Omara plans Rs 18 crore debt repayment led by cash credit

Omara plans to use Rs 18 crore of net initial public offering (IPO) proceeds for repayment or prepayment of specified borrowings, led by Rs 14.7116 crore for a cash-credit facility. That allocation equals 81.73% of the proposed debt repayment and compares with Rs 15.1284 crore outstanding under the facility on September 17, 2026.

How will Omara deploy Rs 18 crore for debt repayment?

Omara proposes to deploy an estimated Rs 18 crore from net IPO proceeds for full or partial repayment and prepayment of borrowings. Its total outstanding loan facilities, comprising term loans, a business loan and unsecured loans, stood at Rs 22.4286 crore on March 31, 2026. The proposed amount is therefore below the March-end outstanding balance, although the facilities selected for repayment had a later reported balance of Rs 18.6324 crore on September 17, 2026.

The proposed allocation can change before the prospectus is filed because instalments, refinancing, additional drawings and further disbursements may alter the relevant balances. Omara states that it may use net proceeds to repay refinanced facilities, additional facilities or subsequent disbursements under existing facilities. The board may also defer a fiscal year's planned deployment to a subsequent fiscal if it considers that appropriate.

Debt repayment is the largest identified allocation among the uses disclosed in this section of the filing. Omara separately proposes Rs 10 crore for long-term working-capital requirements, Rs 2 crore for renovation and expansion of its jewellery boutique, and Rs 2 crore for marketing and promotional activities. The debt-repayment allocation is therefore Rs 8 crore higher than the working-capital allocation and nine times each of the boutique and marketing allocations.

Why is Omara's Rs 18 crore debt repayment led by cash credit?

Omara's debt repayment is led by cash credit because Rs 14.7116 crore is allocated to that one facility. The amount represents 81.73% of the Rs 18 crore debt-repayment plan, calculated from the disclosed allocations. The cash-credit facility had Rs 15.1284 crore outstanding on September 17, 2026, so Rs 41.68 lakh of the reported balance is not included in the proposed repayment.

Cash credit is a working-capital bank facility that the filing says is repayable on demand. Omara's facility was sanctioned at Rs 15 crore on July 14, 2025, disbursed on July 24, 2025 and carried a 9.00% interest rate. The stated security includes an exclusive charge on current assets and movable fixed assets, specified immovable property in Panchkula, Haryana, and guarantees from named guarantors.

The cash-credit limit was increased from Rs 15 crore to Rs 17 crore under a sanction letter dated July 26, 2026. Omara states that the incremental Rs 2 crore limit is not proposed to be repaid from net proceeds. The filing also specifies that no prepayment premium applies to repayment of the cash-credit facility, unlike several of the term loans included in the proposed use of funds.

Which other Omara loans are proposed for repayment?

Omara proposes to repay Rs 3.2884 crore across two secured bank term loans and seven unsecured business working-capital term loans in addition to cash credit. The interest rates on these other selected facilities range from 9.00% to 17.00%. Together, the 10 specified facilities had Rs 18.6324 crore outstanding on September 17, 2026, against proposed repayments of Rs 18 crore.

The two secured bank term loans had outstanding balances of Rs 23.64 lakh and Rs 1.3748 crore, with Rs 20 lakh and Rs 1.35 crore respectively proposed for repayment. Both loans were sanctioned on July 14, 2025 at 9.00%, but their tenures differ: 36 months for the Rs 37 lakh facility and 84 months for the Rs 1.63 crore facility. The disclosed repayment terms require equal monthly instalments.

The seven unsecured loans were obtained between November 30, 2025 and December 8, 2025 for business working capital. Proposed repayments range from Rs 15 lakh for Birla Finance to Rs 39.51 lakh for SMFG India Credit. Tata Capital's Rs 20 lakh proposed repayment relates to a loan carrying 17.00%, the highest disclosed rate among the facilities listed for repayment.

What charges and conditions could affect Omara's repayments?

Omara will meet prepayment or foreclosure penalties from internal accruals rather than net IPO proceeds. The company made this undertaking on June 16, 2016, and the filing lists lender-specific charges and restrictions that can apply to term-loan repayments. The actual cost cannot be calculated from the filing because it depends on the relevant repayment date and lender terms.

For example, Clix Capital permits prepayment after three months, with charges of 6%, 5% or 4% of future principal outstanding depending on the elapsed period. Hero Fincorp does not allow foreclosure or prepayment during the first 12 months from the repayment start date, unless permitted at the lender's discretion. In that lock-in period, the terms can require interest for the balance period and an 8% charge plus applicable taxes on principal outstanding; the disclosed post-lock-in charge is 5% plus taxes.

The two secured bank term loans carry a stated 7% prepayment premium on principal, subject to prior irrevocable written notice. SMFG India Credit lists charges between 7% and 3% of principal outstanding depending on the number of equated monthly instalments, or EMIs, paid. By contrast, the cash-credit facility has no stated prepayment premium, which means the terms of its Rs 14.7116 crore proposed repayment differ from those of several smaller facilities.

Omara says Mehan Associates, its statutory auditors, certified on September 17, 2026 that the loans had been used for their stated purposes. The filing also says no unsecured loans from directors or related parties are proposed to be repaid from issue proceeds. Omara further states that its promoters, directors, key managerial personnel and senior management have no interest in the listed repayments except as disclosed.

How does debt repayment fit Omara's working-capital plan?

Omara's debt-repayment plan operates alongside its proposed Rs 10 crore IPO allocation for long-term working capital. Net working-capital requirements were Rs 33.1553 crore on March 31, 2026, rising from Rs 15.1918 crore on March 31, 2025. Inventory was Rs 43.5815 crore in fiscal 2026, while current liabilities were Rs 12.2246 crore, producing the reported net working-capital requirement.

For the year ending March 31, 2027, Omara projects net working-capital requirements of Rs 51.7409 crore. The projection includes Rs 10 crore from IPO proceeds, Rs 50 lakh of bank borrowings, Rs 2.346 crore of loans from directors, relatives and others, and Rs 38.8949 crore of internal accruals or existing net worth. These are management projections based on stated assumptions, not reported future results.

Inventory is the central working-capital assumption because Omara sells diamond jewellery through a retail boutique and maintains products across designs, sizes, settings and price points. Inventory holding was 347 days in fiscal 2026, compared with 382 days in fiscal 2025 and 370 days in fiscal 2024. The fiscal 2027 projection assumes 320 inventory days, so the planned funding structure depends partly on that lower holding-period assumption being achieved.

Conclusion

Omara's proposed Rs 18 crore debt repayment is predominantly a reduction of its cash-credit facility, with Rs 14.7116 crore allocated to a facility that carried 9.00% interest and was repayable on demand. The remaining Rs 3.2884 crore is allocated among secured and unsecured term loans, including working-capital facilities carrying rates up to 17.00%, while any prepayment charges will be met from internal accruals.

The next disclosed update will be the prospectus-stage revision of facility balances and eligible loans, which Omara says may change after instalments, refinancing, new drawings or further disbursements. Omara's fiscal 2027 plan also calls for Rs 10 crore of IPO proceeds for working capital and assumes inventory holding falls to 320 days from 347 days in fiscal 2026.