Amanaya Ventures coming with an IPO to raise upto Rs 2.76 crore

Amanaya Ventures

• Amanaya Ventures is coming out with an initial public offering (IPO) of 12,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 23 per equity share.
• The issue will open on February 24, 2023 and will close on February 28, 2023.
• The shares will be listed on SME Platform of BSE.
• The share is priced 2.30 times higher to its face value of Rs 10.
• Book running lead manager to the issue is First Overseas Capital.
• Compliance Officer for the issue is Gurpreet Kaur.

Profile of the company

The company was formed with the objective of promoting SPOT buying and selling of Gold across India. It isbullion traders, specializing in bars and coins of various sizes and weights of Gold and Silver and offers wholesale delivery of bullion to domestic users i.e. ornament manufacturers, goldsmiths, jewellers and semi wholesalers as well as individual customs. The company is a member of “Indian Bullion and Jewellers Association Ltd” and “Federation of Indian Export Organisations”.

It has changed the way the customers buy or sell the gold and silver. It has developed an app Aurel Bullion which is available at the play store which provides digital platform to buy and sell 24k Gold and Silver bars and coins to retail as well as the wholesale customers at a lowest possible price in an easy, simple and a transparent manner. It has also developed an E-commerce Portal, www.aurelbullion.com specifically for the retail customers in order to enable them to purchase 24k Gold and Silver bars and coins and provide to its B2B and B2C clients the Antique JadauJewellery which is being manufactured at Amritsar, Punjab. Its Product Portfolio offers a mainly 24K Gold and Silver Bars and Coins according to customer specifications and in standard sizes and weights.

The company also offers the Aurel Gold Purchase Plan for its retail customers in order to enable them to purchase physical gold in the smaller quantities in transparent, convenient and cost effective manner. It has developed its brand name “Aurel Bullion” over the years that provides it with the advantage of the customers relying on the quality of the product. All of its gold jewellery is hallmarked by BIS except gold jewellery weighing less than two grams which is not required to be hallmarked.

Proceed is being used for:

• Meeting the working capital requirements of the company
• General corporate purpose

Industry Overview

India is one of the largest markets for gold, and growing affluence is driving growth in demand. Gold has a central role in the country’s culture, considered a store of value, a symbol of wealth and status and a fundamental part of many rituals. Among the country’s rural population, a deep affinity for gold goes hand in hand with practical considerations of the portability and security of jewellery as an investment. Gold is considered to be auspicious, particularly in Hindu and Jain cultures. The ancient law-giver Manu decreed that gold ornaments should be worn for important ceremonies and occasions. Aside from Diwali, one of the most important dates in the Indian calendar, regional festivals across the country are celebrated with gold: in the south, Akshaya Tritiya, Pongal, Onam and Ugadi; in the east, Durga Puja; in the west, GudiPavda; in the north, Baisakhi and KarvaChauth. Gold is central to more personal life events too. Gifting gold is a deeply ingrained part of marriage rituals in Indian society - weddings generate approximately 50 percent of annual gold demand in India.

Retail investment totalled 282t in Q1. This was 20% weaker than Q1’21, although the y-o-y comparison is affected by the fact that investment in the year-earlier period was very strong. From a longer-term perspective, investment demand remains healthy: 11% higher than the five-year quarterly average of 254t. Bar and coin investment was mixed across markets. The sharp rise in the USD gold price did not quite reach the 2020 record, but foreign exchange movements meant that local prices in a number of currencies were at or close to new historical highs. This generated profit-taking in some markets, notable examples being Turkey and Japan, and this outweighed continued safe-haven investment elsewhere.

Indian bar and coin investment increased 5% y-o-y to 41t - the strongest first quarter since 2014. Retail investors focused on gold’s safe haven attributes amid volatility in local equity markets and the war in Ukraine. The BSE Sensex index fell sharply between mid-January and early March in contrast to the rapid climb in local gold prices over the same period. Investors were attracted by gold’s strong relative (and actual) returns, particularly given the paltry return on government bonds. Further, India’s gold market continues to make strides towards developing its position on the global stage. Trading on the India International Bullion Exchange (IIBX) launched in April, with the first bullion deposit repository (BDR) created and traded. The IIBX is expected to become a conduit for gold imports in India and the launch of trading on this platform is a first step towards establishing India as one of the world’s leading bullion trading hubs.

Pros and strengths

Use of the established Brand name: Over the years “Aurel Bullion” has established itself as a renowned brand in Amritsar and the adjoining areas. The company’s brand name “Aurel Bullion” provides it with the advantage of the customers relying on the quality of the product. Over the years, through the customer centric approach, its core focus on maintaining the customer trust and transparency, has been rewarded and contributed towards brand recognition and customer loyalty. All of its gold jewellery is hallmarked by BIS except gold jewellery weighing less than two grams which is not required to be hallmarked.

