Rating Rationale
November 25, 2024 | Mumbai
Renaissance Global Limited
Ratings upgraded to 'CRISIL A-/Stable/CRISIL A2+'
 
Rating Action
Total Bank Loan Facilities RatedRs.406.15 Crore
Long Term RatingCRISIL A-/Stable (Upgraded from 'CRISIL BBB+/Positive')
Short Term RatingCRISIL A2+ (Upgraded from 'CRISIL A2')
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has upgraded its ratings on the bank facilities of Renaissance Global Limited (RGL) to 'CRISIL A-/Stable/CRISIL A2+’ from 'CRISIL BBB+/Positive/CRISIL A2’.

 

The rating upgrade factors in the improvement in the business risk profile, particularly operating margin.  The group’s operating margin has improved on back of increased revenue contribution from the high margin revenue segment. The group reported an operating margin of 8.6% in fiscal 2024 as against 7.81% in fiscal 2023. The group’s operating margin is expected to remain upwards of 8% over the medium term. RGL had reported an operating income of Rs 2111 crore in fiscal 2024.

 

The improvement in operating margins has resulted in an improvement in the financial risk profile with net cash accruals have remained over Rs 103.8 crore in fiscal 2024. Sustenance of revenue growth and operating margin will remain a key rating monitorable.

 

RGL’s working capital cycle has remained steady despite increased gold prices on account of rationalization of inventory. However, the group sold its gold segment in July 2024 which is expected to result in improved operating efficiency.

 

The rating continues to reflect its extensive experience of promoters in the jewellery industry, which has led to an established market presence, moderate financial risk profile. These strengths are partially offset by volatility in operating profitability resulting from intense competition from other players and working capital intensive nature of operations.

Analytical Approach

CRISIL Ratings has combined the business and financial risk profiles of RGL and its subsidiaries, collectively referred to as the Renaissance group, because of their strong business, operational and financial linkages.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

  • Extensive experience of promoters in the jewellery industry: Experience of over three decades in the jewelry industry has led to deep understanding of industry dynamics. Over the years the promoters have built long-standing relationships with its customers and suppliers successful navigation of business cycles over the decades and have also led to the group having established brands.


On the back of the experience of the promoters in the jewelry industry and long-standing relationship with marquee customers and established brands RGL is expected to earn revenue upwards of Rs 1960 crore in fiscal 2025 despite headwinds in the industry.

 

  • Comfortable Financial Risk Profile: The financial risk profile of the RGL should remain healthy over the medium term marked by healthy networth of Rs.1096 Crores on March 31, 2024. Moderate reliance on external debt has led to the gearing ratio at 0.47 times as of March 2024, it is expected to improve further over the medium term with infusion of capital in the form of shares.

 

The debt protection metrics of the company are moderate with interest coverage and net cash accruals to adjusted debt 2.97 times and 0.20 time for fiscal 2024.

 

Weaknesses:

  • Susceptibility of operating performance to intense competition and volatility in gold prices: The jewellery industry in India is intensely competitive and highly fragmented due to the presence of many small and big players. Intense competition and volatile diamond prices can impact the operating margin of the group.

 

Furthermore, volatility in gold and diamond prices can not only impact demand but also results in inventory risk. However, inventory risk is partially mitigated by inventory hedging practices followed by the company.

 

  • Working capital intensive operations: Company’s operations are moderately intensive working capital requirements, as reflected in gross current asset of 270 days as on March 31, 2024, driven by receivables and inventory of 70 to 85 days and 150 to 185 days, respectively. The working capital requirements are supported by internal accruals, creditors (which stood at 45 days as on March 31, 2024) and by bank borrowings.

Liquidity: Adequate

Liquidity is supported by estimated net cash accrual of over Rs 107 crore against repayment obligations in the range of Rs 16-17 Cr. Bank limit utilization averaged 85% for the last 12 months ended October 2024.

 

No major capex is planned by the group in fiscal 2024. The group had cash and cash equivalent (encumbered and unencumbered) and liquid investments of Rs 192 crore as on March 31, 2024. Liquidity is estimated to be supported by an infusion of funds in the form of equity shares.

