global price setting • Gold savings schemes to expand Gold savings schemes to expand financial inclusion

Framework beyond demand curbs necessary for this vibrant industry ib t i d t

India - Bars & Coins demand Tonnes 400 350 300 250 200 150 100 50 0 2000 2004 2008 2012 Source: Metals Focus, GFMS Thomson Reuters, World Gold Council

India – Q2 2015 Jewellery and Investment Demand Tonnes 250 200 150 100 50 50 0 Q1' 10 Q1' 11 Q1' 12 Q1' 13 Q1' 14 Q1' 15 Jewellery Investment Source: Metals Focus, GFMS Thomson Reuters, World Gold Council

Gifting is an important demand driver

Gold purchasing in India has a deep connection with savings - 3/4th of Gold purchase is driven by personal savings 3/4th of Gold purchase is driven by personal savings Source of Funds (%) Personal savings Profit in business Profit in investments Bonus Property 23 23 Reasons for ALL 34 74 45 investment in Gold (%) To have a better 64 71 67 55 38 35 standard of living To secure child’s 52 53 61 54 47 44 future To grow my money 51 54 61 55 47 42 For retirement 26 24 28 33 44 39 Corpus Funds for Children 28 24 29 34 40 39 education Source: Nielsen study

Gold among top 2 investment products and 4 in 10 intends to purchase branded gold coin purchase branded gold coin Investments Intention to invest in 12months (%) 52 49 48 47 36 26 25 24 22 21 17 15 15 13 13 12 12 10 9 Bank fixed GOLD Traditional Bank Post office ULIP-Life Mediclaim / Chit Funds deposits p products p Life Recurring g savings g insurance Health related Insurance deposits Policies policies Opinion on Idea of purchasing Branded Gold Coin 33 28 Positive Neutral Negative Negative 39 Source: Nielsen study

Traditionally, gold was bought on occasions like weddings, festivals etc. But as an emerging trend gold investments comes majorly from g g g j y the surplus funds 21 Wedding Function at the home g 25 25 20 Festivals like Diwali, Eid, etc 28 20 20 When I have additional funds 9 16 AkshayaTritiya 13 10 New year 7 6 Birthdays 6 6 Gold Investor 4 Birth of new kid 3 Gold Jewellry Buyer 3 3 Anniversary 3 1 House warming 6 Source: Nielsen study

Change in approach • Ashok Chakra Gold Coin Ashok Chakra Gold Coin • Monetisation • Sovereign Gold Bond • Sovereign Gold Bond

Gold coins worldwide Australia South Africa Canada OBVERSE REVERSE OBVERSE REVERSE OBVERSE REVERSE OBVERSE REVERSE Australian Kangaroo Australian Lunar Series Krugerrand Gold Maple Leaf USA Austria China OBVERSE REVERSE OBVERSE REVERSE OBVERSE REVERSE OBVERSE REVERSE A American Eagle i E l A American buffalo i b ff l Vi Vienna Philharmonic Philh i G ld P Gold Panda d Turkey Mexico UK OBVERSE OBVERSE REVERSE REVERSE OBVERSE OBVERSE REVERSE REVERSE OBVERSE OBVERSE REVERSE REVERSE OBVERSE OBVERSE REVERSE REVERSE Meskuk (standard) Ziynet decorative Libertad Britannia 12

