Readying For a Golden Future

You need just one to come in and the rest follow. This is probably what you call the herd mentality a term most often used in context to the equity markets. Another jewellery manufacturing company is planning to raise funds from the primary market. C Mahendra Infojewels Ltd (CMIL) intends issuing 1.30 crore equity shares of face value of Rs 10 each of the company to raise funds. The issue will constitute 34.21% of fully diluted post issue paid-up capital of the company.

CMIL is a jewellery manufacturing company with mainly two business operations namely, manufacturing and exporting diamond studed Jewellery. The company started manufacturing of diamond studded jewellery in Seepz Mumbai in 2000 under the SEZ scheme for a period of ten years. It has also obtained approval for its second unit of manufacturing Gold and Silver Studded Jewellery at the SEEPZ-SEZ, in Mumbai.  CMIL has an installed capacity of manufacturing 65000 pieces (250 Kgs) and is capable of handling 50000, carats of rough, cut and polished diamonds and gemstones from its facility in the Surat Special Economic Zone, Gujarat.

CMIL claims to be in the most profitable business as the company is selling its products directly to retailers with no middleman involved in its sales activity. The company is selling its products in the US market only. Out of its total sales, 60% is through retail chain stores and 40% through a marketing company “mom and pops. Selection Inc.”. In future, the company intends to enter the Arabian market and the United Kingdom to reduce its dependence on the US market.

CMIL intends to use the proceeds of the issue to set up a Gold Refinery unit worth Rs 3.60 crore, repay its unsecured loans from ex-partners worth Rs 71.09 crore and augment working capital requirement of Rs 54 crore. The company's major revenue comes from traded goods, which require considerable working capital. We will revisit this public offering after CMIL's disclosure about price band happens.