Episode Number 246 / February 16, 2024

India’s Gold Obsession, Silver Jewellery Business And Pitching Anushka Sharma

57 minutes

Episode Number 246 / February 16, 2024

India’s Gold Obsession, Silver Jewellery Business And Pitching Anushka Sharma

57 minutes
Listen on

About the Episode

This week’s episode is about India’s Gold Obsession, Pitching to Anushka Sharma, and Silver Jewellery’s $4 billion Business as we welcome GIVA’s Co-founder Ishendra Agarwal to the Neon Show!

History of Gold & Silver As A Stored Value!

Why Does South India Love Jewellery So Much?!

How Has Perception Of Jewellery Changed?

How Did GIVA Pitch To Anushka Sharma?

All these JUICY topics and more in this HONEST & DETAILED conversation about India’s jewellery industry. A deep dive into how jewellery became such a large part of Indians’ lives & whether silver can eventually take over the jewellery sector in India… Tune in NOW!

Watch all other episodes on The Neon Podcast – Neon

Or view it on our YouTube Channel at The Neon Show – YouTube

Ishendra Agarwal 00:00

When we were starting for the first three months we didn’t get any orders. Now what has started happening is with the Western influence the women have started seeing jewellery as a form of fashion accessory rather than an investment, because there are multiple ways if you want to invest in gold and silver bullion like you have ETF bonds, sovereign bonds, etc where you can actually invest in digital gold and you get 2% yield year on year. Concept of wearing very, very heavy jewellery that you would see back in the older days is going away and the concept of wearing minimal fine day to day wear jewellery that you can wear at multiple locations is coming.


Siddhartha Ahluwalia 00:32

How big is the demand for gold in South India compared to the rest?(Speaks in Hindi).


Ishendra Agarwal 00:37

You won’t see any jeweller who’s not rich in these cities, because everybody’s revenue is good(Speaks in Hindi).


Siddhartha Ahluwalia 00:44

They have opened schools and colleges, they have gone to a next level of wealth(Speaks in Hindi).


Ishendra Agarwal 00:48

Correct. Now we have around 89 stores and out of that, 86 stores are all profitable—


Siddhartha Ahluwalia 00:54

like per month how much revenue do you generate—


Ishendra Agarwal 00:56

Per store on an average….. per month around…..


Siddhartha Ahluwalia 01:01

How did you choose Anushka Sharma as a brand ambassador, and how did you convince her?

Siddhartha Ahluwalia 01:09

Hi, this is Siddhartha Ahluwalia and welcome to The Neon Show. Silver jewellery is a $4 billion opportunity in India. His company is a category leader in the silver industry that has less than 7% organised market share. In fact, their brand ambassador is Bollywood’s Anushka Sharma. It’s my pleasure to welcome GIVAS, Ishendra Agarwal on The Neon Show. I would also like to thank our sponsors Prime Venture Partners for sponsoring The Neon Show, Hope you enjoy it!

Siddhartha Ahluwalia 01:42

Ishendra, welcome to the podcast so excited to have you today.


Ishendra Agarwal 01:45

Thank you, thanks a lot, Siddhartha for having me here. Thanks a lot.


Siddhartha Ahluwalia 01:48

So, Ishendra you’re in a very interesting category right? Silver jewellery India as a country right we have only focused on you know, mostly gold jewellery and the utility of silver has been utensils in our parents age and now the trend is changing and you are leading that trend. So, tell us about how valuable metals like gold and silver came into human history as a store of value?


Ishendra Agarwal 02:14

Yeah. So, essentially, you know, the way gold and silver emerged is, if you go back to the history of gold and silver being a rare metal used in the form of coins in the form of currencies, because there is a limited availability of these metals. So people would use them for, you know, as a store of wealth. And then eventually what happened is because they were metals women were also using these metals to make jewellery pieces. And this became a store of wealth for a woman because if let’s say a woman gets married, then essentially if you look at 20-30 years before journey, then women would stay at home and you know, she would do her work right. So then for her to store her wealth jewellery would be one form of element right, where she would buy multiple jewellery pieces and whenever you know, anything would happen then you know her jewellery would use which is why you will see a lot of brands have jewellery buy back as their programmes etc. And which is where you will see gold and silver being used in jewellery and utensils in a lot of these places. And then along with that, people also started you know, exchanging gold and silver in some of the auspicious events like Dhanteras(Dhanatrayodashi) is a very big event then Akshaya Tritiya another very big event, people also gift their sisters some form of silver gifts or gold gifts during Raksha Bandhan as well. So the existence of gold and silver came from the rarity but then they were always used as a store of wealth because they were not abundantly available. And they were easy for women to carry also because they were casted into jewellery which used to be an article which you know, men and what women would largely wear. So, that is how it became a currency which is a store of value for people.


Siddhartha Ahluwalia 04:07

And if we study history also like when humans were tribesmen or tribes women, if they had to shift base from one area to another, the only thing they could carry is a store of wealth which was gold or silver.


Ishendra Agarwal 04:18

Correct. It is easy to carry gold and silver with them rather than a land etc. Because you can’t carry land, land is fixed and if anything happens, any kingdom would occupy another kingdom. You can just take away your gold and silver and then you could go to another place and start a settlement. It was a universal currency. Like even now countries have gold stores against the reserves right. So, it was a universal currency which would be accepted everywhere because of the rarity of the metal. So yes, and the second reason also why they became super popular is they are a noble metal. So even if you wear them in jewellery or use them, they would not cause any allergies, infections. No reactions, nothing will happen to them even if you keep them for longer durations unlike other metals which either will evaporate or will tarnish. So, that was the other characteristic of the metal which also led it to become a jewellery specific element or element which can be a store of wealth.

Siddhartha Ahluwalia 05:19

Tell us about your own experience and how you have observed that how has Indian especially literate to India’s context the Indian use of gold and silver evolved over a period of time?


