PC Jewellers


(jainnitinp) #195

Clarification issued by the company at 7:20pm today

Sub.: Clarification on Shareholders / Investors queries

Ref.: PC Jeweller Limited (Scrip Code: 534809, Symbol: PCJEWELLER)

Dear Sir / Madam,
With reference to the today’s price movement in the Company’s shares on stock exchanges, the
Company has been receiving following queries from its shareholders / investors:

  1. The reason behind so much decrease in the price?
  2. Whether promoters of the Company have been selling shares in the market?

With reference to aforesaid queries our point-wise reply is as under:

  1. The Company makes timely disclosures of all the events, information etc. that have a bearing
    on the operation / performance of the Company which include price sensitive information etc.
    Presently, the Company is not having any such information, which requires disclosure as
    aforesaid and the Company is not aware of reason of sudden decrease in price of equity share
    of the Company today. The’ Company would further like to assure its investors, shareholders
    and other stakeholders that the fundamentals of the Company remain strong and it continues
    to move ahead on the growth path.

  2. None of the promoters of the Company have sold any shares in the market. However, one of
    the promoters, Shri Padam Chand Gupta has gifted some of his shares to his family
    member(s) through off-market transactions and the Company is already making the requisite
    disclosures in this regard from time to time.

Sanjeev Bhatia
Chief Financial Officer


(dr ravindra gupta) #196

I think company have given time to time communication with the shareholders and it has not shown any kind of foul play so far. Crash in the price is due to panic in jewellery sector by Nirav Modi issue and Bakranji issue. It will recover soon as the things will settle down.


(Gurmeet) #197

I really don’t see any reason for such a fall in the price of PC except concern about integrity of management because of Vakrangee issue. It is really very difficult to know if promoters were involved in price manipulations of the script.
Financial ratios are very good. Product designs are exceptionally good even better than Tanishq.


(donbox5) #198

If we compare PCJ and Titan on screener.in, one can see that Debtor days for PCJ are 10x times that of Titan and similarly receivables for PCJ are much much higher in comparison to Titan.

Maybe there is uncertainity whether those receivables would be realized or not.


(svasa13) #199

According to confcall , mgmt clarified this point .According to them , domestic business have 8 to 9 days of receivables.Similary for export business receivable days are more.


(RedEPS) #200

I don’t think receivables are an issue here. They are from the legacy export business and people knew about them in advance. That can’t explain the 20% drop in a couple of days. Export business is known for high receivables and low margins.

This looks like share price manipulation. This after the Vakrangee fiasco is not very positive development.


(onlish2014) #201

Clarification by CFO on TV. Promoter holding ~58% after gifting of 1.5% shares by one of the promoters to a family member classified as non propomoter.


(phreak) #202

Is it believable that 85 lakh shares worth about 250 Cr is given as gift to a non-promoter and then prices fall drastically and it had nothing to do with the aforesaid gift? The key term is “non-promoter”, so no disclosure on subsequent sale of said gift. I think this had something to do with money laundering post demonetisation. The 800 Cr odd operating cash flows in FY17, the 250 Cr gift now, the big pump and the big dump should all be seen in conjunction. This happens all the time in micro/smallcaps but when big money has to be washed, the scale of operations have to shift up with same modus operandi. To a large extent, I think this is what was happening with Vakrangee as well - They can technically show any income by increasing the number of Vakrangee outlets at a few fake locations. Withdrawal of washed cash is making these scrips go down. I have suspected this for months not just in these two scrips but in a lot of scrips that had fantastic operating cash flow post demonetisation which was history defying.


(jajushobhit) #203

Though what you are saying may well be true, I am unsure, whether jump in operating cash flow for jewelers should be inferred as money laundering. In FY 17, the cash flow from operating activities (CFOA)/operating profits for PCJ was 1.1x, while it was ~1.7x for titan, which also showed a ~3x increase in CFOA. The main reason for increase in CFOA is increase in trade payables. The average payables period for Titan is ~110 days while it is ~140 days for PCJ.

Regards
SJ


(Gaurav) #204

I didn’t quite understand the logic you are trying to imply by way of FY17 cashflow and the gift amount. Can you please explain a bit in layman term? Would be very grateful.

Thanks


(phreak) #205

Let’s look at jewellery as a business and look at it from the perspective of various stakeholders during demonetisation. Money is suddenly flowing in overnight and some small fry are interested in buying jewellery with whatever cash they have hoarded that they don’t want to take to the bank and be asked questions. This is where sales (topline) is impacted positively and things are still above book for the jewellery business.

