Press Release

Press Release

August 29, 2024

WAMAN HARI PETHE SONS PRIVATE LIMITED
Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	175.00	ACUITE A- \| Stable \| Reaffirmed	-
Total Outstanding	175.00	-	-

Rating Rationale

Acuité has reaffirmed its long-term rating of 'ACUITE A-’ (read as ACUITE A minus) for the Rs. 175.00 crore bank facilities of Waman Hari Pethe Sons Private Limited (WHPS). The outlook remains 'Stable'.

Rationale for Rating

The rating reaffirmation considers the stable operating and financial performance of WHPS, marked by improved revenue and a moderate financial risk profile. The revenue of the company stood at Rs. 912.29 Cr. in FY2024 (Prov.), registering a growth of ~16 percent YoY compared to a revenue of Rs. 788.79 Cr. in FY2023. There has been a decline in the operating margin of the company in FY2024. Reduction in making charges, fluctuating gold prices and marginal increase in the selling expenses have affected the operating profit of the company. The operating margin stood at 3.30 percent in FY2024 (Prov.) as against 4.94 percent in FY2023. The PAT margin, however, has improved marginally at 1.56 percent in FY2024 (Prov.) as against 1.44 percent in FY2023 on account of reduced finance costs.
The financial risk profile, marked by moderate gearing and comfortable debt protection metrics, continues to remain moderate.
The rating remains constrained on account of working capital-intensive nature of operations and high Debt-EBITDA levels of the company. Also, the rating takes cognizance of the intense competition limiting pricing flexibility, volatile gold prices, and regulatory risks that may adversely impact the operations.

About the Company

Waman Hari Pethe Sons Private Limited (WHPS) started in 2001 as a partnership firm called "Waman Hari Pethe Sons’. Later in 2010, the constitution was changed to private limited and the entity was renamed "Waman Hari Pethe Sons Private Limited. The company is promoted by Mr. Subodh Pethe and Mrs. Sonali Pethe. Pursuant to a family arrangement, Mr. Subodh Pethe has been operating under the brand name WHPS. The promoter’s family has been in the gold jewellery business for more than 100 years. WHPS operates 10 retail jewellery stores across Mumbai, the Mumbai Metropolitan Region, Thane, Pune, Solapur, and Raigad.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profile of WHPS to arrive at the rating.

Key Rating Drivers

Strengths

Experienced management and an established market position with a strong brand presence:
Waman Hari Pethe Sons Private Limited (WHPS) is among the leading gold jewellery retail chains in Maharashtra. The brand ‘Waman Hari Pethe’ has a history of more than 100 years and enjoys strong patronage, especially among the Maharashtrian community. Mr. Subodh Pethe, a member of the promoter family, along with his wife, Mrs. Sonali Pethe, operate a chain of 10 stores under the name ’WHPS’ spread across Mumbai, the Mumbai Metropolitan Region, Thane district, Pune, Solapur, Raigad, and Aurangabad. The company owns six out of these 10 stores, and the balance is on lease. Mr. Subodh Pethe has been managing the business operations for three decades and is ably supported by the second line of management. WHPS is well supported by a dedicated team of professionals and has tie-ups with more than 200 artisans. WHPS specialises in Maharashtrian gold and studded jewellery such as ‘Mangalsutra’, ‘Bajubandh’, and ‘Pichodi," among other products. Mr. Subodh Pethe has recently been awarded a patent for light-weight jewellery, a segment that is expected to exhibit steady growth over the near to medium term. Besides plain gold jewellery, the company also has an established presence in diamond-studded jewellery in tune with changing consumer preferences.

Acuité believes that the company will continue to benefit from WHPS‘s strong brand equity, wide network of stores across Maharashtra, and the promoter’s demonstrated ability to adapt to changing consumer tastes and preferences.

Moderate Financial Risk Profile

The moderate financial risk profile of the company is marked moderate networth, improved gearing and comfortable debt protection metrics. The tangible networth increased to Rs. 130.84 Cr. in FY2024 (Prov.) from Rs. 116.56 Cr. in FY2023 due to accretion of profit to reserves. Gearing stood improved to 1.12 times on March 31, 2024 (Prov.) from 1.51 times on March 31, 2023. TOL/TNW also stood improved at 1.38 times on March 31, 2024 (Prov.) as against 1.84 times on March 31, 2023. The Debt-EBITDA stood high at 4.53 times on March 31, 2024 (Prov.) as against 4.35 times on March 31, 2023, due to decline in absolute EBITDA of the company.

The debt protection indicators stand comfortable with significant improvement in the coverage ratios. The Interest Coverage Ratio (ICR) stood at 3.49 times for FY2024 (Prov.) as against 2.03 times for FY2023. The Debt Service Coverage Ratio (DSCR) stood at 2.86 times for FY2024 (Prov.) as against 1.42 times for FY2023.

