Initial Public Offer

MARCH 15, 2021

IPO Note KALYAN JEWELLERS LTD NOT RATED (Note: All the information in this note is taken from RHP) Offer Details

The price band is in the range of Rs.86-87/share. The total issue size is of

Rs.1,175 cr (at Rs.87/share). It includes fresh issue of equity shares aggregating upto Rs800 cr and offer for sale (Mr. T.S. Kalyanaraman – The Promoter Selling Shareholder:Rs125 cr and HighDell Investment Ltd – Investor Selling Shareholder:Rs250 cr ) upto Rs375 cr.

Offer details

Particulars Details Price band (Rs/share) Rs86-87

Opening date of the Issue March 16th, 2021

Closing date of the issue March 18th, 2021

No. of shares pre-issue (nos. cr) 93.81

No. of shares post-issue (nos. cr)* 103.01 Fresh Issue (nos. cr)* 9.20 Offer for sale (nos. cr)* 4.31 Issue size (Rs cr)* 1,175 Bid Lot 172 Equity share and multiple of 172 thereafter Book Building QIBs 50%

Non-Institutional 15%

Retail 35%

Lead managers Axis Capital Limited, Citigroup Global Markets India Private Limited, ICICI Securities Limited, SBI Capital

Markets Limited and BOB Capital Markets Limited.

Source: Company RHP, * Based on upper price band

Shareholding Pattern Pre Issue Post Issue

Promoter holding (%) 67.99 60.53 Public shareholding (%) 32.01 39.47 Total (%) 100.00 100.00 Source: Company RHP

Objects of the offer

Particulars (Rs cr) Funding working capital requirements of the Company 600.00 General corporate purposes NA

Source: Company RHP

Background Kalyan Jewellers India Ltd (Kalyan Jewellers) is one of the largest jewellery

companies in India based on revenue as of March 31, 2020, according to the Technopak Report. They were established by their founder and one of their Promoters, Mr. T.S. Kalyanaraman, who has over 45 years of retail experience, Jatin Damania of which over 25 years is in the jewellery industry. They started their jewellery [email protected] business in 1993 with a single showroom in , . +91 22 6218 6440

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MARCH 15, 2021

Kalyan Jewellers has since expanded to become a pan-India jewellery company, with 107 showrooms located across 21 states and union territories in India, and also have an international presence with 30 showrooms located in the Middle East as of December 31, 2020. All of their showrooms are operated and managed by them. In Fiscal 2020 and in the nine months ended December 31, 2020, the revenue from operations was Rs101,00.92 cr and Rs5,516.70 cr, of which 78.19% and 86.21% was from India and 21.81% and 13.79% was from the Middle East. Their total showrooms have increased from 77 as of March 31, 2015 to 137 showrooms as of December 31, 2020, and they intend to continue to open additional showrooms as they expect significant opportunity for further penetration in their existing markets as well as in new markets, primarily in India. The company also sell jewellery through their online platform at www.candere.com. The company design, manufacture and sell a wide range of gold, studded and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, which is their highest-selling product category, to daily-wear jewellery. In Fiscal 2020 and in the nine months ended December 31, 2020, 74.77% and 75.88%, respectively, of their revenue from operations was from the sale of gold jewellery, 23.36% and 21.72%, respectively, was from the sale of studded jewellery (which includes diamonds and precious stones), and 1.87% and 2.40%, respectively, was from the sale of other jewellery. Hyperlocal Jeweller: One of their key competitive strengths is their ability to operate as a hyperlocal jewellery company. They endeavour to cater to their customers’ unique preferences, which often vary significantly by geography and micro market, through their local market expertise and region-specific marketing strategy and advertising campaigns. They engage local artisans to manufacture jewellery (based on their specifications) that is suited to local tastes in the markets in which they operate and hence endeavour to curate a localised product mix and store experience within each of their showrooms to suit their customers’ preferences in the immediate micro market. It is in large part due to some of these strategies, as well as their ability to operate as a hyperlocal jewellery company, that has enabled them to become one of only the few pan-India jewellery companies. Trusted Jewellery Brand: The Company pride themselves on being a trusted jeweller and have endeavoured to establish a strong brand that their customers associate with trust and transparency. They were one of the first jewellery companies in India to voluntarily have all of their jewellery BIS hallmarked as well as accompanied by a detailed pricing tag disaggregating the various components of price to aid transparency to consumers. These initiatives, along with their carefully crafted customer education and awareness campaigns around the lack of transparency historically prevalent in the Indian jewellery industry, have helped build the strength of their brand and enabled them to a develop a loyal customer base. They were awarded the Superbrands title of being ‘India’s most preferred jewellery brand in Fiscal 2020’. “My Kalyan” Neighbourhood Centres: The “My Kalyan” network and strategy is a unique pillar of their business which significantly enhances the distribution footprint in a manner which is difficult for their peers to easily replicate and enables Kalyan Jewellers to access India’s large pool of jewellery customers across urban, semi-urban and rural markets.

