AJC Jewel Manufacturers Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. Industry Structure and Developments

Gold has historically held a unique position as both a precious commodity and a store of value. Its ability to preserve wealth over time has made it an important asset across global economies.

In India, gold carries significant cultural and economic importance. Gold jewellery is an integral part of weddings, festivals, religious ceremonies and social occasions, symbolising prosperity, security and tradition. This enduring demand has positioned India as one of the leading global markets for gold jewellery.

Gold is also widely recognised as a safe-haven asset and an effective hedge against inflation, currency fluctuations and geopolitical uncertainty. As a result, global macroeconomic conditions, interest rate movements, currency trends and investment demand significantly influence gold prices.

The Indian jewellery industry is undergoing structural transformation. Consumer preferences are shifting towards contemporary designs, lightweight jewellery, better quality assurance and competitive pricing. Simultaneously, the gradual transition from unorganised to organised retail is creating opportunities for established manufacturers with strong design capabilities, consistent quality standards and reliable delivery systems.

Retailers are increasingly focusing on inventory efficiency and faster product turnover, thereby increasing demand for agile manufacturers capable of delivering market-responsive designs within shorter timelines.

Technology adoption is also reshaping the industry. CAD/CAM systems, 3D printing, advanced casting techniques, precision machinery and integrated ERP platforms are enhancing design accuracy, production efficiency and inventory management.

In this evolving environment, manufacturers with strong design capabilities, modern infrastructure, skilled craftsmanship and established customer relationships are well positioned for sustainable growth.

2. Business Overview

AJC Jewel Manufacturers Limited is engaged in the manufacturing of gold and precious metal jewellery. The Company produces a wide range of jewellery designs catering to jewellery retailers and corporate customers.

The Company primarily operates through a B2B manufacturing model, addressing diverse customer requirements in terms of design, weight, category and customisation.

Its operations combine traditional craftsmanship with modern manufacturing technologies. The Companys infrastructure, skilled workforce and quality systems enable it to deliver a diversified product portfolio. Customisation remains a key strength, enabling the Company to effectively serve both large corporate clients and retail jewellers.

In addition to its core B2B gold jewellery manufacturing business, the Company is expanding its presence in the Direct-to- Consumer (D2C) jewellery segment through Esthara, its silver jewellery business. Esthara focuses on contemporary and affordable silver jewellery, providing the Company with an opportunity to participate directly in the growing branded jewellery retail market and diversify its presence beyond the traditional B2B manufacturing model.

The development of Esthara represents an important step towards building a diversified jewellery platform encompassing

manufacturing, wholesale and consumerfacing businesses.

3. Manufacturing and Technological Capabilities

Jewellery manufacturing is increasingly technology-driven, particularly in design

development, precision engineering and productivity enhancement.

The Company continues to invest in modern machinery and process improvements aimed at increasing efficiency, reducing wastage and expanding product capabilities.

Its manufacturing facility is equipped with advanced machinery sourced from countries such as Japan and Switzerland, enabling high- precision production supported by skilled craftsmanship.

CAD/CAM capabilities further enhance design development, enabling faster turnaround and production of complex jewellery designs.

As part of its product diversification strategy, the Company is also preparing to introduce CNC-based jewellery manufacturing. CNC technology enables precision cutting, engraving and development of intricate designs with a high degree of consistency.

The proposed CNC jewellery category is expected to broaden the Companys product portfolio and enable it to offer differentiated and contemporary designs to its existing and prospective customers. The initiative is also expected to complement the Companys existing manufacturing capabilities and strengthen its ability to respond to evolving market trends.

4. Internal Control Systems and Adequacy

The Company has established robust internal control systems commensurate with the scale and nature of its operations.

These controls cover procurement, inventory management, production processes, sales, financial reporting and statutory compliance. Given the high-value nature of precious metal inventory, strong controls are maintained over storage, movement and utilisation of materials. The internal audit function, along with Audit Committee oversight, ensures periodic review and continuous strengthening of internal systems.

5. Financial Performance

During FY 2025-26, the Company delivered strong financial performance driven by higher

volumes, improved operational efficiency and disciplined cost management.

Revenue from operations increased from ^22,046.35 lakhs in FY 2024-25 to ^29,174.87 lakhs in FY 2025-26, representing a growth of 32.3%.

Profit After Tax increased from S286.34 lakhs to S802.37 lakhs, reflecting a growth of 180 %

The significant improvement in profitability reflects operating leverage benefits and enhanced efficiency across operations.

