Master Chains N Jewels Limited

Related Party Transactions Promoters

Promoter Private Companies in Same Business: One Promoter Group entity, S.K. Chain (a partnership where Madan Sardarmal Kothari is a partner), is engaged in a similar line of business. Additionally, the business undertakings of two former Promoter Group entities, Aurous Jewels LLP and M/s. Kanak Shilp, were recently acquired by the Company in October 2025.

Financial Performance of Private Companies: Separate full financial statements for these private entities are not provided in the sources; however, the Company acquired Aurous Jewels LLP for ₹118.22 million and M/s. Kanak Shilp for ₹19.09 million. These acquisitions were structured as slump sales based on independent valuation reports.

Key Details of Related Party Transactions (Financial Terms): Total related party transactions were ₹1,695.38 million (10.09% of revenue) in Fiscal 2026, ₹3,374.82 million (22.32%) in Fiscal 2025, and ₹3,301.39 million (25.94%) in Fiscal 2024.

RPTs with Promoter-Owned Private Companies: Key transactions included the purchase of goods from Aurous Jewels LLP (₹2,844.48 million in Fiscal 2025) and labor charges paid to M/s. Kanak Shilp (₹163.96 million in Fiscal 2025).

Closing Balance of Trade Receivables (RPT): As of March 31, 2024, there were trade receivables of ₹9.70 million from M/s. Kanak Shilp. By March 31, 2026, these balances were eliminated as these businesses were acquired by the Company.

Quality of Promoters: The Company was founded by Madan Sardarmal Kothari, who has over 29 years of experience in the gold jewellery business. The Promoters have extended personal guarantees and unsecured loans to support the Company’s working capital needs. However, the sources note that one Promoter, Taruna Madan Kothari, does not possess documentary proof of her educational qualifications.

Business Model Operations

Business Model: The Company operates a B2B model, specializing in the design, manufacture, and wholesale distribution of gold jewellery, primarily gold chains. They supply in bulk to retail and wholesale jewellers across India.

Debtors Age Analysis: As of March 31, 2026, the majority of trade receivables (₹2,338.81 million out of ₹2,392.59 million) were outstanding for less than 6 months. Only ₹0.18 million were outstanding for more than 3 years.

Advances from Customers: The Company received advances from customers (contract liabilities) totaling ₹69.92 million in Fiscal 2026, compared to ₹20.40 million in Fiscal 2025.

Comparable Peers: Listed peers include Shanti Gold International Limited, Shringar House of Mangalsutra Limited, and Sky Gold & Diamonds Limited.

Raw Materials: The primary raw materials are gold bullion, silver, platinum, diamonds, and gemstones. Gold constitutes the most significant portion of the cost structure.

Sourcing & Volatility: Raw materials are sourced domestically from authorized bullion dealers and banks. Gold prices are inherently volatile, influenced by global macroeconomic factors and regulatory changes.

Key Raw Material Vendors: The top 10 suppliers accounted for 67.60% of total purchases in Fiscal 2026. The Company does not have long-term exclusive arrangements with these suppliers.

Key Factors & Landscape: Business is affected by gold price fluctuations, seasonal demand (weddings/festivals), and the shift toward lightweight jewellery. The regulatory landscape includes strict compliance with Hallmarking and GST norms.

Legal Cases: There are 6 criminal proceedings initiated by the Company (aggregate ₹18.58 million) and 1 tax proceeding against the Company (GST demand of ₹2.45 million). Promoters face 3 tax proceedings involving ₹12.37 million.

Total Addressable Market (TAM): While a single TAM figure is not cited, the sources highlight that India is one of the world's largest wholesale markets for gold jewellery, with the gems and jewellery sector contributing significantly to India's GDP.

Key Competitors: Competition comes from a large number of organized and unorganized players in the fragmented wholesale market.

Order Book: The Company typically procures precious metals on a back-to-back basis based on confirmed orders. A specific "order book" value is not provided, but they aim to utilize Net Proceeds to fund an estimated ₹9,140.75 million in current assets for Fiscal 2027.

Financial Performance Health

Balance Sheet Health: Total assets grew from ₹2,180.40 million in 2024 to ₹4,736.35 million in 2026. However, the Company has a high Total Borrowings/Total Equity ratio of 92.34% as of March 31, 2026.

Operating Cashflows: Net cash flow from operating activities was negative (₹736.54 million) in Fiscal 2026, primarily due to a ₹1,742.00 million increase in trade receivables.

Customer Concentration: The top 10 customers accounted for 28.79% of revenue in Fiscal 2026.

Revenue Mix: 100% of revenue is derived from the domestic market in India.

Total Debt & CapEx (3 Years):

1. Debt (Mar 2026): ₹2,141.94 million (mostly current bank overdrafts and unsecured promoter loans).
2. CapEx (3 Years): Fiscal 2026: ₹26.61 million; Fiscal 2025: ₹0.84 million; Fiscal 2024: ₹13.07 million.

Return on Capital (RoCE): Conversion converting capital into earnings was 77.09% in Fiscal 2026, up from 42.30% in Fiscal 2024.

Asset Turnover: While not a direct KPI, Fixed Asset Turnover (Revenue/Net PPE) for Fiscal 2026 was 159.8x (16,805.90 / 105.17).

Growth in Sales, EBITDA, PAT:

1. Sales: Increased from ₹12,726.41M (2024) to ₹16,805.90M (2026).
2. EBITDA: Increased from ₹403.98M (2024) to ₹1,459.16M (2026).
3. PAT: Increased from ₹220.40M (2024) to ₹972.72M (2026).
4. Margins: EBITDA margin increased from 3.17% to 8.68%; PAT margin increased from 1.73% to 5.79% over the three-year period.

Financial Analysis Table

1. (₹ in millions, except percentages)

Analysis of Conversion Trend: The EBITDA to Cash Flow from Operations conversion percentage is not increasing; rather, it has shown a significant decline over the last three fiscal years. In Fiscal 2024, the conversion rate was 4.74%.

In Fiscal 2025, it dropped to 1.90%.

In Fiscal 2026, the rate turned sharply negative at (50.48%).

This steep decline in Fiscal 2026 was primarily driven by a massive increase in working capital requirements, specifically a ₹1,742.00 million increase in trade receivables and other working capital outflows, which resulted in a net operating cash outflow despite the Company's high reported EBITDA.

Risks Management Outlook

Key Risks: High working capital requirements, volatility in gold prices, dependence on a limited number of suppliers, and regional concentration in Western and Southern India (77.94% of revenue).

Free Cash Flow & Conversions (Red Flags):

FCF (2026): (₹828.58 million).

EBITDA to CFO Conversion %: Declined from 4.74% in 2024 to (50.48%) in 2026 [See Previous Calculation].

Red Flags: Negative operating cash flow in 2026, untraceable secretarial records (Forms 23B/7B), and unspent CSR obligations.

Growth Plans: Strategies include product diversification (expanding karatages), expanding the retail/wholesale customer base, and increasing capacity through inorganic acquisitions.

Government Intervention: The sector is subject to Government of India policies on gold import duties, Hallmarking regulations, and PMLA (Prevention of Money Laundering Act).

Management Commentary: Management views current trends, such as the preference for lightweight jewellery and the shift from unorganized to organized sectors, as structural opportunities for growth. They also note the cyclical/seasonal nature of the business tied to the festive and wedding calendar.