Press Release

S. Jogani Exports Private Limited

January 31, 2023

Facilities/Instruments Amount (₹ crore) Ratings1 Rating Action

Long Term Bank Facilities 70.00 Revised from CARE BBB; Stable
CARE BBB+; Stable
(Enhanced from 50.00) (Triple B; Outlook: Stable)
Revised from CARE BBB; Stable
Long Term / Short Term Bank CARE BBB+; Stable /
32.00 (Triple B; Outlook: Stable);
Facilities CARE A3+
ST rating assigned
3.00
Short Term Bank Facilities CARE A3+ Revised from CARE A3 (A Three)
(Reduced from 7.00)
Details of instruments/facilities in Annexure-1.

Rationale and key rating drivers

For arriving at the ratings, CARE has combined the financials of S. Jogani Exports Private Limited, M/s. S.Jogani Impex and M/s.
S.Jogani Gems due to the three entities (together referred to as the S. Jogani Group) being controlled by same promoter group
and the decision-making being centralized. The group has common finance and administration teams. Also, the group enjoys
business synergies with operations in same line of business.
The ratings may undergo a change in case of significant withdrawal of capital by the partners i.e. being more than the
envisaged levels in addition to the financial performance and other relevant factors.
The revision in the ratings assigned to the bank facilities of S. Jogani Exports Private Limited (SJEPL) factors in the
improvement in the scale of operations coupled with improvement in operating profitability margins resulting in higher cash
accruals. The growth in revenues is on the back of buoyancy in demand and recovery in retail off-take for cut and polished
diamonds (CPD)
in key G&J markets coupled with better realisations.
The ratings continue to factor in the group’s established presence in the CPD industry backed by the promoters' extensive
experience, diversified geographical presence, having well established clientele base, comfortable financial risk profile.
These rating strengths are however tempered by large working capital requirement, profit margins susceptible to the volatility
in the raw material prices amidst intense competition, foreign exchange fluctuations and partnership nature of two entities
within the group.

Rating sensitivities: Factors likely to lead to rating actions

Positive factors
• Sustained increase in the scale of operations of the combined entity around Rs2,500 crore and sustenance of the PBILDT
margins of over 6% leading to higher cash accruals.

Negative factors
• Deterioration in revenue below Rs. 700 crores and PBILDT margin falling below 4% on sustained basis
• Significantly large debt funded capex or leveraged acquisition, leading to sustained and major deterioration in its leverage
and debt coverage indicators
• Significant Elongation in operating cycle owing to any significant increase in receivables or inventory levels
• More than envisaged dividend payout or buy back (if any), withdrawals of capital or financial support by promoters, debt
funded capex weakening the financial risk profile especially liquidity.

Analytical approach: Combined

CARE has combined the financials of S. Jogani Exports Private Limited, M/s. S. Jogani Impex and M/s. S. Jogani Gems due to all
the three entities within the Group being controlled by same promoter group and the decision-making being centralized. The
group has common finance and administration teams. Also, the group enjoys business synergies with operations in same line of
business.

Key strengths
Established long track record and market presence backed by experienced promoters in the CPD industry
S. Jogani Group is largely into trading of cut and polished diamonds. Supported by more than three and half decades of vast
experience of the promoters, S. Jogani Group is having established presence in the domestic as well as international cut and
polished diamond markets. The operations of all the three entities are currently, managed by Mr. Shailesh J. Jogani along with
Mr. Sarju Jogani and Mr. Sanket Jogani. Furthermore, the promoters are well supported by a team of qualified professionals
having experience in the relevant fields.

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Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

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Diversified geographical presence along with well-established customer base

S.Jogani Group has vast global presence with clients based out of almost all the major gems and jewellery hubs in the world.
The Group derives around 59% of its overall revenues from domestic market while remaining 41% is derived from various
export markets across geographies. The main markets for their exports are based in multiple countries – with UAE being the
highest, followed by Hong Kong, Thailand and USA. The Group has a well-established clientele base within and outside India
and have maintained longstanding relations with customers as well as suppliers. The Group purchases from various sources
largely through secondary market. The top ten clients contributed around 44% of the overall revenues of the Group, thereby
indicating the presence of diversified customer base.

Improvement in operating performance

S. Jogani group reported ~27% jump in its total operating income from Rs.754.67 crore in FY21 to Rs.958.55 crores in FY22 on
the back of increased demand from both domestic as well as export markets. The increase in demand was seen robust from
UAE, USA, Thailand as well as within India in the post pandemic era is owing to pent-up demand and retail offtake owing to
increase in spending on the jewellery both from the fashion wear segment and bridal jewellery segment. Further, gradual
opening of the markets and removal of entry restrictions seeing a recovery from the Covid slump. Further in 9MFY23(From April
to December 2022), the DNJ Group has achieved total income of Rs.675.53 crore.
The operating margins of the S. Jogani Group continues to remain above average at 6.32% in FY22 vis-à-vis 5.79% in FY21.
Further PAT margins stood at 8.17% in FY22 vis-à-vis 3.61% in FY21. The improvement in PAT margins is owing to
improvement in PBILDT margins on the back of better realisations as well as owing to dividend received from the subsidiary
company. Consequently, the Group’s cash accruals have been on the higher side. The profit margins is expected to remain
robust. However, as the prices of CPD remain volatile, the sustainability of above average PBILDT margins in the CPD industry
remains to be seen and the same shall remain a key rating monitorable.