6. Operational Performance

The Company focused on strengthening manufacturing efficiency, improving product quality and enhancing production capabilities during the year.

Continuous process improvements and

technology integration supported better

productivity and operational performance.

7. ERP and Digital Systems

The Companys ERP system integrates key business functions including inventory management, production tracking and operational reporting.

This enables improved visibility, better control over operations and more efficient decisionmaking.

8. Human Resources

Employees remain a key strength of the Company. As on 31 March 2026, the Company had 113 employees.

The Company places strong emphasis on training, skill development and capability enhancement to support operational requirements and growth.

Industrial relations remained cordial throughout the year.

9. SWOT Analysis Strengths:

Experienced management, skilled workforce, strong customisation capability, modern machinery and integrated ERP systems.

Weaknesses:

Exposure to gold price volatility and working capital-intensive operations.

O pportunities:

Growth in organised retail, export potential, product diversification and increasing demand for lightweight jewellery.

Threats:

Intense competition, regulatory changes, economic slowdown and fluctuations in gold prices.

10. Risk Management

The Company operates in an environment exposed to commodity price volatility, credit risk, inventory risk and regulatory changes.

Gold price fluctuations remain the most significant external risk, impacting demand patterns and working capital requirements.

The Company manages risks through prudent inventory control, customer assessment, internal monitoring systems and compliance frameworks

11. Growth Strategy

The Companys growth strategy focuses on expanding its customer base, increasing manufacturing capacity, adopting advanced technology, developing new product categories and exploring domestic as well as international opportunities.

Key priorities include strengthening relationships with existing customers, onboarding new corporate and retail clients, improving operational efficiency, enhancing design capabilities and expanding the product portfolio.

The Company also intends to progressively develop Esthara as its consumer-facing silver jewellery business, thereby creating an additional growth platform alongside its established B2B gold jewellery manufacturing operations.

The introduction of CNC jewellery is another important element of the Companys product diversification strategy. By adding new manufacturing technologies and product categories, the Company seeks to increase its addressable market and generate additional business from both existing and new customers.

The Company will continue to evaluate opportunities that can enhance manufacturing capabilities, geographic reach, customer access and long-term shareholder value.

Outlook

The long-term outlook for the jewellery industry remains positive, supported by strong cultural demand, increasing penetration of organised jewellery retail, evolving consumer preferences and growing acceptance of contemporary and lightweight jewellery.

While short-term demand may be influenced by gold price volatility, macroeconomic conditions, consumer sentiment and regulatory developments, the Company remains optimistic about the long-term growth potential of the jewellery industry.

Building on its existing manufacturing capabilities, customer relationships and recent business performance, the Company is targeting approximately 50% year-on-year growth in revenue for FY 2026-27, subject to prevailing market conditions, gold prices, availability of working capital, customer demand and other external factors

The Company expects future growth to be supported by expansion of its B2B customer base, increased manufacturing capabilities, introduction of new product categories such as CNC jewellery, technology-led productivity improvements and development of its D2C silver jewellery business through Esthara.

The Company is also evaluating opportunities to strengthen its international manufacturing presence. In this regard, the Company has proposed the acquisition of AJC Jewel Manufacturers FZC, Sharjah, UAE, subject to completion of necessary due diligence, valuation, regulatory approvals, corporate approvals and other applicable requirements. The proposed acquisition, if completed, is expected to strengthen the Companys international presence and provide a platform for expanding its manufacturing and business activities in the Middle East and other international markets.

The Company views Esthara as an important part of its longer-term diversification strategy.

Expansion of the silver jewellery business is expected to provide direct access to end consumers and enable the Company to participate in the growing organised and branded silver jewellery market.

Going forward, the Company intends to build a scalable, technology-driven and diversified jewellery platform with capabilities across B2B manufacturing, new product categories, consumer-facing jewellery and international markets.

The Company remains focused on pursuing growth in a disciplined manner while maintaining operational efficiency, financial prudence and sustainable long-term value creation for its stakeholders.

Cautionary Statement

Statement given in this section describing the companys objectives, projection, estimates, and expectations may be forward looking statements based on the present environment, rules and regulations. The actual result could differ materially from those expressed or implied. The important factors that could make a difference among others are economic situation affecting demand and supply, price fluctuation both in domestic and international markets in which the company operates, changes in Govt. regulations, consumer taste, tax laws and other statues and other incidental factors. The company assumes no responsibility to publicly amend, modify or revise any of the forward-looking statements on the basis of any subsequent developments or events