Asian Star Company Ltd Management Discussions

ECONOMIC OVERVIEW Global Economy

FY 2025-26 unfolded against a global economic backdrop defined by uneven growth, elevated policy uncertainty and rapidly shifting trade conditions. While economic activity was sustained across major markets, the pace of expansion fell short of earlier projections. The International Monetary Fund placed global growth at 3.5% for 2025 and projected a modest further moderation to 3.0% in 2026, reflecting the cumulative weight of tariff actions, trade fragmentation and softening momentum across several important economies.

Trade policies emerged as one of the most consequential variables shaping the global environment during the year. Tariff announcements, particularly from the United States, introduced significant uncertainty into business confidence, supply chain planning and shipment timing. Organisations operating across borders were compelled to reassess sourcing strategies, pricing structures and market priorities as duty regimes and trade negotiations continued to evolve. For export-oriented economies and globally integrated industries, the net effect was a more fragmented and cautious operating environment.

The World Trade Organization projected that global goods trade growth would slow materially, from 4.6% in 2025 to 1.9% in 2026, with tariff-related effects, geopolitical risks and transport disruptions collectively weighing on the medium-term outlook.

Geopolitical developments added further layers of complexity to an already uncertain environment. The ongoing Russia-Ukraine conflict continued to exert pressure on energy and commodity markets, while escalating tensions in West Asia affected trade sentiment, disrupted shipping routes and elevated energy-linked costs. Disruptions across the Red Sea corridor and the broader Middle East region exposed the fragility of global logistics networks to regional instability, with direct consequences for freight movement, insurance costs, delivery timelines and overall trade confidence.

Commodity price volatility remained a defining feature of the operating environment. Oil, gold and other key commodities experienced sharp price movements through the year, influencing inflation expectations, consumer behaviour and business planning across geographies. Energy-linked volatility carried particular significance for production costs, logistics and transportation. The IMF noted that oil price trajectories remained acutely sensitive to geopolitical developments and continued access through critical maritime routes, including the Strait of Hormuz.

In aggregate, FY 2025-26 reflected a global economy that remained functional but increasingly cautious and less predictable in its trajectory. Growth was uneven, trade flows became more sensitive to policy decisions, and the range of external risks that businesses were required to manage widened considerably. The year reinforced the strategic value of disciplined planning, diversified market exposure, resilient supply chains and agile response mechanisms in navigating a more complex global operating environment.

Indian Economy

India delivered a standout economic performance in FY 2025-26, with real GDP growth at 7.7% for the year. This outcome was underpinned by sustained domestic demand, accelerating investment activity, agricultural recovery, robust construction and continued public expenditure on infrastructure. Against a global backdrop marked by trade uncertainty, commodity volatility and geopolitical disruption, Indias growth trajectory reinforced its standing as one of the worlds most resilient large economies.

A defining feature of the year was a meaningful moderation in inflation. Consumer price pressures eased considerably through FY 2025-26, supported by softer food prices, favourable supply conditions and the subsequent disinflationary impact of GST rate rationalisation. Retail inflation fell to 0.25% in October 2025, the lowest reading in the current CPI series, creating a more stable price environment relative to the preceding year and providing a supportive foundation for consumption and investment decisions.

Domestic demand continued to anchor economic activity, though growth patterns varied across segments. Rural demand strengthened on the back of improved farm output, while urban consumption remained selective across categories. Ongoing investments in infrastructure, logistics and digital public infrastructure continued to support formalisation, productivity and economic connectivity. Public capital expenditure remained a significant driver of growth, with private investment showing measured improvement in select sectors.

Indias external sector navigated a more complex global environment. Merchandise exports faced headwinds from softer demand in key markets, tariff-related uncertainty and evolving global sourcing patterns. Services exports and remittances, however, continued to provide meaningful support to Indias external position. Indias continued pursuit of trade agreements and deeper economic partnerships with key markets also aims to provide an important counterbalance to tariff-related pressures, improving the medium- term prospects for market access and export competitiveness. The current account deficit stood at a manageable 0.6% of GDP for FY 2025-26, reflecting underlying external resilience despite elevated global volatility.

