PC Jeweller has received approval from its board to raise Rs 2,000 crore to support its operations and financial obligations. The funds will be sourced through a combination of rights issues and fully convertible warrants, according to the company’s latest regulatory filing.
Details of the Funding Mechanism
The company aims to raise Rs 1,500 crore through a rights issue of equity shares, priced at Rs 10 each, available to eligible equity shareholders. The record date and further details will be announced later, and the issue’s completion depends on regulatory approvals.
Additionally, the board has approved raising up to Rs 500 crore through a preferential allotment of fully convertible warrants. This method provides a mechanism to secure additional funds while potentially affecting the current shareholding structure.
Utilisation of Funds
The funds from the preferential allotment are intended for the payment of the company’s financial liabilities, pending approval from the lenders’ consortium. This indicates a strategic use of the raised capital to manage existing financial challenges.
Current Financial Health
The company’s accounts have been classified as non-performing assets since June 2021, with significant lenders, including the State Bank of India, pursuing legal recovery actions. This situation places the success of the funding initiatives in a critical position for the company’s ongoing financial management.
Operational Footprint
PC Jeweller currently operates 55 owned and seven franchise stores. Three stores in Delhi are temporarily closed due to ongoing legal proceedings, reflecting operational challenges impacting the company.
Implications for the Industry
The funding strategy adopted by PC Jeweller is indicative of underlying financial pressures faced by large retail jewellers. This situation highlights the necessity for strict financial strategies and careful management of liabilities. The steps taken by PC Jeweller may offer insights for other industry participants facing similar financial and operational challenges.