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Information Technology: Kalyan Jewellers has built robust information technology and operational management systems for their operations. These systems are specific to their business needs to ensure best-in-class standards of controls and operational efficiency. They particularly regard the implementation of their policies concerning inventory management and the mitigation of gold price fluctuations as critical to the success of their business. Additionally, they consider investments in technology to be a key enabler of their growth and have invested in building various technology platforms, particularly in their “My Kalyan” operations, to support their customer acquisition activities. They also plan to leverage the “near me searches” technology through which they are able to make their “My Kalyan” centres and showrooms discoverable across internet searches and allow their customers to contact a showroom or “My Kalyan” centre closest to them seamlessly. Promoters and Management: Kalyan Jewellers is led by a management team with extensive experience in the jewellery and retail industries and with a proven track record of performance. Founded by the Chairman, Managing Director and Promoter T.S. Kalyanaraman, they are led by their whole-time Directors and Promoters, T.K. Seetharam and T.K. Ramesh, who have been involved in their business since company’s inception and oversee the development of their business strategy. The company has built an experienced team of senior management professionals, led by the Chief Executive Officer, Sanjay Raghuraman who joined the company in 2012 when they were only present in South India and has been a key figure in their geographical expansion and evolution into a pan-India business. Raghuraman is supported by a strong and experienced team of cross functional professionals across senior and middle level management. Board of Directors and Shareholders: The Company is supported by an experienced board of directors with diversified expertise which actively contributes to and participates in their strategy. Their Board consists of eminent personalities from varied fields such as banking and finance, retail, marketing and regulatory bodies and includes the former CEO of Shoppers Stop, former CEO of L&K Saatchi & Saatchi, the former Deputy Governor of the RBI, as well as former leaders of well-reputed banking institutions such as Catholic Syrian Bank, Indian Overseas Bank and State Bank of Travancore. Furthermore, their shareholders include Highdell, belonging to the Warburg Pincus group.

Product Offerings The company design, manufacture and sell a wide range of jewellery products at varying price points for uses ranging from jewellery for special occasions such as weddings, which is their highest sold product category, to daily-wear jewellery. They offer gold jewellery, studded jewellery (including diamond) and other jewellery (including platinum jewellery and silver jewellery). The following table provides a breakdown of the revenue from operations in Fiscal 020 and in the nine months ended December 31, 2020 by product category:

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Table Fiscal 2020 Nine Months ended December 31,2020 Product Rs Cr % of revenue % of revenue from operations Rs Cr from operations Gold 7,552.53 74.77% 4,185.96 75.88% Studded 2,359.97 23.36% 1,198.27 21.72% Other* 188.43 1.87% 1,32,477.00 2.40% *Others inclues revenue from the sale of silver; commissions earned from selling insurance policies for jewellery; and revenue earned from providing ancillary services to customers, such as nose and ear piercing Source: Company RHP

Jewellery Manufacturing The Company manufactures their products through a network of artisans throughout India, who work in the capacity of contract manufacturers and as their independent contractors to manufacture their products. Most of the contract manufacturers are long-term business partners of the Company and they continue to work closely with them. They execute agreements with their contract manufacturers whereby the company supply them with all raw materials and design for their jewellery. The company procures and supply raw materials, including gold, diamonds, precious stones, platinum, and silver, to their contract manufacturers and pay them a fee as a contractor. Under the contract manufacturing agreements, the company control the entire manufacturing process and the ultimate risk of the raw materials and products lies with them. They inspect their contractors’ facilities and supervise the entire manufacturing process to ensure their jewellery is being manufactured in line with their designs and with the desired levels of quality.

Manufacturing facility

Locatio of Plant

March 31, 2020 March 31, 2019 March 31, 2018 Type of Jeweller Actual Capacity Installed Actual Capacity Installed Actual Capacity Installed capacity Production Utilisation capacity Production Utilisation capacity Production Utilisation (kg) (kg) (%) (kg) (kg) (%) (kg) (kg) (%)

SAIF Facility I Gold Jewellery 1020 123.2 12.1 1020 102.9 10.1 1020 166.2 16.3 SAIF Facility II Gold Jewellery - - - 1800 55.6 3.1 - - -

Old Gold Refinery 5400 116.7 2.2 ------

Kenous Facility Gold Jewellery 12420 585.7 4.7 10560 449.9 4.3 5760 258.1 4.5 Oman Facility Gold Jewellery 720 91.4 12.7 360 15.5 4.3 - - -

Source: Company RHP

Showroom Network As of December 31, 2020, the company had 107 showrooms located across 21 states and union territories in India, which covered a total aggregate area of 4,65,235 sq. ft. as well as 30 showrooms located in the Middle East, which covered a total aggregate area of 38,056 sq. ft. All of their showrooms are operated and managed by them.

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The showroom centre presence across India as of December 31, 2020

Source: Company RHP

Management Background Name Designation Profile Mr. T.S. Kalyanaraman Chairman and Managing Director He is one of the Promoter of the company. He has been associated with the company since the incorporation and has been associated with the brand ‘Kalyan Jewellers’ since 1993. He has over 45 years of retail experience, of which over 25 years is in the jewellery industry. Mr. T.K. Seetharam Whole-time Director He is one of the Promoter of the company. He has been associated with the company since its incorporation and has been associated with the brand ‘Kalyan Jewellers’ since 1998. He has approximately 22 years of experience in the jewellery industry. Mr. T.K. Ramesh Whole-time Director He is one of the Promoter of the company. He has been associated with the company since its incorporation and has been associated with the brand ‘Kalyan Jewellers’ since 2000. He has approximately 20 years of experience in the jewellery industry. Mr. Sanjay Raghuraman Chief Executive Officer He joined the company on October 4, 2012, in his prior capacity as the Chief Operating Officer. He has approximately 14 years of experience in retail financial services and operations. Mr. V. Swaminathan Chief Financial Officer He has been associated with the company since September 22, 2016. He has approximately 26 years of experience in finance and corporate planning and control. Mr. Sanjay Mehrottra Head of Strategy and Corporate Affairs He has been associated with the company since January 22, 2018. He has over 26 years of experience in Indian capital markets. Source: Company RHP