Then there are people who have hoarded too much and don’t really care much about jewellery but have got to do something about the money. The jeweller can either take the money and promise to provide its equivalent in jewellery over time or may provide the products but not invoice them right away - This way it doesn’t raise the suspicion of IT dept. Sales will be booked in the future but money has come in for that sales already. This might explain the increase in trade payables. This is still somewhat above book - Like some companies that capitalise expenses, here jewellers are capitalising sales! Capitalising expenses can happen via converting some of the expenses as CWIP so that it doesn’t go into P/L and makes P/L look rosy. Sometimes you can also do this via ESOPs. Capitalising sales is letting the money go into payables for Sales which has perhaps happened but not yet recognised. This could happen potentially without the involvement of the very top level management, maybe with the involvement of certain middle-level managers who could benefit from booking Sales.

Then I think there is the scenario where there is a lot of money to be washed, something that doesn’t even involve jewellery but the stakeholder with the cash is only interested in the unique position the jewellery business has in accepting demonetised cash. Now this chap, if he is pally with the very top-level management in a listed business, could buy some stake in the listed business by paying the promoter some cash. He could sell this stake after a year and avail LTCG benefits as well, as a bonus. He cannot do this in any other business with demonetised cash. Now in PC Jeweller, promoter stake has come down by about 4% since demonetisation. It is hard to say how much of such stake could have been sold but not yet transferred (remember, the stakeholder could be pally with the promoter). Then there is a business like Vakrangee which may have been doing this washing with a more straight-forward non-existent franchise business model. What if they had more cash than that could be handled with adding more franchises without raising eyebrows and decided to participate in the PC Jeweller business model by buying stake in PCJ? Maybe they had already paid the money to PCJ and what was left was just buying the stake and then selling it in the open market to get back that 100 odd Crores.

All this is just a lot of speculation but to figure out crooked things, one has to think like a crook. I am sure there are loopholes in my theory and I am no expert but I have been smelling a rat in this whole Jewellery business is benefitting from demonetisation and CNBC TV18 and ET’s narrative of business moving from unorganised to organised players and all that hogwash. I could still be proved wrong if jewellery businesses do as well as they did in FY17 in the next 2-3 years but I have my reservations.


(cooljeba) #206

I subscribe to what you say here… Also, showing sales over a period of year, shows the Jewelers are having good order books with consistent sales when actually the footfall was much lower.
Through their bank contacts they can convert all that old notes with new ones. With Geetanjali gems we already know how deep their roots are.
Pretty much explains why people were dying outside the ATM during demonetization, while RBI was printing faster than a rabbit can replicate.


(LTInvestor) #207

Total shares o/s - 39.4cr. Promoters - 23.75cr minus 0.8cr (transferred). FII + DII + MF = 13cr. So you have me and you holding 3.4cr shares. Yesterday 5cr were traded on NSE (0.85cr delivered), day before 65L delivered, today already 2.5crs traded. So if the promoters are not selling and also not the the FII + DII. Then who sold 1.5cr (~50% of ordinary public holding) shares in two days?


(Radiozammy) #209

My question too… promoter holding about 60% (previous to gifting)+ 30% approx FPI holding = 90% and they dont seem to be selling… so the remaining 10% retail ownership was able to swing the price down by 50% in 2-3 days ??? something doesn’t add up.


(shyamutty) #210

PCJEWELLER fell another 28% today :frowning: is there any hope more or should investors exit the stock?


(manivannan.g) #211

Promoters “gifted” to “relative” that relative sold that in market. Now you can claim that promoter has not exited, at the same time he made money as well. Also if you gift more than 1%, the receiver has to disclose, hence smartly “gifted” only 0.8%. Now this is sums up for me !


(manivannan.g) #212

Most of your points are right.

  • PC Jeweller is a pumping-and-dumping stock where operators push the prices higher, and dump those at higher levels
  • People prefer Tanishq over PCJ
  • Although jewellery business is nice, but most businessmen running it are not (All these from below link)

Everyone feels there’s something really wrong with PCJ.

Disc: Invested and trapped, took a hard hit, lesson learnt :neutral_face:


(LTInvestor) #213

Does not add up. Total shares gifted as per management is 2%, 85lakhs. Very unlikely the person to who it was gifted sold it right away. That would defeat the purpose of raising funds. With average volumes delivered before this was 14L, even if the new holder were to sell 3L daily, in one month he would have cleared it neatly.

The most unusual thing is that no shares are pledged also.

Todays delivery at 86L. So three day delivery at 2.3cr shares or 65% of all retail and small investors have sold off.


(dr ravindra gupta) #216


Once more company have given the justification about the sudden decrease in the price. and reassured the investor about good fundamentals of the company and a great future ahead.


(jajushobhit) #217


The total selling/gifting is 1.03cr shares/2.24% share capital.The promoters’ stake has fallen from 60.24% to 58%. They make these disclosures after 6 days. I won’t be surprised if there was further gifting/selling in the past 2-3 days.

Disc: Invested
Regards
SJ