Policy emphasis on infrastructure, manufacturing capacity, digitalisation, logistics efficiency and formalisation continued to support the operating conditions for organised businesses and Indias medium-term growth foundation.

Looking ahead, India is well positioned to remain among the stronger performing major economies, though the pace of expansion will continue to be shaped by the interplay of domestic demand, private investment momentum, export performance and global conditions. FY 2025-26 reaffirmed the importance of productivity, disciplined execution and organisational agility in responding effectively to an evolving domesticand external environment.

Industry Overview

Global Gems and Jewellery Industry

FY 2025-26 was defined by a clear divergence between value and volume across the global gems and jewellery industry. Precious metals attracted strong investor interest, while jewellery consumption came underpressure in several major markets as prices moved sharply upward. The year was therefore characterised less by broad demand expansion and more by how consumers, retailers and manufacturers navigated elevated prices, increasingly selective spending patterns and meaningful shifts at the category level.

Gold stood at the centre of this movement. Global gold demand reached record levels in 2025, driven primarily by investment demand through exchange-traded funds, bars and coins. Jewellery demand, however, contracted in 2025, declining 18% in volume during the year as elevated prices weighed on consumer buying volumes. This contrast illustrated that while golds relevance as a store of value strengthened considerably, its role in jewellery consumption became notably more price sensitive.

This shift was particularly pronounced in China, where gold jewellery consumption declined sharply and bars and coins overtook jewellery purchases for the first time, reflecting an increasingly investment-oriented approach to gold ownership. Across markets, retailers and manufacturers responded by pivoting towards lighter formats, sharper price-point management and collections designed to preserve design appeal without relying solely on metal weight.

The diamond segment remained under sustained pressure through the year. Natural diamonds continued to reflect subdued trading sentiment, cautious inventory behaviour and softness in polished prices across parts of the midstream. At the same time, lab-grown diamonds experienced steep price compression, especially in accessible price categories. Together, these developments sharpened consumer comparison across diamond categories and reinforced the need for clearer differentiation around rarity, origin, emotional value and long-term desirability.

Against this backdrop, the natural diamond industry intensified its focus on category distinction and consumer communication. The Luanda Accord, supported by major diamond-producing nations, committed 1% of annual diamond sales revenue from participating producers towards the promotion of natural diamonds. This represented a coordinated industry-wide effort to reinforce the narrative around natural origin, rarity and enduring value, rather than allowing the category to be defined primarily by price comparison.

In aggregate, FY 2025-26 was characterised by selective demand, sustained pricing pressure and a sharper divide between investment-led buying and jewellery consumption. Gold retained its prominence as an asset class, but elevated prices constrained jewellery volumes. Diamonds continued through a difficult pricing cycle, while the sharp decline in lab-grown diamond prices reinforced the need for clearer positioning across categories. The year underscored that future growth will depend on disciplined pricing, lighter and more wearable product formats, stronger category storytelling and the ability to align with consumers who are i ncreasingly conscious of both value and authenticity.

Indian Gems and Jewellery Industry

Indias gems and jewellery industry navigated a demanding year in FY 2025-26, shaped by global trade uncertainty, tariff-related disruption, elevated precious metal prices, geopolitical tensions in West Asia and continued pressure in the diamond segment. Despite

these headwinds, the industrys overall export performance reflected a narrower decline relative to the sharper corrections recorded in specif ic product categories, pointing to a gradual but discernible shift in the composition of exports.

Indias total gems and jewellery exports declined 3.32% to US$27.72 billion during FY2025-26. Asignificant portion of this decline was attributable to disruption in the United States market, where Indias gems and jewellery exports fell 45% to US$5.09 billion following tariff-related measures. Given the United States position as one of the most consequential consumer markets for the sector, this disruption materially affected shipment planning, buyersentiment and export momentum through the year.

