Retaggio Industries coming with IPO to raise Rs 15.50 crore

Retaggio Industries

• Retaggio Industries is coming out with an initial public offering (IPO) of 61,98,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 25 per equity share.
• The issue opens on March 27, 2025 and will close on April 2, 2025.
• The shares will be listed on BSE SME Platform.
• The share is priced at 2.5 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Gretex Corporate Services.
• Compliance Officer for the issue is Nayan Mehta.

Profile of the company

Retaggio Industries is a Jewellery manufacturing company with a strong presence and experience in catering to B2B segment of the industry. It specializes in the production and sale of a wide range of jewellery products, including gold jewellery, diamond jewellery, precious stones, and other fancy jewellery and bullion in the form of coins and bars. Jewellery manufacturing is the process of designing and creating jewellery, including rings, bangles, necklaces, bracelets, earrings, and other types of decorative pieces. It specializes in crafting heritage and high-end jewelry pieces, emphasizing craftsmanship and unique designs. Jewellery manufacturing is a skilled trade that requires experience, attention to detail, and creativity. Mass-produced jewellery is often made using automated processes, while custom-made jewellery is crafted by hand and may take longer to produce. The quality of the final product is largely dependent on the skills of the manufacturer, and it is passionate about crafting beautiful, high-quality jewellery that tells a unique story. Right from the initial design phase to the final product, every step of the manufacturing process is carefully planned and executed to create pieces that are both stunning and durable. It also has display centre at its registered office.

Its talented team of designers starts by sketching out ideas for new pieces of jewellery, drawing inspiration from nature, history, and the latest fashion trends. Once a design is finalized, it uses state-of-the-art technology to create a 3D model of the piece, allowing the company to refine every detail before it goes into production. It might have a signature style or aesthetic that sets it apart from other jewellery manufacturers, such as a focus on natural materials like wood or stone, or a commitment to using sustainable and eco-friendly materials and processes. The company might also be known for its customer service, with a focus on helping each customer find the perfect piece of jewellery to suit their style and budget. Using the 3D model, it creates a wax or resin model of the jewellery piece, which is used to create a mold. The mold is then used to cast the piece in the desired metal, such as gold, silver, or platinum.

Proceed is being used for:

• Repayment/Prepayment of certain debt facilities
• Working capital requirements

Industry Overview

As of January 2022, India’s gold and diamond trade contributed around 7% to India’s Gross Domestic Product (GDP). The gems and jewellery sector has employs around 5 million. Based on its potential for growth and value addition, the Government declared the gems and jewellery sector as a focus area for export promotion. The Government has undertaken various measures recently to promote investment and upgrade technology and skills to promote ‘Brand India’ in the international market. The Government has permitted 100% FDI in the sector under the automatic route, wherein the foreign investor or the Indian company do not require any prior approval from the Reserve Bank or the Government of India. 

India’s gems and jewellery market size was at $78.50 billion in FY21. Growth in exports is mainly due to revived import demand in the export market of the US and the fulfilment of orders received by numerous Indian exhibitors during the Virtual Buyer-Seller Meets (VBSMs) conducted by GJEPC. In FY24, India's gems and jewellery exports were at $22.27 billion, a 14.94% decline compared to the previous year's period. Exports of gems & jewellery at stood at $2.54 billion in September 2024.

In the coming years, growth in the gems and jewellery sector would largely be contributed by the development of large retailers/brands. Established brands are guiding the organised market and are opening opportunities to grow. Increasing penetration of organised players provides variety in terms of products and designs. Also, the relaxation of restrictions on gold import is likely to provide a fillip to the industry. The improvement in availability along with the reintroduction of low-cost gold metal loans and likely stabilisation of gold prices at lower levels is also expected to drive volume growth for jewellers over the short to medium term. India has 450 organised jewellery manufacturers, importers & exporters and is the hub for jewellery manufacturing.

Pros and strengths

Product quality & timely delivery: It has a set of standards for itself when it comes to timeliness and the quality of service it provides to its customers. The stringent systems ensure that all the products reach its customers on the stipulated time and there are minimum errors to ensure reduced product rejection. Its quality service has earned the company goodwill from its customers, which has resulted in customer retention and order repetition. It has also helped the company to add to its existing customer base. It has developed an internal procedure of checking the client orders at each stage from customer order to delivery. 

Wide product range: Its wide range of product offerings caters to diverse customer segments, from the value market to high-end customized jewellery. Its product profile includes traditional, contemporary and combination designs across jewellery lines, and price points. Its focus on design and innovation, its ability to recognize consumer preferences and market trends, the intricacy of its designs and the quality and finish of its products are its key strengths.

Timely fulfilment of orders: Timely fulfilment of the orders is a prerequisite in its industry. The company has taken various steps in order to ensure adherence to timely fulfilment and also to achieve greater cost efficiency at its existing unit. The company constantly endeavors to implement an efficient business process so as to ensure cost efficiency in procurement.

Risks and concerns

Changes in consumer preferences and fashion habit: The demand for its products is based on its strength in identification of the latest trends and its continued ability to offer products that are acceptable to the consumers. If consumer preferences change due to shifts in consumer demographics, national, regional or local economic conditions, change in trend and fashion which it is not able to adapt, its consumers may begin to seek alternative options, which would adversely affect its financial results. If it is unable to procure products to successfully meet changes in fashion and trends, its business and financial condition may be materially and adversely affected.

Geographical concentration: The major portion of its revenue for the half year ended on September 30, 2024 and for the financial year ended on March 31, 2024 is from only one city of Maharashtra. 80.22 % of Revenue for the half year ended on September 30, 2024 and 59.39 % for the financial year ended on March 31, 2024 were from the state of Maharashtra. Such geographical concentration of its business heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in these regions which may adversely affect its business prospects, financial conditions and results of operations. Factors such as competition, culture, regulatory regimes, business practices and customs, industry needs, transportation, in other markets where it may expand, its operations may differ from those in which it is currently offering. 

Face competition: The market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as technical competence, distribution network, pricing and timely delivery. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive. Moreover, the unorganized sector offers their products at highly competitive prices which may not be matched by us and consequently affect its volume of sales and growth prospects. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition.

Outlook

Retaggio Industries is a Jewellery manufacturing company with a strong presence and experience in catering to B2B segment of the industry. It specializes in the production and sale of a wide range of jewellery products, including gold jewellery, diamond jewellery, precious stones, and other fancy jewellery and bullion in the form of coins and bars. On the concern side, fluctuation in prices, non-availability or high cost of quality of gold, silver, diamonds and other precious and semi-precious stones may have an adverse effect on its business, results of operations and financial condition. Further, its business is dependent on its continuing relationships with its customers. The company neither has any long-term contract with any of customers nor has any marketing tie up for its products

The company is coming out with an IPO of 61,98,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 25 per equity share to mobilize Rs 15.50 crore. On performance front, the company’s revenue from operations is Rs 2,327.83 lakh for the financial year 2023-24 as compared to Rs 2,306.59 lakh for the financial year 2022-23 representing an increase of 0.92% on account of expansion of business. The profit after tax increased by 8.13% to Rs 334.11 lakh for the financial year 2023-24 from Rs 308.99 lakh for the financial year 2022-23.

Meanwhile, it is focused on establishing and increasing its manufacturing facilities as this will allow it to exercise control over manufacturing costs and the quality of the finished products. Additionally, it intends to enhance the brand recognition of its services through its presence in major cities. It does market through traditional channels such as word of mouth and intend to do other marketing as well. Its marketing and advertising initiatives shall be directed to increase brand awareness, acquire new customers, drive customer traffic across its retail channels and strengthen its brand recall value.