Press Release October 01, 2024 KAMA JEWELRY PRIVATE LIMITED (ERSTWHILE KAMA SCHACHTER JEWELRY PRIVATE LIMITED) Rating Reaffirmed and Withdrawn

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	122.23	ACUITE BB+ | Reaffirmed & Withdrawn	-
Bank Loan Ratings	2.90	Not Applicable | Withdrawn	-
Bank Loan Ratings	47.77	-	ACUITE A4+ | Reaffirmed & Withdrawn
Total Outstanding	0.00	-	-
Total Withdrawn	172.90	-	-

Rating Rationale

Acuite has reaffirmed and withdrawn the long-term rating of 'ACUITE BB+ (read as ACUITE double B plus)' on the Rs.122.23 Cr. bank facilities of Kama Jewelry Private Limited (Erstwhile Kama Schachter Jewelry Private Limited)(KJPL).  Acuite has reaffirmed and withdrawn the short-term rating of 'ACUITE A4+ (read as ACUITE  A four plus)' on the Rs.47.77 Cr. bank facilities of Kama Jewelry Private Limited (Erstwhile Kama Schachter Jewelry Private Limited)(KJPL). Further, Acuité has withdrawn its long-term rating on Rs 2.90 Cr. proposed bank facilities of Kama Jewelry Private Limited (Erstwhile Kama Schachter Jewelry Private Limited)(KJPL) without assigning any rating as it is a proposed facility. The withdrawal is in accordance with Acuite's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company, and NOC (No Objection Certificate) received from the banker. Rationale for rating reaffirmation The rating reaffirmation takes into account the improvement recorded in the financial risk profile primarily on account of equity infusion. The networth of the company increased to Rs.186.47 Cr. as of March 31, 2024 from Rs.182.50 Cr. as of March 31, 2023 and Rs.117.54 Cr. as of March 31, 2022. The rating reaffirmation also considers the company’s long track record of operations and long-standing experience of the promotors in the industry However, the operating revenue of the company declined to Rs.690.34 Cr. in FY2024 from Rs.853.42 Cr. in FY2023 primarily on account of policy change at customers end and switched to job work model. .Further, the rating remains constrained on account of intensive nature of working capital operations.

About the Company

­Incorporated as private limited company in 1993, Kama Jewelry Private Limited (KJPL) is based out of Mumbai. The operations were started in 1996. The company is promoted by Mr. Colin Shah, and the Israel-based Leo Schachter group. KJPL is engaged in manufacturing and exports of gold and diamond-studded gold jewellery. The company’s manufacturing facility is located at Goregaon and SEEPZ, Mumbai. It also has marketing and sales office at New York. The company caters to domestic as well as export markets.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profiles of KJPL to arrive at this rating.

Key Rating Drivers

Strengths

­Established market position, experienced management and reputed clientele KJPL has established presence since 1996, thus having an operational track record of over two decades in jewellery industry. The company is jointly owned by Mr. Colin Shah and the Israel-based Leo Schachter group. The Leo Schachter group is one of the leading supplier to America’s major retail jewelry chains. Mr. Colin Shah is senior member of ‘Gem and Jewellery Export Promotion Council of India and has over two decades of experience in the said industry. The promoters' extensive industry experience and established brand presence has helped the company to establish longstanding relationships with reputed clientele. The company caters to reputed clients like Titan Company limited, Unique Design, Caratlane, GRT jewellers, Senco Gold and diamonds, and Malabar gold to name few. The company benefits from established market position, promoters' extensive industry experience, and established relationships with major jewellery retail chains in domestic as well as international markets for over two decades. KSPL is well supported by its association with the Leo Schachter group in international market and by second line of management with skilled staff. Acuité believes the company will continue to benefit from its established presence in the industry, and the promoter’s demonstrated ability to sustain a healthy level of operations across various cycles. Moderate Financial Risk Profile The financial risk profile of the company is moderate marked by moderate net-worth, gearing levels and average debt protection metrics. The net worth of the company stood at Rs. 186.47 Cr. as on 31 March 2024 as against Rs.182.50 Cr. as on 31 March 2023 due to accretion of profits to reserves and infusion of equity. The total debt of the company stood at Rs.184.19 Cr. as on March 31, 2024 as against Rs.189.65 Cr. as on March 31, 2023.The debt profile of the company comprises of Rs.22.14 Cr. of long-term debt, Rs. 149.49 Cr. of short-term debt comprising of working capital loans, Rs.12.56 Cr. of CPLTD. The gearing of the company stood comfortable at 0.99 times as on 31 March 2024 as against 1.04 times as on 31 March 2023. The total outside liabilities to tangible net worth (TOL/TNW) of the company  stood at 1.67 times for FY2024 as against 1.84 times for FY2023.However,the debt protection metrics of the company remained average reflected by debt service coverage ratio of 1.07 times for FY2024  as against 1.17 times for FY2023. The interest coverage ratio stood at 1.79 times for FY2024  as against 2.05 times for FY2023. Further, Net Cash Accruals to Total Debt (NCA/TD) stood at 0.06 times for FY2024.