Ishendra Agarwal 05:31

Yes. So, interestingly if you see the market of gold and silver in India it’s huge right even now, India is world’s top three consumer in the of gold and silver—


Siddhartha Ahluwalia 05:43

Does India export golden silver or imports?


Ishendra Agarwal 05:45

India imports. So, India imports the raw metal, but then they make jewellery etc and then they export the jewellery because a lot of craftsmanship happens in India, but the metal comes from outside but even now, and historically jewellery used to be a big you know, storage of wealth in India largely because, you know, India was again ruled by multiple kingdoms. Back in the ancient days where those kings will have gold and silver as their storage of wealth and then even after that women you know, traditionally in India have been always told that jewellery is a very good investment like, if you store certain money then it is good to get a jewellery out of money because that jewellery will stay with you will help you in tough times.. etc that has been the lesson you know, usually in earlier days people used to tell women. Because of that, you know, the use of golden silver in jewellery, golden jewellery and silver and utensils, you know, you worship your Murthy out there right and all those things have been largely used. But what started happening is and even you know, in earlier days, you would see whenever a woman would get married, then you know, her you know, parents or parents in laws would give them jewellery, for give them a significant amount of jewellery etc, because that would be a way to give wealth to a women right by their parents or parents in laws right. So, but now, what has started happening is women, with the Western influence and the influence of fast fashion, women have started seeing jewellery as a form of you know, fashion accessory rather than an investment okay, because what government has also done is there are multiple ways if you want to invest in gold and silver bullion, like you have ETF bonds, you have other sovereign bonds, etc, where you can actually invest in digital gold and you get 2% yield year on year. So now, and with the you know, women also modernising, getting into jobs getting into startups getting into multiple other fields, they’re also realised that better form of investment is actually silver and bonds… etc for gold, versus jewellery for them is more like an accessory which is where you would see that you know, the concept of wearing very, very heavy jewellery is you know, all those heavy jewellery that you would see back in the older days is going away and the concept of wearing minimal fine, day to day wear jewellery which you can wear at multiple location is coming in. So, yeah, that is the shift in the trend that is happening in jewellery. And that is also in some sense promoted by the government, as you said, because India largely imports the raw metal. So, you know, it doesn’t make sense to import so much of raw metal, you can have a digital metal as well, which is where they’ve launched sovereign gold bond etc, where you can give your metal to the government, which can be bagged against their reserves..etc and then they can give you certain interest over that. So, that is also something which has been driven by the government and even by fashion trends as well, which is why you see a lot of minimal fine Jewellery coming in trend.

Siddhartha Ahluwalia 09:04

And these bonds are not really popular, right? Like what part of India if you say, invest in jewellery in very physical sense? And what part of India would have, you know, investment in these kinds of bonds.


Ishendra Agarwal 09:19

So, you’re right, not too popular right now, but it’s gaining well, so like, there was this new sovereign bond scheme that government recently launched and we saw gold prices going up because people, suddenly was showing interest but it is largely specific to tier one metros, you know the concept of bonds. That is very largely specific to tier one and metros, but that is slowly and slowly increasing. And secondly, what has also started happening is you see a lot of finance related tools like there’s Muthoot Finance, multiple finance companies will give you a loan against the gold and then they use that gold reserves. And give it back to the banks etc and then take loan against those reserves also. So those tools were existing even before and they have a very deeper penetration. So like the goal loans even exist in tier two, tier three very popular…. very, very popular. The Pawnshops, you’re right. The Pawns is a new phenomena which is where you can actually directly give to them. Earlier it used to be an indirect way which has now become a direct way.


Siddhartha Ahluwalia 10:27

But we have never seen a silver pawn shop. Why is that?


Ishendra Agarwal 10:30

Yeah. So silver, if you see, has been largely used in utensils and coins, because they’re actually a large silver metal. So like if you see the cost of silver it is around 70,000 rupees a kg. And if you use it for jewellery in jewellery, you will consume at max 5 grammes 10 grammes. So, there is no significant value in the jewellery versus in utensils and coins, you will consume one kg of silver and two kgs of silver. So, that will essentially store some wealth. So which is why you will see for the investment purpose, people actually carry utensils, they carry coins of silver, they carry you know all the god goddesses you know, of silver etc, all those sculptures of silver but jewellery in silver was not something that because it is light, you know, for silver versus in gold, which is very expensive. It’s, you know, 6000 rupees a gramme. So there you would see a lot of jewellery in gold.


Siddhartha Ahluwalia 11:31

So, what you’re also essentially saying is till India (Inaudible) from Independence from 1950s to 1990s, because India was essentially a capital starved country right whatever capital the families could save, they could store in fixed deposits and in gold.


Ishendra Agarwal 11:47

Correct, and in gold. Secondly, also because in India, people used to transact a lot in cash. So not everything would go in the bank and if you want to settle cash, one used to be land, the second used to be gold, silver…etc. So that also used to be another form of investment for people to keep their cash reserves rather than keeping a direct cash as well.


Siddhartha Ahluwalia 12:10

So I want to take a step back right now because of your deep interest in, you know, silver and gold, which is the city that you grew up in.


Ishendra Agarwal 12:20

So I actually was born and brought up in Agra—


Siddhartha Ahluwalia 12:24

City of tier two or tier three, civilization. And famous for its for Sweets—


Ishendra Agarwal 12:29

Yeah, it is famous for the “Petha”(Indian Sweet). It’s also famous for, you know, a lot of handicraft work. A lot of marble handicrafts have happened. And it is now becoming famous for even leather work. You can see a lot of shoe, small “Karighars” in Agra, as well —


Siddhartha Ahluwalia 12:47

And your father has been a service man or business man?


Ishendra Agarwal 12:50

My father has been a businessman, actually, I come from a business family. And so I was at home till I was 18. After that I went to college.


