M. K. Sons Fine Jewels Limited has 44% unsecured borrowings

M. K. Sons Fine Jewels Limited had Rs 71.394 crore of outstanding borrowings on October 7, 2026, with Rs 31.251 crore, or 43.77%, unsecured. M. K. Sons Fine Jewels’ largest lender was Kotak Mahindra Bank Limited, whose Rs 37.997 crore exposure represented 53.22% of total borrowings and included working-capital facilities and term loans.

How much debt and unsecured borrowing does M. K. Sons Fine Jewels have?

M. K. Sons Fine Jewels had Rs 71.394 crore of borrowings outstanding on October 7, 2026, against sanctioned facilities of Rs 105.05 crore. Secured fund-based borrowings accounted for Rs 40.143 crore, while unsecured facilities and an inter-company deposit accounted for Rs 31.251 crore. The company said its borrowings were used in the ordinary course for working capital, vehicle purchases and general corporate purposes.

The October 7, 2026 balance was Rs 87.2 lakh above the Rs 70.522 crore of total borrowings reported in the pre-offer capitalisation statement as at June 30, 2026. The two figures are reported at different dates. At June 30, 2026, M. K. Sons Fine Jewels’ total borrowings were 0.39 times total equity of Rs 183.04 crore, while non-current borrowings of Rs 27.875 crore were 0.15 times total equity.

M. K. Sons Fine Jewels’ unsecured funding was led by a Rs 19.933 crore inter-company deposit from Kanaiyalal Hiranand Private Limited. An inter-company deposit is funding provided by one corporate entity to another. The Rs 11.065 crore working-capital facility from Abans Finance Private Limited and a Rs 0.253 crore director-related-party loan made up the rest of the Rs 31.251 crore unsecured balance.

Why does Kotak Mahindra Bank account for more than half of borrowings?

Kotak Mahindra Bank accounted for Rs 37.997 crore, or 53.22%, of M. K. Sons Fine Jewels’ Rs 71.394 crore outstanding borrowings on October 7, 2026. Kotak’s exposure comprised Rs 10.34 crore under two working-capital facilities and Rs 27.657 crore under four term loans. Its sanctioned facilities of Rs 52.70 crore were 50.17% of the company’s total sanctioned facilities of Rs 105.05 crore.

Kotak also made up 94.65% of M. K. Sons Fine Jewels’ Rs 40.143 crore secured borrowings. The remaining secured balances were a Rs 1.097 crore term loan from BMW India Financial Services Private Limited and a Rs 1.049 crore term loan from Mercedes-Benz Financial Services India Private Limited. This means the secured borrowing structure depended predominantly on one bank rather than being distributed across multiple secured lenders.

M. K. Sons Fine Jewels disclosed that security for its borrowings can include mortgages over properties owned by the promoter director, hypothecation of vehicles bought using loan proceeds, charges over card receivables and personal guarantees from the promoter director. A mortgage gives a lender security over property, while hypothecation gives a lender a charge over an asset without transferring possession. Kotak’s facilities also restrict funds to business purposes and prohibit equity investments or real-estate transactions using the sanctioned loan proceeds.

What makes the unsecured funding material to the debt structure?

Unsecured financing represented 43.77% of M. K. Sons Fine Jewels’ October 7, 2026 borrowings, or Rs 31.251 crore. The total included Rs 11.065 crore outstanding from Abans, Rs 0.253 crore from a related-party director loan and Rs 19.933 crore from Kanaiyalal Hiranand. Secured funding remained larger at Rs 40.143 crore, but the difference between secured and unsecured balances was Rs 8.892 crore.

Kanaiyalal Hiranand’s Rs 19.933 crore deposit represented 27.92% of all outstanding borrowings, making it the second-largest funding source after Kotak. Abans’ Rs 11.065 crore working-capital facility represented 15.50% of total borrowings. The director loan was Rs 0.253 crore, or 0.35% of the total, showing that the unsecured category was principally dependent on corporate and non-bank funding rather than the related-party director balance.

Interest rates vary across M. K. Sons Fine Jewels’ facilities. Market-linked borrowings carry rates from the Reserve Bank of India repo rate plus 2.55% a year to the repo rate plus 2.90% a year, while non-market-linked facilities carry rates from 7.77% to 12.00% a year. Term-loan tenors range from 12 to 144 months, whereas certain working-capital facilities are repayable on demand and may be rolled over under their facility documents.

What default and repayment terms could affect the funding?

Kotak’s Rs 37.997 crore facilities contain cross-default provisions, meaning a default under another relevant obligation may trigger default under the Kotak facilities. M. K. Sons Fine Jewels disclosed that default under another agreement, guarantee, security or other indebtedness with Kotak can constitute an event of default under the relevant Kotak agreement, and vice versa. Missing monthly instalments or other payments by the due date is also an event of default.

Kotak may charge substitute interest of 2% a month during a default, compounded at monthly rests, in addition to potential penal or additional interest. The bank may revoke, withdraw or stop financial assistance in whole or part without notice, and may increase its interest spread prospectively by up to 2% a year if credit quality deteriorates. Amounts under other defaulted agreements may also be treated as dues under the Kotak facilities and secured by the same security.

Prepayment terms can affect M. K. Sons Fine Jewels’ ability to reduce borrowings before scheduled maturity. Where applicable, disclosed prepayment penalties generally range from 2% to 5% of the amount proposed to be prepaid. Certain Kotak facilities have a six-month lock-in after equated monthly instalment commencement, and prepayment above 25% of the outstanding loan after that period can attract a 2% charge plus taxes and statutory dues.

The Rs 0.253 crore director loan and the Rs 19.933 crore Kanaiyalal Hiranand deposit did not have specific events of default, default consequences or restrictive covenants stated in their arrangement or sanction letters. Abans’ Rs 11.065 crore facility specifies triggers including insolvency proceedings, an adverse change in business or financial condition in Abans’ opinion, and default under another bank or lender agreement. Its arrangement letter did not state specific consequences of an event of default.

Conclusion

M. K. Sons Fine Jewels’ October 7, 2026 debt structure combined Rs 40.143 crore of secured facilities with Rs 31.251 crore of unsecured funding. Kotak’s Rs 37.997 crore exposure accounted for more than half of total borrowings and nearly all secured borrowing, while Kanaiyalal Hiranand supplied Rs 19.933 crore through an unsecured inter-company deposit.

The next disclosed item to watch is the post-offer capitalisation, which was not determinable when the capitalisation statement was prepared because the book-building process had not been completed. M. K. Sons Fine Jewels said it had obtained necessary consents under relevant borrowing documents for the offer, including consents relating to changes in capital structure, shareholding pattern or constitutional documents.