Deepa Jewellers Plans Factory to Reduce Outsourcing Reliance

Deepa Jewellers Limited plans to bring part of jewellery manufacturing in house through a 6,696-square-foot Hyderabad facility, reducing its reliance on 41 outsourced karigars, or jewellery artisans. The proposed facility remained in installation as of the offer document date, while 12 of the 41 karigars had no formal agreements on July 31, 2026.

How does Deepa Jewellers manufacture jewellery today?

Deepa Jewellers currently uses an outsourced manufacturing model in which it designs jewellery, supplies gold, alloys and precious stones to karigars, and receives finished ornaments after paying making charges. The 41-karigar network, primarily located in Telangana and Maharashtra as of July 31, 2026, undertakes activities including crafting, polishing and finishing.

The arrangement assigns product design, raw-material supply and quality oversight to Deepa Jewellers, while physical production is performed externally. Of the 41 karigars, 29 had formal agreements and 12 were engaged through ongoing working relationships; 25 had worked with Deepa Jewellers for more than five years. The manufacturing model can continue to support production only if the artisan network remains available and delivers ornaments to the company’s specifications and schedules.

Deepa Jewellers supplies hallmarked gold jewellery, meaning ornaments certified for purity under applicable regulatory standards. Its quality-control process assesses purity, structural integrity, design accuracy and finishing during manufacturing, before ornaments are sent to government-approved hallmarking centres under Bureau of Indian Standards norms. The company’s quality framework therefore operates across outsourced stages before finished products are supplied to business customers.

Why is Deepa Jewellers planning a Hyderabad factory?

Deepa Jewellers is planning the Hyderabad factory to reduce dependence on karigars, manage production timelines more directly and lower making charges paid for outsourced work. The company expects the facility to become operational before the conclusion of the first half of Fiscal 2027, although this remains a disclosed forward-looking plan.

The facility had not started commercial operations and was in the installation phase as of the offer document date. By March 31, 2026, Deepa Jewellers had incurred Rs 2.282 crore on the project, including Rs 2.206 crore of equipment orders funded entirely from internal accruals and Rs 7.6 lakh of capital advances. The equipment orders were recorded as capital work in progress, while the advances appeared under other current assets.

Deepa Jewellers says the proposed facility will contain a ProJet MJP 3000W wax three-dimensional printer, a vacuum-pressure casting machine and an induction melting furnace. Wax printing creates patterns for casting, while an induction melting furnace uses electromagnetic heating to melt metal. The company expects machine-led processes and direct supervision to standardise manufacturing, but any reduction in outsourcing depends on commissioning the facility and moving production into it.

What risks is the factory meant to address?

The proposed factory is intended to address production-timing, labour-availability, material-handling and design-confidentiality risks in Deepa Jewellers’ outsourced model. The company expects centralised production to support output during demand cycles associated with weddings, festivals, birth occasions, anniversaries and harvest seasons.

Deepa Jewellers expects greater internal production to make manufacturing expenses more predictable by reducing external making charges. It also expects a monitored environment for gold and precious stones to mitigate pilferage and material-loss risks. The offer document does not disclose a target share of output to be manufactured internally, a planned reduction in making charges or an installed production capacity for the facility.

The facility is also expected to apply uniform quality processes and reduce outside exposure of new jewellery designs. This is relevant because Deepa Jewellers had 16 product categories and more than 110 stock-keeping units, or distinct saleable product variations, as of July 31, 2026. Its range includes vaddanam waist belts and computer numerical control, or CNC, machine-cut bangles, requiring production processes that can accommodate varied designs.

How central is processing to Deepa Jewellers’ revenue?

Processing is Deepa Jewellers’ principal revenue activity, generating Rs 190.7448 crore in Fiscal 2026 out of total revenue from operations of Rs 192.6676 crore. Job-work services, where customers provide raw material for processing, generated Rs 1.7229 crore, while trading generated Rs 19.99 lakh.

Revenue from product processing rose from Rs 101.04 crore in Fiscal 2024 to Rs 129.5399 crore in Fiscal 2025 and Rs 190.7448 crore in Fiscal 2026. Over the same two-year period, revenue from operations increased from Rs 102.4568 crore to Rs 192.6676 crore. The comparison shows why production control matters to the business model: most of the reported revenue increase came from processed product sales.

Hallmarked jewellery sales were Rs 176.2813 crore in Fiscal 2026, representing 91.50% of revenue from operations, compared with 98.52% in Fiscal 2024. Total quantity sold fell to 1,644 kilograms in Fiscal 2026 from 1,889 kilograms in Fiscal 2025 and 1,739 kilograms in Fiscal 2024, while job-work quantity increased to 757 kilograms from 485 kilograms and 387 kilograms respectively. Factory utilisation will consequently depend on product mix, customer orders and the balance between company-owned manufacturing and job work.

How does regional concentration affect the factory plan?

Deepa Jewellers remains concentrated in South India, where its Hyderabad factory would be located. South Indian states generated Rs 181.8187 crore, or 94.37%, of Fiscal 2026 revenue from operations, compared with Rs 137.3807 crore, or 98.33%, in Fiscal 2025. Telangana alone contributed Rs 80.1062 crore, or 41.58%, in Fiscal 2026.

The company’s sales model is business-to-business, or B2B, rather than direct retail. As of July 31, 2026, Deepa Jewellers had 373 customers across 13 states and one union territory, comprising 47 jewellery retail chains and 326 standalone stores, while owning no standalone stores itself. The company had 15 in-house designers who developed products around customer requirements, market trends and regional preferences.

Financial measures changed as processing revenue expanded. Revenue from operations rose to Rs 192.6676 crore in Fiscal 2026 from Rs 139.701 crore in Fiscal 2025, while earnings before interest, tax, depreciation and amortisation margin increased to 7.60% from 4.01%. Inventory holding fell to 18 days from 21 days, but the net operating cycle rose to 53 days from 49 days as debtor days increased to 36 from 29 days.

Conclusion

Deepa Jewellers’ proposed Hyderabad factory marks a planned move toward internal manufacturing while its current production model remains dependent on 41 outsourced karigars. The stated objectives are to reduce reliance on the artisan network, improve control over schedules and quality, lower making charges, protect designs and limit material-handling risks in a business where processing generated Rs 190.7448 crore in Fiscal 2026.

The next operational milestone is whether the facility becomes operational before the end of the first half of Fiscal 2027, as planned. Deepa Jewellers also intends to add two product categories and 22 stock-keeping units by Fiscal 2027, so subsequent disclosures on commissioning, internal output and capacity use will show whether the facility supports the planned wider portfolio.