Press Release

Press Release

January 05, 2024

GOLD STAR JEWELLERY PRIVATE LIMITED
Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	21.00	ACUITE A- \| Stable \| Assigned	-
Bank Loan Ratings	326.23	ACUITE A- \| Stable \| Reaffirmed	-
Bank Loan Ratings	18.00	-	ACUITE A2+ \| Assigned
Bank Loan Ratings	7.00	-	ACUITE A2+ \| Reaffirmed
Total Outstanding	372.23	-	-

Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITE A-’ (read as ACUITE A minus) on the bank facilities of Rs.326.23 Cr and reaffirmed its short-term rating of ‘ACUITE A2+’ (read as ACUITE A two plus) on the bank facilities of Rs.7.00 Cr bank facilities of Gold Star Jewellery Private Limited (GJPL). The outlook is 'Stable'.

Further, Acuité has assigned its long-term rating of ‘ACUITE A-’ (read as ACUITE A minus) on the bank facilities of Rs.21.00 Cr and its short-term rating of ‘ACUITE A2+’ (read as ACUITE A two plus) on the bank facilities of Rs.18.00 Cr bank facilities of Gold Star Jewellery Private Limited (GJPL). The outlook is 'Stable'.

Reason for reaffirmation
The rating reaffirmation takes into account the healthy financial risk profile and adequate liquidity position of the group. The group has recorded a decline in the FY23 with revenues at Rs.1786.04 crore in FY23 as against Rs.1865.39 crore in FY22. This decline is on account of lower demand in the overseas markets. The revenue of the group stood at ~Rs.1374 Crore till November 2023. The operating margins stood at 6.25 percent in FY23 as against 7.32 percent in FY22. The margins have deteriorated and stood at 3.45-4.00 percent in 8MFY24 due to the high raw material prices. Despite the subdued operating performance, the financial risk profile of the company is estimated to remain healthy marked by healthy net-worth, low gearing and comfortable debt protection metrics. The ratings are however constrained by the working capital intensive operations and susceptibility to volatility in raw material prices. Going forward the ability of the group to improve the margins and maintain the adequate liquidity position and the healthy capital structure will remain key monitorable.

About Company

Mumbai based, Gold Star Jewellery Private Limited (GJPL) was incorporated in 1990. The company is engaged in the export of diamond studded gold jewellery. GJPL is the flagship company of the Gold Star group led by Mr. Alkesh Shah and Mr. Ashish Shah.

About the Group

The Gold Star group manufactures and exports diamond-studded gold and platinum jewellery. The group is also engaged in cutting and polishing of diamonds. The jewellery business is carried out through Gold Star Jewellery Private Limited (GJPL) (incorporated in 1990) and the diamond business is carried out through Gold Star Diamond Private Limited (GDPL) (incorporated in 1995). The jewellery division accounts for ~92 per cent of the group's revenue, and the diamond division for the balance ~8 per cent. The Group is managed by Shah family and are supported by seasoned professionals.

Unsupported Rating

Not Applicable

Analytical Approach

Extent of Consolidation

•Full Consolidation

Rationale for Consolidation or Parent / Group / Govt. Support

Acuité has considered the consolidated business and financial risk profiles of Gold Star Jewellery Private Limited (GJPL) and Gold Star Diamond Private Limited (GDPL). Hereinafter refer to as ‘Gold Star Group’. The consolidation is due to the presence of common promoters, shared brand name, significant operational and financial synergies within the group.

Key Rating Drivers

Strengths

Established track record of operations and experienced management
The Gold star group has established presence since 1990, in manufacturing and export of diamond-studded gold jewellery. The Group has established presence of over three decades in the industry and primarily exports to the USA and Europe. The long-term relations with some of the renowned wholesalers in the market has helped the group in getting regular flow of orders. Gold star group also deals with customers in Australia, Canada, and Italy to name a few. The directors extensive experience of over three decades in the gems and jewellery industry and long relationship with its customers has resulted in stable revenues. The Board is well supported by second line of experienced management team. Acuité believes that with its long track record of over two decades in the business and long-standing relationship with its customers, the group will continue to benefit from its established market position over the medium term.

Healthy financial risk profile
The group has a healthy financial risk profile marked by healthy networth, low gearing and comfortable debt protection metrics. The tangible net worth of the group increased to Rs. 588.27 crores as on March 31, 2023, as against Rs. 516.54 crore as on March 31, 2022. The increase is due to the accretion of profits to reserves. The group’s gearing stood at 0.76 times as on March 31, 2023, as against 0.73 times in the March 31, 2022. The total debt of Rs.447.34 crore as on March 31, 2023, consists of long-term borrowings of Rs.35.93 crore, unsecured loan of Rs.25.82 crore and short-term debt borrowings of Rs.371.74 crore. The interest coverage ratio stood at 3.98 times in FY2023 as against 5.39 times in the previous year 2022. The DSCR stood at 2.36 times in FY2023 as against 3.26 times in FY2022. Acuité believes that the financial risk profile of the company is likely to remain healthy in medium term on account of no debt funded capex in medium term.