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Business response to COVID-19

March 2020 to May 2020 An outbreak of COVID-19 was recognised as a pandemic by the WHO on March 11, 2020. In response to the COVID-19 outbreak, the governments of many countries, including India and in the Middle East, have taken preventive or protective actions such as imposing country-wide lockdowns, as well as restrictions on travel and business operations. Since May 2020 many of these measures have been lifted. Due to a government mandated lockdown in India, the company had to temporarily close all of their showrooms, “My Kalyan” centres, manufacturing facilities, procurement centres and offices from mid- March to May 2020. The company’s operations in the Middle East were similarly impacted during this period, and given the slowdown in the general economy of the Middle East countries in which they have operations, the company chose to permanently close seven of their showrooms. As of December 31, 2020 the company operated 30 showrooms in the Middle East.

May 2020 onwards In May 2020, the company resumed operations and in June 2020 they opened most of their showrooms. Kalyan Jewellers pan-India presence, strong supply chain network and the capabilities and depth of the management team enabled them to restart their operations quickly after the lockdowns eased. The company was able to leverage their 13 procurement centres across India to direct supplies from centres that were relatively unaffected by COVID-19. They also proactively engaged with their customers to reassure them about the strength of their brand and business, to demonstrate their commitment to restart the operations and to build confidence in the safety protocols deployed at their showrooms. As a result, they have since experienced a return of customer traffic to their showrooms and by July 2020 revenues generated from their showrooms in India that were open were broadly in line with pre-COVID-19 levels. Furthermore, in the three months ending December 31, 2020, the company generated revenues in their showrooms in India that were higher than pre-COVID-19 levels and the corresponding period in Fiscal 2019. They believe the rapid recovery and subsequent growth in their business is being driven by the following key factors:  Resilience of wedding-related jewellery, the highest-selling product category  Jewellery seen as a store of value and as an investment  Preference for safety of organised retail shopping experience Furthermore, in the long-term, the company expects the impact of the COVID-19 pandemic to further accelerate the shift of the jewellery market from unorganised players to organised chains such as Kalyan Jewellers, given the conviction consumers are likely to have in the store experience and safety protocols businesses like their can offer. They also expect the negative impact of the pandemic to be disproportionately higher for some of their competitors, particularly the smaller jewellers and those operating in the unorganised market. They expect this will provide them with a competitive advantage in the long-term and hence they intend to leverage the strength of their brand, pan- India presence and “My Kalyan” network to increase their sales and expand their presence in several markets.

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Cost control: In order to reduce the impact of COVID-19 on the company’s operations, they have proactively taken various steps to manage their expenses and liquidity, including reducing their marketing costs; seeking partial rent waivers and discounts under most of their lease agreements for their showrooms, “My Kalyan” centres and offices; temporarily reducing the cash compensation of senior executives; and reducing their administrative overhead expenses. As a result of prompt action by the management team, the company did not layoff any of their employees or terminate out their contractual arrangements with their suppliers and contract manufacturers during the lockdown period.

Strengths

Established brand built on the core values of trust and transparency Kalyan Jewellers has endeavoured to establish a strong brand in the Indian jewellery market that their customers associate with trust and transparency. They were among the pioneers in the Indian jewellery market in (a) educating consumers about the aforementioned industry issues; (b) instituting the highest quality standards for their jewellery, and (c) introducing complete price transparency with their products. Through the following initiatives, coupled with concurrent customer education and awareness campaigns, particularly through their “My Kalyan” network, they have helped strengthen their brand by building customer trust and promoting transparency. BIS hallmarked jewellery: While selling BIS, hallmarked jewellery is expected to become mandatory in India in 2021, the company is selling only BIS hallmarked jewellery, which is independently verified for purity by government-approved agencies in accordance with BIS norms. Detailed price tags disaggregating various components: All of their jewellery items are accompanied by a detailed pricing tag disaggregating the various components such as metal weight, stone weight, stone price and making charges to aid transparency to consumers. Karatmeters to verify purity: Company’s showrooms offer karatmeters to allow customers to verify the purity of their gold jewellery as well as the jewellery they have previously purchased from other sources. Transparency in gold exchange: In Fiscal 2020 and 9 months ended December 31, 2020, 27.13% and 31.50% of their revenue from operations involved customers exchanging or selling their previously purchased jewellery to them as payment for newly purchased jewellery. They have deployed a transparent process for valuing such exchange of customer gold, including verifying the exchanged gold purity in front of the customer to determine its fair value. Product certification: With each purchase of jewellery they provide their customers with a “four level product certification” which assures purity, offers lifetime product maintenance, identifies exchange and buy-back terms and provides a detailed product description. Relevant Staff Training: The company’s sales staff is trained to be forthright with customers and to develop trust with the aim of providing long-term customer satisfaction and winning repeat business rather than focusing on a one-time sale.

