Kalyan Jewellers is raising $200 million through its subsidiary, Kalyan Jewellers FZE, to refinance old debt. The subsidiary will issue senior US dollar-denominated fixed-rate notes (bonds).

Rating agency Standard and Poor’s (S&P) has assigned a preliminary 'B' long-term issuer credit rating to Kalyan Jewellers India Ltd (KJIL) and the proposed senior secured notes issued by Kalyan Jewellers FZE.

Proceeds from the notes will be used for refinancing borrowings, payment of transaction fees, and general corporate purposes. KJIL will guarantee the notes proposed to be listed on the Singapore Stock Exchange. Issuance for the notes is subject to market conditions.

S&P said in a statement that the jewellery retailer benefits from its good market position in the domestic organized jewellery market, with favourable growth prospects and resilient demand.

However, KJIL’s limited scale, operations in a highly fragmented market, high leverage, and short track record in the capital markets constrain its credit profile, the rating agency said.

The outlook on the financial instrument is stable, reflecting the expectation that the company will maintain its market position and steady revenue growth, and manage leverage and liquidity prudently, even as it expands.

Kalyan Jewellers is the second-largest player in India’s organised jewellery retail market, after Tanishq owned by Titan Co. Ltd. The company had 151 showrooms and 853 My Kalyan outlets as of December 31, 2021. It is likely to generate about $1.4 billion in revenue and $110 million in EBITDA in fiscal 2022.

Its market share is only about 2% of India’s $60-billion jewellery retail market. This market is dominated by unorganized players, who have a 70% share.