Siddhartha Ahluwalia 13:04

When you were serving the market, right to start a silver jewellery business? How did you stumble upon this because it is completely unheard of, like, I can understand somebody starting a gold jewellery business, because it’s a very large market. But this looks like from the periphery back when you refer to a very small market.


Ishendra Agarwal 13:23

So, you’re right. If you look at it from outside, this is what you get.

Ishendra Agarwal 13:23

So I’ll tell you a bit more about how I stepped into this. So when I was in my college, at Indian Institute of Technology Kanpur you know, I was very clear that I needed to do something of my own(Speaks in Hindi), and then I actually started two businesses of my own. One was in the social media space, one was in the general media space, none of them worked. So back, then I realised that maybe, you know, the research that I’m doing on something that I want to start is not sufficient. I’m directly jumping into a problem and thinking of it as a problem, which is not really a problem, right? So maybe I need to do a bit of research and then go deep into it. So then post that I joined Boston Consulting Group, because before joining the BCG I heard consultants work directly with the CEO, they get a view of the problem in much more detail etc. And then when I was working there, I was working largely in the consumer space there and one of the assignments actually, you know, we were speaking to all the possible businesses which exist in India, like all the possible spaces, be it leathers space, hair care, makeup, skincare, jewellery, everyone, and trying to understand the problems that the people were facing. And what I realised is this was about seven years before in skincare makeup, haircare there were so many brands that were coming in because India was going through this transition of international brands to homegrown brands that would grow right but in jewellery, they were very few brands that we’re doing something good in the, you know, Fine Jewellery in this price range. And that’s when I also went deeper and to understand what is happening in the US and Europe. Because one key thing that you know a consultant would do is international benchmarking, what is happening in these developed countries what is happening in India so that you can at least get a correlation of what could you expect? And then I realise that the US and European people just buy Fine Jewellery at not so high prices, they don’t invest 50,000, 1 lakh to buy a jewellery, they just buy it for 10,000-20,000 or unless it is a wedding ring exactly, where they would go for an expensive jewellery. For their day to day jewellery, it would be 10,000-20,000 rupee budget or like $100 to $200 budget. And then whenever I was looking at it from India perspective, I realised there is no Fine Jewellery brand in this range. So, still, I was not convinced to be honest. So then I thought there must be something I’m missing because this doesn’t sound like a very amazing insight. Someone would have tried it. So, you know, I just joined Guild Capital back then, which was an early stage VC and then I was speaking to a lot many startups in the consumer space in these aspects and then I spoke to a lot many startups in jewellery also. So, then what I realised is a lot of people fail because it’s also a jewellery business, which is a Fine Jewellery, but it’s also a fashion business. So you need to manage inventory well. And second is building a brand is in itself a big problem there, you know, you need to be very, very clear on what you’re building on, which was the vision which was lacking in multiple founders. So, you know, once I got that clarity, you know, the space really is attractive, and I was convinced with the research, that’s when I started GIVA.


Siddhartha Ahluwalia 16:46

And basically, you will, there was no competition to GIVA back then. And Kushal’s Fashion Jewellery which is a second you know, company in this space, which is a recognizable brand is purely offline. So, essentially, you were replacing the artificial jewellery. You’re not replacing gold jewellery. There was no silver jewellery to be replaced. And artificial jewelleries were never a brand for artificial jewellery or even jewellery, which is plastic or semi metal in nature. And this used to get sold at small shops, all across India, especially in tier two. Tier three.


Ishendra Agarwal 17:25

Yeah. So actually, you know, you’re right. So, what we were doing is when I was starting before that, I looked at Amazon. So, Amazon has this top 100 bestseller in every category. I looked at India, top 100 bestsellers, and there was one silver product and rest all over artificial, okay. And I looked at that similar data for you and for Germany, the US had 46 Silver products out of 100 in this jewellery category in Germany it was about 48. And that was a time I thought okay, why is India having so few products and the US and Europe have these high products. There may be one reason why things will migrate towards that. And you’re right, because they were very, very few brands and silver and all of them were family owned businesses that had a very limited scale limited vision. So, they were very much focusing on what they were doing in just one shop or two shop, like you would see so many “Sunar ki dukan” which used to sell silver a lot right, but you will not see a large brand of silver versus in gold you would see so many large brands also along with the small shops. So then you know, what I realised is the problem in this segment is in gold because you have so many brands right? You have Tanishq Jewellery, Kalyan Jewellers, Malabar Gold & Diamonds was setting the standards of quality setting the standards of this is the serviceability we need to give to the user we need to offer buyback to the user etc. in silver because there’s no brand all these small shops are just doing what they like. They are just selling whatever purity that they would commit to a consumer, but the consumer was forced to buy. So, it was not like people were not aware about silver prices that they had these local people did not have any competition or anyone who was setting those standards for silver on which they would operate and that was happening in the market and that is the problem that we were trying to solve also, eventually when we started GIVA that we wanted to give those standards that you would find in gold and diamonds in silver as a category. So that at least you know the perception of silver becomes more towards jewellery and women are more acceptable because there are these standards, you will get a jewellery at GIVA you will get a jewellery of the same look and feel of the same quality that you will get in gold and diamond. So that was our vision statement that we have to create those standards for the category because already people are aware about it.

Siddhartha Ahluwalia 19:56

And how did you make GIVA into such a recognisable Brand, what went behind in building the distribution machine at GIVA?