Comfortable financial risk profile

The group entity has comfortable financial risk profile marked by a healthy net worth position of around Rs.193.48 crore, lower
debt levels of Rs5.64 crore comprising of working capital borrowings, lower Total Outside Liabilities to Tangible Networth Ratio
of 0.45 times. Debt coverage indicators such as interest coverage ratio remained healthy at 56.56 times in FY22 as compared to
40.21 times in FY21 and Total debt to GCA remained comfortable at 0.07 times in FY22 as compared to 1.15 times in FY21.

Key weaknesses
Large working capital requirement
As the Group is largely into trading of cut and polished diamonds, the inherent nature of the business is working capital
intensive. This is further supported by the fact that Gross current asset days of the group stood at around 94 days and with the
increase in business, the same is expected to increase further. This would result in higher working capital requirement. The
same is primarily due to higher collection period of around 52 days. However as on March 31 2022, the operating cycle of the
Group has been at around 49 days. With the increase in business, the working capital requirement is expected to remain large
and substantial increase in collection period or inventory holding period shall be key rating monitorable.

Profit margins remain susceptible to volatility in the prices of the diamonds and intense competition in the
industry
The Group procures rough diamonds largely from non – sight holding sources and other suppliers from the open market. The
major customers of the Group comprise wholesalers who in turn sell the polished diamonds to jewellery manufacturers. In order
to meet the requirement of CPD of end customers the group inherently maintains inventory of various sizes, cut, clarity, colour
etc which results in higher inventory. As the CPD market is fragmented, low entry barriers as it involves less capital and
minimum investment in technology, the competition becomes intense owing to presence of large number of players. Hence,
with relatively limited value addition the group’s profitability margins remain vulnerable to fluctuation in diamond prices. As
indicated India’s CPD market is highly fragmented with presence of numerous unorganized players apart from some very large
integrated G&J manufacturers leading to high level of competition. Thus, the Group’s profit margin also remain susceptible
towards prevailing intense competition in the industry.

Foreign exchange rate fluctuation risk

The Group derives around 41% of its overall revenues from the export sales. The group imports around 15% of its raw material
requirement which is processed on job work basis. Thus, foreign exchange fluctuation is naturally hedged to a certain extent.
However, any significant adverse movement in foreign currency may affect the profitability of the group in absence of any
hedging mechanism.

Partnership nature of the firm

Both M/s. S. Jogani Impex and M/s. S. Jogani Gems are operating as a partnership firm managed by Mr. Shailesh Jogani. The
credit risk profile of the firms is tempered by the constitution of the entity as there is an inherent risk of withdrawal of the
capital in a partnership firm.

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Liquidity: Adequate
Liquidity is characterized by healthy level of accruals and no fixed repayment obligations. With a gearing of 0.03 times (for
combined entity) as of March 31, 2022, the issuer has sufficient gearing headroom, to raise additional debt if required. The
average working capital utilization of combined entity is at around 17% for the last 12 months i.e. January 2022 till December
2022. With lower utilisation of limits indicating of higher limits available for business use, low gearing and large net worth base
support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the
business.

Applicable criteria
Policy on default recognition
Liquidity Analysis of Non-financial sector entities
Criteria on Assigning ‘Outlook’ or 'Rating Watch’ to Credit Ratings
Financial ratios - Non-Financial Sector
Short Term Instruments
Manufacturing Companies
Rating Methodology: Cut and Polished Diamond Industry
Rating Methodology: Consolidation

About the company

S. Jogani Exports Private Limited (SJEPL), the flagship company of the S.Jogani Group, started as a partnership firm in 1986
under the name of M/s S. Jogani & Co, it was later converted into a private limited company on 1st January 2008 under the
present name. The company is a closely held family concern and is involved in the trading of cut and polished diamonds. The
Group involving two other entities M/s. S, Jogani Impex and M/s. S. Jogani Gems are also in similar line of business.
The Group deals in cut and polished diamonds ranging from 10 cents to 1 carat. with utilization of 93.05% in FY21).
Manufacturing activity takes place only at Gujarat while Bhilai and Durgapur are trading depots.

