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Kalyan Jewellers raises Rs 1,200 cr from PE major Warburg Pincus

Business Standard:  October, 2014

Chennai: In one of the largest private equity (PE) deals in the jewellery manufacturing segment, the India arm of US PE major Warburg Pincus has picked up a minority stake in Kerala-based jewellery maker and retailer Kalyan Jewellers for Rs 1,200 crore. While, Kalyan Jewellers refused to divulge how much stake it sold but industry sources pegged it at 10-12 per cent.

The jeweller will use the proceeds from the deal to fund its retail and manufacturing expansion plans. T S Kalyanaraman, chairman and managing director said the firm would open 28 stores - including 12 in overseas. Sixteen stores will come up before December 2014 and the remaining by another six months, he added.

Kalyan Jewellers plans to scale up its global presence in West Asia by foraying into Kuwait and Qatar markets and in south-east Asia by launching its footprints in Singapore and Malaysia. Currently, the company has six exclusive outlets in the United Arab Emirates.

The retail expansion is expected to cost Rs 1,000-1,200 crore. The jeweller is also planning to invest Rs 300-400 crore in enhancing its manufacturing capacity. The investment manufacturing will be funded through internal resources.

Kalyanaraman added that the company also plans to open about 25 stores every year. 'We look forward to working with Warburg Pincus as we continue to build on our foundation and move onto our next phase of growth," he noted.

The company has set a target to close the current financial year with a turnover of Rs 10,000 crore, up from last year's Rs 8,000 crore. "In the next three years, our revenue will reach around Rs 25,000 crore," said Kalyanaraman.

He claimed this is the largest PE investment into Kerala so far. To a question on whether the company is planning an initial public offering, he said: "Currently, we have enough funds; if we feel we need more money, then we will look into it."

Vishal Mahadevia, managing director and co-head (India) at Warburg Pincus, said the PE firm's investment in Kalyan Jewellers is the largest PE investment into the jewellery segment in India, and is an acknowledgment of the company's highly-talented team and its pioneering role within the sector.

Founded in 1993 and headquartered at Thrissur in Kerala, Kalyan Jewellers is the part of 100-year-old Kalyan Group, which started out with textile manufacturing and retailing.