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One of India’s largest jewellery companies with a pan-India presence The company is one of the largest jewellery companies in India based on revenue as of March 31, 2020, according to the Technopak Report. The company has a pan-India presence with 107 showrooms located across 21 states and union territories in India and also have 30 showrooms located in the Middle East, as of December 31, 2020. In Fiscal 2020 and in the nine months ended December 31, 2020, 78.19% and 86.21% of their revenue from operations was from India and 21.81% and 13.79% was from the Middle East. While they started their operations in Kerala, over time the company has been able to successfully expand to become a pan-India jewellery company. As of December 31, 2020, 72 of their 137 showrooms were located outside of South India (South India includes Kerala, , , , Pondicherry and ). Kalyan Jewellers operations outside of South India contributed 57.69% and 49.92% of their gross profit and 47.81% and 40.40% of their revenue in Fiscal 2020 and in the nine months ended December 31, 2020. In addition, they have a relatively diversified presence across larger and smaller cities, semi-urban and rural regions. For Fiscal 2020 and in the nine months ended December 31, 2020, approximately 51.29% and 53.08% of their revenue in India was generated from sales outside of tier-I cities. Their total showrooms have increased from 77 as of March 31, 2015 to 137 as of December 31, 2020.

Hyperlocal strategy enabling the company to cater to a wide range of geographies and customer segments Jewellery consumption patterns in India are highly localised with customer preferences varying significantly by region, according to the Technopak Report. According to the same report, this industry characteristic has acted as a significant barrier for jewellery brands to scale up in India as it demands (a) a nuanced understanding of local customer needs, (b) region-specific procurement and inventory models, which require operating at sufficient scale to attract the best artisans, and (c) significant investments in localised and region-specific marketing campaigns to build awareness and trust with consumers. They strive to appeal to a broad base of customers via a multi- faceted hyperlocal strategy by deploying the following initiatives in their operations: Localisation of the product portfolio: The company appeal to a wide audience by endeavouring to understand the local market preferences and trends in the geographies in which they operate and offering a range of jewellery products in their showrooms that are tailored to such tastes. Localisation in brand communication and marketing: The company’s region- specific marketing efforts, including state and city-specific brand campaigns with differential, localised creative content and the use of various relevant brand ambassadors with national, regional and local appeal, is a core element of their brand positioning. Localisation of the showroom experience for customers: Their localisation strategy is further supported by their policy of hiring personnel for each of their showrooms with local language and cultural knowledge, as well as their practice of designing the showrooms to reflect local tastes and sensibilities.

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Localisation through the “My Kalyan” network: Through their strategy of catering to local preferences, combined with their large scale of operations, allows them to cater to a wide range of customers across geographies, age groups, socio-economic status levels and genders as well as across urban, rural and semi-urban markets, all of which greatly widens their appeal and addressability to broad segments of jewellery consumers across India.

Extensive grassroots “My Kalyan” network with strong distribution capabilities enabling deep customer outreach The company grassroots “My Kalyan” customer outreach network is a key element of their hyperlocal strategy enabling them to be a neighbourhood jeweller and is focused on marketing and customer engagement across urban, semi-urban and rural areas in India. According to the Technopak Report, a significant proportion of India’s gold jewellery demand originates from rural and semi-urban markets where the penetration of organised jewellery companies has historically been even lower than that of the overall Indian market. They believe that their network of “My Kalyan” centres provides them with a marketing tool to help address the latent demand that exists in some of these markets.

Visionary Promoters with strong leadership and a demonstrated track record The company is led by a management team with extensive experience in the jewellery and retail industries with a proven track record of performance. Strong promoter background with extensive experience in retail and jewellery: The company was founded by the Chairman, Managing Director and Promoter, T.S. Kalyanaraman, who has over 45 years of retail experience, of which over 25 years is in the jewellery industry. They are led by the whole-time Directors and Promoters T.K. Seetharam and T.K. Ramesh, who have been involved in their business since the company’s inception and oversee the development of their business strategy. Professionally managed: They have built an experienced team of senior management professionals, led by their Chief Executive Officer, Sanjay Raghuraman who joined the company in 2012 when they were only present in South India. He has been a key figure in their geographical expansion and evolution into a pan-India business. He is supported by a strong and experienced team of cross-functional professionals across senior and mid-level management.

Wide range of product offerings targeted at a diverse set of customers Kalyan Jewellers products span jewellery for special occasions, such as weddings, to daily-wear jewellery, and their product portfolio also caters to a wide range of price points. The company has launched numerous sub-brands that address specific customer niches such as: Ornate wedding jewellery, which they sell through their “Muhurat” brand to their wedding customers; High-volume, mass market jewellery, which they sell through their “Aishwaryam” brand to their value conscious customers; Antique and heritage gold jewellery, studded with precious stones jewellery, polki and uncut diamond jewellery that they sell through their “Mudhra”, “Sankalp”, “Nimah” and “Anokhi” brands to the mid-to-high end customers; and

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Technology savvy customers, to whom they cater through their online platform. Recognizing early the powerful potential of engaging customers online in an increasingly digitally connected world, they invested and acquired a majority stake in Enovate Lifestyles Pvt. Ltd. and its online platform, www.candere.com. Through this platform, the customers can purchase a wide variety of jewellery under the Candere and Kalyan brands, as well as enroll in their purchase advance schemes.

