Goldiam International Ltd Management Discussions

This report covers the operations and financial performance of the Company for the year ended March 31, 2023. The Company has two segments viz. jewellery manufacturing and investment activity. The contribution of Jewellery manufacturing segment to the total standalone turnover of the Company was 91.66% during the FY 2022-23 and residual portion was contributed by investment activity.

Business Segment:- Gold, silver Jewellery and diamonds

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The gems and jewellery industry plays a vital role in the Indian economy. It contributes about 6-7 percent of the GDP and employs over 2.5 million workers, according to FICCI. The Government of India recently declared the gems and jewellery industry as a focal point for exports. India is considered a global hub for low costs and inexpensive skilled labour.

India?s economy has displayed remarkable resilience amidst global challenges, positioning itself as the frontrunner in growth among major economies. The latest economic survey anticipates a substantial GDP growth rate of 6.5% in FY24, further consolidating India?s impressive growth trajectory.

India is one of the fastest growing major economies and is expected to be one of the top three economic powers in the world over the next 10 to 15 years, backed by its robust democracy and strong partnerships. Estimates suggest that the Indian economy has rebounded sharply following the contraction in 2020 & 2021.

India is one of the largest exporters of gems and jewellery and it contributes a major chunk to the total foreign reserves of the country and also one of the fastest growing industries in the country. It is extremely export oriented and labour intensive.

The overall gross exports of gem & jewellery from April 2022- March 2023 stood at US$ 3808.45 billion, showing a decline of 2.94% in dollar terms as compared to US$ 3923.77 billion in FY 2021-22.

OPPORTUNITIES:

Based on its potential for growth and value addition, the Government declared gems and jewellery sector as a focus area for export promotion. The Government has undertaken various measures recently to promote investment and upgrade technology and skills to promote ‘Brand India? in the international market.

The Government has permitted 100% FDI in the sector under the automatic route, wherein the foreign investor or the Indian company do not require any prior approval from the Reserve Bank or Government of India.

The Government has reduced custom duty on cut and polished diamond and coloured gemstones from 7.5% to 5% and NIL, that will help the gems and jewellry exports market in India become globally competitive. The Bureau of Indian Standards (BIS) has revised the standard on gold hallmarking in India from January 2018 to include a BIS mark, purity in carat and fitness, as well as the unit?s identification and the jeweller?s identification mark on gold jewellery. The move is aimed at ensuring stringent quality check on gold jewellery. The Government has made hallmarking mandatory for gold jewellery and artefacts and a period of one year is provided for its implementation.

In the jewellery industry, a company?s brand reputation hinges on the quality and safety of its products. To uphold their brand reputation, Our Company takes measures to ensure that their products meet high standards of quality and safety. This, in turn, fosters customer loyalty and helps to build a positive image.

THREATS:

The growth trend of the diamond industry continued fueled by strong demand for rough diamonds amid continuing geopolitical tensions and sanctions imposed on Russia, steady recovery in key export destinations such as USA, Europe, Israel, among others, resilient consumer & business sentiment, easing of almost all covid-19 restrictions pertaining to manufacturing in the domestic market. However, the diamond outlook for the 2024 remains uncertain with concerns rose about Russian sanctions, inflation and supply chain issues.

The Company is exposed to risk in exchange rate fluctuations as the Company is dependent on exports sales. However, the Company closely monitors and takes appropriate steps to reduce such risks.

Competition which has always been a challenge is countered by better quality and designs, branding, catering to changing customer demands/styles and cost control measures. Increasing prices of raw materials have affected and can affect the profit margins. However, the Company continuously thrives for improved production efficiency to counter this risk as far as possible.

RISKS AND CONCERNS:

Risk management is integral to your Company?s strategy and to the achievement of Goldiam?s long-term goals. The nature of the Company?s business exposes it to several inherent risks and concerns. The Company strives to closely monitor the risks and to mitigate them by adopting suitable, pragmatic strategies.

a) Bullion Risk:

The volatility in the gold prices exposes the Company to bullion risk as gold forms approximately 30% to 50% of the cost of the finished product.

b) Raw Material Supplies Risk:

Though India plays a dominant role in the Gems & Jewellery industry in terms of processing and consumption, mining of gold and diamond is amongst the lowest in the world.

India imports gold and rough diamonds along with other precious metals.

c) Laboure?s availability Risk:

Gems and jewels industry is a highly labour-bounded and export-oriented sector. The labourers shifted back to their native places due to Covide-19 and lockdown, which is resulted non- availability of Laboure?s

c) Currency Risk:

Currency risk arises from exposure to foreign currencies and the volatility associated therewith. 100% of our exports have been transacted in US Dollars. While the Company hedges majority of its receivables, any sharp fluctuation in currency is likely to affect the cash flow of the Company as well as its profitability.

d) Geography Risk:

Dependence on any geographic location makes the Company?s business in that region vulnerable to the economic slowdown therein. While USA continues to be our prime export destination.

OUTLOOK:

The financial year 2022-23 continued to be a volatile one like the previous year characterised by disruptions in diamond supply due to the international geopolitical situation, consequent diamond price volatility and the sudden spikes in gold prices on account of international macro-economic environment.

The ongoing Russia-Ukraine conflict is expected to have an adverse impact on the diamond industry by disrupting the supply of rough diamonds used for manufacturing finished products. The rising inflation declined consumer income that could subdue the growth of the sector. Furthermore, thriving ecommerce activities and increased web penetration in remote areas have created a huge growth potential for untapped markets and positive announcements in the Union Budget 2022-23 for the G&J sector.

INTERNAL CONTROL AND ITS ADEQUACY:

The Company has proper and adequate systems of internal controls in order to ensure that all assets are safeguarded against loss from unauthorised use or disposition and that all transactions are authorised, recorded and reported correctly. Regular internal audits and checks are carried out to ensure that the responsibilities are executed effectively and that adequate systems are in place. The Management continuously reviews the internal control systems and procedures to ensure orderly and efficient conduct of business. The emphasis of internal control will be further strengthened across functions and processes, covering the entire gamut of activities including manufacturing, finance, supply chain sales & distribution, marketing etc. The Company has adopted Risk Management Policy.

FINANCIAL PERFORMANCE:

During the financial year ended March 31, 2023, your Company recorded a consolidated turnover of ^53318.43 lakhs as compared to the turnover of ? 68774.32 lakhs in the previous financial year ended March 31, 2022 thereby consolidated turnover decreased by 22.47% over previous year. The consolidated Profit before tax and exceptional items were ?11746.75 lakhs as against ?14862.67 lakhs of the previous year resulted in a decline of consolidated profit approximately by 20.96% over previous year. The consolidated Profit after tax stood at ?8518.85 lakhs as compared to the profit of ^10595.81 lakhs in the previous year.

The Company has achieved a standalone turnover of ?30344.78 lakhs during the FY 2022-2023 as compared to ^39072.81 lakhs during the previous year reflects a decline of 22.33% over the corresponding financial year ended March 31,2022. The standalone profit after tax of the Company decreased by 0.92% from ? 5740.38 lakhs to ^5687.58 lakhs in the current year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS:

The Company considers its human resources as amongst its most valuable assets and continues to place emphasis on their development. It has been Company?s constant endeavour to impart requisite training and thereby develop and hone the skills and talent of its personnel and enable them to realize their potential.

The overall Industrial Relations in the Company have been quite peaceful and cordial.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing Company?s objective, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company?s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws, statutes and other incidental factors