Warburg Pincus invests $77 mn more in Kalyan Jewellers

Thrissur-headquartered Kalyan Jewellers India Pvt. Ltd has raised Rs 500 crore (around $77 million) from private equity firm Warburg Pincus, it said in a statement.

The company will use the fresh capital to grow its distribution network in India and expand its overseas operations.

Kalyan Jewellers aims to build its presence in the country’s central region, including Uttar Pradesh and Madhya Pradesh. It will also add showrooms in Mumbai and Delhi in addition to expanding its presence in southern states where it already has a strong presence.

The jewellery retailer also plans to enter overseas markets such as Saudi Arabia, Bahrain, Oman, Singapore and Malaysia. Besides, it will bolster its presence in the UAE where it already has 13 showrooms. It also has a presence in Qatar and Kuwait with multiple showrooms.

The firm currently runs 106 outlets, including 23 in West Asia. Recently, it forayed into states such as West Bengal, Orissa and Rajasthan.

“The company plans to nearly double its presence to more than 200 showrooms using a combination of equity, debt and internal accruals,” said TS Kalyanaraman, managing director of Kalyan Jewellers.

The firm may also foray into the ecommerce segment to complement its physical stores, he said.

With this investment, Warburg Pincus has put in Rs 1,700 crore in the company so far. In 2015, the PE giant invested Rs 1,200 crore ($195.6 million), which also happened to be the second-biggest bet on an Indian company ever by the PE firm.

“The fresh investment will be used to accelerate Kalyan’s growth efforts for expanding its network and pursuing acquisition opportunities,” said Vishal Mahadevia, managing director at Warburg Pincus India.

Despite big-ticket investments, the company appears to be facing growth pangs and a sharp slide in margins. Its revenues remained almost flat for three years from FY2012-13 to FY2014-15. In FY2014-15, its net sales declined to Rs 7,289 crore from the previous year, as per regulatory filings. The financials for FY2015-16 could not be immediately ascertained.

The Kerala-based firm mainly competes with Mumbai-based jewellery retailer PC Jeweller Ltd and Kolkata-based Senco Gold and P C Chandra Jewellers Pvt. Ltd in the highly unorganised jewellery retail space in the country. PC Jeweller is also reported to be raising Rs 257 crore ($38.2 million) from US-based investment firm Fidelity to support its expansion plans.

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