Bhima Jewels on the lookout for PE investor for funding?

KOCHI: Bhima Jewels Pvt Ltd (BJPL), one of the oldest and leading retail jewellery brands in the state, is reportedly seeking private equity (PE) investors to meet its incremental working capital requirements.

Bhima has reportedly been going through a tough period for the past two years owing to the additional investments made towards expansion of its network.

EBITDA under pressure

In FY23, EBITDA, which measures the operational efficiency of an entity, had declined to Rs1,49.2 crore compared with Rs156.9 crore in the previous year.

This was due to higher operational overheads, resulting from store expansion (three stores added during FY23), and higher marketing overheads.

Moreover, in the first quarter of FY25, five of the newly opened stores reported EBITDA losses.

Bhima Jewels, which has witnessed a muted sales growth in 2023-24 (FY24), views that by roping in a PE investor it can limit its exposure to additional working capital bank funding to meet the inventory requirements of the new showrooms to be opened during 2024-25 (FY25).

Another PE story

Kalyan Jewellers, another leading jewellery retailer with presence in India as well as overseas, also had investments from Highdell Investment Ltd, an affiliate of the reputed PE investor, Warburg Pincus, until last month.

In August, the PE Investor exited Kalyan Jewellers selling 2.36 per cent stake in the company to the promoter T S Kalyanaraman, whereas the remaining 6.81 per cent was sold through a block deal.  

As per financial records, the US-based PE company held 9.17 per cent stake in Kalyan Jewellers as on June 30, 2024, through its affiliate Highdell Investment.

Since 1925

Established in 2011, BJPL is an entity under the Bhima family that has been in existence since 1925. BJPL is a faction under the brand name of Bhima, promoted by B. Bindumadhav.

BJPL has 18 showrooms, most of which are located in tier-2 and tier-3 cities in southern India.

Of these, 11 are located in Kerala, five in Telangana, and one each in Tamil Nadu and Karnataka.

Good understanding

The Bhima group, through all five factions, operates over 40 showrooms, of which 18 showrooms are operated by BJPL (Cochin faction).

One would naturally wonder how these five factions operate within the same market without any discord or unhealthy competition.

As per the agreements among the five factions and their promoters, one faction cannot open a showroom within a 100km radius of an existing showroom of another faction, so as to avoid any competition.

Bhima brand for all

However, all jewellery is sold under the same brand name of Bhima. All the five Bhima factions are run independently, both operationally and financially.