A description of company’s jewellery sub-brands and their target geographies and themes:

Source: Company RHP

Robust and effective internal control processes to support a growing organisation and showroom network with a pan-India presence The company has established a robust set of operational and control processes to manage their business operations and to support their future growth at both the showroom and corporate level. Given the high value nature of their jewellery, their inventory management and internal audit procedures are critical to the success of their business. The company closely track their inventory starting from the initial procurement of raw materials to its ultimate sale in their showrooms, including by barcoding each piece of finished goods inventory and conducting daily counts at their showrooms. These measures are coupled with an integrated enterprise resource planning, or ERP, system. The ERP system is designed to permit the management to manage all aspects of their operations, including procurement of raw materials and semi-finished products, inventory management, sales and finance from a centralised platform.

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Strategies

Leverage the scalable business model to expand showroom network and diversify the channels of distribution According to the Technopak Report, the Indian jewellery industry is expected to continue to witness a shift in demand in favour of organised jewellery companies, which are likely to continue to gain market share from the unorganised market. The company believe that their strong brand, scalable business model, effective operational processes and proven track record of profitable expansion, all positions them well to capitalise on this market opportunity, and accordingly they intend to further expand their network of showrooms. Between April 1, 2015 and December 31, 2020, Kalyan Jewellers opened 60 net new showrooms at an average rate of approximately 11 showroom openings per year across multiple regions, which has provided them with significant experience in expanding their showroom network, including in new markets. The company evaluate all of their new showroom locations by conducting extensive market research designed to understand a market’s demographics, spending capacity and economic conditions. Further, they also study the incumbent jewellers in a given region to understand their product offerings as well as local jewellery preferences, enabling them to curate a merchandise offering at their showrooms that is both tailored to local preferences as well as to offer a wider range of jewellery products to which they have access given their pan-India network, which their competitors typically are not able to showcase. In the past, while expanding into certain new markets such as Mumbai, Delhi, and Kolkata, as part of a carefully designed marketing strategy, the company had opened multiple showrooms on the same day in order to maximise local brand awareness as well as optimise their showroom opening costs. The company intend to leverage their substantial past efforts and experience, to expand their presence across several markets in India which they have identified as having potential for opening further showrooms. The company believe the significant investments they have already made in (a) brand building across a large number of local markets, (b) understanding the varying nuances of customer behavior across geographies, and (c) building an artisan network across various parts of India, will enable them to effectively utilise their previously proven playbook in successfully expanding their showroom network. In addition, the company plan to continue to diversify their channels of distribution. For example, recognizing early the powerful potential of engaging customers online the company invested in and acquired a majority stake in Enovate Lifestyles Private Limited and its online platform, www.candere.com. The company’s online platform offers them another distribution channel to reach customers and potentially drive further traffic to their showrooms. They intend to set up Candere kiosks in shopping malls, as well as at some of their showrooms in order to offer their customers the option to purchase products offline and also offer them the opportunity to tangibly experience their products offered online. They also intend to leverage their increasing engagement with a digitally savvy consumer base to increase revenues for jewellery sold online through www.candere.com.

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Widen product offerings to further increase consumer reach The company intends to continue to increase their focus on studded jewellery going forward as these products have widened the consumer base to which they cater and also typically have a higher gross margin profile than their gold jewellery. The company tailored their showrooms to offer prominent displays of diamond and other studded jewellery and, in many cases, have entire floors dedicated to such jewellery. Furthermore, they have launched a number of subbrands around their studded jewellery range. Their revenue from sales of studded jewellery increased from 20.65% of their revenue from operations in Fiscal 2018 to 23.36% of revenue from operations in Fiscal 2020. Indian jewellery consumers are also becoming increasingly brand conscious and developing greater sophistication in their jewellery preferences, according to the Technopak Report. Given this trend, the company is continuing to explore opportunities to expand their range of sub-brands and to introduce new branded jewellery lines that are targeted at both specific customer niches as well as the luxury market focused on high-end gold and studded jewellery.

Increasing global footprint and augmenting growth in current geographies With a view to further diversify their customer base and increase market share, the company intends to augment their sales in the geographic markets where they sell their products as well as expand into new geographic markets. Currently, they have customers in over 30 countries including China, Netherlands, Russia, Singapore, United Arab Emirates, United Kingdom and USA. They have recently commenced sales of their products in Vietnam. Further, they have also received orders from new customers in the United States of America and also grown their sales in China during the current fiscal. The company will continue to focus their efforts in select geographies such as United States of America, and establish a greater presence there. Their growth strategy in these markets will be to create strong local presence and connect and expertise with required development capabilities to exploit growth potential offered by these markets. Their strong focus will remain on acquiring new customers, retaining existing customers and offering high quality products and innovation. In the last few years, they have introduced a range of jewellery collections under distinct sub-brands, such as “Muhurat”, “Mudhra”, “Rang”, “Nimah” and “Anokhi”, which are designed to cater to specific customer niches such as antique jewellery, temple jewellery and polki diamonds and precious stones jewellery. These brands are marketed through distinct promotional campaigns and have separate shelf-space in their showrooms.

