PC Jewellers


(Saurabh Maheshwari) #500

I know about the benefits for retail shareholders. But for PCJ, even at an average buyback price of 175, they will be able to suck 2x the outstanding shares as compared to 350 making stock a lot more stable. And if the stock becomes stable then everyone makes money instead of those whose shares are accepted in tender offer. Additionally, at an average of 175 amount of capital gains will be minimal for most people reducing the tax efficiency argument further.


(jajushobhit) #501

I completely understand from where you are coming. Given that the promoters are not participating, open market would have been perfectly OK. It is a move driven more to improve market sentiments than capital efficiency.

SJ


(Growth_without Debt) #502

Look at history of companies which declared share buy back (in spite of weak balance sheet) when share price crashing - you will find that share prices goes down more instead of reversal …investors are more worried about promoters intention !! Who want to take risk of buying more shares and selling back to company (as buy back offer) as there is no surety that he will be lucky to get profit!


(xaxa33) #503

That is the million dollar question…promoter’s intention!! One would imagine that the promoter’s primary (if not sole) intention would be to maximize economic value for herself (the stock price is the most definitive proxy for that) and if the prompter’s value increases other co-owners benefit commensurately, Now in this case the stock price is falling like a stone. So on a relative basis the promoter should also be losing as much as other stock owners- may be her grief is even more intense :slight_smile: .
So how do we figure out what is the underlying intention…what do they want!! I really wish if there was a metric for that.


(Rohit) #504

This is pure speculation. Once can never be sure about promoters intention, Any promoter will always try to paint a rosy picture only. In this case they have given clarifications time to time. However , Mr. market do not seems to be satisfied. Only time will tell who is right/wrong. Though stock looks highly undervalued (8-9 trailing PE), one has to take this risk and believe the promoters , if they are interested to buy.


(xaxa33) #505

These fellows are total sloths or total crooks. Announced the buyback on May 15th and when asked in the conference call on May 25th as to when the buy back process will commence- Srikrishna said in a week. Till today the merchant bankers (IDBI plus some local Delhi) guy has not even been able to draft the papers for shareholder communication. Not that all this really means anything- but at least we will know that the company still exists and is able to pay fees to its merchant bankers

Disc: Invested to make a quick buck but looks like stuck with them for ever:(


(xaxa33) #506

I don’t know if it is possible to check but are they able to pay salaries to their staff… are the stores open…any customers buying or at least walking in. May be people from North India/NCR would know. Any friends/ex friends/acquaintances who with work with PCJ :frowning: :frowning:


(Antriksh Patel) #507

I am from Vadodara, Gujarat. Haven’t visited the store, but yes it is open and functional. If this helps.


(xaxa33) #508

Thanks Antariksh bhai. If you are going in that area pls see from outside if lights etc are functioning and/or if people resembling customers can be seen in the vicinity :smile:


(Growth_without Debt) #509

Today visited PCJ showroom. 30 sales persons were waiting for customers but few people just came and went without buying anything but enjoying free AC in this scratching heat


(xaxa33) #511

which city was this?


(drsachin) #512

I belong to Delhi… PC jewelers are pretty reputed jewelers in Delhi… We used to buy exclusively from TBZ only… But since last 4/5 yrs have started buying jewelry from pcjeweller too… They only sell hallmark Gold jewelry and certified diamond jewelry…people mainly shop for gold jewelry here… Not much diamond sales though… Both mine and my sister’s wedding jewelry was bought from pcj only.(Had shifted to pcj from tbz because to modern designs, low making charges, similar quality gold)… Have seen showrooms in at Indirapuram, South extension and Karol Bagh. All three are good showrooms with lots of customers whenever I went there.


(manivannan.g) #513

Every jeweler has their own geographic dominance. If you take Chennai, Saravana stores dominate there, followed by GRT, Lalitha and other players, even I saw these stores being empty sometimes, because gold is not something people buy everyday… We can’t simply generalize. Heard lot of positive feedback from Delhiites about pcj.


(jajushobhit) #514

The postal ballot notice for buyback is out.

http://kcpl.karvy.com/images/2018/PCJL_6893/Postal%20Ballot%20Notice.pdf


(khushi) #516

Can anybody reading this notice calculate roughly what could be the acceptance ratio for buy back for retail investors.


(RedEPS) #518

Reset your password here: https://evoting.karvy.com/common/passwordoptions.aspx


(vamsi21) #521

Read through most of the discussion. I am quite interested because of the price…
Below are the cross checks i did which are faring well in comparison with other Jewellers:
Other Jewellers means(Titan, TBZ, Thangamayil Jewellery)

  • Inventory per Store at 50-60 Crore average every year…which is derived from Inventory. So inventory increases with no of Stores so will trade payables because of the nature of business.

  • Verified all 94 Stores(of course on WEB).

