| Goldkart Jewels Limited | ||||
| Rating Reaffirmed and Withdrawn | ||||
| Rating Action | ||||
| ||||
| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its rating on the long term bank facilities of Goldkart Jewels Limited (GKJL) and subsequently withdrawn the rating at the company's request and on receipt of a no-objection certificate from the banker. The withdrawal is in line with Crisil Ratings’ policy on withdrawal of bank loan ratings.
The rating reflects the extensive experience of the promoters in the jewellery retailing business along with moderate financial risk profile of the company. These strengths are partially offset by geographical concentration in revenue, large working capital requirement and modest scale of operations. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of GKJL. |
Key Rating Drivers & Detailed Description Strengths:
Moderate financial risk profile: The capital structure has been healthy due to limited reliance on external funds, yielding gearing less than 0.5 time and total outside liabilities to adjusted networth ratio below 0.3 time as on March 31, 2025. Debt protection metrics may continue to be comfortable, despite leverage, owing to moderate profitability. Interest coverage and net cash accrual to total debt ratios were around 4 times and 0.3 time for fiscal 2025.
Weaknesses: Geographical concentration in revenue: Although the company has been in the jewellery retailing business for over two decades, all its stores are in Gujarat. Gold buying is a localised activity and its accrual depends on the level of economic activity in the region. Geographical concentration in operations exposes the business to volatility in demand because of local factors. Competitive pressure from reputed, local brands also persists.
Large working capital requirement: Gross current assets (GCAs) have been 200-224 days for the past three fiscals and were around 200 days as on March 31, 2024, driven by high debtors of 41 days and huge inventory of 161 days. Furthermore, the company holds large work in process and inventory to meet business need.
Modest scale of operations: The jewellery retailing industry is highly fragmented owing to low entry barriers. The consequent intense competition along with limited value addition may continue to constrain scalability, pricing power and profitability. Thus, the operating margin stood low at 2-4% over the past three fiscals; revenue has been Rs 55-80 crore for the past four fiscals and is estimated at Rs 34.5 crore for the first half of fiscal 2025. |
Liquidity: Stretched Bank limit utilisation was high at 97.39% on average for the 12 months through March 2025. Cash accrual is expected at more than Rs 2 crore per annum, against yearly debt obligation of Rs 0.6-0.8 crore over the medium term; the surplus cash will act as a cushion to liquidity. Current ratio was healthy at 2.64 times on March 31, 2024. Liquid investments stood at around Rs 14.27 crore in the form of shares, debentures and mutual funds as on September 30, 2024. Low gearing and moderate networth should boost financial flexibility. |
Outlook: Stable GKJL will continue to benefit from its longstanding relationship with principals and experience of the management in mitigating inherent risks in the trading business. |
Rating sensitivity factors Upward factors
Downward factors
|
About the Company GKJL, a part of the Laxmi group, was formed as a proprietary concern of Mr Vijay Shah in 2002. It got converted into a public-limited company -- Sona Hi Sona Jewellers (Gujarat) Ltd -- in 2017 and was renamed as GKJL in October 2023. It is engaged in jobwork and trading business of gold jewellery and ornaments. Its showrooms are located in Ahmedabad, Gujarat. The company is listed on the small and medium enterprises platform of National Stock Exchange. Mr Vijay Chinubhai Shah and Ms Alpa Vijay Shah own and manage the business. |
Key Financial Indicators
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
|
* - Issuer did not cooperate; based on best-available information
|
|||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||
|
Criteria Details
|