Ishendra Agarwal 20:04

So, I think this is a journey and you know, we’re still very, very early in my journey. It’s an ongoing journey. I think one big lever for this journey is obviously the right people. Because it’s very tough to do everything alone. We’ve been fortunate that we got the right people who were carrying the same vision, or who at least had the purpose of creating something big. But one big thing that we realised in jewellery which is very important is trust and quality is because jewellery is a very small element in the women’s entire attire, right? If you wear a shirt that has a very large element, like you would see it prominently. But jewellery is a very small element, but it’s a very emotional element. Like people use jewellery to gift during a proposal, or during a wedding or you know, someone with their jewellery for gifts etc. So it is very special to people. And when something is very, very special to people, then you cannot really mess up with the quality. You really can’t mess up with the brand promise you have to serve it in a very special way. And that has been our thesis all throughout like when we started GIVA we said not all our jewellery will be 92.5% Pure. We’ll have an authenticity certificate with every jewellery. Then we will give a 30 day no questions asked return policy, even now launched lifetime plating guarantee as well. Like, even if you lose plating, it is all covered. Even the experience with the jewellery will come the packaging will be the best in class—


Siddhartha Ahluwalia 21:44

Is there a buyback also?


Ishendra Agarwal 21:46

So that is something that is on cards. You know, jewellery buyback, that’s something we’re figuring out. So right now the focus is on building these initiatives even stronger, and then yes.


Siddhartha Ahluwalia 21:58

And when did your first offline store come up?


Ishendra Agarwal 22:01

So it came up about 14 months ago? Very recent. Yeah. We have grown quite a lot offline over the last few months.


Siddhartha Ahluwalia 22:09

How many stores do you have right now?


Ishendra Agarwal 22:11

So right now we have around 89 company owned stores of our own okay. And then there are across 67 stores in store counters with shoppers’ stops and pantaloons.


Siddhartha Ahluwalia 22:20

And what are the cities that you are presenting?


Ishendra Agarwal 22:23

So we are quite deep in Bangalore, where we have around 24 stores, very deep in Delhi, where we have around 23 stores, then, you know, we’re there in Pune, Hyderabad, we have three stores in Lucknow, two in Dehradun, and two in Indore and in three more cities.

Siddhartha Ahluwalia 22:44

And it is very interesting, right, how did you choose Anushka? As a brand ambassador, and how did you convince her?


Ishendra Agarwal 22:49

So yeah, that has been quite a journey. So in fact, when we were starting for the first three months, we didn’t get any order, right? And then I was so tense that what is happening, whether I’ve entered into the wrong space,


Siddhartha Ahluwalia 23:12

Whether this is the third business that will fail.


Ishendra Agarwal 23:14

This is another failure. And this was a big failure, right? Because I left my job. And I also deployed all my savings into the business, etc. So then I invited two of my relatives to my home, and then two friends of mine also for dinner. And I showed them the jewellery after having dinner. And each of them bought 10,000 rupees worth of pieces back then. So that was the first order that I got. And that was the moment I realised that there is a pull in the product, maybe, you know, I need to now figure out the marketing element of it. Because before that, I didn’t even know whether we should do something in marketing. What I thought was, you create a website, and then the product will start selling on its own. So that was the time I was introduced to marketing. And when we started initially, we started with the approach of partnerships where we were there at CRED, we were there at StepSetGo, we were there at multiple partner portals where your early adopters would just get a discount coupon and then would experience the product, and we would get a feedback. But then once we established the PMF, and then we were going to the middle middle layer of the people where trust really matters. That is when we realise that if you go to tier two cities and tier three cities, whether normal, simple creatives of yours and if you say that we are a silver brand lifetime warranty in 30 days, no question asked return policy, etc. versus where Anushka Sharma says that 30 day no questions asked return policy. It’s a Silver Brand. The second approach had a much, much wider trust versus the first approach. And the amount of money we were spending on marketing was quite a lot. So whatever we were paying, you know, whatever the association with her was was not that much compared to the incremental benefit that the brand had. So that was the time we decided we’ll go with the celebrity. We started initially with Neha Kakkar with the smaller experiment. And then when this thesis was proven, then we went towards Anushka, because we realised she carries a very strong image, very fashionable image, strong women image, and our brand positioning would turn into a premium brand, our CTRs and conversions of the ads would improve significantly. So, then after that, it was all just chasing, convincing them. Exactly. And that happened, luckily. And then since then Anushka—


Siddhartha Ahluwalia 25:40

You went to Mumbai to meet Anushka to sign the final contract?


Ishendra Agarwal 25:43

So for the contract, we were directly in touch with the agency, but yeah, for the shoots and all we went and met her, but it was just like, I spoke to Anushka once before the contract. Sachin Shetty and I was pitching about the vision about the brand and she was also very, very excited about it. But along with me, I also convinced her manager that this is what we want to do and they were also very excited. So, they also helped me in convincing Anushka to endorse.

Siddhartha Ahluwalia 26:13

That day we were discussing this interesting thing. How big is India’s jewellery market? How much organised and unorganised is it? Who owns the most?(Speaks in Hindi)


Ishendra Agarwal 26:24

So, now if your looking at the Indian Jewellery market, It is huge it’s $100 billion market(Speaks in Hindi)—


Siddhartha Ahluwalia 26:33

How much is the $100 billion market in crores?


Ishendra Agarwal 26:43

It is around 83,01,92,50,00,000 crore market


Siddhartha Ahluwalia 26:49

How much is Titan’s market cap(Speaks in Hindi)?


Ishendra Agarwal 26:54

Titan’s revenue is around 25,000crores so—


Siddhartha Ahluwalia 26:59

$4 million Titan’s revenue, mostly from jewellery(Speaks in Hindi)


Ishendra Agarwal 27:00

Yeah mostly from jewellery. So Titan also only has 5% in the jewellery market(Speaks in Hindi). So the market is so huge that even Titan which is the largest, their market share is only 5%(Speaks in Hindi).