West Asia also emerged as a critical area of concern towards the latter part of the year. Escalating tensions involving Iran, Israel and the United States affected regional trade sentiment and created operational disruption for flows linked to the Middle East. Flight cancellations, airspace closures and interruptions in Dubai-linked cargo movement affected both exports and the import of rough diamonds. Given Dubais role as a major hub for polished diamonds, rough diamonds and bullion, the disruption carried particular significance for Indias gems and jewellery sector, elevating uncertainty around shipment timing, logistics availability, insurance costs and buyerconfidence.

Within the export basket, performance varied considerably across categories. Cut and polished diamonds remained under pressure, reflecting weak global demand and price correction. Jewellery exports provided a comparatively steadier base, with stronger traction in value-added and design-led products. Silver and platinum jewellery recorded notable growth, demonstrating that demand remained resilient in categories offering affordability, differentiated positioning orstrongerend-use relevance.

The year also underscored the strategic importance of market diversification. While exports to the United States declined sharply, destinations including the UAE, Hong Kong, Australia and Canada delivered stronger growth. Shipments to the UAE grew by over 10% during the year despite geopolitical disruptions, supported by established trade relationships and sustained regional demand. This performance reinforced the imperative for Indian exporters to broaden their market base and reduce concentration risk in any single destination.

FY 2025-26 marked a period of meaningful transition for Indias gems and jewellery industry. The decline in overall exports, sustained pressure in diamonds, disruption in the United States market and West Asia-linked logistics challenges collectively reflected the complexity of the operating environment. At the same time, growth in value-added jewellery categories and select export markets demonstrated that momentum remained available where product positioning and market selection were well aligned.

Cut and Polished Diamonds

The cut and polished diamond segment continued to face pressure during FY 2025-26, though the rate of decline moderated relative to the previous year. Indias exports of cut and polished diamonds declined 8.52% to US$ 12.16 billion, accounting for 43.9% of total gems and jewellery exports. This followed a sharper 16.8% decline in FY 2024-25, when exports had fallen to US$ 13.3 billion. While the segment remained under pressure, the more moderate pace of decline indicated an early degree of stabilisation following the significant correction of the prioryear.

The sustained pressure reflected subdued demand in key overseas markets, continued softness in polished diamond prices and cautious inventory management across the midstream. The United States and China remained the most consequential demand variables forthe trade. Tariff-related uncertainty in the United States affected shipment planning and buyer confidence during the year, and given its position as a primary end-consumer market for diamond jewellery, this uncertainty continued to constrain order visibility forlndian exporters.

Rough diamond procurement reflected a more disciplined posture during the year. Gross imports of rough diamonds declined approximately 2% to US$ 10.47 billion in FY 2025-26, compared with a considerably sharper reduction in the prioryear. This indicates more selective procurement behaviour rather than a broad withdrawal from manufacturing activity, with processors aligning rough buying more closely to confirmed demand and polished price movement, ratherthan building speculative inventory positions.

Lab-grown diamonds continued to influence pricing dynamics and consumer comparison across the broader diamond market. Polished lab-grown diamond exports declined 10.55% to US$ 1.13 billion amid price compression, demonstrating that pricing pressure was not confined to natural polished diamonds alone. Loose polished stones across categories faced headwinds, reinforcing the i mporta nee of clearer differentiation, stronger value communication and a more deliberate emphasis on rarity, origin and assurance in naturaldiamonds.

Despite this challenging environment, India retained its central position in the global diamond value chain. The country continues to process nine out of every ten diamonds handled globally, underpinned by a skilled workforce, significant manufacturing depth and a well-established trading ecosystem. India also remained an important demand market in its own right, with domestic consumption showing early signs of recovery and industry commentary pointing to India as a constructive demand anchor, alongside improving momentum in the Middle East.