Outlook: Stable

CRISIL Ratings believes RGL will continue to benefit from the extensive experience of its promoters and established presence in exports market along with increasing contribution from the branded jewellery segment.

Rating sensitivity factors

Upward Factors

  • Sustained and healthy growth in revenue and improvement in operating margins leading to higher net cash accruals.
  • Efficient working capital management resulting in an improved capital structure and improvement in debt protection metrics with interest coverage sustaining over 5 times.

 

Downward Factors

  • Lower-than-expected revenue or operating margins below 6% leading to lower than expected net cash accruals.
  • Increased inventory resulting in high GCAs days weakening the capital structure and higher reliance on bank lines leading to high bank limit utilization.

About the Group

The Renaissance group manufactures and trades in diamond studded jewellery. It manufactures generic as well as licensed branded jewellery. RGL, the holding company of the group, was incorporated in 1989 as Mayur Gems & Jewellery Exports Pvt Ltd. It was acquired by Mr Niranjan Shah and his family in 1995. It was reconstituted as a public limited company and acquired its present name in 2005. The company is engaged in wholesale manufacturing of jewellery in gold, silver, platinum, studded with polished diamonds, semi-precious and precious stones. RGL has sales subsidiaries in the US, the UK, and the UAE. Facilities are in Mumbai, Bhavnagar (Gujarat), and the UAE. Group has sold of its gold division in July 2024.

Key Financial Indicators

As on / for the period ended March 31

 

2024

2023

Operating income

Rs crore

2,111.12

2,238.20

Reported profit after tax

Rs crore

73.13

87.31

PAT margins

%

3.49

3.90

Adjusted Debt/Adjusted Net worth

Times

0.47

0.47

Interest coverage

Times

2.97

3.48

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Fund-Based Facilities NA NA NA 336.00 NA CRISIL A-/Stable
NA Non-Fund Based Limit NA NA NA 15.00 NA CRISIL A2+
NA Working Capital Term Loan NA NA 31-Dec-28 19.26 NA CRISIL A-/Stable
NA Working Capital Term Loan NA NA 31-Dec-28 21.88 NA CRISIL A-/Stable
NA Working Capital Term Loan NA NA 31-Dec-28 4.37 NA CRISIL A-/Stable
NA Working Capital Term Loan NA NA 31-Dec-28 7.93 NA CRISIL A-/Stable
NA Working Capital Term Loan NA NA 31-Dec-28 1.71 NA CRISIL A-/Stable

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Renaissance Global Limited

100%

Holding company of the Renaissance group and operational and financial linkages with other group entities

Verigold Jewellery DMCC

100%

Wholly owned subsidiary of Renaissance Global Ltd and operational and financial linkages between the group entities

Verigold Jewellery (UK) Limited


100%

 

Wholly owned subsidiary of Renaissance Global Ltd and operational and financial linkages between the group entities

