RBZ Jewellers
- RBZ Jewellers is coming out with a 100% book building; initial public offering (IPO) of 1,00,00,000 shares of Rs 10 each in a price band Rs 95-100 per equity share.
- Not more than 35% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not more than 30% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
- The issue will open for subscription on December 19, 2023 and will close on December 21, 2023.
- The shares will be listed on BSE as well as NSE.
- The face value of the share is Rs 10 and is priced 9.50 times of its face value on the lower side and 10.00 times on the higher side.
- Book running lead manager to the issue is Arihant Capital Markets.
- Compliance Officer for the issue is Heli Akash Garala.
Profile of the company
The company is one of the leading organised manufacturers of gold jewellery in India, specializing in Antique Bridal Gold Jewellery and distribute to reputable nation-wide retailers and significant regional players in India. It holds approximately 1% of total organized wholesale gold jewellery market in India. It has a history of more than 15 years in the jewellery industry. It designs and manufacture a wide range of Antique Bridal Gold Jewellery which consists of jadau, Meena and Kundan work and sell it on a wholesale and retail basis. It also processes and supply Antique Bridal Gold Jewellery on job work basis to national retailers. Its customer base in wholesale business includes reputed national, regional and local family jewellers spread across 20 States and 72 cities within India. The company also operates its retail showroom under the brand name ‘Harit Zaveri’ and is an established player in Ahmedabad. in Ahmedabad. It offers jewellery for bridal, occasional and daily wear at various price range in its retail showroom. It also exports its jewellery to Middle East region. It carries out its manufacturing operations from a well-equipped and modern facility situated at Ahmedabad, Gujarat having advanced technologies in casting, laser and 3-D printing. Its retail showroom is situated in the prominent area of Ahmedabad, Gujarat.
The company offer a diverse range of jewellery collections comprising of different manufacturing techniques and varieties. It specialises in Antique Gold bridal jewellery and is known for its unique designs and craftmanship. It has a dedicated and experienced in-house design team who supervises the artisans and craftsmen to develop new products and unique designs that meet customers’ demands and requirements basis its own market research in the jewellery industry. It endeavours to cater to its customers’ preferences, which often vary significantly by geography and micro market. Its jewellery designs are inspired by traditional Indian art and culture, and it blend these elements with contemporary designs to create aesthetic pieces that are both classic and modern. It uses a variety of precious and semi-precious stones in its jewellery, including diamonds, emeralds, rubies, and pearls, which are intricately set in gold. Its constant focus on design and technological innovation in its jewellery products, its ability to recognize consumer preferences and market trends, the unique designs and the quality of its products are its key strengths, amongst others.
Proceed is being used for:
- Funding working capital requirements of the Company.
- General corporate purposes.
Industry overview
The Indian Gems and Jewellery (G&J) business has traditionally been very fragmented with consumers mainly purchasing from family jewellers. The fragmented nature of this sector makes it difficult to quantify the number of jewellers in India. However, the industry has seen structural transformation in the recent decade with more G&J players moving up the value chain with a greater focus on branded jewellery. Jewellery retailing is not just profitable and high-margin, but it's also an underpenetrated industry in India, which means there is a lot of room for growth. Consumers are more predisposed to branded jewellery particularly in metro & tier I cities, as a result of rising media and western influences, and willingness to pay a premium. In CY20, the domestic jewellery (gold and studded) industry was negatively impacted by the Covid-19 outbreak and the industry size contracted by nearly a fourth. In CY22, the domestic jewellery industry stabilized at around Rs. 4,641 billion. In CY22, the demand for gold jewellery remained subdued in terms of volume and declined by about 2%, while the gold price registered 7% increase as compared to its previous year. The long-term demand prospects for the sector are supported by growing working population, higher disposable income, easier access to credit and improving standard of living.
The Indian jewellery market is traditionally dominated by gold jewellery. Gold jewellery purchases in India are not only limited to consumption, as is the case with fashion jewellery, but they do have a strong saving significance. This is more evident in rural communities where access, literacy, and acceptance of other financial savings instruments are low. These factors have resulted in gold being a major saving asset class. Cultural differences, religious and trust concerns, as well as other elements that influence jewellery purchases have all contributed to gold jewelry's significance. Apart from gold jewellery, the other type of jewellery which is gaining traction is the studded ornaments segment. The key factor contributing to the growth of this segment is the younger population’s preference for diamond studded gold jewellery, typically made with 14 or 18 carat gold rather than heavy 22 carat gold. There has also been a noticeable shift towards more informal and everyday use of diamond studded jewellery. Many urban millennials, unlike their parents, are drawn to studded jewellery, which is easy on the pocket and therefore supports multiple purchases. Furthermore, most of the young population think that heavy gold jewellery is for the elderly and that modern designs cannot be found in pure gold. Studded jewellery comes in a wide range of styles and prices. When paired with white gold, a studded diamond appears to be more expensive thereby evoking the quality feel of platinum.
