Kalyan Jewellers has temporarily paused its debt reduction strategy to prioritise the release of non-core land assets used as bank collateral, according to Executive Director Ramesh Kalyanaraman. He clarified that this is “a pause, not a full stop,” aimed at strengthening the company’s balance sheet while pursuing new growth initiatives.
He explained that after successfully reducing debt by over Rs 500 crore in the last year and a half, the primary objective was to release non-core land assets that had been mortgaged with banks as collateral. The company has initiated paperwork to release Rs 200 crore worth of this collateral.
“We decided we will just take a pause, let the collateral come out and then again start repaying. Maybe in the couple of months when the bank brings out the collateral, we will again start repaying the debt. So, it’s a pause and it’s not a full stop,” he said during a conversation with NDTV Profit on Friday.
He also clarified that the jewellery retailer has no immediate plans to enter in-house manufacturing. Instead, the company is developing a jewellery park in Kerala, providing infrastructure for its contract manufacturers without significant capital investment in machinery.
Despite the pause in debt reduction, the company is not slowing down its growth plans. Kalyan Jewellers is launching a new jewellery line targeting regional markets, with plans to open five showrooms in the next 12 months.
“It will need maybe Rs 300 crore capex, including inventory, and post which the expansion will be in the FOCO (franchise-owned, company-operated) model. And we might even convert the Rs 300 crore that we employed and bring it back to the system.”
Kalyan Jewellers has piloted a lean credit procurement model over the past four to five months, reducing the average credit period from 30-32 days to about a third of that.
“The return on capital for the amount employed for this pilot project was more than our ROCE (Return on Capital Employed) at a corporate level in India. So, we might continue with that,” the top executive underlined.
On being asked if the company’s margins will be more than 7% (in FY26), he said, “It should because our gross margins have gone up at a store level. And there is some operating leverage also kicking in. So, it should be in this range, is what we feel.”
Kalyanaraman indicated that the company’s ROCE is expected to grow organically by 1-2% annually. It will be driven by its asset-light expansion strategy and operating leverage.
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