Siddhartha Ahluwalia 27:16

There name is correct in a way Titan(Speaks in Hindi) (Chuckles)


Ishendra Agarwal 27:20

I am from Meerut by the way, and Meerut’s biggest market is jewellery market.(Speaks in Hindi)


Ishendra Agarwal 27:20

See you won’t see a single Jeweller in your city who’s not a rich person. Everybody’s revenue is so high.(Speaks in Hindi)


Ishendra Agarwal 27:20

Titan is the biggest and then comes Malabar. Malabar is big in India but it’s more huge in the Middle east. But if you look at all these organised markets Titan, Malabar, Kalyan, and CaratLane, BlueStone, PC Jeweller…etc. All of them combined there’s only 10 % market share for each of them. (Speaks in Hindi)


Ishendra Agarwal 27:29

They are opening schools and colleges, that means they have went to the next level of wealth.(Speaks in Hindi)


Ishendra Agarwal 28:00

Correct. So because the unorganised market used to be so big about 10-20 years ago, because in jewellery the important thing is trust. If you’re buying from someone then you have to trust that they’re giving you pure jewellery because when a jeweller sells he will say its 100% pure versus 80% pure one, you will not go to the lab and test it. You will keep it on the basis of trust. So that is very important, that’s why local jewellers have a big market share. But interestingly in the past 10 years that is happening is the market is slowly getting organised. Because a new generation of local Jewellers are emerging and some of those new generations are greedy and their product quality has started to deplete, and because of that people are losing trust on the product whereas, these big brands like, Titan, Malabar, Kalyan and us. We have so many processes on quality checks to ensure that the product that we sell is of very high quality etc. So people trust us more than the local jeweller. So that’s why the market now is changing rapidly from unorganised to organised.(Speaks in Hindi)


Siddhartha Ahluwalia 29:12

You just mentioned market is around 8%(Speaks in Hindi) —


Ishendra Agarwal 29:15

8% to 10% market is organised in the whole 8 lakh crore market(Speaks in Hindi) —


Siddhartha Ahluwalia 29:22

What is the ratio of gold and silver in this now(Speaks in Hindi) ?


Ishendra Agarwal 29:24

So in the whole market around 12% to 13% consist of the silver market. And if you look at the silver consumption in jewellery only it was around 2300 tonnes. So 2300 tonnes of silver was used in jewellery which together amounts to about 8 billion of the market(Speaks in Hindi) .


Siddhartha Ahluwalia 29:48

Just the cost of the raw metal?


Ishendra Agarwal 29:50

Cost, labour and you can also add 40% of margin of manufacture, retail margin. That is an 8 to 9 billion market of silver(Speaks in Hindi).

Siddhartha Ahluwalia 30:02

Gold and Silver has a difference in an unorganised market where there is making charges where the jeweller charges 10% and CaratLane and Tanishq charges around 20% to 30%. But when it comes to silver, why is it at 40%?


Ishendra Agarwal 30:17

The reason for it is because you are looking at it as a percentage. So, if your per gramme rate of a metal is 6000, then its 10% becomes 600 right. In silver’s case if per gramme rate metal cost around 70 rupees, then its 40% becomes 30 rupees. The way the gold is made the same process goes for the silver too, there is the same amount of craftsmanship that goes in gold and silver. There is no difference in it. The only difference is that, silver is a little automated and mechanised, a lot of 3d printing is included etc.. Versus gold wastage becomes less. So because the per unit price of gold making is 600 rupees, in silver it is around 30 rupees silver. If you are looking at it at a percent level, then you would feel it as very high, but at an absolute level it is very low.


Ishendra Agarwal 30:25

So, if I buy 1 lakh worth gold jewellery and buy 1 lakh worth silver jewellery, then the making charge of gold would be higher than silver’s?


Ishendra Agarwal 30:51

No, so if you are buying 1kg of gold jewellery vs 1 kg of silver jewellery, then gold’s making charge would be 20x than silver’s making charge. That is what I’m trying to say. Ramka vinayaga book gold may aapke check Ramka Golmaal Veronica check Rambo silver Maboneng gold my you will pay 3600 rupees silver my aapke making Jagow scavo 30 topia grande Seiko Toronto Serbia your 180 rupees will be the making charge. So the scale is different.


Siddhartha Ahluwalia 31:56

I think in your business that is the margin right? That is making charges.


Ishendra Agarwal 31:59

Correct. That is the one margin that we have.


Siddhartha Ahluwalia 32:03

Do you have any other margins also in the business?


Ishendra Agarwal 32:07

Obviously on the making charge there is a margin and then we do a certain markup on the product, so from that also we make a little margin.


Siddhartha Ahluwalia 32:15

There’s one fundamental thing in business, which we see in jewellery shops: they don’t dedicate to silver jewellery the Average Order Value. So for gold, the Average Order Value would be $1,000 or 80000 or 1 lakh rupees, And the same for silver would just cost around between 6000-8000 rupees. So how do you solve this in your business? Because you open a store of lets say 1000 square feet, but the cost of running the store is the same and the customer that comes in won’t buy 10 silver jewellery in one go right? He might buy 1 gold jewellery and 2 or max 3 silver jewelleries. So how do you manage it?


Ishendra Agarwal 32:55

True, so one of the big advantages we have is that, whenever people enter the GIVA store they won’t come for a single jewellery, they come for minimum 2 products. Because of the price range we have, people don’t think too much before they buy. If they like any of the designs that they see, they’ll buy it. Between a price range of 1000 to 10000 if they like any of the designs they don’t think much about, they will directly buy the product. But what happens in gold is that people come with a mental budget of let’s say around 20 to 40000, and if I get a good design for that price range they might go for the buy. They won’t come in and say, show me the best designs.(Inaudible) Exactly, because the best you can get in any of the price range, here people first say their budget, that is show me a piece between 20000-40000 and they’ll pick. But in silver the budget factor doesn’t come. So there we sell multiple pieces to the people.


Siddhartha Ahluwalia 33:52

But still you won’t be able to match right? So either your number of customers entering increases per store per day because if for gold the average order value is one lakh rupees per customer, in silver even if 2–3 things are bought then the max would still be 15,000 rupees, right?