Recovery in cut and polished diamonds will require more than a rebound in export volumes. Stability in polished prices, improved demand from key consumer markets, balanced rough procurement, responsible sourcing, robust traceability and sharper positioning of natural diamonds will all be essential to restoring confidence across the value chain. Manufacturers with disciplined inventory management, strong customer relationships and the capability to supply consistent, well-aligned assortments are expected to be better positioned as the segment progresses through this adjustment cycle.

Jewellery

Jewellery exports represented a comparatively stronger area of performance within Indias gems and jewellery industry during FY 2025-26, though momentum within the category was uneven. Overall gold jewellery exports remained broadly stable at US$ 11.36 billion during the year. Within this headline figure, plain gold jewellery declined 7.42%, while studded gold jewellery grew 6.27%, reflecting a clear and consequential shift in buyer preference towards value-added and design-led jewellery.

The divergence between plain and studded gold jewellery carried significant implications in a year defined by elevated gold prices. Plain gold jewellery, where purchase decisions are more directly tied to metal weight, was considerably more exposed to price sensitivity. Studded gold jewellery, by contrast, offered a broader value proposition through design, craftsmanship, stone setting and finished-product differentiation. Its growth during a year of overall export moderation demonstrated that buyers remained receptive to jewellery where value was created beyond the underlying metal.

The broader jewellery data also indicated that demand was becoming more selective rather than uniformly weak. Silver and platinum jewellery recorded strong traction during the year, signalling that buyers remained open to broader material choices where products offered either a more accessible entry point or a differentiated premium proposition.

A similar dynamic was visible in the contrast between loose stones and finished jewellery. While loose polished stones remained exposed to pricing pressure, finished jewellery performed with greater resilience when supported by design context, affordability and clear end-use relevance.

FY 2025-26 demonstrated that jewellery performance was increasingly determined by the depth of value addition. Products dependent primarily on metal weight or loose-stone value faced greater price sensitivity, while categories anchored in design, craftsmanship, product differentiation and finished jewellery application delivered more resilient results. For organised manufacturers, this reinforced the strategic importance of design capability, quality assurance, responsible sourcing, customer-specific collections and the ability to deliver jewellery that balances price, wearability and market relevance.

OUTLOOK

The industry is entering a more demanding phase, where growth will depend increasingly on value addition, supply-chain readiness and considered market selection. FY 2025-26 demonstrated that demand cycles are no longer the sole pressure point. Tariff uncertainty, geopolitical disruptions, elevated precious metal prices and logistics risks have become central considerations for business continuity and sustained trade confidence.

Trade access is expected to become a more constructive factor for the industry. Indias recent and anticipated trade agreements with key markets, including the India-UK Free Trade Agreement and ongoing engagement with the United States, can support demand, improve export competitiveness and provide greater market access over time.

In diamonds, restoring confidence remains the critical priority. Stable polished prices, balanced rough procurement and disciplined inventory management will be essential to improving movement across the value chain. Natural diamonds will require more compelling positioning around rarity, provenance, responsible sourcing and traceability, as buyers place increasing weight on assurance and long-term value.

Jewellery is expected to remain better positioned where products combine design, craftsmanship and price-point discipline. The stronger performance of studded gold jewellery, silver jewellery and platinum jewellery during FY 2025-26 signals that buyers responded to differentiated products with clear end-use appeal, reinforcing the importance of design capability, product development, quality assurance and customer-specific collections.

Market diversification has moved from strategic priority to operational necessity. The events of FY 2025-26 exposed the cost of concentration, whether in a single export market or a single logistics corridor. Building a genuinely balanced market footprint is no longer aspirational; it is foundational.

