Kalyan Jewellers to launch pilot franchise showrooms in Middle East in FY23
Kalyan Jewellers on Thursday said it is planning to expand its presence in the Middle East through franchisee model and is expected to launch its pilot franchise showrooms in the region in the current financial year.We are looking at franchisee routes for expansion in the Middle East market.
Kalyan Jewellers on Thursday said it is planning to expand its presence in the Middle East through franchisee model and is expected to launch its pilot franchise showrooms in the region in the current financial year.
''We are looking at franchisee routes for expansion in the Middle East market. There are enquiries from potential franchise partners in the region. ''We plan to launch the pilot franchise showrooms in the region before the end the current financial year. Once that gets stabilised, we will formalise our expansion strategy in the Middle East through the franchisee route,'' Kalyan Jewellers Executive Director Ramesh Kalyanaraman told shareholders in the 2nd annual general meeting after IPO.
Talking further about the Middle East market, he said, the region has been performing well over the last 3-4 consecutive quarters.
''With air connectivity achieving normalcy, we have been witnessing improved customer sentiments over the last 3-4 quarters. Business at all the showrooms have surpassed pre-Covid levels. Talking about expansion in the Middle East, it will be funded by the internal accruals from the region itself,'' he added.
The company, which entered the franchise model in India in the first half of this financial year, currently has three franchised stores operational and it is on track to open three more such stores before Diwali this year in the country, Kalyanaraman said.
Kalyanaraman further noted that the company has a healthy pipeline of interested franchisees in various parts of the country and Kalyan Jewellers will be able to add more franchise showrooms before the end of the current financial year.
''We have recently launched our first set of franchise showrooms through a significantly more capital efficient franchisee owned company operated model. In this model, investments into inventory and capex will be taken care of by the franchise partners. ''With the franchisee model getting stabilised and gaining scale, we will not need to re-invest all the cash generated, thereby generating more free cash in the system, which can be utilised to reward shareholders, and dividend is definitely one of the options,'' he added.
Explaining reports on Moody's withdrawing Kalyan Jewellers India's stable rating after fund raise delay to access the international debt capital markets, Kalyanaraman said, ''We were planning to tap the international bond market during the second half of the last financial year.'' The proposed bond issue was supposed to be net debt neutral for us and the objective of the transaction was to establish relationships with a new class of investors, thereby diversifying the company's sources of financing, he stated.
There was no other pressing need for Kalyan Jewellers to pursue the transaction. However, at this stage, given the market conditions, the company has decided not to pursue the transaction during the current financial year, he said.
''We had appointed Moody's and S&P as rating agencies for the proposed bond issue. Given the decision to not pursue the fund raise, the credit rating by the international agencies did not make much sense for us, hence, we requested the rating agencies to discontinue the ratings,'' he added.
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