S. Jogani Exports Pvt Ltd, M/s. S. Jogani Impex and M/s. S. Jogani Gems (Combined)
Brief Financials (₹ crore) 31-03-2021 (A) 31-03-2022 (A) 9MFY23 (Prov.)
Total operating income 754.67 958.55 675.53
PBILDT 43.70 60.55 NA
PAT 27.26 78.28 NA
Overall gearing (times) 0.29 0.03 NA
Interest coverage (times) 40.21 56.56 NA
A: Audited; Prov.: Provisional; 9MFY23 (period refers from April 01, 2022 to December 31, 2022); NA: Not Available

S. Jogani Exports Private Limited (Standalone)

Brief Financials (₹ crore) 31-03-2021 (A) 31-03-2022 (A) 9MFY23 (Prov.)
Total operating income 431.82 431.47 293.00
PBILDT 18.82 21.12 NA
PAT 10.93 52.46 NA
Overall gearing (times) 0.32 0.00 NA
Interest coverage (times) 17.73 26.84 NA
A: Audited; Prov.: Provisional; 9MFY23 (period refers from April 01, 2022 to December 31, 2022); NA: Not Available

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Disclosure of Interest of Independent/Non-Executive Directors of CARE: Not Applicable

Disclosure of Interest of Managing Director & CEO: Not Applicable

Rating history for last three years: Please refer Annexure-2

Covenants of the rated instruments/facilities: Detailed explanation of the covenants of the rated instruments/facilities is
given in Annexure-3

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Complexity level of the various instruments rated: Annexure-4

Lender details: Annexure-5

Annexure-1: Details of instruments/facilities

Size of
Date of Coupon Maturity Rating Assigned
Name of the the
ISIN Issuance (DD- Rate Date (DD- along with Rating
Instrument Issue
MM-YYYY) (%) MM-YYYY) Outlook
(₹ crore)

Fund-based - LT-Post Shipment

- - - - 70.00 CARE BBB+; Stable
credit

LT/ST Fund-based/Non-fund-
CARE BBB+; Stable /
based-EPC / PCFC / FBP / FBD / - - - - 32.00
CARE A3+
WCDL / OD / BG / SBLC

Non-fund-based - ST-Forward
- - - - 3.00 CARE A3+
Contract

Annexure-2: Rating history for the last three years

Current Ratings Rating History

Date(s) Date(s) Date(s) Date(s)

Name of the
Sr. and and and and
Instrument/Bank Amount
No. Rating(s) Rating(s) Rating(s) Rating(s)
Facilities Type Outstanding Rating
assigned assigned assigned assigned
(₹ crore)
in 2022- in 2021- in 2020- in 2019-
2023 2022 2021 2020
1)CARE
BBB; Stable
(02-Nov-21) 1)CARE
CARE
Fund-based - LT-Post BBB;
1 LT 70.00 BBB+; - -
Shipment credit 2)CARE Negative
Stable
BBB; (20-Mar-20)
Negative
(06-Apr-21)
1)CARE A3
(02-Nov-21)
Non-fund-based - ST- CARE 1)CARE A3
2 ST 3.00 - -
Forward Contract A3+ (20-Mar-20)
2)CARE A3
(06-Apr-21)
LT/ST Fund- CARE
based/Non-fund- BBB+;
3 based-EPC / PCFC / LT/ST* 32.00 Stable /
FBP / FBD / WCDL / CARE
OD / BG / SBLC A3+
*Long term/Short term.

Annexure-3: Detailed explanation of the covenants of the rated instruments/facilities

Name of the Instrument Detailed Explanation
A. Financial covenants
I – Financial Ratios for FY2022 ▪ Total Debt / TNW < 1.5
▪ Total Debt / EBITDA < 5.50
B. Non-financial covenants
I – Non-submission of required statements ▪ Non-submission of stock statements (delay beyond 25
days of the succeeding month to be considered as non-
submission) – Penal Interest @1% p.a.
▪ Non-submission of renewal data beyond three months

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Name of the Instrument Detailed Explanation

A. Financial covenants
from the due date of renewal – Penal Interest @1% p.a.
▪ Non-compliance with covenants – Penal Interest @1%
p.a.

Annexure-4: Complexity level of the various instruments rated

Sr. No. Name of the Instrument Complexity Level

1 Fund-based - LT-Post Shipment credit Simple

2 LT/ST Fund-based/Non-fund-based-EPC / PCFC / FBP / FBD / WCDL / OD / BG / SBLC Simple
3 Non-fund-based - ST-Forward Contract Simple

Annexure-5: Lender details

To view the lender wise details of bank facilities please click here

Note on the complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis
of complexity. Investors/market intermediaries/regulators or others are welcome to write to care@careedge.in for any
clarifications.

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Contact us
Media Contact
Name: Mradul Mishra
Phone: +91-22-6754 3573
E-mail: mradul.mishra@careedge.in

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Name: Vikash Agarwal
Phone: +91-22-67543408
E-mail: vikash.agarwal@careedge.in

Relationship Contact
Name: Saikat Roy
Phone: 022-67543404/136
E-mail: saikat.roy@careedge.in

About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise
capital and enable investors to make informed decisions. With an established track record of rating companies over almost
three decades, CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise,
backed by the methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in
developing bank debt and capital market instruments, including commercial papers, corporate bonds and debentures, and
structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to
sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey suitability or price for the investor.
The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible
sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions
and the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE Ratings have paid a credit rating fee,
based on the amount and type of bank facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions
with the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the
partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought
in by the partners/proprietors in addition to the financial performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it
has no financial liability whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as
per the terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced
and triggered, the ratings may see volatility and sharp downgrades.

For the detailed Rationale Report and subscription information,

please visit www.careedge.in

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