Acuité believes that the financial risk profile of the company is likely to improve in the near to medium term, in absence of any major debt funded capex plan.

Stable revenue growth, albeit decline in operating margin
The company generated a revenue of Rs. 912.29 Cr. in FY2024 (Prov.), registering a growth of ~16 percent YoY compared to a revenue of Rs. 788.79 Cr. in FY2023. Despite stable revenue growth, there was decline in the operating margins of the company. The operating margin stood at 3.30 percent in FY2024 (Prov.) as against 4.94 percent in FY2023. Reduction in making charges, fluctuating gold prices and marginal increase in the selling expenses have affected the operating profit of the company. The company is opening a new store by the end of Aug 2024 in Mira-Bhayandar. Also with reduction of custom duty on gold from 15 percent to 6 percent, the demand for gold is expected to increase.

Acuite expects that the reduction of custom duty on gold and the addition of a new store will fuel further revenue growth of the company.

Weaknesses

Moderately intensive working capital operations

The operations of the company are moderately working capital intensive in nature marked by improved GCA of 91 days for FY2024 (Prov.) as against 116 days in FY2023. The GCA days are driven by inventory levels of 90 days in FY2024 (Prov.) as against 117 days in FY2023. being in the retail jewellery segment, the company needs to maintain adequate inventory levels at its store. The creditor days stood at 4 on March 31, 2024 (Prov.) as against 8 days on March 31, 2023.

Intense competition and exposure to regulatory risk
The country’s gems and jewellery sector is highly fragmented. The retail segment has high dominance of unorganized players, who enjoy around 70 per cent market share. While in case of the manufacturing segment, the dominance of unorganized players is even higher at around 90 per cent. Moreover, increased regulatory intervention such as gold hallmarking, requirement of PAN, etc. impact the demand-supply trend in the sector. Furthermore, the fluctuation in gold prices also impact the demand for gold. However, the company’s presence since 1905 and strong brand value have enabled it to establish itself as a major player in Maharashtra over the years.

Rating Sensitivities

Improvement in profitability margins while maintaining stable revenue growth.
Further deterioration in the Debt-EBITDA levels of the company.

Liquidity Position

Adequate

The adequate liquidity profile of the company is marked by sufficient net cash accruals (NCAs) against maturing repayment obligations. The company generated NCA worth Rs. 18.37 Cr. in FY2024 (Prov.) against maturing repayment obligations of Rs. 0.37 Cr. for the same period. The net cash accruals of the company are expected to remain in the range of Rs. 24 - 29 Cr. for 2025-26 period against repayment obligations in the range of Rs. 0.35 – 2.00 Cr. The average working capital utilization for the company stands at 87.66 percent for FY2024. The company had an unencumbered cash and bank balance of Rs. 1.28 Cr. on March 31, 2024 (Prov.). The current ratio stood at 1.43 times on March 31, 2024 (Prov.) as against 1.32 times on March 31, 2023.

Outlook: Stable

The outlook is 'stable' on account of the stable operating and financial performance of WHPS, marked by improved revenue, and a moderate financial risk profile. The outlook may be revised to 'positive' in case the company registers higher-than-expected growth in revenue and profitability margins while maintaining its debt protection metrics. The outlook may be revised to 'negative' incase lower than expected generation of revenue and profitability margin or elongation of working capital cycle leading to stretch in liquidity position.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	912.29	788.79
PAT	Rs. Cr.	14.21	11.35
PAT Margin	(%)	1.56	1.44
Total Debt/Tangible Net Worth	Times	1.12	1.51
PBDIT/Interest	Times	3.49	2.03

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 Jun 2023	Cash Credit	Long Term	55.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	40.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	40.00	ACUITE A- \| Stable (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	10.00	ACUITE A- \| Stable (Assigned)
	Proposed Long Term Bank Facility	Long Term	5.00	ACUITE A- \| Stable (Reaffirmed)
19 Sep 2022	Proposed Long Term Bank Facility	Long Term	26.50	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	55.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	8.50	ACUITE A- \| Stable (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	10.00	ACUITE A- \| Stable (Assigned)
21 Jan 2022	Proposed Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	10.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	55.00	ACUITE A- \| Stable (Reaffirmed)
19 Mar 2021	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	55.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	10.00	ACUITE A- \| Stable (Reaffirmed)
21 Jan 2021	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	55.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	25.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	20.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Term Loan	Long Term	10.00	ACUITE A- \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Axis Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	45.00	Simple	ACUITE A- \| Stable \| Reaffirmed
ICICI Bank Ltd	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	25.00	Simple	ACUITE A- \| Stable \| Reaffirmed
RBL Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	40.00	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	40.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	15.00	Simple	ACUITE A- \| Stable \| Reaffirmed

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Kruti Patel Associate Analyst - Rating Operations Tel: 022-49294065 kruti.patel@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.

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