  • Higher Designer count high.(this explains the better designs!!!)

  • Total Designers/Store count comparable to others. Designers means(CAD/CAM and all you can search the word designers)

AR 2015:

The Company also has a strong 75-member design team that works on CAD/CAM to develop jewellery that is aligned with contemporary trends; this also helps retain product freshness and sustain marketplace excitement.

  • Inventory Turnover ratio is good (2.0… in actual because the number of stores is growing per store inventory turnover should lie somewhere between 1.7 and 1.85) compared to 1.3 and 1.5 of other jewellers. All ratios should be good if this is good.

  • Median employee salary is comparable to Thangamayil Jewellery
    PC Jeweller 1.84 lkhs Median Remuneration
    Thangamayil Jewellery 1.07 lkhs median remuneration
    TBZ 2.73 lakhs Median Remuneration
    Titan 5.78 lakhs Median Remuneration

Auditors are considered ok… however they clearly wrote they cannot do cost Audit because there is no clear section written …in their own words below

Page66 AR2017:

The Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of Company’s products. Accordingly, the provisions of clause 3(vi) of the Order are not applicable.

Page 125 AR2017:

Based on the audit procedures performed and taking into consideration the information and explanations given to us and on consideration of the reports of SJA on separate financial statements, in our opinion, the total receipts, total payments and total amount deposited in banks are in accordance with the books of account maintained by the respective companies.
Next lines talk about demonetization

  • They are not very much into diamonds like Gitanjali or Nirav Modi… so below is evidence.

Page 11 AR17: You can take the below point with a pinch of salt

First ranking in the category of Precious Metal Jewellery Plain – Large for the year 2015-16 by the Gem & Jewellery Export Promotion Council.

  • High Finance cost due to the gold leasing and interest on gold leased is reflected in finance cost.

  • Their total Sales movements per quarter are tying out with others.

  • Their Profit and CF from Ops are widely different because profit is again moving into inventory.

  • Receivables are proportionately growing with Sales.

  • Management talks really rudimentary… listen to Q3 Conf Call. They cannot talk on how will they manage the brand dilution if they open franchise stores.

  • ESOP 2011-- ESOPS issued can only fully be converted to shares after 4 years from issue… and they are issued at Rs.318

  • There is no formal mention of the profile of any of the board of directors what did they do and they just appointed the directors just like that… refer corp Announcements in 2014.
    Two Profiles are quite not good as per me.

MUNEESH CHAWLA : Associated with the below companies… and in turn those companies are associated with things that are questionable…
His Date of Cessation is 20 Jan 2018
IVY LEAGUE VENTURES
INTERNATIONAL PRINT-O-PAC
This director is also in defaulters list you can check his name in this pdf in watchoutinvestors website… you can also check his CIN its the same.

MIYAR RAMANATH NAYAK:
Director also in “ASIAN STAR COMPANY LIMITED”
This company is linked to fraudulent trading
Links to questionable behaviour for ASIAN STAR COMPANY: [1][2]

Loose Ends i didn't cover:

  • To grow at the current pace which they are growing(i mean stores,sales…etc) … you need more capital to stock gold… which means you need more collateral with banks … to get more gold… how is this collateral available to them… some things i can find are from AR2017.
    investments by dvi fund Mauritius and Fidelity Investments which are for this year and last year.
    What about other years prior?
    Through Internal accruals and their best cases they cannot grow more than 15% how did they manage
    a 10 year 40% and 5 year 20%…

  • How is their operating margin high even if they are not selling so much diamond jewellery? i mean TBZ is quoting -ve and Thangamayil is 5% nearly… ofcourse for TITan this matches?

Let me know what i am missing.

Disl: No holding in PC Jewellers when written.


(jajushobhit) #522

Great research @vamsi21! We need to look at the revenues of PCJ with a pinch of salt as for the franchisee model, sales is booked when goods are transferred to the store and not necessarily sold. So the built-up in receivables is more critical than built-up in inventory. Given that they are planning to expand primarily on franchisee going forward, makes it even more critical. This was exactly the case with Gitanjai Gems. They were showing high sales and good PAT but no cash with receivables and debt swelling. Further the opening of new stores should also be looked at differently. Opening new stores can also be an incentive for increasing sales, as new store will definitely require more jewellery, while the older stores may be sitting with unsold inventory. In short, we need to critically examine the balance sheet items like receivables, payables, cash, debt and inventory in far more detail than the P&L, going forward.

Disc: Small tracking position
SJ


(Ashwini) #523

Having spoken to a jeweller, he said old jeweller can be re-processed to make new jewellery so risk of inventory write off is negligible or small. Maybe another jeweller can confirm this point?


(niravacharya) #524

There is no inventory write off in jewelry, only making charges may be written off to have design as per latest fashion and trends