|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 80.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding | 80.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuite has reaffirmed in its long-term rating of 'ACUITE BBB’ (read as ACUITE triple B) on Rs. 80.00 Cr. bank facilities of AVP Star Private Limited (AVPSPL). The outlook remains 'Stable’. Rationale For Rating The rating reaffirmation draws comfort from the group’s established presence in the diamond industry along with its experienced management. The group’s financial risk profile is marked by healthy net worth, low gearing, albeit moderation of debt protection metrics and adequate liquidity. Further the rating reflects decline in scale of operations due to geopolitical changes leading to subdued demand and volatility in diamond prices. However, AVP Star Private Limited (AVPSPL) has set up additional machines of Microwave Plasma Chemical Vapor Deposition (MPCVD) to meet the growing demand of lab grown diamonds which is expected to support the revenue profile. Going forward, movement in the scale of operations while maintaining the profitability margins along with working capital cycle will be a key rating monitorable. The rating is also constrained by the susceptibility of profitability margins to volatility in raw material prices as well as forex fluctuations.
|
| About the Company |
|
Incorporated in 2022, AVP Star Private Limited (AVPSPL) is engaged as a manufacturer and wholesaler of Lab Grown Diamonds. The company caters to both domestic and international markets via manufacturing unit in Surat, Gujarat. Currently managed by its Directors Mr. Vijaybhai Harakhjibhai Mavani, Mr. Nandesh Popatbhai Lukhi and Mr. Shaileshkumar Popatlal Lukhi.
|
| About the Group |
|
JKPL was set up as a partnership firm in 1996 by Mr. Shailesh Lukhi and his brother Mr. Nandesh Lukhi. JKPL has been converted into J K Star Private Limited, a private limited company in September 2021.The company processes and trades in white natts (diamonds with inclusions). The company is headquartered in Mumbai.
|
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profile of J. K. Star Private Limited and AVP Star Private Limited together referred as ‘J. K. Star Group’. The consolidation is in view of common management, financial linkages between the entities. Furthermore, JKSPL has extended corporate guarantee for the loans of AVPSPL.
|
| Key Rating Drivers |
| Strengths |
| Experienced management and established operations of the group
The promoters of AVPSPL were already in the business of selling natural diamonds under JKSPL and have a good experience of more than 25 years in the diamond industry. During FY25, the revenue generated from exports was 95% and from domestic sources was 5%. The group exports to USA, Hongkong, Japan, Korea and others. Acuite believes that even though lab-grown diamonds are a different segment, the promoter’s experience in the natural diamond industry will benefit the group in the near to medium term. Healthy Financial Risk Profile The financial risk profile of the group is marked by healthy net worth, low gearing albeit weakening of debt protection metrics. The tangible net worth stood at Rs.286.53 Cr. as on 31st March 2025 (Prov.) as against Rs.250.91 Cr. as on 31st March 2024 and Rs.166.11 Cr. as on 31st March 2023 due to accretion of reserves, equity infusion and quasi-equity. The net worth includes Rs.20.00 Cr. of cumulative redeemable preference shares of JKSPL which are being treated under quasi equity. The gearing of the group stood below unity at 0.57 times as on 31st March 2025 (Prov.) as against 0.69 times as on 31st March 2024 and 0.72 times as on 31st March 2023. The unsecured loans stood at Rs.3.00 Cr. in FY25 (Prov.) as against Rs.33.58 Cr. in FY24 and Rs.37.04 Cr. in FY23. The Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio improved and stood moderate at 0.65 times in as on 31st March 2025 (Prov.) as against 1.22 times as on 31st March 2024 and 1.96 times as on 31st March 2023. The debt protection metrices of the group stood weakened but moderate marked by Interest Coverage Ratio (ICR) of 4.95 times and Debt service coverage ratio (DSCR) of 2.44 times for FY2025 (Prov.) as against 12.46 times and 7.77 times for FY24 respectively. Acuite believes that the financial risk profile of the group will remain on similar levels over the medium term backed by steady networth and no debt funded capex plans. |