Ishendra Agarwal 34:09

Interestingly, what happens is… Let me first break down our unit economics for you. So in our store nearly 2-3 times more people come in compared to our equivalents like a CaratLane type of a store because number one the number of times people purchase GIVA jewellery is much more than that. Most people buy gold jewellery once a year or max twice a year versus silver where people will buy it even 4-5 times per year. Whenever there is an occasion, then people will buy silver as well and it’s a go to place for them. So the frequency is much higher. The repeats are much higher for single users. They buy it quite a few times. Third, the gross margin is better than gold because what happens in gold is that— Again, you have a product for 6,000 rupees of which 600 rupees is your labour charge and above that is the markup costs so your net margin product would be around 30-40% versus silver where your cost of metal is not very expensive so your markups will be quite high meaning your margin structures also are much better. So even at a lesser sale you end up making a lot more money in silver than in gold. So for example, we have around 89 stores currently of which 86 stores are all profitable.


Siddhartha Ahluwalia 35:24

And per month, how much revenue is generated?


Ishendra Agarwal 35:28

Per store on an average per month around 14-15 lakhs. The payback period which includes upfront without capital, inventory or deposit etc, we recoup about 12-14 lakhs for each store.


Siddhartha Ahluwalia 35:46

So what’s your current ratio for online and offline currently?


Ishendra Agarwal 35:49

Currently, majority businesses are online. Around 70% of our business is online. We started offline only around 15 months ago and we started from Bangalore. We set up four stores in Bangalore. When we started, our thesis was that we don’t want to go to many cities. We will stay in limited cities but we will go deep because what we realised is we wanted to solve for our marketing costs and in marketing when you go from performance to branding, that takes place at the city level. For example, if you’ve founded a store in the airport or at the cinemas, that all happens at the city level. You can’t plan for specific stores but at the city level itself. So that is why our marketing efficiency which is the marketing ROI is quite good because of focusing on one city. This is why we focused on the two cities of Bangalore and Delhi and we put 15 stores each in those two places and we went very deep there. And then we conducted a lot of marketing, BTL activities, branding activities to create awareness.

Siddhartha Ahluwalia 35:52

I actually have one question in mind as to why the demand for gold is so high as compared to other parts of India?


Ishendra Agarwal 36:11

Actually, I’ve also been thinking about the answer to this question and trying to figure out why South India has so much demand compared to North India, but one reason that I have identified is that, in general if you look at the per capita income distribution then it is quite dense here compared to North India. Secondly, if you go back to the history again, when those invasions involving the Mughals and other dynasties took place, they all started from the North. They entered through the North and then they would make their way to the South. So the wealth in the North was slowly depreciating verses when things started arriving to the South things started changing such as gaining Independence and policies started changing. So the availability of gold or the likeability of gold in the South is quite high compared to the south because because historically people have had a lot of gold. If you go to a normal South Indian wedding here, you will see a women wearing at least one kg in a rich wedding in the form of multiple things you will see a woman wearing. I’ve heard so many communities where talks are about how much kilo gold has been spent at the wedding so generally the mindset of parents has been the same. The mindset of women has changed though. For example, my sister was getting married—


Siddhartha Ahluwalia 36:11

In Agra?


Ishendra Agarwal 36:12

Yeah. So my parents asked her to get one good set to which she said ‘No I don’t want one big set. Instead of that just get me 10 small sets that I can wear to the office or parties rather than buying just one big set.’ So women don’t want to buy… If you ask modern women, they don’t want to buy one kg heavy sets.


Siddhartha Ahluwalia 37:50

So instead of a 10-15 lakh set, they would rather have 10 sets each worth 1 lakh.


Ishendra Agarwal 38:10

Yeah because they can wear it on different occasions. So that mindset has heavily shifted now but previously it used to be the norm to get a heavy set worth 10-15 lakhs.

Siddhartha Ahluwalia 39:03

One more very interesting insight is that previously there used to be a lot of homemakers amongst women so when they used to go out to marriages or parties of which the occasions are not as much so they used to wear heavy jewellery to such occasions. Now it’s becoming a daily occurrence going to the office so they prefer wearing light jewellery which is daily wear.


Ishendra Agarwal 39:47

Correct. In fact, previously when women would go to such events, there was a mental perception to wear heavier jewellery. They wanted to wear heavier jewellery because ‘it showed family’s status or showed how wealthy they are.’ Until 10-20 years ago, that was the mindset versus now vs they think ‘with the suit that I’m wearing, what jewellery would go nice with that?’ rather than wearing heavy pieces. So that perception has changed and in the process people are no longer thinking that they want to wear heavy jewellery but rather the jewellery that would look good on me. And now if you look at the fashion trends going on, a lightweight jewellery with saree looks amazing compared to a very heavy look which has now been reserved for bridal affairs that very heavy jewellery must be worn. The guests who come still prefer to wear minimal, lightweight jewellery with sarees because it gives it a very different look. So there has been a revolution in fashion and jewellery as well and this has also been supported by modern machineries as well. Around 10-20 years ago, jewellery used to be mainly handmade. There were artisans who would make it and the process was not so mechanised back then. Even the dye that would be made for jewellery, earlier the artisan would make the dye of the negative jewellery on the fax then after it was cast, it would be made into the main jewellery piece and then polishing , finishing would happen. Now that whole process can be done on 3D printing and you can go into the absolute minute detailing. Even if you want a big piece, you can make it quite lightweight as well. And then when you sell those pieces to the consumer, their preference is that these pieces are 50,000 rupees which are lightweight compared to the 3 lakh heavyweight jewellery so it’s better I get the cheaper one and get eight pieces compared to buying a single piece.


Siddhartha Ahluwalia 42:03

This is quite an interesting insight you have provided. First, could you speak about how big the team of GIVA is?


Ishendra Agarwal 42:10

So we currently have around 800 people in the team.


Siddhartha Ahluwalia 42:13

And out of that how many are designers?