Analysis of worldwide coins Count-ry Year Marketing Purity Coins Coins sold Coin name Carat Legal tender status Symbolic importance name launched entity (%) sold (mn) (tons) Australia Australian 1987 GoldCorp 99.99 Under the Australian The coin features a kangaroo, which is 10 173 24 Kangaroo Australia. Currency Act 1965 the international recognized symbol of Australia and its wildlife Australian Lunar 1996 GoldCorp 24 99.99 Under the Australian Each year the coin depicts one of the 12 1 21 Series Australia. Currency Act 1965 animals associated with the ancient Chinese Lunar Calendar South Krugerrand 1970 Rand Refinery 22 91.67 Under the South African The coin features the springbuck, an 60 1,445 Africa Reserve Bank Act (No 90 of African antelope, a national symbol of 1989) SA and an international symbol of wildlife Canada Gold Maple 1979 Royal Canadian 99.99 Under the Currency and With a maple leaf motif on the 39 751 24 Leaf L f Mint (RCM) Mi t (RCM) Exchange Act as specified in E h A t ifi d i reverse, this coin features a depiction of thi i f t d i ti f Part 1 of the schedule to the Queen Elizabeth II on the obverse. Act USA American Eagle 1986 United States Mint 91.67 Under the Gold Bullion Coin The coin features “lady Liberty”, the 35 567 22 Act of 1985. traditional U.S. symbol of freedom, encircled by 50 stars, representing the 50 States in the American 2006 United States Mint 24 99.99 Under the Presidential $1 $ The coin follows the greatly admired g y 2 45 U S U.S. buffalo Coin Act of 2005. design of the Indian Head nickel and has gained its nickname from the American Bison on the reverse side of the design Austria Vienna 1989 Austrian Mint LC 99.99 In accordance with the The obverse of the coin depicts the pipe 15 291 24 Philharmonic Currency Act 1988. organ in the Vienna Musikverein's Golden Hall. The reverse of the coin shows instruments of the Vienna shows instruments of the Vienna Philharmonic, Turkey Meskuk 1944 Turkish State Mint 91.66 Passed on 8 August 1951 The coin features the head of Kemal 31 187 22 (standard) Ataturk, encircled by the words “HAKIMIYET MILLETINDIR” and “ANKARA” -the capital city of Turkey Ziynet 1944 Turkish State Mint 91.66 Passed on 8 August 1951 The coin features the head of Kemal 180 5,467 22 decorative decorative Ataturk he first President of Ataturk, he first President of Turkey, encircled by 32 stars and a decorative design incorporating flowers China Gold Panda 1982 China Gold Coin 99.99 People’s Bank of China with The coin features different portraits of 16 139 24 Inc.(CGCI) the authority of the State the panda that change every year Council of the People’s Republic of China Mexico M i Lib Libertad t d 1981 1981 - 90 00 90.00 - The coin features the Mexican National Th i f t th M i N ti l - - 22 22 Seal with an eagle atop a cactus, clutching a serpent in its beak. UK Britannia 1987 - 24 99.99 - The coin features the effigy of her - - Majesty, Queen Elizabeth II and displays the depiction of the Iconic Warrior Maiden "Britannia – a symbol of

Retailers’ promotion of gold coins

Banks’ promotion of gold coins

Preferred features of India Gold Coin

India Gold Coin Proposition Guarantee of purity Transparent pricing Transparent pricing Minted in India Recycling through buy back Driver of Monetisation & other gold banking products gold banking products

Benefits to Stakeholders Industry Appetite for high quality gold coins Unlocking latent 1 Recycling without loss of labour charge Recycling without loss of labour charge demand for gold demand for gold Increased share of rs Transparency a spa e cy nsumer 2 2 organised trade & i d t d & Easier gold loans Banks Con “Ashok Chakra” “Ashok Chakra” Addresses trust issues Addresses trust issues 3 standard gold coin Consumer protection , safety and convenience Domestic minting Alignment with ‘Make 4 Increased gold exports in India’ objective Employment Across the value chain 5 generation Gold Tourism Government

Evolving scenario • Sourcing • Face value • Standards • Brand • Pricing • • Distribution Distribution – including jewellers including jewellers • SKU’s • NRI market • Regulatory facilitation

India Gold Coin is an important piece for the future R d fi Redefine India's relationship with gold by creating I di ' l ti hi ith ld b ti - best in class infrastructure best in class infrastructure - new relevance - higher and more transparent value addition higher and more transparent value addition - ecosystem for smooth recycling Make gold a fungible asset