Leverage “My Kalyan” network to deepen customer outreach and strengthen the distribution network in their core markets The company intends to continue leveraging their extensive “My Kalyan” network of 766 centres across India to deepen customer engagement and actively bolster their efforts to acquire a larger customer base in the markets in which they operate. In many of these markets, particularly in semi-urban and rural areas, the penetration of organised jewellery companies has historically been low. Furthermore, they believe the local and unorganised jewellery players who dominate some of these markets have been and may continue to be adversely impacted by the COVID-19 pandemic. Given this opportunity to access latent demand, the company plans to build the employee strength across their Kotak Securities – Private Client Group Please see the Disclosure/Disclaimer on the last page For Private Circulation 12

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“My Kalyan” centres to increase customer engagement and drive traffic to their showrooms. Additionally, the company intends to expand their “My Kalyan” network in areas where they believe their network is currently underpenetrated relative to the scale of the latent demand opportunity in those particular markets. For example, in certain regions in south India, particularly Andhra Pradesh, Telangana and Karnataka, they intend to increase the footprint of their “My Kalyan” network. Similarly, across the rest of the country, there are several regions they have already identified where the company plan to set up My Kalyan centres which they believe will be able to significantly drive incremental customer traffic to their showrooms and increase enrolments in their purchase advance schemes, given the underlying dynamics of those particular markets. Based on their past experience, they believe “My Kalyan” network and strategy significantly enhances their distribution footprint in a manner which would be difficult for their peers to easily replicate and enables them to access India’s large pool of jewellery customers across urban, semi-urban and rural markets. As they continue to embark upon their showroom expansion, they also plan to expand their “My Kalyan” network in tandem with their showroom footprint in order to promote their brand, showcase their product catalogue, enrich their customer database and help drive traffic to their showrooms.

Invest in CRM, marketing and analytics to more effectively target consumers and drive sales The company intends to continue to invest in customer relationship management, or CRM, strategies, campaigns and technologies to analyse and manage customer interactions and related data throughout the customer lifecycle, with the goal of creating a long-term relationship with customers, building customer retention and driving sales. Developing a deep and nuanced understanding of their customers and their purchasing patterns is crucial to their business. They acquire data to identify and understand their customers from numerous sources, including their showroom sales, in-person customer visits, Kalyan Jewellers mobile app, their online platform candere.com, their Kalyan Matrimony site and “My Kalyan” network. The company has micro websites for each of their showrooms as well as for various jewellery designs and products that enable search, lead generation and tracking in a hyperlocal manner. The access to data allows them to understand customer consumption patterns and preferences, enabling targeted advertising campaigns and hence influencing their merchandising strategy. They are able to target customers through SMS messages, WhatsApp, e-mails and phone calls in order to inform customers of promotions and sales that are of particular interest and relevance to them, as well as to build their brand image. They plan to leverage the “near me searches” technology through which they are able to make “My Kalyan” centres and showrooms discoverable across internet searches and allow customers to contact a showroom or “My Kalyan” centre closest to them seamlessly. They believe this technology along with their large presence across India gives them a clear competitive advantage within their industry. They also intend to further build their relationships with external agencies that assist them with analytics in order to use data more effectively and to target new uses and methods of analyzing customer data.

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Financials Balance Sheet As at As at As at As at As at March 31, March 31, March 31, Dec 31, Dec 31, 2018 2019 2020 2019 2020 Particulars (Rs Cr) Non-current assets Property, plant and equipment 1,008.29 1,089.73 1,079.19 1,059.43 986.24 Capital work-in-progress 17.99 16.71 24.23 27.79 38.45 Right-of-use assets 790.47 984.94 1,011.05 999.16 840.54 Investment property 62.23 62.23 62.23 62.23 61.14 Goodwill on Consolidation 5.06 5.06 5.06 5.06 5.06 Intangible assets 12.54 10.02 9.66 11.02 8.00 Intangible assets under development - 5.02 0.22 0.25 0.11 Investments 1.06 2.56 - - - Financial assets Other financial assets 37.15 74.42 58.84 70.55 62.44 Deferred tax assets (net) 42.65 30.23 8.10 8.06 33.14 Other non-current assets 102.81 66.56 61.73 67.29 56.71 Total non-current assets 2,080.25 2,347.46 2,320.29 2,310.83 2,091.82 Current assets Inventories 5,022.07 4,500.70 4,720.34 4,510.66 5,168.20 Financial assets (i) Trade receivables 181.82 146.69 213.65 242.38 130.50 (ii) Cash and cash equivalents 178.17 150.10 160.87 159.86 128.02 (iii) Bank balances other than (ii) above839.74 675.34 589.27 544.37 423.07 (iv) Other financial assets 43.15 46.05 81.22 45.24 37.91 Other current assets 206.03 193.56 133.04 117.69 143.47 Total current assets 6,470.98 5,712.45 5,898.39 5,620.20 6,031.16 Total Assets 8,551.23 8,059.91 8,218.68 7,931.03 8,122.99 EQUITY AND LIABILITIES Equity Equity share capital 839.24 839.24 839.24 839.24 839.24 Compulsorily convertible preference share capital 119.05 119.05 119.05 119.05 119.05 Other equity 1,012.09 1,045.93 1,202.82 1,142.77 1,099.15 Non-controlling interest -2.32 -3.58 -3.03 -2.87 0.45 Total equity 1,968.06 2,000.64 2,158.08 2,098.18 2,057.89 Non-current liabilities Financial liabilities (i) Borrowings 178.61 107.50 84.84 25.00 55.68 (ii) Lease liabilities 622.96 730.49 667.41 673.67 599.38 Provisions 19.99 23.97 30.68 29.22 34.30 Total non-current liabilities 821.56 861.97 782.92 727.89 689.36 Financial liabilities (i) Borrowings 1,843.57 2,099.95 2,338.21 2,366.01 2,635.46 (ii) Metal gold loan 1,952.93 1,496.43 1,167.14 1,053.57 803.53 (iii) Lease liabilities 71.47 68.06 90.34 88.04 83.44 (iv) Trade payables Total outstanding dues of micro and small enterprises - - - 0.07 0.10 Total outstanding dues of creditors Other than micro and small enterprises748.64 419.41 557.56 492.13 528.27 (v) Other financial liabilities 166.13 97.45 65.64 147.71 195.62 Provisions 6.78 7.06 7.82 7.42 9.04 Other current liabilities 927.27 1,008.43 1,011.90 916.96 1,045.38 Current tax liabilities (net) 44.83 0.52 39.07 33.05 74.90 Total current liabilities 5,761.61 5,197.31 5,277.68 5,104.96 5,375.74 Total equity and liabilities 8,551.23 8,059.91 8,218.68 7,931.03 8,122.99 Sourcce: Company RHP