Ishendra Agarwal 42:16

So we don’t do any manufacturing. All our manufacturing is outsourced to our manufacturing partners. And this is in India, China, Thailand, Turkey & Italy where our manufacturing partners are. Largely in India, but we also get it from other countries because what is the case is that every country has its own specialty. Italian chains are known for their quality. They’re the finest quality chains that you get versus India is known for a lot of handmade work etc. China is known for cubic zirconia etc so our entire procurement distribution is country-wise, quality basis dependent.


Siddhartha Ahluwalia 42:58

And of all the jewellery that is made, is this machine-made or hand-made?


Ishendra Agarwal 43:04

So about 10-15 years ago, the entire process from dye to making the final product used to take about 15-20 days. Just making a dye used to take 6-7 days. Now the whole process takes only 4 days because the dye which is the biggest time-consumer is fully automated and even casting is automated. The finishing also is mainly automated outside of the stone placing. So now the 15-20 day process as a result has been cut down to 3-4 days which is why you see a lot of startups in gold who say they can make orders right? All this has been possible because of the mechanisation—


Ishendra Agarwal 43:14

And is AI playing any role in this or has it not come yet?


Ishendra Agarwal 43:54

Currently, the role of AI is not that big but actually AI’s biggest role which in this full process is the 3D printing of the jewellery. From that you can make the dye as well so with AI that process becomes much faster. Currently, someone is sitting like an illustrator who will be doing a 3D design on the computer. With the AI you just need to plug in five images of the product and that whole model the 3D printer can render the file and provide for you.


Siddhartha Ahluwalia 44:32

Then the make to order market will grow exponentially as customers will choose a design and AI can create that design for them and 3D will print and in 3-4 days it will be delivered.

Ishendra Agarwal 44:42

Yeah if you order today then in 4 days the jewellery will be made and in about 7-8 days the jewellery will come to you. Only thing in this is that the market is bigger in gold and diamond because of two reasons. One is that the cost of holding inventory is big. If one gold store is made, then you will need at least 4-5 crores worth of inventory for it or the customer will come and think of it as being a very empty store. I will not buy from the store right and then that 4-5 crores of capital at scale will become much tougher right which is why if you see Tanishq and other stores are all franchises. It takes up about 40-50 crores of inventory—


Ishendra Agarwal 44:45

Per store, 40-50 crores of inventory?!


Ishendra Agarwal 44:59

Total inventory plus deposit is somewhere between 25-40 crores of investment. So that is why these companies take the franchising mode of investment but with gold inventory becomes a very big problem which is not so big for us but because gold has a high cost of metal so there it has a big role because if you have good 3D models and have very fast service given to people then inventory doesn’t become such a big problem. You’ll keep about 25-30 lakhs worth of inventory in your stores and you can keep duplicates of products in brass, bronze from which customers will make to order and then you can convert it. So there it has a big utility versus in our case, we don’t carry that much in inventory.


Siddhartha Ahluwalia 46:16

How much do you have to carry in inventory?


Ishendra Agarwal 46:17

In one store of ours, we carry around 20-25 lakhs of inventory. So in our case it doesn’t have that high an inventory value. In our case, the highest value is that customers come up with their own designs and then they say that they want a replica of that. We have to double check for copyright and IP issues such as you cannot make a design if someone brings like that but once that is clear then that process becomes much faster.


Siddhartha Ahluwalia 46:46

One more interesting thing that demonstrates how big the South is as a market for jewellery. If you go watch a movie, 95% of the ads are usually for jewellery.


Siddhartha Ahluwalia 47:00

I mean Tanishq is pretty universal.


Ishendra Agarwal 47:00

Yeah you are right. I mean there are so many and many South brands that are really big. If you look at Malabar then that originated in the South. Kalyan also originated in the South. TBZ also originated from the South. Bhima jewellers also originated from the South. Senco originated from the west and south, all combined. So there are many brands which came from Southern Region verses from the North of which the biggest brand was Tanishq I believe which came from North and West—


Ishendra Agarwal 47:35

Correct. Well, in fact even the headquarters for Tanishq is in Bangalore. They have their factories in Hosur Road and their main office is in Bangalore. So traditionally, there has always been a very big market in the South because people had a lot of disposable income and more preference as well so you will see a lot of brands coming from there.


Siddhartha Ahluwalia 47:55

The initial point you made is that the Mughals came. The Mughals looted all of the North’s wealth but they couldn’t penetrate the South and by the time the British came, the Mughals’ domination ended as well so the common person in the South always had gold. One more parallel also is that all the temples in the North… The biggest temple in the north is the Kashi Vishwanath which was also broken by the Mughals. There are famous stories about how the Shivling was saved. However in the south, no temples were broken since the Mughals could not reach there.


Ishendra Agarwal 48:29

Yeah. In fact, there are so many temples here that have their own unique architecture and they are so preserved even now compared to the north. you are right, there are very few.


Siddhartha Ahluwalia 48:44

You’ll notice that in the temples in the north, they don’t adorn gold much compared to the South where they are filled with gold.


Ishendra Agarwal 48:55

They have a massive reserve of gold in fact.


Siddhartha Ahluwalia 48:59

Countries would operate on that kind of gold.


Ishendra Agarwal 49:01

Correct. Exactly countries could operate on such an amount of gold reserves.


Siddhartha Ahluwalia 49:05

So that is 200-300 years of gold wealth that is compounded and the north never got that same opportunity.


Ishendra Agarwal 49:12

Correct, correct. You’re right and there was another reason. So one reason is the Mughal one. The other one is that the South had great connectivity with the ports as well. So a lot of people who would come from Dubai and the Middle East would come from the south hence the passage of gold was also from here.


Siddhartha Ahluwalia 49:35

One more observation is that, people spend more on weddings and less on gold in the north because gold wasn’t given that much importance. On the other hand, the south weddings have very basic weddings where even the richest people serve guests on banana leaves but a large amount of spending goes into gold.