Renaissance Jewelry, NY Inc

100%

Wholly owned subsidiary of Renaissance Global Ltd and operational and financial linkages between the group entities
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 391.15 CRISIL A-/Stable   -- 04-09-23 CRISIL BBB+/Positive 18-08-22 CRISIL BBB+/Positive / CRISIL A2 02-07-21 CRISIL BBB+/Stable / CRISIL A2 CRISIL BBB+/Negative / CRISIL A2
      --   --   -- 29-07-22 CRISIL BBB+/Positive / CRISIL A2 21-06-21 CRISIL BBB+/Stable / CRISIL A2 --
      --   --   -- 24-06-22 CRISIL BBB+/Stable / CRISIL A2   -- --
Non-Fund Based Facilities ST 15.0 CRISIL A2+   -- 04-09-23 CRISIL A2 18-08-22 CRISIL A2 02-07-21 CRISIL A2 --
      --   --   -- 29-07-22 CRISIL A2   -- --
      --   --   -- 24-06-22 CRISIL A2   -- --
Fixed Deposits LT   --   --   -- 24-06-22 Withdrawn 02-07-21 F A-/Stable --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Fund-Based Facilities 125 State Bank of India CRISIL A-/Stable
Fund-Based Facilities 30 YES Bank Limited CRISIL A-/Stable
Fund-Based Facilities 84.25 Bank of India CRISIL A-/Stable
Fund-Based Facilities 29 Punjab National Bank CRISIL A-/Stable
Fund-Based Facilities 18 Central Bank Of India CRISIL A-/Stable
Fund-Based Facilities 49.75 IndusInd Bank Limited CRISIL A-/Stable
Non-Fund Based Limit 7 State Bank of India CRISIL A2+
Non-Fund Based Limit 2 IndusInd Bank Limited CRISIL A2+
Non-Fund Based Limit 6 Punjab National Bank CRISIL A2+
Working Capital Term Loan 19.26 State Bank of India CRISIL A-/Stable
Working Capital Term Loan 21.88 Bank of India CRISIL A-/Stable
Working Capital Term Loan 4.37 Punjab National Bank CRISIL A-/Stable
Working Capital Term Loan 7.93 IndusInd Bank Limited CRISIL A-/Stable
Working Capital Term Loan 1.71 Central Bank Of India CRISIL A-/Stable
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Criteria for Consolidation

Media Relations
Analytical Contacts
Customer Service Helpdesk

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Himank Sharma
Director
CRISIL Ratings Limited
D:+91 124 672 2152
himank.sharma@crisil.com

Rushabh Pramod Borkar
Associate Director
CRISIL Ratings Limited
D:+91 22 3342 3390
rushabh.borkar@crisil.com

Hetvi Shailesh Darji
Rating Analyst
CRISIL Ratings Limited
B:+91 22 3342 3000
Hetvi.Darji@crisil.com		Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com

 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).

CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").

For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') provided by CRISIL Ratings Limited ('CRISIL Ratings'). For the avoidance of doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for use only within the jurisdiction of India. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings provision or intention to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

The report is a statement of opinion as on the date it is expressed, and it is not intended to and does not constitute investment advice within meaning of any laws or regulations (including US laws and regulations). The report is not an offer to sell or an offer to purchase or subscribe to any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way.

CRISIL Ratings and its associates do not act as a fiduciary. The report is based on the information believed to be reliable as of the date it is published, CRISIL Ratings does not perform an audit or undertake due diligence or independent verification of any information it receives and/or relies on for preparation of the report. THE REPORT IS PROVIDED ON “AS IS” BASIS. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, CRISIL RATINGS DISCLAIMS WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR OTHER WARRANTIES OR CONDITIONS, INCLUDING WARRANTIES OF MERCHANTABILITY, ACCURACY, COMPLETENESS, ERROR-FREE, NON-INFRINGEMENT, NON-INTERRUPTION, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USAGE. In no event shall CRISIL Ratings, its associates, third-party providers, as well as their directors, officers, shareholders, employees or agents be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

The report is confidential information of CRISIL Ratings and CRISIL Ratings reserves all rights, titles and interest in the rating report. The report shall not be altered, disseminated, distributed, redistributed, licensed, sub-licensed, sold, assigned or published any content thereof or offer access to any third party without prior written consent of CRISIL Ratings.

CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains or its associates. Ratings are subject to revision or withdrawal at any time by CRISIL Ratings. CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors.

CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For more detail, please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the Securities and Exchange Board of India regulations (and other applicable regulations, if any), are made available on its websites, www.crisilratings.com and https://www.ratingsanalytica.com (free of charge). CRISIL Ratings shall not have the obligation to update the information in the CRISIL Ratings report following its publication although CRISIL Ratings may disseminate its opinion and/or analysis. Reports with more detail and additional information may be available for subscription at a fee.  Rating criteria by CRISIL Ratings are available on the CRISIL Ratings website, www.crisilratings.com. For the latest rating information on any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisilratings.com/en/home/our-business/ratings/credit-ratings-scale.html