Technology based solution: The company has developed a mobile technology based trading solution under the name of Aurel Bullion which has the potential to scale up its business. It has also developed an E-commerce based portal aurelbullion.com to cater the needs of its retail customers. In this platform they can buy 24k Gold and silver bars and coins at lowest possible price, convenient and transparent manner.

Well established and cordial relationship with supplier: The company’s access to reputed Gold Traders based at Amritsar, Delhi and Ahmedabad allows it to offer quality products at timely manner. Its access to local jadaujewellery manufacturers allows it to offer quality and a diverse product range. The company actively engages with such traders and manufacturers to ensure that the products are as per its specifications and suggested designs. This arrangement has been beneficial for it as the company is able to successfully execute its orders on time and develop strong relationships with suppliers and customers.

Risks and concerns 

Significant revenue comes in festive season: The company’s business is experience significant increase in its sales during the festive, wedding season and other significant seasons like Christmas, Diwali season, GudiPadwa, Dhanteras etc. Any significant shortfall in sales or its inability to cope up with the growing demands during these periods during these periods, would affect its profitability and it would experience adverse effect on its results of operations.

Maximum revenue comes from few sellers: The company is extensively dependent on a limited number of sellers for a significant portion of its income. During the period ended on March 31, 2022 its top 10 contributed around 91.77 % of its total revenue. The loss of one or more of these significant sellers or a reduction in the amount of business it obtains from them could have an adverse effect on its financial condition and result in reduction of its income. Furthermore, major events affecting its customers, such as bankruptcy, change of management, change in their country’s policy and business framework, mergers and acquisitions, etc. could adversely impact its business. If any of its major customers becomes bankrupt or insolvent, it may lose some or all of its business from that customer and its receivable from that customer would increase and may have to be written off, adversely impacting its income and financial condition.

Stiff competition in the bullion sector: The bullion sector is highly fragmented and competitive. The company would not only compete with organized players but also a high percentage of unorganized entities such as individual jewelers, retailer stores, jewellery showrooms and galleries and small scale companies. Some of them may offer better designs and patterns to the clients and may be capable of providing more personalized services to each client due to the smaller number of orders placed with them. Further, these unorganized entities offer their services at highly competitive prices having well established presence in their local markets. Aggressive discounting by competitors, including liquidating excess inventory, may also adversely impact its performance in the short term. This is particularly the case for easily comparable pieces of jewellery, of similar quality, sold through stores that closely resemble to those that it operates. In addition, there are minimal entry barriers in this sector and hence it may also face competition from new entrants.

Outlook

Amanaya Ventures was formed with the objective of promoting SPOT buying and selling of Gold across India. They are bullion traders, specializing in bars and coins of various sizes and weights of Gold and Silver. The company has developed its own brand under the name 'Aurel Bullion'. The brand provides advantage to the customers for relying on the quality of the product. All of the gold jewellery offered is hallmarked by BIS except gold jewellery weighing less than two grams which is not required to be hallmarked. On the concern side, Significant portion of its sales is dependent on few of its seller. A loss of one or more such significant seller or a reduction in their sales, could adversely affect its financial condition thereby reducing its reducing revenues. Moreover, the company’s business experiences an increase in sales during the festive, wedding season and other significant seasons. Any substantial decrease in its sales during such periods and its inability cope up with its service during this time, then its revenues and profitability will be affected and have a negative effect on its image and brand.

The company is coming out with a IPO of 12,00,000 equity shares of Rs 10 each at a fixed price of Rs 23 per share to mobilize Rs 2.76 crore. On performance front, the total revenue of the company has increased to Rs 13.25 crore as against Rs 6.20 crore in year 2020-21 showing an increase of 113.71%. This is primarily due to increase in demand during FY22. The PAT for FY22 has increased to Rs 7.63 lakh from Rs 1.12 lakh in FY21, an increase of around 581.25% over the previous year.

Going forward, the company’s vision is to grow in markets by providing quality products through leveraging the strength of technology. It intends to make gold purchase affordable, convenient and transparent for its B2C customers. It intends to change the bullion buying and selling process by providing mobile based trading platform to its B2B customers. The company intends to sell the bullion products under its own brand name. It intends to capitalize on the growing demand for its products in the existing and newer market. In line with this vision, the company is implementing a business strategy with the following key components. The company’s strategy will be to focus on capitalizing on its strengths and expanding the operations of its business.