Ishendra Agarwal 49:54

That is right. In North weddings so much of the money goes into the wedding and providing expensive cutlery. A lot of money gets spent on weddings. Lot of planning goes into it and there are different types of packages provided. One is the medium one, then the expensive one and one that is looking to loot you (Chuckles)! I think it’s somewhat engineered into parents as well that weddings are a once in a lifetime event so spend extravagantly. They don’t think about saving up. In the south on the other you end up spending more on gifts rather than on catering—


Siddhartha Ahluwalia 50:36

In the south, all the weddings end up taking place within the temple or in a hall next to the temple.


Ishendra Agarwal 50:43

Correct. In the north, whoever is in the wedding business is making loads of money. That is also one of the reasons so you are right.


Siddhartha Ahluwalia 50:58

Gold is also given importance in the south because it is seen in divine form because it is adorned on God as well and you never see that in the north.


Ishendra Agarwal 51:08

Gold is adorned on God as well. You are right. That is also a big reason. Yeah.


Siddhartha Ahluwalia 51:15

They’re quite stark differences.


Ishendra Agarwal 51:16

Yeah and that’s why the market is massive here as the consumption is very high.


Siddhartha Ahluwalia 51:23

Those 4-5 companies that you have mentioned would have a minimum of 10,000 crores revenue.


Ishendra Agarwal 51:31

Correct, in fact all of these companies are publicly listed. Malabar isn’t listed here but in Dubai. Tanishq is listed here. Kalyan is listed here. If you look at the revenue of all these companies then they would all have a revenue of upwards of 5-10,000 crores. Tanishq is 25-30,000. It’s a 30,000 plus crores yearly revenue. Malabar is also around that same range. I think Kalyan is in the 10,000+ crores range. Everyone is huge. All of them are big.


Siddhartha Ahluwalia 52:01

I’ll tell you one more interesting thing. Rakesh Jhunjhunwala is considered one of the top investors of India. 75% of his wealth he got from putting a stock on Titan which is Tanishq. He made around 15 crores in 2000. When he passed away a few years ago, that same wealth was around 10-15,000 crores.


Ishendra Agarwal 52:29

Yeah, he made a lot of money.


Siddhartha Ahluwalia 52:33

So most of his money was made from the jewellery business.


Ishendra Agarwal 52:38

And the great thing is that there is a lot of potential in this industry even now.


Siddhartha Ahluwalia 52:44

Do you think if the whole market grows then can Tanishq become let’s say from a 5 billion revenue company and a 70 billion market cap to a 700 million million mark or billion market cap company?


Ishendra Agarwal 52:59

So what I think is… Currently Tanishq has a 5% market share. Easily we could see 25% market share after 10-20 years.


Siddhartha Ahluwalia 53:09

And the market also at 100 billion—


Ishendra Agarwal 53:11

If it goes to 125 or 150 billion but because the whole market is about 10-12%. 6-7 years it was around 4% organised. The pace at which the market is organising is very fast and all the jewellery all the organised jewellery companies will grow.


Siddhartha Ahluwalia 53:36

(chuckles) So if someone wants to buy ETF then they should put it in all the jewellery companies—


Ishendra Agarwal 53:42

And in fact, you can note this. If you see all their revenues, plot their revenues. The only issue in the jewellery business has been the corporate governance. That has been a big issue in the traditional jewellery companies. People used to use it for different reasons rather than for doing jewellery but if you look at all the clean jewellery companies which operated in a trusted way, all of them have been growing right? So yes, it is a very big market and it is going from unorganised to organised so even the market in itself for organised jewellery is growing by 15% plus. Year on year rate. So yeah massive opportunity.


Siddhartha Ahluwalia 54:17

And are these organising only in tier one or are they organising in tier 2/3 as well?


Ishendra Agarwal 54:22

It’s happening everywhere. In fact, with us… One of our top five stores is in Hazratganj in Lucknow. It comes in our top 5 stores. And in fact if you see Tanishq’s top 10 stores then they have 2 stores in Patna and 1 in Lucknow. More than 70 80% of their top 10 stores are in tier two tier three. It is not just a tier one phenomenon. It is a tier two tier three phenomena across largely because tier two tier three mass operations both high and this is what we have also realised both high aspiration Mahaki audience may only give us better the coffee pass uh because manufacturing say traditional businesses say logo but, but channels neocortical media do you see ya Murata PESA to overall as a transportation may or may not pay soccer to jagah firozabad Rent it may I own a skateboard education with me expensive though I’ll give us a limited budget yoga you know to spend on luxury needs but what proper education expensive near compared to metros income levels be decently for good families about your purchase any everyone has house the Mulatu testing the why aspiration higher pessaries other but on the availability of options which is why memory last exile ki Jo online the growth is up to two to three say and offline maybe Joby on the stores dollar tier two tier three all of them are doing great and tarnish KV Alpha tonnage being the gold standard I was given our top 10 stores they gave us was the art of forgetting number but seven to eight stores are from tier two tier three


Siddhartha Ahluwalia 56:03

But your stores are company operated. In Tanishq, it is —


Ishendra Agarwal 56:08

— A franchise-owned but it doesn’t matter. Ultimately it’s the brand. The customer recognizes them as Tanishq and us as GIVA. That’s for investors to know how much capital is going in what, etc, etc. But for consumers it’s very simple.


Siddhartha Ahluwalia 56:27

Thank you so much Ishendra, I had a great time.


Ishendra Agarwal 56:29

Thank you. Thanks a lot. I had a great time as well. Thanks for inviting me here.

Our Sponsors

Sponser Logo

Looking to build a differentiated tech startup with a 10x better solution? Prime is the high conviction, high support investor you need. With its fourth fund of $120M, Prime actively works with star teams to accelerate building great companies.

To know more, visit the Prime Venture Partners website!
Vector Graphic Vector Graphic

Know when new episodes are released. Subscribe to our newsletter!

Please enter a valid email id