Why is the effective tax rate for this company consistently so low? Are there any carry over losses in the company?
The reason is that, income mainly come from exports.
Thank you for the prompt response Arun.
Sorry, Iâm not aware of lower income tax rates for exporters. Is there any specific tax exemption for jewellery exporting companies, as other companies in exporting sectors such as IT Services and pharma do not have such low tax rates consistently?
Also, give the nature of the business, where the company exports the jewellery to other retailers, how is the receivable days so low (FY18 receivable days are 9 days)?
Seems no one has given thoughts on this company for a long time. I see a lot of negatives / uncertainties in the 2012 posts, what are your opinions about REL now?
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Anyone tracking this stock even now? As of FY19 the company seems to have around Rs 14000 crores of Fixed deposit with banks, However other income is just 66 Crores. Even a conservative estimate of 7% interest rate would have yielded ~ Rs 1000 Cr in other incomes. It doesnât add up.
The company is trading currently at market cap = Net cash on books.
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Something seems to be fishy about this company, although they bought Valcambi in 2015 which is world leading Gold Refining but things dont in its accounting. Even Moneylife also pointed out lapses in its accounting in 2015
There seems to be some confusion, just had a look at Rajesh Exportâs most recent annual reports (2018-2019) and that indicates:
- Total Bank Fixed Deposits (In lakhs): 1,482,980.74 (See page 105)
Now Note 20 on Revenue from Operations mentions:
includes interest received on fixed deposits & Mutual Funds made for margin purposes for the sake of procurement of Raw Materials
This seems to be the case with Rajesh Exports for several years in the past and some research indicates usually this should be recognised as Interest Income while Rajesh Exports seems to be recognizing this under Revenue.
However, I had a further look in the statements, I couldnât find a breakup of what is the amount of interest they have received that they seem to have included in Revenue which is not actually revenue
One detail that I could find is in the notes of Standalone financial statements - See Page 72-73
Over there it says the amount of investments they have with several AMC (Asset Management Cos) and the accrued interest they have from those Mutual Funds. Now if you total up the accrued interest - it does fall between 12-15% of their investment amount in Mutual Funds
Other thing I noticed is:
- Fixed Deposit with Banks (Pg: 74 - Standalone statement) - 1,446,797.29
- Fixed Deposit with Banks (Pg: 105 - Consolidated statement) - 1,482,980.74
Interest Income on Cashflow statement is none (Pg: 58) - Here, I think, this is correct, since they have recognized the interest income under Revenue already
With respect to your point about Other Income - I think given that company clearly calls out that interest income is already included in Revenue - reconsidering it separately under Other Income would be double consideration hence cooking the books.
I donât have access to this. Would you mind sharing the PDF or screenshot of this article?
Check post #27 of this thread. The following is mentioned:
1). Working capital Management -REL enjoys strong bargaining power with its suppliers and gets 240 days credit (at aninterest of LIBOR + 80 bps) for making payment towards its purchases of gold. However,RELâs working capital management team effectively utilizes this credit period for generatinginterest income. From its customers, REL gets payment on cash on delivery basis andmanufacturing and delivery of jewellery takes approximately 15-20 days. Because ofhigher creditor days (approximately 240 days) and significantly lower debtor days (15-20days), REL enjoys negative working capital. The money received from customers isgenerally kept in fixed deposits for 6-8 months where company earns interest rate of 8-9%pa. This interest rate differential enhances cost efficiencies and boosts margins ofthe company.
This should theoretically explain booking Interest from FD in revenue as they are considering as WC. However itâs shady accounting to book interest as revenue as it doesnât give accurate picture of sales.
Thanks, this is helpful.
Is anyone aware of other companies who enjoys higher creditor days resulting in possible negative working capital?
We can probably examine their financials and past research reports to determine.
Also, I did some searching but couldnât find any place that suggests they are breaking any of the accounting standards in doing so.
Hi,
Anybody following this company now? I got interested in this again (I had bought and booked profits earlier in this one) when I read the news on Buffett bought shares in a gold mining company. I had earlier seen lot of investors commenting they prefer gold, silver, or a company mining either of these since the central governments are printing lot of money. Interestingly, I did not see much interest in Rajesh exports. This stock continued its fall even after Covid lock-down; however, I noticed that the volume is very less.
If anybody has an opposing/similar view on Rajesh exports? Any negative comment in the current situation is welcomed. Disc: Yesterday I suddenly took a position in this one. Ready to exit if wrong.
Thanks in advance,
Anto
I recently sold RAJESH Exports for 20% profit holding for 2 months. I had the same justification as you have described here so comprehensively but never wanted to hold it for long term. Looking forward for some to shed some light on the long term perspective.
Rajesh Exports looks very interesting both fundamentally and technically.
Having a strong presence in the entire jewelery value chain, including owning Vulcumbi, and now looking to expand their retail footprint keeps it poised for margin expansion and rerating. Technically as wellit is trading at the 200dma andd very close to a multi-year low of 440.
However, there is very little information available on the business and its short and medium term growth plans. The Annual Report doesnât say much, and I canât find too any investor ppts or earnings calls in the past year. Donât think there are any management interviews either. With such opacity,how does one evaluate the business? Does anyone have any more information?
why have they not reported earnings since june ?
They have reported. If you are using screener, then select standalone tab for Sep21 results.
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2% QoQ growth⌠sales is up but margin is down⌠is it due to raise in raw material costs in refining?
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âIn the gems and jewellery segment, exports of plain gold jewellery and gold studded jewellery is expected to increase to $10 billion in 2023. Tariff concessions offered to the UAE by India in products such as gold will reduce the import cost of inputs, he said.â might help Rajesh exportsâŚ
Any update on this company itâs been long? Any of you holding onto this?
Anyone aware if Elest private limited is actually a subsidiary of the company? Have checked all recent annual reports and never found any mention of elest.
But all media outlets including moneycontrol say itâs owned by Rajesh exports.
According to the bse clarification, they say that elest is promoted by the promoters. Does that mean the company has no stake in elest and only the promoters have?
Elest Pvt Ltd has entered into an MOU with the Government of Telangana for
setting up an AMOLED Display FAB for manufacture of AMOLED Display Units with
an investment of Rs. 24,000 Crores. ELest Pvt Ltd is a Company promoted by the
promoters of Rajesh Exports Limited.