Pros and strengths
Organised manufacturing setup under one roof: The company has its own manufacturing set up consisting of bench working artisans, technology for laser cutting, laser engraving and state of the art casting units. It has progressive dyes and hydraulic press dyes and also has inhouse 3D printing machine to convert CAD image in CAM. Its manufacturing facility is capable of processing and manufacturing everything from nugget to necklace, specifically for gold bridal jewellery which is done under one roof using a mix of latest machines and human skills comprising of jewellery designers, well trained and skilled artisans. The premises at which its manufacturing facility is situated is owned by it. The facility under one roof brings efficiency, control, supply assurance and large-scale supplies that are crucial to meet the demands of its customers. It also helps in commanding better management oversight, security of precious metal due to reduced movement and most importantly controlling the manufacturing process loss. This enables it to control costs and increase its profit margins and gives it a competitive advantage.
Client Mix and geographical spread: One of the key strengths of the company in the jewellery business is its wide reach and presence across India. With a customer base in 20 states and 72 cities, it has established a strong foothold in the market and has a deep understanding of the local customer preferences and trends. Its relationship with national retailers like Titan Company, Malabar Gold, Joyalukkas India, Senco Gold and other prominent retailers such as Kalamandir Jewellers, PN Gadgil Jewellers, and prestigious family retailers such as Hazoorilal Jewellers, Om Jewellers, C. Krishniah Chetty Jewellers, Vummidi Bangaru Jewellers and CH Jewellers. These clientele have further enhanced its credibility and reputation in the industry. It also exports to the Middle East region. The client mix and geographical spread help it in understanding customer preferences across the regions, cultures and socioeconomic strata which is one of its key strengths to roll out designs as per the emerging trend. They also help it strengthen its brand in the jewellery industry and the overall experience of dealing with the retailers helps it in adopting best practices in its retail division as well.
Design and Innovation in product range: The company operates on the idea of creating new, innovative and unique designs in its product offerings. Its offerings include antique, bridal, traditional, contemporary and combination designs across jewellery lines, usages across price points. Based on its research, knowledge and expertise, it has been able to create a unique and diversified range of designs and product range to cater to all age and genre of customers keeping in mind the taste and preference of different regions. Its team of jewellery experts and its long-trusted relationships with its job workers and artisans have allowed it to create a diversified and a wide range of varied and unique designs of different weightage to cater to large variety of customers. Its Promoters’ experience in the gold jewellery business helps it to know about the expectation of the customers, which in turn helps to design the products accordingly.
Brand built on core values of trust, transparency and innovation: The company has established ourselves as a reputed brand in the jewellery market. It is one of the leading organized manufacturers of gold jewels in India, specializing in Antique Bridal Gold Jewellery and distribute to reputable nationwide retailers and significant regional players in India. It holds approximately 1% of total organized wholesale gold jewellery market in India. The trust imposed on it by its customers is evident from the volume growth it achieved in the Fiscal 2023. It has also been granted various awards by reputable agencies for its quality and innovative designs. It is a manufacturer, hold itself accountable for maintaining the confidentiality and integrity of the designs provided to national, regional and local family jewellers. It is its business policy that the specially commissioned designs provided to retailers are not used or displayed in its own retail showroom or provided to any other retailers.
Risks and concerns
Significantly dependent on sale of gold jewellery and gold jewellery processed: Any factors adversely affecting the company’s sales of gold jewellery may negatively impact its business, financial condition, results of operations and prospects. The availability of gold, being its key raw material, may be adversely affected due to various reasons, which might affect its manufacturing output of gold jewellery. The prices and supply of gold depends on factors beyond its control, including general economic conditions, competition, production levels and regulatory factors such as import duties. Any decrease in supply of gold or its inability to effectively procure gold at competitive rates, in time, or at all, may adversely impact its business, financial condition, results of operations and growth prospects. Further, factors that may adversely impact sale of gold jewellery, such as imposition of increased KYC regulations, intense competition in the jewellery industry, customer dissatisfaction with the quality, pricing of products, or changes it make to its products and services or changing consumer preferences, may lead to decrease in its revenues.
