1.The company has only 11 Employees in total. A detailed breakup of their qualification and their experience is listed below
Mr. Saunil R. Shah, son of Mr. Shah, is only 20 years old and is the promoter and Full Time Director of the company. He is currently doing his B.Tech and is responsible for the administration of the company. He is managing his studies and the administration of the company at the same time
Mr. Naisadh J. Sadhu is the Chief Financial Officer of the company. He is 25 years old and has a B.Com degree. During our conversation with Mr. Saunil Shah, He told us that Mr. Naisadh has previously worked with Parasmani Jewellers. His annual compensation is Rs. 1 Lakh.
The company is managing 600 Customers across Gujarat and generating an annual turnover of Rs. 19 Cr. with just 3 Sales People and 1 Driver
The company’s biggest customer is Jain Ornaments making purchases worth Rs. 3.41 Cr.. Jain ornaments is owned by Mr. Rohit Shah, promoter of Palm Jewels
Both businesses compete in the same space. Palm Jewels and Jain Ornaments haven’t signed a non compete clause
The company has listed their major customers as M/s. Zaverat, Mehta Ornaments Private Limited, Shah Chinubhai Ramniklal Co. and Shubhlaxmi Jewellers. Jain ornaments is not mentioned in this list despite generating 20% of Palm Jewels Business
The company has very little fixed assets. Total ~Rs. 2 Lakh
They are currently operating out of a leased space
Shareholders fund suddenly increased from Rs. 35 Lakhs (FY 2017) to 4.12 Crores (FY 2018)
This money came in from Promoters, Mr. Rohit, Mrs. Chetna, Mr. Saunil. Most of the shares reside with the 3 promoters and the two public shareholders Veeram Ornaments Limited and Veeram vendors private Limited
Veeram Ornaments Limited is also engaged in the design, manufacture, and wholesale selling of jewellery ornaments. Like Palm Jewels, They source gold from the bullion market, design and then sell it to other retailers in Ahmedabad.
Veeram Ornaments Limited and Veeram Vendors Private Limited hold about 1,66,666 shares ( 3.77% ) of the company (Pre Issue). The company’s promoters are Rakshit Shah and Pinal Shah
The company secured a loan of Rs. 90 Lakh from Yes bank on October 2017 at an interest of 8.8% p.a.
However the company’s financial cost stood at only Rs. 1.37 Lakhs as of Feb 2018.
The company does not design gold ornaments in-house, instead, outsources it to job workers in Mumbai and Ahmedabad
So the company’s margins depend on how cheaply they can get the gold ornaments made. This margin according to most gold experts is very thin.
So the company really has very little competitive advantage except that it can sell gold to seemingly 600 stores in Gujarat with 3 Sales People and 1 Driver
The company makes some bold claims on how it plans to reduce its holding levels of Finished Goods
Last year (FY 17) the company held on to its finished goods for an average 95 days. The company says it will bring it down to 43 days next year.
The company wants to reduce credit periods on the gold it purchases
The company purchases gold on credit. The average credit period stood at 80 days as of FY17. For some odd reason, the company wants to get it down to 7 days in FY18. We don’t fully understand why the company wants to place extra burden on their working capital requirement by bringing down credit periods.