India enters this phase from a position of structural strength, with unmatched diamond processing scale, deep jewellery manufacturing capability and a craftsmanship heritage that few industries can replicate. The opportunity now lies in converting this foundation into higher value realisation, stronger compliance and products that command preference. Organised, well-governed players with the discipline to execute and the agility to adapt are well placed to lead what comes next.

Company Overview

Founded in 1971, Asian Star Company Limited has built an enduring presence in the global diamond and jewellery industry over more than five decades. The Companys standing rests on a consistent commitment to precision craftsmanship, ethical sourcing and the cultivation of long-term partnerships across the value chain. Through a vertically integrated business model, Asian Star oversees every stage of the diamond and jewellery journey, from the procurement of rough diamonds through in-house cutting and polishing, fine jewellery manufacturing, global distribution and retail, ensuring quality, traceability and accountability at each step.

Headquartered in Mumbai, the Companys international footprint spans the worlds most significant trade and consumption centres, including New York, Chicago, Antwerp, Dubai, Shanghai, Hong Kong, Bangkok and Singapore, complemented by key manufacturing and distribution presence in Surat, Ahmedabad, Hosur and Chennai. This geographic reach supports operational agility, enables proximity to both supply and demand, and reinforces Asian Stars position as a trusted connector across the global diamond pipeline.

Rough supply is sourced directly from leading mining operations worldwide, and the Company holds recognised manufacturer status for several prominent global jewellery brands. Its production ecosystem combines skilled craftsmanship with advanced manufacturing infrastructure, underpinned by a rigorous approach to quality, governance and sustainability. Asian Stars adherence to ISO 9001:2015 standards, certified by TUV NORD, and its compliance with the Responsible Jewellery Councils Code of Practices reflect a deep commitment to pipeline integrity and responsible business conduct across all levels of its operations.

Manufacturing Facility for Polished Diamond

Asian Stars diamond manufacturing operations are anchored at its Surat facility, which spans 100,000 square feet and is home to over 1,000 skilled artisans. The facility specialises in the cutting and polishing of diamonds across a wide range of shapes, sizes, colours and clarities up to 5 carats, supported by advanced technology that enables both precision and scalability. Its defining strength lies in the seamless integration of artisanal expertise with technological capability, producing stones of consistently high quality that are internationally recognised under the Asian Star Make benchmark.

The product portfolio encompasses certified diamonds, specialised cuts, programme-based cutting and proprietary creations including EX-EX-EX Hearts and Arrows and custom-designed fancy shapes. These diamonds are distinguished not only by their optical excellence and symmetry but also by the consistency of output that enables clients to compete with confidence across diverse markets and price points. The Companys mine-origin programmes and exclusive cut offerings provide further differentiation, deepening client relationships and reinforcing market relevance.

Every stage of production is governed by rigorous quality control and end-to-end traceability systems, ensuring that ethical sourcing and sustainability remain central rather than incidental to operations. Through continuous investment in process efficiency, design integration and responsible manufacturing practices, the Surat facility sustains Asian Stars position as a benchmark in global diamond manufacturing.

Manufacturing Facility for Jewellery

Asian Stars jewellery manufacturing capabilities are distributed across advanced facilities in Mumbai and Hosur collectively spanning over 60,000 square feet with a combined annual production capacity of 750,000 pieces. These facilities form a core component of the Companys vertically integrated value chain, designed to serve global markets with precision, scale and the flexibility to respond to evolving demand.

The facilities produce a comprehensive range of diamond-studded jewellery across classic, contemporary and fusion aesthetics, catering to a broad spectrum of consumer preferences and regional market requirements. Operations combine traditional craftsmanship with modern engineering across both handmade and machine-made segments, supported by advanced CAD/CAM systems, in-house casting and setting capabilities that enable streamlined workflows, faster turnaround and a high degree of customisation.