Weaknesses

Moderation in scale of operations The company reported a decline in its revenue in FY2024 as it stood at Rs. 690.34 Cr. as against Rs. 853.42 Cr. in FY2023. The decline in operating income is mainly on account of policy change at customers end and switched to job work model. Approximately 42.50% of sales are domestic, with the remaining coming from exports. Further, the operating margin stood at 4.04% in FY2024 as against 3.83% in FY2023 and 4.05% in FY2022. Additionally,the Profit After Tax (PAT) margin recorded a decline, to 0.57% in FY2024, as compared to 0.94% in FY2023 and 1.03% in FY2022. Working Capital Intensive Nature of Operations The working capital management of the company is moderately intensive, marked by Gross Current Assets (GCA) of 216 days as of 31st March 2024, compared to 191 days on 31st March 2023. The high GCA days are primarily on account of high inventory levels. The inventory holding period extended to 129 days on 31st March 2024 as compared to 104 days as on 31st March 2023.The debtor collection period stood at 85 days for FY2024 as against 80 days for FY2023. The creditor days of the company stood at 76 days for FY2024 as against 70 days for FY2023. Furthermore, the average utilization for the working capital limits remained moderate, averaging around ~85.00% over the last twelve months ending May 2024.

Rating Sensitivities

Not Applicable

Liquidity Position

Adequate

The company’s liquidity position is adequate. The company generated sufficient net cash accruals of Rs.11.23 Cr. in FY2024 as against its maturing debt obligations of Rs.9.24 Cr. during the same tenure.The current ratio stands at 1.42 times as on 31st March 2024 as against 1.48 times as on 31st March 2023.The unencumbered cash and bank balance of the company stood at Rs. 9.05 Cr. on March 31, 2024 as against Rs. 21.27 Cr. on March 31, 2023. Further, the working capital management of the company is intensive marked by GCA days of 216 days in FY2024 as against 191 days in FY2023., however, the reliance on working capital limit utilisation stood moderate at 85.00% utilization over the last twelve months ending May 2024.

Outlook: Not Applicable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	690.34	853.42
PAT	Rs. Cr.	3.93	8.00
PAT Margin	(%)	0.57	0.94
Total Debt/Tangible Net Worth	Times	0.99	1.04
PBDIT/Interest	Times	1.79	2.05

Status of non-cooperation with previous CRA (if applicable)

­Not Applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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 02 Nov 2023 PC/PCFC Long Term 7.08 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) Proposed Long Term Bank Facility Long Term 2.90 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) Cash Credit Long Term 4.85 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) PC/PCFC Long Term 12.00 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) Metal Loan Long Term 6.90 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) PC/PCFC Long Term 42.90 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) Cash Credit Long Term 48.50 ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE BBB- | Negative) Post Shipment Credit Short Term 13.60 ACUITE A4+ (Downgraded & Issuer not co-operating* from ACUITE A3) Post Shipment Credit Short Term 12.00 ACUITE A4+ (Downgraded & Issuer not co-operating* from ACUITE A3) Post Shipment Credit Short Term 22.17 ACUITE A4+ (Downgraded & Issuer not co-operating* from ACUITE A3) 16 Aug 2022 Cash Credit Long Term 4.85 ACUITE BBB- | Negative (Reaffirmed) PC/PCFC Long Term 12.00 ACUITE BBB- | Negative (Reaffirmed) Metal Loan Long Term 6.90 ACUITE BBB- | Negative (Reaffirmed) PC/PCFC Long Term 42.90 ACUITE BBB- | Negative (Reaffirmed) Cash Credit Long Term 48.50 ACUITE BBB- | Negative (Reaffirmed) PC/PCFC Long Term 7.08 ACUITE BBB- | Negative (Reaffirmed) Proposed Long Term Bank Facility Long Term 2.90 ACUITE BBB- | Negative (Reaffirmed) Post Shipment Credit Short Term 12.00 ACUITE A3 (Reaffirmed) Post Shipment Credit Short Term 22.17 ACUITE A3 (Reaffirmed) Post Shipment Credit Short Term 13.60 ACUITE A3 (Reaffirmed) 17 May 2021 Post Shipment Credit Short Term 12.00 ACUITE A3 (Reaffirmed) Post Shipment Credit Short Term 22.17 ACUITE A3 (Reaffirmed) Post Shipment Credit Short Term 13.60 ACUITE A3 (Reaffirmed) Cash Credit Long Term 4.85 ACUITE BBB- | Negative (Reaffirmed) Cash Credit Long Term 48.50 ACUITE BBB- | Negative (Reaffirmed) PC/PCFC Long Term 12.00 ACUITE BBB- | Negative (Reaffirmed) PC/PCFC Long Term 42.90 ACUITE BBB- | Negative (Reaffirmed) PC/PCFC Long Term 7.08 ACUITE BBB- | Negative (Reaffirmed) Proposed Long Term Bank Facility Long Term 2.90 ACUITE BBB- | Negative (Reaffirmed) Term Loan Long Term 6.90 ACUITE BBB- | Negative (Reaffirmed)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.85 Simple ACUITE BB+ | Reaffirmed & Withdrawn ICICI Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 48.50 Simple ACUITE BB+ | Reaffirmed & Withdrawn Bank of India Not avl. / Not appl. Metal Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 6.90 Simple ACUITE BB+ | Reaffirmed & Withdrawn Bank of India Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.00 Simple ACUITE BB+ | Reaffirmed & Withdrawn Axis Bank Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 7.08 Simple ACUITE BB+ | Reaffirmed & Withdrawn HDFC Bank Ltd Not avl. / Not appl. PC/PCFC Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 42.90 Simple ACUITE BB+ | Reaffirmed & Withdrawn Axis Bank Not avl. / Not appl. Post Shipment Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 13.60 Simple ACUITE A4+ | Reaffirmed & Withdrawn Indusind Bank Ltd Not avl. / Not appl. Post Shipment Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 22.17 Simple ACUITE A4+ | Reaffirmed & Withdrawn Bank of India Not avl. / Not appl. Post Shipment Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.00 Simple ACUITE A4+ | Reaffirmed & Withdrawn Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.90 Simple Not Applicable|Withdrawn

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Contacts

Mohit Jain Senior Vice President - Rating Operations Kirti Berlia Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@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.