The Company Earmarks Rs 112.50 Crore for Debt and Rents

The Company plans to earmark Rs 112.50 crore of fresh-issue net proceeds for debt and rents, rather than a disclosed new capital-expenditure programme. The Board-approved allocation dated August 21, 2026 includes Rs 70 crore for borrowings and accrued interest and Rs 42.50 crore for warehouse and experience-store lease payments.

How will The Company use Rs 112.50 crore of fresh-issue proceeds?

The Company has specified Rs 112.50 crore for debt repayment and premises rents from a fresh issue of up to Rs 150 crore. The stated objects are repayment or prepayment of borrowings and accrued interest, lease rental or licence-fee payments for warehouses and experience stores, and general corporate purposes. The amount for general corporate purposes will be finalised after the offer price is determined.

The Rs 112.50 crore specified allocation equals 75% of the maximum Rs 150 crore gross fresh-issue proceeds before offer expenses. Under Regulation 7(2) of the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations, or SEBI ICDR Regulations, general corporate purposes cannot exceed 25% of gross proceeds. The final net proceeds remain undisclosed because fresh-issue expenses have not been finalised.

The Company will receive no money from the offer for sale of up to 2,73,65,529 equity shares. Selling shareholders will receive their respective proceeds after their proportionate offer-related expenses and applicable taxes, so the offer-for-sale component is not part of net proceeds. Only the fresh issue can fund the Rs 70 crore debt allocation, Rs 42.50 crore premises allocation and residual general-corporate-purpose amount.

The Company expects to deploy the full Rs 70 crore debt allocation in Fiscal 2027. Premises funding is scheduled at Rs 16.81 crore in Fiscal 2027, Rs 17.76 crore in Fiscal 2028 and Rs 7.93 crore in Fiscal 2029. Management may reschedule the deployment depending on offer completion, financial and market conditions, business requirements, access to capital and external conditions.

Why is The Company putting Rs 70 crore toward debt repayment?

The Company plans to use Rs 70 crore to repay or prepay certain borrowings and accrued interest, an amount equal to 27.10% of its consolidated outstanding borrowings of Rs 258.334 crore as of June 30, 2026. The Company says the repayment is intended to reduce outstanding indebtedness and interest outgo, while potentially releasing internal accruals for business growth and expansion.

The Company has identified borrowings that may be repaid, but it has not committed to settling a particular facility. The selection will depend on interest and other costs, restrictive terms, prepayment charges, lender consents, loan size, remaining tenor, legal requirements and the mix of lender facilities. Any prepayment charges beyond available net proceeds would be paid from internal accruals.

The two IDFC FIRST Bank Limited term loans were sanctioned for Rs 70 crore in November 2024 and Rs 50 crore in July 2025, respectively. Both carried an interest rate of 9.75% as of June 30, 2026. The facilities financed furniture and appliances for renting, expenditure that The Company treats as capital expenditure.

Finance cost declined as a share of total expenses across the reported three fiscal years. Finance cost was Rs 25.335 crore, or 7.82% of total expenses, in Fiscal 2026, compared with Rs 26.523 crore, or 11.59%, in Fiscal 2025 and Rs 25.610 crore, or 14.77%, in Fiscal 2024. The future effect of repayment on finance cost will depend on the facilities selected, prepayment charges, subsequent borrowing and applicable interest rates.

How much of The Company’s premises rent will proceeds cover?

The Company will use Rs 42.50 crore for lease rental or licence-fee payments for certain warehouses and experience stores. Estimated payments for those formats total Rs 88.638 crore across Fiscal 2027 to Fiscal 2029, meaning the disclosed proceeds allocation covers about 48% of the three-year estimate. The remaining payments are to be funded through internal accruals or other sources determined by The Company.

Warehouse payments funded from net proceeds are scheduled at Rs 10.569 crore in Fiscal 2027, Rs 11.165 crore in Fiscal 2028 and Rs 6.963 crore in Fiscal 2029, totalling Rs 22.697 crore. Experience-store payments are scheduled at Rs 6.241 crore, Rs 6.595 crore and Rs 6.967 crore in the same years, totalling Rs 19.803 crore. The estimates include goods and services tax.