To strengthen product leadership and design relevance, Asian Star has established a dedicated Product Development Centre focused on research-led innovation and market-responsive design solutions. A dedicated design centre further supports the Companys ability to anticipate emerging trends and respond to client expectations with agility. Together, these capabilities underpin the creation of bespoke collections and private label programmes, positioning Asian Star as a preferred manufacturing partner for leading jewellery brands and retail chains across global markets.

Distribution

Asian Star maintains a strategically positioned global network of offices and marketing arms across major manufacturing, trading and consumption centres. Supported by the Companys broader organisational workforce, this network provides direct access to real-time market intelligence and evolving global design trends, enabling the Company to respond with speed and relevance to shifting client needs. The Companys distribution strategy serves a diverse and discerning customer base, encompassing renowned international brands, retail chains and trade partners. Underpinning this strategy is an unwavering commitment to placing the customer at the centre of every decision, delivering experiences that are personal, consistent and designed to exceed expectations.

Retail

Asian Star operates a dedicated jewellery boutique offering a curated selection of pret diamond jewellery, designed for high net worth individuals seeking pieces that combine exceptional craftsmanship with everyday wearability. The boutique presents thoughtfully curated collections of versatile, investment-worthy jewellery alongside a bespoke order service, enabling discerning clients to commission personalised creations for significant occasions. Complementing this, Asian Star has extended its retail presence through Tryyst, its proprietary fine jewellery label. Rooted in the belief that jewellery should have a soul, Tryyst brings together heritage craftsmanship and contemporary design, offering collections that are youthful, design-forward and built on ethically sourced natural diamonds. Available across India and the UAE with global shipping, Tryyst represents Asian Stars deliberate step into direct-to- consumer luxury, taking its manufacturing excellence and translating it into a brand experience that speaks to a new generation of jewellery buyers.

Financial Overview

FY 2025-26 presented a demanding operating environment for Asian Star, characterised by sustained pressure in the diamond segment, elevated precious metal prices, tariff-related uncertainty and uneven demand across key markets. Against this backdrop, the Company maintained a stable operating base, supported by a stronger export contribution and continued momentum in the jewellery division.

Consolidated turnover for the year stood at Rs. 2,882.01 crore, compared to Rs. 2,955.75 crore in FY 2024-25, reflecting a measured decline of 2.5%. Export sales grew 8.9% to Rs. 1,914.30 crore, accounting for 66.4% of total sales against 59.5% in the prior year, underscoring the strength and depth of the Companys international market relationships.

Segment performance reflected the prevailing industry environment. Revenue from the diamond segment declined 10.1% to Rs. 1,916.56 crore from Rs. 2,132.80 crore in FY 2024-25, in line with broader industry trends. The jewellery segment, by contrast, delivered growth of 17.4%, with revenue rising to Rs. 965.45 crore from Rs. 822.40 crore, reaffirming the Companys strategic focus on design- led, value-added jewellery and the continued strength of this vertical.

Profitability moderated during the year, consistent with margin pressure and a softer operating environment in diamonds. EBITDA

stood at Rs. 63.81 crore compared to Rs. 80.91 crore in FY 2024-25, while profit after tax was Rs. 40.42 crore against Rs. 43.19 crore in the prior year. Earnings per share stood at Rs. 25, compared to Rs. 27 in FY 2024-25.

While revenue and profitability reflected the weight of the operating environment, the Company remained focused on disciplined cost management, prudent inventory control and selective business execution throughout the year. The sustained growth in jewellery, a higher export contribution and a consistent emphasis on operational discipline provide a sound foundation from which Asian Star moves forward through an evolving industry cycle.

OPPORTUNITIES

India as a Preferred Global Sourcing Destination

Indias standing as a global manufacturing hub for diamonds and jewellery is strengthening, underpinned by evolving trade access, improving infrastructure and a fundamental shift in how international buyers approach sourcing. As global supply chains become more selective and compliance-driven, Indias depth in diamond processing and jewellery manufacturing positions it as a credible, scalable and responsible sourcing destination.

