About Kenrik Industries Limited

Business Overview

Kenrik Industries is engaged in the manufacturing, wholesaling, and supply of plain and studded gold jewellery and ornaments, with a primary focus on traditional Indian jewellery. The product portfolio includes rings, earrings, armlets, pendants, nose rings, bracelets, chains, necklaces, bangles, watches, luxury items, and wedding jewellery, often custom-made as per customer specifications.

Jewellery is crafted using precious and semi-precious stones such as diamonds, rubies, and cubic zirconia, and is produced on a job work basis at the Ahmedabad, Gujarat unit. The company caters to high-end, mid-market, and value market segments, operating mainly on a B2B business model.

Raw materials, primarily gold, are sourced from various regular vendors without fixed contracts due to market price volatility, ensuring flexibility and competitive pricing. Operating in a thriving bullion and jewellery market, Kenrik Industries benefits from a wide vendor network and agile sourcing.

All jewellery is BIS Hallmark certified, ensuring purity and consumer trust. Emphasis is placed on quality control, inventory management, and customer-centric operations. Products are delivered in secure, quality packaging.

Transparent dealings, ethical practices, and timely deliveries contribute to high customer satisfaction. Business expansion is supported through a dedicated website and mobile application, helping offer superior design, finish, and quality. As of October 31, 2024, the Company have 9 employees. The Banker to the Company is Axis Bank Limited.

Industry Analysis

Overview of the Indian Gems & Jewellery Industry

India’s gems and jewellery sector plays a vital role in the nation's economy, contributing approximately 7% to the GDP as of January 2022 and employing nearly 5 million individuals. Recognizing its significant growth potential and value addition capabilities, the Government of India has identified the sector as a key area for export promotion.

To encourage investment and technological advancement, the government has implemented several supportive measures. These include the approval of 100% Foreign Direct Investment (FDI) under the automatic route—eliminating the need for prior approvals—and initiatives to strengthen 'Brand India' in the global market. A major milestone was the signing of the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE) in March 2022. This agreement is set to offer duty-free access to the UAE market, enhancing India's export potential. Post-CEPA, the Gems and Jewellery Export Promotion Council (GJEPC) aims to triple exports to the UAE.

Market Size and Export Performance

India’s gems and jewellery market was valued at US$ 78.50 billion in FY21. A strong revival in export demand, particularly from the United States, coupled with successful engagements in Virtual Buyer-Seller Meets (VBSMs), significantly boosted export performance. In FY23, India recorded US$ 37.73 billion in total gems and jewellery exports. However, exports between April 2023 and January 2024 stood at US$ 26.35 billion, marking a 16.03% decline compared to the same period the previous year.

Future Outlook

The future of India's gems and jewellery industry looks promising, with growth expected to be driven by the expansion of organised retail and the emergence of strong domestic and global brands. The increasing presence of established players is bringing greater variety, contemporary designs, and quality assurance to consumers. Additionally, the relaxation of gold import restrictions, the return of low-cost gold metal loans, and the stabilisation of gold prices are expected to provide a significant boost to volume growth in the near to medium term.

India, home to 450 organised jewellery manufacturers, importers, and exporters, continues to serve as a global hub for jewellery production. Liberal government policies have further supported the sector’s expansion. With these developments, the Indian gems and jewellery industry is projected to reach US$ 100 billion by 2027, underlining its importance in both the domestic and international markets.

Business Strengths

1. Experienced and Skilled Workforce
Employs expert craftsmen, designers, and technicians adept in blending traditional techniques with modern aesthetics, enabling the creation of innovative and high-quality jewellery.

2. Wide Product Range
Offers a diverse portfolio of traditional and contemporary designs, including customized and ready-to-wear jewellery, catering to various customer tastes, occasions, and budgets.

3. Secured Inventory Management
Maintains inventory in a high-security facility equipped with CCTV surveillance, burglar alarms, fire systems, and 24/7 security personnel for maximum protection.

4. Strict Quality Assurance
Implements rigorous quality checks throughout the production process. Products meet high standards in purity, durability, and authenticity, with certifications for gold and silver items.

5. Competitive Pricing Strategy
Delivers high-quality products at competitive prices through efficient manufacturing, strategic sourcing, and cost control, ensuring strong value for customers.

6. Robust Distribution Network
Operates a well-established distribution and logistics network, enabling timely and secure delivery across India and international markets.

7. Sustainability and Ethical Practices
Emphasizes eco-friendly sourcing, waste reduction, energy efficiency, and ethical labor standards, appealing to environmentally conscious consumers

Business Strategies

1. Innovation-Driven Approach
Focuses on product innovation through investment in R&D, recruitment of skilled designers, and fostering a creative work culture.

2. Customer Base Expansion
Aims to enter new markets and demographics by offering customized products and exploring international opportunities via trade shows, distributor partnerships, and multilingual campaigns.

3. Brand Awareness Enhancement
Plans to strengthen brand visibility through social media marketing, influencer collaborations, and partnerships with designers and celebrities.

4. Operational Efficiency
Implements lean manufacturing, supply chain optimization, and automation to reduce costs, enhance productivity, and ensure timely delivery.

5. Superior Customer Service
Differentiates through personalized shopping experiences, prompt issue resolution, and robust after-sales support including repairs and maintenance.

6. Sustainability Focus
Prioritizes eco-friendly sourcing, waste reduction, energy conservation, and ethical labor practices to appeal to environmentally conscious consumers

Business Risk Factors and Concerns

1. Regional Concentration Risk – Gujarat Dependency
A major portion of revenue is concentrated in Gujarat. From FY22 to FY24, over 95% of operational revenue originated from this region, increasing to 100% as of October 31, 2024. Any adverse event impacting Gujarat could significantly affect the company’s business performance, financial health, and growth prospects.

2. Quality and Reputation Risk
Customer complaints or negative publicity regarding the purity and quality of gold/silver jewellery can severely impact brand reputation and financial performance. Despite compliance with BIS hallmarking standards and stringent quality checks, occasional lapses may still occur, posing a risk to customer trust and operational stability.

3. Commodity Price Volatility
Fluctuations in gold and silver prices directly impact inventory valuation, profitability, and sales volume. While efforts are made to mitigate price risks by matching procurement with sales, existing inventory remains exposed to value erosion during prolonged price declines, which may adversely affect financial results.

4. Discretionary Spending Dependency
Jewellery purchases are discretionary and influenced by consumers' disposable income, festive demand, and macroeconomic factors such as employment, inflation, and interest rates. Economic downturns or shifts in investment preferences may reduce jewellery demand, thereby affecting revenue and profitability.

Kenrik Industries faces significant risks from regional concentration in Gujarat, potential quality-related reputational damage, volatile precious metal prices, and dependence on consumer discretionary spending. These factors collectively pose challenges to revenue stability, operational efficiency, and long-term growth.