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Palm Jewels is involved in the business of selling gold based chains, bracelets and necklaces to other businesses

Steps involved in the Business

  1. They source their gold mainly from Bullion Markets at Market Price                                         
  2. Gold bars and other necessary material are provided to the job workers (not employees) who create the finished goods i.e. chains, bracelets and necklaces
  3. The finished jewellery is sold by the marketing and sales team directly to other jewellery stores



19 CR


50 Lakh


600+ Stores in Gujarat  (According to Promoter/Director Saunil Shah)


Great Design, Promoter Experience, Client Base etc. as stated in the DRHP

The company is listed at Rs. 30

Introducing all the Potential Red Flags


1.The company has only 11 Employees in total. A detailed breakup of their qualification and their experience is listed below

Top Management

Mr. Rohit D Shah is the promoter and the Managing Director of the company. He has a diploma in Pharmacy, but he has been involved in the Jewellery Business for a while now

Mrs. Chetna R. Shah, wife of Mr. Shah, is the promoter and the Non Executive Director of the company. She has been involved in the Jewellery business just like her husband


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.  

Other Employees

2 Accountants
3 Salesmen
1 Driver
1 Company Secretary (26 Years Old,, CS, Joined May 15th 2018)


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 

RED FLAG - 2? 

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 

RED FLAG - 3? 

The company has very little fixed assets. Total ~Rs. 2 Lakh

They are currently operating out of a leased space 

RED FLAG - 4? 

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 

RED FLAG - 5? 

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.   

RED FLAG - 6? 

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 

RED FLAG - 7? 

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. 

RED FLAG - 8? 

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. 

The company wants to raise about 9 Cr. for Working capital Requirements through the issue, probably to buy more gold. Maybe the 3 Sales People and that 1 Driver can be tested to their limits in selling all this new gold they can purchase with the money



Finception, Ideapad, CIIE
IIM Ahmedabad, Vastrapur Ahmedabad - 380015


Email: [email protected] 
Phone: +91 89805 94439