The Company had 20 warehouses and 82 experience stores as of March 31, 2026, all held under lease deeds or leave-and-licence agreements. In Fiscal 2026, it paid Rs 14.049 crore for 29 warehouses and Rs 9.883 crore for 83 experience stores. These paid-site counts include operational and inactive premises where lease payments occurred, but exclude fit-out locations where rent did not fall within the reporting year.

Lease expenditure increased over the three reported fiscal years, particularly for experience stores. Warehouse lease expenditure rose from Rs 8.014 crore in Fiscal 2024 to Rs 13.202 crore in Fiscal 2025 and Rs 14.049 crore in Fiscal 2026. Experience-store lease expenditure rose from Rs 83.90 lakh to Rs 3.782 crore and then Rs 9.883 crore, while paid-site counts increased from 15 to 44 and then 83.

Does The Company classify the rent allocation as capital expenditure?

The Company states that internal accruals freed by using net proceeds for premises rents will not be used for capital expenditure as defined under the SEBI Listing Obligations and Disclosure Requirements Regulations. The disclosed Rs 42.50 crore object instead covers payments under existing lease deeds and leave-and-licence agreements for premises.

The Company says freed internal accruals may be used for operating, transportation, employee, consumables, repairs and maintenance, marketing, tax and duty payments, and organic or inorganic growth opportunities. That statement separates the rent allocation from a stated programme to acquire new assets or construct new premises. The source does not disclose a fresh-issue allocation for a new capital-expenditure programme.

The Rs 42.50 crore premises allocation may remain within the same object if agreements change. If an existing agreement is terminated early, amended to lower payments or otherwise modified, surplus proceeds may be used for lease or licence payments for subsequently established warehouses or experience stores, subject to applicable law. The amount used for this object cannot exceed Rs 42.50 crore.

The lease estimates are based on agreements valid as of March 31, 2026, contractual escalation clauses and assumptions that expiring arrangements will be extended on existing commercial terms. Most arrangements provide for rental escalation of about 4% to 10% over 11 months. Warehouse agreements typically range from nine to 108 months, while experience-store agreements typically range from 11 to 120 months.

What oversight applies to The Company’s proceeds deployment?

The Company has appointed CRISIL Ratings Limited as monitoring agency under Regulation 41 of the SEBI ICDR Regulations because the fresh issue exceeds the applicable Rs 10 crore threshold. CRISIL Ratings and the Audit Committee will monitor gross-proceeds use, and the monitoring agency must submit quarterly reports until gross proceeds are fully utilised.

The Company must report uses and appropriations of net proceeds to its Audit Committee quarterly under the SEBI Listing Regulations. It must also file quarterly statements with stock exchanges describing deviations from stated objects and category-wise variations, if any. Its statutory auditor must certify the annual statement covering use for purposes other than those in the offer document until all net proceeds are used.

Pending utilisation, The Company will retain net proceeds in the public offer account until listing and trading approvals are received. It says no lien will be created over these funds, which may be deposited only with scheduled commercial banks included in the Second Schedule to the Reserve Bank of India Act, 1934. The Company also says proceeds will not be used to buy, trade or otherwise deal in shares of another listed company or in equity markets.

Conclusion

The Company’s disclosed plan directs Rs 112.50 crore of specified fresh-issue proceeds toward existing financial and operating obligations: Rs 70 crore for borrowings and Rs 42.50 crore for premises rents. The debt allocation equals 27.10% of June 30, 2026 consolidated borrowings, while the rent allocation covers only part of the Rs 88.638 crore estimated premises payments through Fiscal 2029.

The next disclosures to watch are final offer expenses and net proceeds, which will determine the amount available for general corporate purposes. The Company’s planned Fiscal 2027 to Fiscal 2029 deployment, lease extensions and escalations, selection of debt facilities, and quarterly CRISIL Ratings monitoring reports will show whether use of proceeds follows the stated allocation.