| Weaknesses |
| Decline in scale of operations during FY25
The group’s operating performance is susceptible to volatility in the diamond industry. The operating income of the group stood at Rs.1122.81 Cr. in FY25 (Prov.) as against Rs.1312.95 Cr. in FY24 and Rs.1228.43 Cr. in FY23. The increase in revenue in FY24 was primarily driven by a substantial increase in the sales volume of polished lab-grown diamonds, alongside sustained demand for natural diamonds. However, in FY25, the decline in revenues was mainly because subdued demand of natural dimaond in the export markets of the US and China, decline in diamond prices and shift in consumer preferences towards affordable Lab Grown Diamonds which is reflected in growth in the standalone sales of AVPSL for the year. Further the group has achieved Rs.244.00 Cr. in Q1FY26. AVPSPL has also completed the capex plans by adding 134 machines of Microwave Plasma Chemical Vapor Deposition (MPCVD) to augment the scale of operations and meet the growing demand of lab grown diamonds. The EBITDA margin stood at 6.54% in FY25 (Prov.) as against 9.50% in FY24 and 9.54% in FY23. The decline in margin during FY25 (Prov.) was due to weaker demand, increased competition and inventory losses. The PAT margin stood at 3.16% in FY25 (Prov.) as against 6.19% in FY24 and 6.81% in FY23 due to depreciation for the newly acquired put-to-use machineries and interest costs from increased utilization of working capital debt. Acuite believes the scale of operations of the group will improve over the medium term backed by demand of lab grown diamonds. Intensive working capital cycle The operations of the group remained working capital intensive in nature marked by GCA Days of 111 days for FY25 (Prov.) as against 116 days for FY24. The inventory days stood at 62 days for FY25 (Prov.) as against 56 days for FY24. The increase was due to accumulation of raw materials at better rates. Furthermore, the receivables days stood at 45 days in FY25 (Prov.) as against 59 days in FY24. The credit terms with customers are on an average of 45- 60 days. The other current assets mainly include balance with or refund due from statutory authorities. The creditor days of the group stood at 7 days in FY25 (Prov.) as against 38 days in FY24. The decrease in creditor days was driven by release of payments to suppliers due to slow down in business. Acuite expects working capital cycle to remain on similar levels over the medium term. Susceptibility to volatility in raw material prices and foreign exchange fluctuation risk The group is exposed to volatility in diamond prices. Furthermore, ~95% of the revenues of the group comes from exports, which expose it to foreign currency fluctuation risk. Hence, the profitability margins remain susceptible to volatility in raw material prices as well as forex fluctuations. The same is reflected from volatile margins which has stood at 6.54% in FY25 (Prov.) and 9.50% in FY24. |
| Rating Sensitivities |
|
Movement in operating income and profitability margins
Debt protection metrics Working capital cycle |
| Liquidity Position |
| Adequate |
|
The liquidity position of the group remains adequate marked by reduced but sufficient net cash accruals of Rs.51.69 Cr. in FY25 (Prov.) against debt obligations of Rs.11.82 Cr. over the same period. The current ratio stood at 1.99 times as on 31 March 2025 (Prov.). The group has cash and bank balances of Rs.2.06 Cr. as on 31 March 2025 (Prov.). The average bank limit utilization of AVPSPL stood moderate at 73.46% for the last 12 months ended April 2025. The group does not have any major debt funded capex plans over the medium term. Acuite expects the liquidity to remain adequate on account of sufficient accruals against debt repayments, moderate bank limit utilization and moderate current ratio.
|
| Outlook: Stable |
| |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 25 (Provisional) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 1122.81 | 1312.95 |
| PAT | Rs. Cr. | 35.43 | 81.30 |
| PAT Margin | (%) | 3.16 | 6.19 |
| Total Debt/Tangible Net Worth | Times | 0.57 | 0.69 |
| PBDIT/Interest | Times | 4.95 | 12.46 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
|
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
|
| |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
|
||||||
|
Contacts |
About Acuité Ratings & Research |
