Rbz Jewellers Limited

Rbz Jewellers Limited has filed  its DRHP with market regulator SEBI on June 16, 2023 to raise capital through IPO. The IPO of the Company consists of Fresh Issue. The size of Fresh Issue is up to 1,00,00,000 Equity Shares aggregating up to ₹[●] crore.  

Business Model of the Company

Rbz Jewellers Limited is one of the leading organised manufacturers of gold jewellery in India, specializing in Antique Gold Jewellery and distribute to reputable nation-wide retailers and significant regional players in India (Source: Care Edge Report). The Company has a history of more than fifteen (15) years in the jewellery industry. The Company designs and manufactures a wide range of Antique Gold Jewellery which consists of jadau, Meena and Kundan work and sell it on a wholesale and retail basis. The Company also processs and supplies Antique Gold Jewellery on job work basis to national retailers. The Company’s customer base in wholesale business includes reputed national, regional and local family jewellers spread across 19 States and 72 cities within India (Source: Care Edge Report).

The Company also operates its retail showroom under the brand name “Harit Zaveri” and is a leading player in Ahmedabad. (Source: Care Edge Report) The Company offers jewellery for bridal, occasional and daily wear at various price range in the retail showroom. The Company also exports its jewellery to Middle East region. The Company 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. The retail showroom of the Company is situated in the prominent area of Ahmedabad, Gujarat.

The Promoters of the Company belong to a family of jewellers who have been involved in the same business over decades. Shri Bababhai Hargovandas Zaveri, a renowned goldsmith from Patan, Gujarat, laid the foundation of the family gold business several decades ago. The Promoter, Rajendrakumar Kantilal Zaveri, was part of the family partnership arrangement since 1992. Later on, he started jewellery business through a sole proprietorship tilted ‘M/s. Rajubhai Bababhai Zaveri’ in the year 2004. In the year 2006, other Promoter Harit Rajendrakumar Zaveri joined the business at the age of seventeen (17) years.

Management of the Company

(i) Rajendrakumar Kantilal Zaveri, aged sixty-one (61) years is the Promoter and the Chairman & Managing Director of the Company. Being the Promoter, he has been associated with the Company since its incorporation. He holds a degree in Bachelor of Commerce from Gujarat University. He has thirty-five (35) years of experience in manufacturing and trading of gold jewellery. Prior to the incorporation of the Company, he was associated with ‘Bababhai Hargovandas Zaveri’ as one of the Partner from April 01, 1992 till April 15, 2004 and he was also sole proprietor of a firm namely ‘Rajubhai Bababhai Zaveri’ from 2004 till 2011. He was awarded an appreciation award by Jewellers Association Ahmedabad, Gujarat in the year 2018.

(ii) Harit Rajendrakumar Zaveri, aged thirty-four (34) years is the Promoter and the Joint Managing Director of the Company. He holds diplomas in graduate gemologist, graduate diamonds and graduate-colored stones from the Gemological Institute of America. Being the Promoter, he has been associated with the Company since its incorporation and has established a retail division of the Company under the name of “Harit Zaveri Jewellers”in 2014. He has over seventeen (17) years of experience in jewellery industry and has contributed to the growth of Company.

Object of the Issue

Fresh Offer

The Company proposes to utilize the Net Proceeds from the Issue towards:

1. Funding working capital requirements of the Company

2. General Corporate Purpose

In addition, the Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges and enhancement of the Company’s brand name amongst its existing and potential customers and creation of a public market for the Equity Shares in India.

Risks in the IPO

The Company requires significant amount of working capital

The Company requires significant amount of working capital for continued growth. The inability of the Company to meet its working capital requirements, on commercially acceptable terms, may have an adverse impact on the business, financial condition and results of operations of the Company. 

The strength of the brand is crucial to success of the Company 

The Company’s the brand “RBZ Jewellers” along with “Harit Zaveri”, retail division of the Company are very important for the business. The business and results of operations are influenced by the strength and popularity of the brand, including the level of recognition by national retailers, regional retailers and reputed family jewellers and perception of the brand in the mind of the customers. The strength of the brand is crucial to the success and the Company may not succeed in continuing to maintain and develop the brand. 

The Company may not be able to maintain its sales 

The revenue and earnings are dependent on the sales mix consisting of retail and wholesale as well as provision of job work services and working capital requirements of each segment is different. If the Company is unable to balance or maintain this sales mix or balance working capital requirement for every segment in future, there could be an adverse impact on the business, financial condition and results of operations of the Company. 

The Company is dependent on the long-term relationship with the customers.

The Company is dependent on the long-term relationship with the customers. In particular, the Company processes substantial volume of gold for its customers for whom it works on jobwork basis. If such customers were to suffer a deterioration of their business, cease doing business with the Company or substantially reduce their dealings with the Company, the revenues could decline, which could have adverse effect on  business, financial condition and  results of operations of the Company.

Any failure in quality control processes

Any failure in the quality control processes, the inability to maintain or establish formal arrangements with third party manufacturers, and any disruptions at such third-party manufacturing facilities, or 

failure of such third parties to adhere to the relevant quality standards may have an adverse effect on the business, brand, results of operations and financial condition of the Company. 

Financial Performance 

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

Total Income

The total income of the Company increased by 14% to Rs. 289 crore in FY23 compared to Rs. 252 crore in FY22.

Total Expenses

The total expenses of the Company rose by 11% to Rs. 259 crore in FY23 from Rs. 232 crore in FY22.

Profit Before Tax

The profit before tax of the Company surged by 52% to Rs. 29 crore in FY23, up from Rs. 19 crore in FY22.

Profit After Tax

The profit after tax of the Company grew by 57% to Rs. 22 crore in FY23, compared to Rs. 14 crore in FY22.

Total Assets 

The total assets of the Company amounted to Rs. 206 crore in FY23, witnessing an increase from Rs. 154 crore in FY22.

Total Equity and Liabilities

There was no change in the total assets of the Company, which remained at Rs. 206 crore in FY23 as well as FY22.

Cash Flow from Operating Activities

The net cash used in operating activities of the Company was Rs. (11) crore in FY23, while it generated cash amounting to Rs. 87.38 lakhs in FY22.

Cash Flow from Investing Activities

The net cash used in investing activities of the Company was Rs. (11) crore in FY23, whereas it was Rs. (65.42) lakhs in FY22.

Cash Flow from Financial Activities

The net cash generated from financial activities of the Company was Rs. 28 crore in FY23, in contrast to Rs. (87.80) lakhs cash used in FY22.

Cash and Cash Equivalents 

The net cash and cash equivalents at the end of the year of the Company were Rs. 6 crore in FY23, as opposed to Rs. 5 lakhs in FY22.