Trade agreements are expanding this advantage meaningfully. The India-UK Free Trade Agreement is expected to open a high-value consumer market through preferential duty access for Indian gems and jewellery. Existing frameworks with the UAE and EFTA, alongside anticipated progress with the EU and Oman, further extend Indias reach across both developed and emerging markets, providing organised exporters with a structural edge over less-connected competitors.

Domestic infrastructure development is reinforcing manufacturing capability at scale. Initiatives such as the Bharat Ratnam Mega Common Facility Centre at SEEPZ, India Jewellery Park Mumbai and Maharashtras sector-focused manufacturing policy are creating conditions for more efficient, transparent and technology-enabled production ecosystems. These developments support the transition from fragmented capacity towards organised, cluster-based manufacturing with improved logistics, skill access and compliance readiness.

As international buyers place increasing weight on responsible sourcing, traceability and dependable execution, the opportunity for organised Indian manufacturers extends well beyond volume. The ability to offer consistent quality, ethical provenance and responsive product development positions India as a trusted partner in the global value chain rather than simply a cost-competitive supplier.

Broadening Market Reach Across Geographies

FY 2025-26 reinforced the strategic imperative of a diversified export base. The sharp disruption in the United States market exposed the vulnerability of concentration in a single destination, while growth in the UAE, Hong Kong, Australia and Canada demonstrated that meaningful demand opportunities exist across a broader geography.

Emerging and underpenetrated markets offer considerable scope for deeper engagement as retail infrastructure matures, luxury consumption expands and appetite for design-led jewellery grows. Regions with improving trade access and rising middle-class affluence represent a new frontier for Indian exporters prepared to invest in market-specific relationships and product strategies.

Capturing this opportunity requires more than geographic presence. Buyer preferences, price sensitivities, design expectations and product formats differ materially across regions. Manufacturers with the capability to adapt assortments to local demand, while maintaining consistent quality, compliance and supply reliability, will be best positioned to build enduring customer relationships across a wider market footprint.

Diversification Across Precious Metals and Material Categories

The stronger performance of silver and platinum jewellery during FY 2025-26 signals a meaningful broadening of demand across material categories, driven by affordability considerations, design evolution and shifting consumer preferences. This creates a tangible opportunity for manufacturers to develop differentiated collections that serve both accessible and premium market segments without dependence on a single metal category.

Mixed-metal designs, lighter formats and engineered alloys are gaining relevance as buyers seek greater design distinction and wider price-point coverage. Manufacturers that invest in multi-material capability and product development across categories will be better positioned to serve a more varied and discerning global customer base.

Technology-Led Transformation and Artificial Intelligence

Technology is rapidly becoming a defining competitive lever across the gems and jewellery value chain. Artificial intelligence, digital workflows and data-led planning tools are enabling faster design development, enhanced production visibility, more disciplined inventory management and sharper customer responsiveness across the industry.

For jewellery manufacturers, AI-enabled tools can meaningfully accelerate the product development cycle, supporting design exploration, trend interpretation, assortment planning and collection visualisation. They can also deepen market understanding by analysing consumer preferences, regional buying behaviour and product performance across geographies, enabling more targeted and commercially viable design decisions.

Across operations, technology can improve planning accuracy, quality assurance, production tracking and material optimisation. As margins remain under pressure and demand grows increasingly selective, digital integration offers manufacturers a credible pathway to reducing inefficiencies, improving turnaround and aligning production more closely with confirmed customer requirements.

Evolving Consumer Preferences

Global jewellery consumption is undergoing a structural shift, with consumers moving away from purely occasion-led purchasing towards pieces that offer everyday wearability, personal expression and enduring design relevance. While price sensitivity remains a consideration, buyers are increasingly seeking jewellery that is versatile, lifestyle-aligned and reflective of individual identity.