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Profit and loss statement Particulars (Rs Cr) As at As at As at As at As at March 31, March 31, March 31, Dec 31, Dec 31, 2018 2019 2020 2019 2020 Revenue from operations 10,547.95 9,770.76 10,100.92 7,960.20 5,516.70 Other income 32.25 43.27 80.10 39.77 33.09 Total income 10,580.20 9,814.03 10,181.02 7,999.97 5,549.80 EXPENSES Cost of sales 8,801.70 8,198.34 8,391.77 6,667.98 4,518.43 Excise duty on sale of goods 21.93 - - - - Employee benefits expense 368.74 381.40 357.23 268.06 234.59 Finance costs 349.18 379.06 380.32 287.53 288.78 Depreciation and amortisation expense202.03 223.62 239.17 179.09 170.05 Other expenses 622.83 610.68 591.66 443.45 397.08 Total expenses 10,366.41 9,793.10 9,960.13 7,846.12 5,608.91 Restated Profit/ (loss) before tax 213.79 20.93 220.89 153.86 -59.12 Tax expense Current tax 75.37 20.44 59.13 40.11 45.48 Deferred tax -2.57 5.35 19.48 19.43 -24.65 Total tax expense 72.79 25.79 78.61 59.53 20.83 Restated Profit/(Loss) for the year 141.00 -4.86 142.28 94.32 -79.95 Owners of the Company 142.37 -3.61 143.00 94.89 -80.49 Non controlling interests -1.38 -1.26 -0.72 -0.56 0.54 Sourcce: Company RHP

Cashflow statement As at As at As at As at As at March 31, March 31, March 31, Dec 31, Dec 31, Particulars (Rs Cr) 2018 2019 2020 2019 2020 Net cash flow from / (used in) operating activities 1,043.11 388.89 319.50 110.97 -228.12 Net cash flow from / (used in) investing activities -615.10 -123.67 34.33 99.14 145.20 Net cash flow from / (used in) financing activities -450.33 -293.30 -343.06 -200.35 50.07 Net increase / (decrease) in Cash and cash equivalents -22.32 -28.07 10.77 9.76 -32.85 Cash and cash equivalents at the beginning of the period/ year 200.49 178.17 150.10 150.10 160.87 Cash and cash equivalents at the end of the period/ year 178.17 150.10 160.87 159.86 128.02 Sourcce: Company RHP

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MARCH 15, 2021

RATING SCALE (PRIVATE CLIENT GROUP) Definitions of ratings BUY – We expect the stock to deliver more than 15% returns over the next 12 months ADD – We expect the stock to deliver 5% - 15% returns over the next 12 months REDUCE – We expect the stock to deliver -5% - +5% returns over the next 12 months SELL – We expect the stock to deliver < -5% returns over the next 12 months NR – Not Rated. Kotak Securities is not assigning any rating or price target to the stock. The report has been prepared for information purposes only. SUBSCRIBE – We advise investor to subscribe to the IPO. RS – Rating Suspended. Kotak Securities has suspended the investment rating and price target for this stock, either because there is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. NA – Not Available or Not Applicable. The information is not available for display or is not applicable NM – Not Meaningful. The information is not meaningful and is therefore excluded. NOTE – Our target prices are with a 12-month perspective. Returns stated in the rating scale are our internal benchmark.