Weaknesses

Working capital intensive nature of operations
The operations of GS Group are working capital intensive reflected by Gross Current Assets (GCA) of 212 days as on March 31, 2023, as against 201 days as on March 31, 2022. The inventory holding days stood at 80 days as on March 31, 2023, as against 69 days as on March 31, 2022. The average inventory holding period of the group is around 60 days. The inventory is stocked up on based on orders received. The debtor days stood at 121 days as on March 31, 2023, as against 128 days as on March 31, 2022. Average credit period allowed to the customers are around 145 days. The creditors days stood at 59 days as on March 31, 2023, as against 81 days as on March 31, 2022. Average creditor period received from the suppliers is around 75 days. Working capital requirement is funded through bank lines, the average utilisation of bank facilities is ~88 percent for 6 months ended as on Nov’2023 for GSJ and ~81 percent for 6 months ended as on Nov’2023 for GSD. Acuité believes the Group's ability to restrict further elongation in working capital cycle will be a key rating sensitivity.

Susceptibility to volatility in raw material prices, foreign exchange fluctuation risk
The Group is exposed to volatility in gold and diamond prices. The raw material is procured from the domestic market and overseas market. Hence the Group is exposed to raw material price fluctuation risk. Furthermore, the Gold Star Group derives most of its revenues from export sales. Hence, the profits are susceptible to fluctuations in forex rates. However, these risks are partially mitigated as the Group has export forwards as well as gold forwards with the banks.

Rating Sensitivities

Ability to improve its scale of operations while maintaining its profitability
Any further elongation in its working capital cycle
Deterioration in the financial risk profile

Liquidity position: Adequate

The group’s liquidity profile is adequate marked by healthy net cash accruals against maturing debt obligations. The group generated cash accruals of Rs.80.83 crores in FY23 as against debt obligations of Rs.16.22 crore for the same period. The cash accruals of the company are estimated to remain in the range of around Rs.60.13-78.46 crore during FY2024-25 against repayment obligations ranging from Rs.11.14-11.23 crore for the same period. The group maintains unencumbered cash and bank balances of Rs.34.79 crore as on March 31, 2023. The current ratio stood at 1.82 times as on March 31, 2023. Acuité believes that group's liquidity position will remain adequate in the medium term.

Outlook:

Acuité believes that Gold Star group will maintain a ‘Stable’ outlook over medium term on account of extensive experience of its management, established track record of operations and healthy financial risk profile. The outlook may be revised to ‘Positive’ in case the Company achieves higher than expected improvement in its scale of operations while maintaining its profitability and capital structure. Conversely, the outlook may be revised to ‘Negative’ in case of any significant debt funded capex leading to deterioration of financial risk profile or any further elongation in its working capital cycle impacting its liquidity profile.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	1786.04	1865.39
PAT	Rs. Cr.	70.72	85.14
PAT Margin	(%)	3.96	4.56
Total Debt/Tangible Net Worth	Times	0.76	0.73
PBDIT/Interest	Times	3.98	5.39

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
• Trading Entitie: https://www.acuite.in/view-rating-criteria-61.htm