Dependent on machinery and technology for operations: The company operates out of its manufacturing facility located in Ahmedabad, Gujarat, which is equipped with modern machinery equipment including quality testing equipment and software. Its success and its financial condition are predicated on its ability to maximise its manufacturing capacities. The process of manufacturing jewellery is a mix of deploying advanced manufacturing techniques as well as traditional jewellery techniques. The advanced manufacturing techniques involve use of various machinery such as induction melting furnace for gold melting, wax injector machine for the process of investment casting, laser welding, laser marking and engraving machines for the process of laser cutting and engraving, CNC die and mold making machine for the process of progressive die stamping and hydraulic die pressing, as well as 3D printers. The traditional jewellery techniques which all involve human skill and handwork include Jadai, Enameling, Powai and Antique Finish. As such, its final products go through a mix of machine and labour process and none of the products are entirely dependent on machine process. While there have been no instances of malfunctions or breakdown in its machinery, any malfunction or breakdown of machinery may entail repair and maintenance costs and cause delays in delivery of order as it may significantly impact its manufacturing process which could also have an adverse impact on its ability to meet its product delivery schedules, business operations and reputation.
Income and sales subject to seasonal fluctuations: The company’s sales in certain regions have historically exhibited certain seasonal fluctuations, reflecting higher sales volumes and profit margins during festival periods and wedding season. While it stocks certain inventory to account for this seasonality which differs across regions, its fixed costs such as employee salaries, manufacturing facility and showroom operating costs, which form a significant portion of operating costs, are relatively constant throughout the year. Consequently, lower than expected net sales during certain periods or more pronounced seasonal variations in sales in the future could have a disproportionate impact on its operating results for any fiscal year or could strain its resources and impair its cash flows. Any slowdown in demand for its jewellery during peak seasons or failure by it to accurately anticipate and prepare for such seasonal fluctuations could have a material adverse effect on its business, financial condition and results of operations.
Fluctuations in the price of gold and other raw materials: The jewellery industry is generally affected by fluctuations in the price of gold and other raw materials. Gold prices have been volatile in the recent past and there has been increase in the prices of gold due to external factors. In the past the company has suffered losses due to hedging. In FY 2014 and FY 2015, it suffered loss of Rs 27.69 lakh and Rs 2.82 lakh. However, at present it does not have any specific hedging policies for its gold inventory to protect it from price fluctuations and there can be no assurance that non-existence of any hedging strategy will adequately protect its results of operations from the effects of fluctuations in the prices of gold either in the short or long-term. In addition, no established hedging instruments are available for some of the raw materials, other than gold, that it uses in its products. Unavailability of the raw materials it require or an increase in the prices of such raw materials together with an inability to transfer such increased costs to its end-consumers may have a material adverse effect on its business, results of operations and financial condition.
Outlook
RBZ Jewellers is an India-based gold jewellery manufacturer specialising in the creation of antique designs. The company’s retail business was established in the year 2014 in the name of ‘Harit Zaveri Jewellers’ under the brand name of ‘Harit Zaveri’, with the aim of bringing transparency and ethical practices in maintaining and offering the finest quality and the right price to its customers in the retail market. Its retail division offers various categories of gold, diamond and Polki jewellery, containing various types of bangles, rings, bracelets, necklaces and jewellery sets, which cater to bridal, occasional and daily wear. It endeavours to establish a strong brand name in the Indian jewellery Industry that its customers associate with trust, transparency and innovation. It is supported by an experienced board of directors with diversified expertise which actively contributes to and participates in its strategies. On the concern side, the markets in which the company operate is competitive. Its competitors include both organised as well as unorganized jewellers in the various markets in which it operates. Besides, Jewellery purchases are discretionary and any factor negatively impacting discretionary spending by consumers such as availability of alternative investment options such as gold ETF, sovereign gold bond and digital gold may adversely affect its business, results of operations, financial condition and prospects.
The issue has been offered in a price band of Rs 95-100 per equity share. The aggregate size of the offer is Rs 95.00 crore to Rs 100.00 crore based on lower and upper price band respectively. On the financial front, the company’s total Income increased by 14.69% to Rs 28,962.62 lakh in Fiscal 2023 from Rs 25,252.66 lakh in Fiscal 2022. The company’s profit for the year increased by 55.03% from a profit of Rs 1,440.57 lakh in Fiscal 2022 to Rs 2,233.31 lakh in Fiscal 2023. Meanwhile, the company intends to strengthen its relationship with its existing customers by achieving recurring sales and also increasing the quantum of these sales. It also intends to add new customers in its portfolio in unpenetrated markets. It intends to achieve this by increasing frequency of its visits and catering to customer’s desired preferences. It intends to manufacture more designs, showcase the same to its customers and generate more orders. It intends to achieve the same by introducing a wider range of gold jewellery based on different parameters such as weight, diverse cultural and regional preferences.
RBZ JewellersRBZ Jewellers is coming out with a 100% book build..
1135.75 (10.75%)