FUNDAMENTAL RESEARCH TEAM (PRIVATE CLIENT GROUP)

Rusmik Oza Arun Agarwal Amit Agarwal, CFA Priyesh Babariya Head of Research Auto & Auto Ancillary Transportation, Paints, FMCG Research Associate [email protected] [email protected] [email protected] [email protected] +91 22 6218 6441 +91 22 6218 6443 +91 22 6218 6439 +91 22 6218 6433

Jatin Damania Purvi Shah K. Kathirvelu Metals & Mining, Midcap Pharmaceuticals Support Executive [email protected] [email protected] [email protected] +91 22 6218 6440 +91 22 6218 6432 +91 22 6218 6427

Sumit Pokharna Pankaj Kumar Krishna Nain Oil and Gas, Information Tech Midcap M&A, Corporate actions [email protected] [email protected] [email protected] +91 22 6218 6438 +91 22 6218 6434 +91 22 6218 7907

TECHNICAL RESEARCH TEAM (PRIVATE CLIENT GROUP)

Shrikant Chouhan Amol Athawale Sayed Haider [email protected] [email protected] Research Associate +91 22 6218 5408 +91 20 6620 3350 [email protected] +91 22 62185498

DERIVATIVES RESEARCH TEAM (PRIVATE CLIENT GROUP)

Sahaj Agrawal Prashanth Lalu Prasenjit Biswas, CMT, CFTe [email protected] [email protected] [email protected] +91 79 6607 2231 +91 22 6218 5497 +91 33 6615 6273

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Disclosure/Disclaimer (Private Client Group) Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of India's largest brokerage and distribution house. Kotak Securities Limited is a corporate trading and clearing member of BSE Limited (BSE), National Stock Exchange of India Limited (NSE), Metropolitan Stock Exchange of India Limited (MSE), National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange (MCX). Our businesses include stock broking, services rendered in connection with distribution of primary market issues and financial products like mutual funds and fixed deposits, depository services and Portfolio Management. Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Kotak Securities Limited is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI). We are registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise/warning/deficiency letters/ or levied minor penalty on KSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. We offer our research services to clients as well as our prospects. This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of Kotak Securities Ltd. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither Kotak Securities Limited, nor any person connected with it, accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the investments referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions -including those involving futures, options and other derivatives as well as non- investment grade securities - involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a stock's price movement and trading volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's fundamentals. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has been prepared by the Private Client Group. We and our affiliates/associates, officers, directors, and employees, Research Analyst(including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company/company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of Research Report or at the time of public appearance. Kotak Securities Limited (KSL) may have proprietary long/short position in the above mentioned scrip(s) and therefore may be considered as interested. The views provided herein are general in nature and does not consider risk appetite or investment objective of particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with KSL. Kotak Securities Limited is also a Portfolio Manager. Portfolio Management Team (PMS) takes its investment decisions independent of the PCG research and accordingly PMS may have positions contrary to the PCG research recommendation. Kotak Securities Limited does not provide any promise or assurance of favourable view for a particular industry or sector or business group in any manner. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and take professional advice before investing. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. No part of this material may be duplicated in any form and/or redistributed without Kotak Securities' prior written consent. Details of Associates are available on www.kotak.com 1. “Note that the research analysts contributing to the research report may not be registered/qualified as research analysts with FINRA; and 2. Such research analysts may not be associated persons of Kotak Mahindra Inc and therefore, may not be subject to NASD Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account Any U.S. recipients of the research who wish to effect transactions in any security covered by the report should do so with or through Kotak Mahindra Inc. (Member FINRA/SIPC) and (ii) any transactions in the securities covered by the research by U.S. recipients must be effected only through Kotak Mahindra Inc. (Member FINRA/SIPC) at 369 Lexington Avenue 28th Floor NY NY 10017 USA (Tel:+1 212-600-8850). Kotak Securities Limited and its non US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non US issuers, prior to or immediately following its publication. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. This research report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services. Accordingly, any brokerage and investment services including the products and services described are not available to or intended for Canadian persons or US persons.” Research Analyst has served as an officer, director or employee of subject company(ies): No We or our associates may have received compensation from the subject company(ies) in the past 12 months. We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past 12 months: No We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report. Our associates may have financial interest in the subject company(ies). Research Analyst or his/her relative's financial interest in the subject company(ies): No Kotak Securities Limited has financial interest in the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Nature of financial interest is holding of equity shares or derivatives of the subject company. Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report. Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No. Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No

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By referring to any particular sector, Kotak Securities Limited does not provide any promise or assurance of favourable view for a particular industry or sector or business group in any manner. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and take professional advice before investing. Such representations are not indicative of future results. Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report. "A graph of daily closing prices of securities is available at https://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the "three years" icon in the price chart)." Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com/www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: INZ000200137 (Member ID: NSE-08081; BSE-673; MSE-1024; MCX-56285; NCDEX-1262), AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Our research should not be considered as an advertisement or advice, professional or otherwise. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and the like and take professional advice before investing. Investments in securities market are subject to market risks, read all the related documents carefully before investing. Derivatives are a sophisticated investment device. The investor is requested to take into consideration all the risk factors before actually trading in derivative contracts. Kotak Securities Limited is a Sub-Syndicate member for the public issue of KALYAN JEWELLERS INDIA LTD. Compliance Officer Details: Mr. Manoj Agarwal. Call: 022 - 4285 8484, or Email: [email protected]. In case you require any clarification or have any concern, kindly write to us at below email ids: ⚫ Level 1: For Trading related queries, contact our customer service at '[email protected]' and for demat account related queries contact us at [email protected] or call us on: Toll free numbers 18002099191 / 1860 266 9191 ⚫ Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you are still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208. ⚫ Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Mr. Manoj Agarwal) at [email protected] or call on 91- (022) 4285 8484. ⚫ Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach Managing Director / CEO (Mr. Jaideep Hansraj) at [email protected] or call on 91-(022) 4285 8301.

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