Note on Complexity Levels of the Rated Instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
21 Feb 2022	Post Shipment Credit	Long Term	10.60	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	17.52	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	15.00	ACUITE A- \| Stable (Reaffirmed)
	Proposed Bank Facility	Long Term	5.89	ACUITE A- \| Stable (Reaffirmed)
	Standby Line of Credit	Long Term	4.00	ACUITE A- \| Stable (Reaffirmed)
	Standby Line of Credit	Long Term	2.08	ACUITE A- \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	7.00	ACUITE A2+ (Reaffirmed)
	Packing Credit	Long Term	15.00	ACUITE A- \| Stable (Reaffirmed)
	Packing Credit	Long Term	40.00	ACUITE A- \| Stable (Reaffirmed)
	Packing Credit	Long Term	20.27	ACUITE A- \| Stable (Reaffirmed)
	Packing Credit	Long Term	28.08	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	12.65	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	10.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	8.13	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	3.29	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	4.52	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	1.93	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	3.46	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	6.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	2.34	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	11.10	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	4.96	ACUITE A- \| Stable (Reaffirmed)
	Standby Line of Credit	Long Term	12.00	ACUITE A- \| Stable (Reaffirmed)
22 Jun 2021	Packing Credit	Long Term	12.00	ACUITE A- \| Stable (Reaffirmed)
	Packing Credit	Long Term	40.00	ACUITE A- \| Stable (Reaffirmed)
	Packing Credit	Long Term	28.08	ACUITE A- \| Stable (Reaffirmed)
	Packing Credit	Long Term	20.27	ACUITE A- \| Stable (Reaffirmed)
	Bank Guarantee	Short Term	7.00	ACUITE A2+ (Reaffirmed)
	Post Shipment Credit	Long Term	12.65	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	8.00	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	17.52	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Post Shipment Credit	Long Term	10.60	ACUITE A- \| Stable (Assigned)
	Standby Line of Credit	Long Term	2.08	ACUITE A- \| Stable (Reaffirmed)
	Standby Line of Credit	Long Term	12.00	ACUITE A- \| Stable (Reaffirmed)
	Standby Line of Credit	Long Term	4.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	11.10	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	3.46	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	8.13	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	4.52	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	6.00	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	3.29	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	1.93	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	4.96	ACUITE A- \| Stable (Assigned)
	Working Capital Term Loan	Long Term	2.34	ACUITE A- \| Stable (Assigned)
	Proposed Bank Facility	Long Term	5.89	ACUITE A- \| Stable (Reaffirmed)
	Proposed Bank Facility	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
07 Apr 2020	Term Loan	Long Term	4.44	ACUITE A- (Withdrawn)
	Standby Line of Credit	Long Term	18.08	ACUITE A- \| Negative (Reaffirmed)
	Proposed Bank Facility	Long Term	20.00	ACUITE A- \| Negative (Reaffirmed)
	Post Shipment Credit	Long Term	68.77	ACUITE A- \| Negative (Reaffirmed)
	Bank Guarantee	Short Term	7.00	ACUITE A2+ (Reaffirmed)
	Packing Credit	Long Term	100.35	ACUITE A- \| Negative (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Union Bank of India	Not Applicable	Bank Guarantee (BLR)	Not Applicable	Not Applicable	Not Applicable	7.00	Simple	ACUITE A2+ \| Reaffirmed
State Bank of India	Not Applicable	PC/PCFC	Not Applicable	Not Applicable	Not Applicable	47.50	Simple	ACUITE A- \| Stable \| Reaffirmed
Bank of India	Not Applicable	PC/PCFC	Not Applicable	Not Applicable	Not Applicable	28.08	Simple	ACUITE A- \| Stable \| Reaffirmed
Punjab National Bank	Not Applicable	PC/PCFC	Not Applicable	Not Applicable	Not Applicable	20.27	Simple	ACUITE A- \| Stable \| Reaffirmed
Yes Bank Ltd	Not Applicable	PC/PCFC	Not Applicable	Not Applicable	Not Applicable	9.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Axis Bank	Not Applicable	PC/PCFC	Not Applicable	Not Applicable	Not Applicable	12.50	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	PC/PCFC	Not Applicable	Not Applicable	Not Applicable	10.50	Simple	ACUITE A- \| Stable \| Assigned
Punjab National Bank	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	12.65	Simple	ACUITE A- \| Stable \| Reaffirmed
Bank of India	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	17.52	Simple	ACUITE A- \| Stable \| Reaffirmed
Union Bank of India	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	10.60	Simple	ACUITE A- \| Stable \| Reaffirmed
ICICI Bank Ltd	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	10.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Indusind Bank Ltd	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	30.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Axis Bank	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	12.50	Simple	ACUITE A- \| Stable \| Reaffirmed
Yes Bank Ltd	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	9.00	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	27.50	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	Post Shipment Credit	Not Applicable	Not Applicable	Not Applicable	6.50	Simple	ACUITE A- \| Stable \| Assigned
Not Applicable	Not Applicable	Proposed Long Term Bank Facility	Not Applicable	Not Applicable	Not Applicable	12.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Not Applicable	Not Applicable	Proposed Short Term Bank Facility	Not Applicable	Not Applicable	Not Applicable	18.00	Simple	ACUITE A2+ \| Assigned
Bank of India	Not Applicable	Stand By Line of Credit	Not Applicable	Not Applicable	Not Applicable	4.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Punjab National Bank	Not Applicable	Stand By Line of Credit	Not Applicable	Not Applicable	Not Applicable	2.08	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	Stand By Line of Credit	Not Applicable	Not Applicable	Not Applicable	14.00	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	Stand By Line of Credit	Not Applicable	Not Applicable	Not Applicable	4.00	Simple	ACUITE A- \| Stable \| Assigned
Bank of India	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	5.82	Simple	ACUITE A- \| Stable \| Reaffirmed
Punjab National Bank	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	1.73	Simple	ACUITE A- \| Stable \| Reaffirmed
Union Bank of India	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	1.93	Simple	ACUITE A- \| Stable \| Reaffirmed
Punjab National Bank	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	3.46	Simple	ACUITE A- \| Stable \| Reaffirmed
Bank of India	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	8.13	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	11.10	Simple	ACUITE A- \| Stable \| Reaffirmed
ICICI Bank Ltd	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	2.34	Simple	ACUITE A- \| Stable \| Reaffirmed
ICICI Bank Ltd	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	4.52	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not Applicable	Working Capital Term Loan	Not available	Not available	Not available	8.00	Simple	ACUITE A- \| Stable \| Reaffirmed

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Tanvi Kadam Analyst - Rating Operations Tel: 022-49294065 tanvi.kadam@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.