Golkunda Diamonds & Jewellery Ltd Management Discussions

Industry structure and Developments

Global Economic Overview

The global economy in 2024 demonstrated resilience despite facing multiple challenges including geopolitical uncertainties due to various ongoing wars and tariff uncertainty. Subdued GDP in key developed economies also played a significant part in pulling down global economy and trade. The OECD projected steady global GDP growth of 3.1% in 2024, matching the 3.1% achieved in 2023, with expectations for a slight uptick to 3.2% in 2025. This moderate but stable growth trajectory reflected the ability to navigate through complex headwinds.

Indias real GDP growth reached approximately 6.5% in FY/ 2024–25, driven by strong private consumption. India is expected to remain the worlds fastest growing major economy, with GDP growth of 6.4–6.5% in FY/ 2025–26 and stable projections into FY/ 2026–27

Gulf Cooperation Council (GCC) economies grew around 2.8–3.3% in 2024, driven heavily by non-oil sectors such as manufacturing, construction, and tourism, which together composed over 70% of real GDP. Growth was constrained by geopolitical instability, trade disruptions, and prolonged oil production cuts.

The United States saw real GDP growth likely to be a solid 2.0 percent in 2025 from a brisk 2.8 percent in 2024. This can vary significantly based on the decision of the political leadership on economic policy including the continuing of higher tariffs and heightened uncertainties.

Southeast Asia grew at 4.3/ % in 2024, with ASEAN countries collectively around 4.2/ %. Growth is expected to slow slightly to 4.0/ %, with Asia Pacific region moderating from 4.6% in 2024 to 3.9% in 2025.

Eurozone GDP growth is forecast at 0.8/ % in 2024. It is expected to record H"/ 1.2/ % growth in 2025, while the EU overall may reach 6/ % GDP growth

Global Jewellery Trade 2024

The global jewellery market emerged as a resilient sector in 2024, demonstrating moderate growth despite broader economic uncertainties. The Global Jewellery Market size was valued at $371 Billion in 2024 and is projected to grow to $565 Billion at a CAGR of 4.8% through 2033.

The jewellery trade benefited from several key drivers in 2024, including rising disposable incomes in emerging markets, evolving fashion trends, cultural celebrations requiring traditional jewellery, and growing interest in luxury accessories. The market also saw increased focus on sustainable and ethically sourced materials including emergence of lab grown diamonds, reflecting changing consumer preferences especially in advanced economies.

The trade demonstrated resilience despite facing multiple challenges including persistent price rise concerning key raw material i.e. gold and silver. Also, fluctuations in pricing for diamonds, impact of Lab grown diamonds and overall geopolitical uncertainties due to wars and tariff uncertainty has also played a significant impact in the overall jewellery demand.

Opportunities and Threats

Opportunities

1. Lab-Grown Diamonds

- Rising consumer acceptance due to ethical sourcing and lower costs.

- Major brands entering this space (e.g., Pandora, De Beers Lightbox).

2. Digital Transformation

- Growth in e-commerce, AR/VR for virtual try-ons.

- Social media marketing allows direct-to-consumer branding.

3. Expanding into Emerging and Domestic Markets

- Urbanization and rising incomes in India, Southeast Asia, and Middle East offer new growth avenues.

4. Customization & Personalization Trends

- Consumers are seeking bespoke jewellery and unique design experiences.

5. Sustainability Branding

- Brands that embrace ethical sourcing, recycling, and sustainability can build customer trust and loyalty.

T – Threats

1. Synthetic Diamond Competition

- Lab-grown diamonds are disrupting pricing and perception of rarity.

2. Economic Uncertainty

- Recessions or inflation can reduce demand for luxury items.

3. Geopolitical Risks

- Sanctions, mining regulations, and global trade disruptions (e.g., Russia sanctions on Alrosa).

Outlook

Global Economic Outlook

The global economic outlook presents a mixed picture with recent upward revisions offering cautious optimism. According to the latest IMF projections, global growth is forecast at 3.0% for 2025 and 3.1% for 2026, representing an upward revision from earlier forecasts.

The January 2025 IMF World Economic Outlook had initially projected 3.3% growth for both 2025 and 2026, but the July 2025 update shows a more conservative due to fast changing geo-political situation and uncertainty in trade tariffs. The global economy faces a critical juncture amid policy shifts and intensifying downside risks.

