Khazanchi Jewellers is a prominent player in the Indian jewellery industry, specialising in the production and sale of a wide range of jewellery products. The company’s promoters enjoy over 25 years of expertise in the field. Products include gold, precious stones, diamond jewellery, and bullion in the form of coins and bars. But they focus on creating exquisite wedding jewellery and other designs suitable for festive occasions.
They source their gold from a group company and from other private players. After production, the jewellery is then placed on show in the retail shops. In case of specific customer demands, the designing is done via independent artisans. Customers include both retail and institutional ones. All of their products are insured.
India’s gems and jewellery market size was at US$ 78.50 billion in FY 2021. The government is aiming at US$ 70 billion in jewellery exports per year by 2025, a 100% jump from US$ 35 billion in 2020. The government has reduced customs duties and set up free trade agreements with countries like UAE to increase exports. The growing market and exports offers Khazanchi Jewellers the opportunity to expand its revenues and operations in the coming years.
Khazanchi Jewellers Ltd IPO Details
Khazanchi Jewellers is a 100% fresh issue IPO comprising 69,10,000 shares. It is a fixed price issue with a price of ₹140 per share. Retail investors can bid for the Khazanchi Jewellers IPO that will open on July 24th 2023. The IPO will list on the NSE exchange on August 7th 2023.
Khazanchi Jewellers Ltd IPO Objectives
The company wants to use the net proceeds from the issue to:
- Finance the establishment of the new showroom in Chennai, Tamil Nadu. This includes both capital expenditure for the showroom and additional inventory costs.
- To augment the working capital requirements of the existing operations.
- For general corporate purposes.
Peer Details
The competitors of Khazanchi Jewellers Ltd include various big and small players. Companies declared by Khazanchi Jewellers itself as its peer include:
- Deep Diamond India Limited
- Eighty Jewellers Limited
- Moksh Ornaments Limited
Highlights of Khazanchi Jewellers Ltd
- Presently, around 95% of the total revenue of the company comes from institutional sales.
- The purchase of stock-in-trade makes up most of their costs.
- The company has seen overall negative cash flow in the year ending 31st March 2023. In the past three years, at least one out of the following three has been negative:
- Cash flow from operating activities
- Cash flow from investing activities
- Cash flow from financing activities
Khazanchi Jewellers Company Financials
| Particulars | Period Ending on 31st March ’23 | Year ending on 31st Mar’22 |
|---|---|---|
| Total Income (in ₹ lakhs) | 48,181.65 | 25,799.75 |
| Profit After Tax (in ₹ lakhs) | 756.49 | 756.49 |
| As of 31st March ’23 | As of 31st Mar’22 | |
| Current ratio | 2.32 | 2.65 |
| Return on Capital Employed | 18.91% | 10.27% |
| Inventory Turnover Ratio (in days) | 88.66 | 146.64 |
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Strengths
4They are an experienced player in this market, which gives them strong branding and trust.
They have a wide product range as well as connections with third party artisans, which helps them meet a variety of needs of different customers.
They have multiple group companies that can help source raw materials and finance operations.
With a strong brand existing, they are poised to scale their operations by investing in infrastructure.
Risks
4Their operations are concentrated in Chennai only. Therefore, local disruption due to natural or political causes can severely affect its business.
Since they change their jewellery designs frequently, they do not register them under Designs Act, 2000. So anyone can copy their designs.
Their business has a significant need for regular working capital, which exposes them to interest rate risk.
They are dependent upon a few suppliers for the supply of raw materials.
