Motisons Jwellers Limited IPO

Motisons Jwellers Limited has filed  its DRHP with market regulator SEBI on March 27, 2023 to raise capital through IPO. The IPO of the Company consists of Fresh Issue only .  The size of Fresh Issue is upto 3,34,71,000 Equity Shares aggregating upto ₹ [●] crore.

Business Model of the Company

Motisons Jwellers Limited is a Jewellery retail player with a history of more than 2 decades in the jewellery industry having experienced entrepreneurs as its Promoters with more than 20 years of experience. Its jewellery business includes the sale of jewellery made of gold, diamond, kundan and sale of other jewellery products that include pearl, silver, platinum, precious, semi-precious stones and other metals. The other offerings include gold and silver coins, utensils and other artifacts. The Company commenced its business through a partnership firm ‘M/s Motisons Jewellers’ in 1997 which was subsequently converted into a public limited company in 2011 and currently has presence across multiple prominent locations in Jaipur, Rajasthan.

The Company started its jewellery business in 1997 with a single showroom in Jaipur, Rajasthan. The first outlet, famously known as the ‘Traditional Store’ was set up amidst the famous lanes of the busiest Johri Bazaar, renowned jewellery hub in the heart of the city. This Johri Bazaar showroom displaying gold and diamond jewellery was approx. 304 sq. ft. in area which was expanded to 1355 sq. ft. by 2002 with growth in the business. The Company has, since then, expanded its network of showrooms and the product portfolio and currently operates 4 showrooms under the “Motisons” brand, located across the city of Jaipur.

The flagship store ‘Motisons Tower’ is located at the high street of Tonk Road, Jaipur. The showroom at Tonk Road spans in an area of approx. 11,700 Sq Ft and has 3 floors with a dedicated floor space for silver, gold, and diamond jewellery respectively. The most recent outlet, opened in the year 2021, is situated in the affluent neighborhood in the southwestern part of Jaipur at Vaishali Nagar.

Management of the Company

(i) Sandeep Chhabra is the Promoter, Chairman and Whole Time Director of the Company. He has cleared higher secondary examination conducted by Board of Secondary Education, Rajasthan in the year 1987 in the field of Commerce. Mr. Sandeep Chhabra stepped into business and has been associated with the Company since 1997. He brought his strong business acumen and vision to the Company at a very early age. He has more than two decades of experience in the business of manufacturing and retailing of jewellery made of gold, diamond, and other precious and semi-precious stones.

(ii) Sanjay Chhabra is the Promoter and Managing Director of the Company. He cleared higher secondary examination conducted by Central Board of Secondary Education in the year 1993 in the field Commerce. Vigorously seizing the right opportunity, Mr. Sanjay Chhabra associated himself with Motisons Jewellers in 1997 and thereafter diligently worked towards building the brand ‘Motisons’. He has an experience of more than two decades in the jewellery industry. Being a part of the top management, Mr. Sanjay Chhabra is responsible for devising long-term business plans, new business initiatives and achieving customer service excellence.

Object of the Issue

Fresh Issue

The net proceeds are proposed to be utilized in the following manner:

1. Repayment of existing borrowings availed by the company from scheduled commercial banks.

2. Funding the working capital requirements of the Company; and

3. General corporate purposes.

Further, the Company expects to receive the benefits of listing the Equity Shares on the Stock Exchanges, which will result in enhancement of  visibility and  brand image among its existing and potential customers.

Risks in the IPO

Promoters and Directors are involved in certain legal proceedings

The Company, Promoters and Directors are involved in certain legal proceedings. Any adverse decision in such proceedings may render the Company liable to liabilities/penalties and may adversely affect the business and results of operations.

Involvement of Promoters in Betting

The Promoters, Mr. Sanjay Chhabra and Mr. Sandeep Chhabra, in the past, were involved in proceedings initiated by the investigation agency in relation to betting in the cricket matches of Indian Premier League. Though they have been duly discharged, any re-opening of matter could have an adverse impact on the business and reputation.

Inability to respond to changes in consumer demands

The inability to respond to changes in consumer demands and market trends in a timely manner and to maintain an optimal level of inventory in the showrooms may impact the operations adversely. The Company has above average Inventory turnover days in comparison to the listed peers in line of trade the Company operates.

Significant working capital requirements

The Company has significant working capital requirements and operates on a high debt to equity ratio and if the Company is unable to secure adequate working capital loans on commercially reasonable terms it could have a material adverse effect on the business, financial condition and results of operations.

The Company is required to obtain, renew or maintain certain statutory and regulatory

The Company is required to obtain, renew or maintain certain statutory and regulatory permits and approvals required to operate the business. Non-compliance with existing or changes to environmental, health and safety, labour laws and other applicable regulations by the Company may adversely affect the business, financial condition, results of operations and cash flows.

Financial Performance

As per the financial statements of the Company, here are Financial Highlights for FY22 compared to FY21:

1. Total revenue: The total revenue of the company increased by 32% to Rs. 314 crore in FY22, compared to Rs. 213 crore in FY21.

2. Total expenses: The total expenses also increased by 32% to Rs. 294 crore in FY22, compared to Rs. 199 crore in FY21.

3. Profit before tax: The profit before tax increased by 31% to Rs. 19 crore in FY22, compared to Rs. 13 crore in FY21.

4. Net profit: The net profit for the year showed significant growth, increasing by 55% to Rs. 14 crore in FY22, compared to Rs. 9 crore in FY21.

5. Total assets: The total assets of the company increased to Rs. 306 crore in FY22, compared to Rs. 275 crore in FY21.

6. Total equity and liabilities: The total equity and liabilities of the company also increased to Rs. 306 crore in FY22, compared to Rs. 275 crore in FY21.

7. Cash from operating activities: The company generated Rs. 61 crore in cash from operating activities in FY22, compared to Rs. 17 crore in FY21.

8. Cash from investing activities: The cash generated from investing activities was Rs. 69 lakhs in FY22, compared to a negative amount of Rs. 74 lakhs in FY21.

9. Cash from financial activities: The company used Rs. 7 crore in cash from financial activities in FY22, compared to Rs. 12 crore used in FY21.

10. Net cash and cash equivalents: At the end of FY22, the company had net cash and cash equivalents of Rs. 5 crore, compared to Rs. 6 crore in FY21.