Global Jewellery Market Forecast

The global jewellery market demonstrates resilience and moderate growth prospects across multiple zones. The market size is projected to grow from $242.79 billion in 2025 to reach between $343.90-$482.22 billion by 2030-2032, depending on the research methodology. Most estimates converge on a compound annual growth rate (CAGR) of 4.7-5.10% during the forecast period.

The 2025 revenue projections show the jewellery market reaching approximately $370 trillion globally, with an expected annual growth rate of 5.02% through 2029.

India Economic & Jewellery Forecast 2025-2026

India stands out as the worlds fastest-growing major economy with impressive revised forecasts. The IMF has upgraded Indias GDP growth forecast to 6.4% for both 2025 and 2026, up from earlier projections of 6.2% for 2025 and 6.3% for 2026. This upward revision reflects a more benign external environment than previously anticipated.

For the fiscal year framework, India is projected to maintain potential real GDP growth of 6.5% over FY26-28, positioning it to become the worlds third-largest consumer market and third-largest economy by 2026. Indias nominal GDP is expected to increase from $4 trillion in FY25 to over $6 trillion by FY30.

Indias jewellery market shows exceptional dynamism with multiple growth projections indicating strong expansion. The market is expected to grow from $85.5 billion currently to reach $118-168.62 billion by 2029-2030. The most conservative estimate projects 6.01% growth from 2024-2029

The Indian gems and jewellery market specifically shows remarkable potential representing some of the highest growth rates globally in this sector.

Key Growth Drivers and Outlook

Several factors support these positive forecasts across all three regions:

Global Drivers: Social media influence, rising disposable incomes, fashion consciousness, and demand for personalized jewellery continue to drive market expansion.

Regional Strengths: The Middle East benefits from cultural traditions, tourism, and trade hub advantages, while India leverages its massive domestic market, favourable demographics, and supportive government policies.

Market Evolution: The jewellery industry is experiencing transformation through digital channels, sustainable practices, and customization trends, supporting sustained growth across traditional and emerging markets.

The overall outlook for 2025-2026 suggests resilient economic growth globally, with India leading major economies and jewellery markets showing robust expansion across all three regions, driven by both traditional demand and evolving consumer preferences.

Risk and concerns

Risks and Concerns:

Following can be some of the risks and concerns the Company needs to be wary of:

The largely unorganized structure of the market can affect the systematic functioning of the Company. Geo Politics and Political instability in key markets has a tremendous impact on the capital markets.. The Jewellery manufacturing in India is heavily influenced by the US Markets and key Western countries.

The major income component of the Company being exports, changes in economies or government policies of the producer or user countries may also affect the operations of the Company.

Increasing competition among the Indian Exporters as well as global competition in this industry.

Impact of Tariffs on Jewellery Trade to the USA from India

India is one of the largest exporters of diamonds and gold jewellery globally. The USA is Indias largest market for jewellery exports, accounting for over 40% of Indias gem and jewellery exports.

Increased Costs for Importers and reduced-price competitiveness with exports from China, Thailand, Italy, and Vietnam.

If tariffs are substantial and sustained, US buyers may reduce orders or cancel contracts. In the Long-term, Indian firms may explore setting up units in tariff-friendly countries and diversification into non-US markets (UAE, Hong Kong, Europe).

Internal Control Systems and their Adequacy:

The Company has adequate internal control procedures commensurate with the size of the Company and the nature of its business for purchase of stores, raw materials, components, plant and machinery, equipment and other assets, and for the sale of goods.

The Company also has in place an Audit Committee to have a periodic overview of the internal control procedures of the Company. The Audit committee is accessible at all times to the employees of the Company for any improvement to be recommended in the procedures in place.

We are looking for various reputed audits like SMETA, RJC to make company compliant as a workplace of the highest working standards.

Performance Overview:

During FY 2024-25, the company achieved total revenues of Rs 252.44 crores, marking a change from the previous years Rs 230.47 crores. The organization recorded net profit after tax of Rs 11.82 crores in FY 2024-25, compared to Rs 9.62 crores in the preceding financial year.

Export performance and Foreign Exchange earnings:

The Company is making contribution towards foreign exchange through export and foreign exchange earnings stood at Rs. 24843.37 Cr during the financial year under review.

