­­Acuite has considered the consolidated approach of the business and financial risk profiles of Hari Krishna Exports Private Limited (HKEPL), H K Jewels Private Limited (HKJPL) and H K Designs India LLP (HKDLLP) to arrive at the rating. The consolidation is in the view of a similar line of business, common shareholding, and significant business & financial interlinkages between these entities. The group is herein referred to as H K Group (HKG).

Experienced management and established market position in the gems and jewellery industry
HKG is engaged in manufacturing and trading of cut & polished diamonds (CPD) and manufacturing of diamond studded gold jewellery. The group is promoted by Mr. Savji Dholakia, Mr. Ghanshyam Dholakia, Mr. Tulsi Dholakia and Mr. Himmatbhai Dholakiya.  HKG also has a global presence and is among one of the leading diamond players in India. They have a diversified customer base in around 53 countries namely USA, Europe and Hong Kong. HKEPL, parent company is a sight holder with leading miners such as De Beers, Rio Tinto which ensures steady supply of rough diamonds. Further, the group’s venture under the brand “Kisna” has also enhanced its domestic presence with nearly 136 stores (including "Company owned company operated' & "Franchisee owned franchisee operated") spread across the country. Therefore, the extensive experience of the promoters for over three decades has helped the group to establish long and healthy relationships with reputed customers like Malabar Gold and Diamond, Titan, Kalyan Jewellers and Joyalukkas and suppliers over the years.
Acuité believes that the group is likely to sustain its existing business profile over the medium term on the back of an established track record of operations and experienced management.

Healthy financial risk profile
The financial risk profile of the group is healthy with strong tangible networth, low gearing and comfortable debt protection metrics. The tangible networth increase to Rs. 3,259.96 Cr. in FY2025 from Rs.3,030.24 Cr. in FY2024 due to profit accretion. Despite increase in the debt primarily due to elevation in lease liabilities and working capital borrowings of HKJPL, gearing remained below unity at 0.54 times in FY2025 (0.55 times in PY). The TOL/TNW levels also remained on similar lines at 0.91 times on March 31, 2025 (0.89 times in FY). Further, the coverage metrics, continue to remain comfortable, with interest coverage ratio (ICR) at 3.97 times and debt service coverage ratio (DSCR) at 3.03 times in FY2025. The Debt-EBITDA levels however, deteriorated to 3.26 times in FY2025 from 2.52 times in FY2024 on account of decline in the EBITDA levels.
With increase in the working capital requirements and lease liabilities for addition of new stores over the medium term, the financial metrics are expected to moderate to some extent. However, the overall financial risk profile of the group is expected to remain healthy.

Steady revenue with moderated profitability
The operations of the group have remained largely stable for the last two years. While the operating revenue HKEPL declined due to low volumes and pressurized realisations, the revenues of HKJPL and HKDLLP improved, leading to sustenance of the topline in FY2025 at Rs. 7,584.08 Cr as against Rs. 7,658.66 Cr. in FY2024. Moreover, the revenue in FY2026 improved moderately and stood more than ~Rs. 8500 Cr.
Further, the profitability margins of the group had declined due to increased costs and relatively lower increase in realization prices for natural diamonds amid growing competition from lab grown diamonds. The EBITDA margin stood declined at 6.25 percent in FY2025 from 8.10 percent in FY2024. On an overall basis, FY2026 margins are expected to be in similar lines as FY2025. However, since the group is engaged in exports, the impact of the continuity of the ongoing geopolitical crisis on the topline and margins of the group will be a key monitorable.

­Working capital intensive operations
Over the past three years, there has been a significant stretch in the working capital cycle of the group, evident from its increasing gross current asset (GCA) days of 247 days in FY2025 from 227 days in FY2024 and 180 days in FY2023. The increase is primarily driven by sustained high levels of inventory and increase in the credit period offered to the customers. This is because of slow demand in the export markets resulting in increased inventory holding and elevated storage costs and increased receivable period. The inventory days stood at 193 days (191 days in PY) and receivables period stood at 58 days (44 days in PY) in FY2025. The creditor days stood at 61 days (49 days in PY) in FY2025. However, despite stretch in the working capital cycle, the utilization of the group remains moderate at 78.37 percent for the last eight months ended August 2025. Further stretch in the working capital cycle will be a key monitorable.
 

Tariff and lab grown diamond (LGD) competition with exposure to regulatory challenges 
The cut-and-polished diamond industry has continued to face headwinds over the last two to three years, driven by subdued international demand and the rising popularity of lab-grown diamonds (LGDs). These factors have weighed on realizations and pressured margins. Export volumes had declined by the imposition of US tariffs—prompting manufacturers to curtail production and diversify into newer markets across Asia, Europe and the Middle East. Nevertheless, strong domestic demand, particularly for lightweight, affordable, and gold-accented jewellery, has supported the group’s overall revenue performance. Within the B2B jewellery segment, the sector remains susceptible to regulatory changes that can materially impact procurement and supply chain processes. Demand from wholesale clients also fluctuates with seasonal trends such as festivals, auspicious buying periods and retailer stocking cycles. The group operates in a fragmented and competitive manufacturing landscape characterized by high price sensitivity, rapidly changing design expectations from buyers, and stringent compliance requirements. Exposure to volatility in gold and diamond prices remains a critical operational risk, though manufacturers benefit partially from hedging mechanisms and favourable supplier credit terms.

• ­Improvement in operating performance leading to generation of net cash accruals higher than Rs. 400 Cr
• Improvement in working capital cycle

• ­­Significant decline in operating performance leading to generation of net cash accruals lower than Rs. 200 Cr
• Significant increase in debt levels impacting the financial risk profile