This evolution creates a compelling opportunity for manufacturers with strong design interpretation capability and the agility to translate changing consumer behaviour into commercially viable collections. Lighter formats, modular designs, contemporary styling and market-specific aesthetics are expected to gain sustained relevance across both developed and emerging markets. Manufacturers that can consistently deliver jewellery combining visual impact, wearability and design distinction will be well placed to capture this evolving demand.

RISKS, THREATS AND CONCERNS

Trade Policy Disruption and Geopolitical pressure

The global operating environment for gems and jewellery has become increasingly sensitive to shifts in trade policy, tariff structures, import regulations and geopolitical developments. FY 2025-26 demonstrated that disruption is no longer confined to demand; it now directly affects shipment planning, buyer confidence, cargo movement, insurance costs and delivery timelines. For an export-led industry with globally distributed sourcing and distribution linkages, sudden changes in market access or trade routes can materially alter order flows, execution certainty and business continuity planning.

Commodity Price Volatility and Demand Uncertainty

The industry remains exposed to significant price volatility across gold, silver, platinum & polished diamond. Price corrections in diamonds affect inventory valuations, margin structures and order visibility, while sharp movements in precious metal prices influence consumer demand patterns, product pricing strategies and price-point planning. In such conditions, business performance depends not only on revenue growth, but on disciplined procurement practices, careful stock rotation and close alignment between inventory positions and confirmed demand.

Evolving Consumption Patterns and Generational Shifts

Jewellery consumption patterns are evolving at an accelerating pace across generations and markets. Younger consumers increasingly prioritise everyday wearability, personal expression, design relevance, responsible sourcing and value transparency, while more traditional demand remains anchored in occasions, gifting and investment-led purchasing. The principal risk lies in product offerings becoming misaligned with how consumers now discover, evaluate and acquire jewellery, with implications for sell-through rates, retailer confidence and the long-term health of demand creation across categories.

Competitive Intensity, Margin Pressure and Category Distinction

The industry continues to operate in an environment of intense competition across both diamonds and jewellery. Price-led competition, cautious retailer procurement, evolving product preferences and rising operational expectations constrain pricing power and compress margins. The steep price correction in lab-grown diamonds has also complicated consumer comparison within the broader diamond category, making clear value communication and product differentiation increasingly important.

INTERNALCONTROLS

Asian Star Company Limited maintains a robust and comprehensive internal control framework, designed to support the integrity of financial reporting, operational oversight and regulatory compliance across its business operations. The framework is calibrated to the scale and complexity of the Companys activities and encompasses detailed policies and procedures spanning governance, risk management, information security, regulatory compliance and audit practices.

These controls are structured to identify irregularities in a timely manner, facilitate prompt corrective action and reinforce accountability at every level of the organisation. The effectiveness of the framework is evaluated through regular internal audits and periodic risk assessments, which are reviewed by the Audit Committee of the Board in coordination with the internal audit function. These reviews are conducted at regular intervals to assess the adequacy of controls, maintain transparency, minimise exposure to fraud and ensure continued adherence to statutory obligations.

For the financial year under review, the internal control systems functioned effectively and no material weaknesses were identified in either their design or implementation.

HUMAN RESOURCES

Asian Stars people remain central to its performance, culture and long-term growth. The Companys human resources framework is built around creating a transparent, inclusive and performance-oriented work environment that supports the professional development and wellbeing of its workforce. Engagement, capability and organisational alignment are treated as ongoing priorities rather than periodic initiatives.

During the year, the Company continued to invest in structured learning and development programmes, interactive capability-building sessions and targeted workshops across quality, production and operational functions. These initiatives are designed to nurture a growth-oriented culture and equip employees with the skills required to meet evolving business demands.

Employee satisfaction and motivation are supported through clearly defined reward and recognition programmes and consistent acknowledgement from leadership. These efforts ensure that the Companys workforce remains skilled, engaged and aligned with Asian Stars values and strategic direction as the organisation continues to grow and evolve.