Strategic Geographic Expansion: The organization has strategically implemented a multi-country business approach, establishing partnerships across various global markets. This deliberate diversification strategy has successfully minimized business concentration risks tied to any single nation. The approach has proven particularly valuable in navigating current geopolitical volatility and rising trade barriers, which have had minimal impact on overall sales performance. The company maintains its commitment to expanding both product offerings and market presence to mitigate regional market fluctuations.

Indian Market Entry Initiative: Recognizing Indias position as one of the worlds most rapidly expanding jewellery markets, the company is actively pursuing domestic market opportunities. Plans are underway to establish operations in the Indian market through a proposed new manufacturing facility outside the Special Economic Processing Zone (SEEPZ). This strategic move aligns with the Atmanirbhar Bharat initiative and represents a prudent response to increasing global market uncertainties.

Sustainable Jewellery Innovation: The company is launching an innovative lab-grown diamond jewellery segment, specifically designed for environmentally conscious younger consumers in developed markets. This new product category addresses growing demand for sustainable, ethically-sourced, and accessible luxury jewellery options.

Retail Partnership Development: The organization is actively building strategic alliances with prominent retail networks, including major jewellery chains, online marketplaces, and large-format retailers. These partnerships encompass exclusive product collections and private-label manufacturing arrangements.

Technology-Driven Growth Vision: The companys forward-looking strategy focuses on leading industry innovation through ethical sourcing practices, strategic market expansion, and cutting-edge technology adoption. Key technological initiatives include implementing artificial intelligence for design development and market trend forecasting, deploying machine learning for collection customization based on consumer preferences, investing in automation to enhance production efficiency and quality control, and utilizing advanced analytics to optimize customer engagement, inventory systems, and marketing effectiveness.

Financial Strategy: After maintaining operations through internal funding and consistent borrowing levels for nearly ten years, the company recognizes the need for expanded financial resources. Given evolving market conditions, increasing raw material costs, and product diversification requirements, management is evaluating multiple financing options to support both immediate operational needs and long-term growth objectives.

Environmental and Social Commitment: The company believes that sustainable environmental practices are fundamental to creating lasting value and making meaningful societal contributions through financial support and expertise sharing. Current initiatives include implementing advanced pollution treatment technologies in manufacturing processes and pursuing renowned audit certification like SEDEX to validate standards in workplace conditions, health and safety protocols, environmental impact, and ethical business practices. Community engagement efforts continue through educational programs, local partnerships, and skills development initiatives in collaboration with non-governmental organizations.

Organizational Development Focus: The company maintains its commitment to comprehensive employee development, ensuring a motivated and high-performing workforce that drives sustainable business growth. With renewed focus and energy, the organization is preparing for its next growth phase, working toward establishing itself as a distinguished leader in jewellery manufacturing.

Changes in Key Financial Ratio

Pursuant to provisions of Regulation 34 (3) of SEBI (LODR) Regulation, 2015 read with Schedule V part B(1) details of changes in Key Financial Ratios is given hereunder:

Key Financial Ratio	FY 2024-25	*FY 2023-24
1. Inventory Turnover Ratio	17.02	12.65
2. Current Ratio	1.90	1.77
3. Debt Equity Ratio	0.96	1.10
4. Debt service coverage ratio	5.43	3.93
5. Return on equity ratio	19.78	19.33
6. Trade receivables turnover ratio	2.91	3.22
7. Trade payables turnover ratio	10.93	11.20
8. Net capital turnover ratio	4.93	5.41
9. Net profit ratio	4.77	4.23
10 Return on capital employed	31.74	31.16
11. Return on Investment	18.07	17.80

*Previous years Figures have been regrouped / rearranged wherever necessary

Industrial Relations and Human Resources:

The Company values its relationship with its employees and ensures that employees feel valued. We strive to create an environment and culture within which every employee can put his best efforts and maximize his contribution.

The Company ensures that all its employees remain competent through education, skills, training and experience as necessary. The Company has had cordial relations between the management and employees. The Company is poised to motivate each of its employees to perform to the fullest extent possible and to appropriately reward their excellence

Cautionary Note:

Statements in this report and Corporate Governance Report read together with the Directors Report and financial statement describing the Companys objectives, projections, estimates, expectations and predictions, may be "forward looking statements". Actual results may differ from those expressed or implied due to variations in prices of raw materials, seasonal demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and other incidental factors.