PC Jeweller Ltd has announced plans to raise up to Rs 2,705 crore by issuing warrants on a preferential basis to promoters and investors. This move is mainly aimed at settling bank loans and meeting working capital requirements. The promoters will contribute around Rs 850 crore by subscribing to these warrants.
According to Managing Director Balram Garg, the funds will be primarily used to settle bank loans, with 75% allocated for this purpose and the remaining 25% for working capital needs. This initiative is part of the company’s strategy to manage its financial obligations and strengthen its operations.
Details of the Issuance
In a regulatory filing, PC Jeweller stated that its board has approved the proposal to raise funds through the preferential issue of fully convertible warrants. The company plans to issue up to 481,342,500 warrants at Rs 56.20 each, targeting both the promoter group and public investors. Specifically, the promoter group is set to receive 15 crore warrants.
Approval and Next Steps
An extraordinary general meeting (EGM) will be held on August 8, 2024, to seek approval from the company’s members for this proposed preferential issue. This step is crucial for moving forward with the fundraising plan.
PC Jeweller has opted for a one-time settlement (OTS) for its outstanding dues with a consortium of banks. This settlement includes cash and equity components, as well as the release of securities and mortgaged properties. Punjab National Bank (PNB), the third-largest bank in the consortium, has already approved the OTS.
Positive Developments and Future Focus
In an investor presentation in late May, PC Jeweller highlighted positive developments, such as the withdrawal of a petition from the National Company Law Tribunal (NCLT) by State Bank of India (SBI) and favorable consideration of its OTS proposal by the banks. These developments are helping the company refocus on increasing its brand presence and marketing efforts, which have shown visible impacts in the ongoing quarter.
Business Operations and Expansion
As of March 31, 2024, PC Jeweller maintains a wide network of 60 showrooms, including six franchisee showrooms, spread across 44 cities in 15 states. The company continues to leverage its core strengths in manufacturing and designing, supported by skilled staff and efficient systems.
PC Jeweller is also revamping other aspects of its operations, including launching new jewelry collections, enhancing its franchisee business, and optimizing costs. These efforts are aimed at strengthening the company’s market position and driving growth.
PC Jeweller’s plan to raise Rs 2,705 crore through warrants, with significant investment from promoters, is a strategic move to manage its financial obligations and support business growth. With a focus on settling bank loans and enhancing working capital, the company is well-positioned to capitalize on positive developments and expand its market presence.
