Mini Diamonds (India) Ltd Management Discussions

This report covers the operations and financial performance of the Company for the financial year ended March 31, 2025. The Company operates in one segment which is Jewellery manufacturing. Your Board of Directors places herewith the Management Discussion and Analysis Report on the business of the Company as applicable to the extent relevant.

INDUSTRY STRUCTURE AND DEVELOPMENTS (FY 2024 25)

During the financial year 2024-25, Indias gems & jewellery exports totalled about US$28.5 billion, down ~11.7% YoY, reflecting softer global demand and price normalisation. India continued to anchor the midstream, cutting and polishing ~90% of the worlds natural diamonds. On the domestic front, hallmarking scaled up as BIS made HUID hallmarking mandatory across 361 districts (with 40+ crore items hallmarked cumulatively), reinforcing consumer trust. The retail mix kept shifting as lab-grown diamonds share by value rose from ~3.5% (2018) to

~18.5% (2023) and was widely expected to exceed 20% in 2024; alongside this, gold averaged US$2,386/oz in 2024, shaping purchasing behaviour and inventory discipline across channels.

Lab-Grown Diamonds (LGD)- The Shift Continues

LGD continued to deepen its market presence through financial year 2024-25, supported by improving technology, capacity additions and growing retail acceptance. Its value proposition, affordability, assured supply and ethical positioning, resonated with younger and sustainability-conscious consumers. Strengthening of certification and testing infrastructure further buttressed ecosystem credibility and buyer confidence.

Market Share and Industry Impact

The steady penetration of LGD continued to reshape product architecture across the chain, with clearer differentiation between natural and LGD collections at retail. For the natural midstream, the environment reflected price normalisation and tighter inventory discipline, while select producing regions faced pressure from the global demand slowdown and LGD substitution.

Global Policy Backdrop and Compliance

From January–March 2024 onward, G7/EU measures introduced staged restrictions and traceability requirements for Russian-origin diamonds, increasing compliance complexity for exporters and their downstream partners. Indian processors adapted to evolving verification expectations in key trade hubs during the year.

GOVERNMENT INITIATIVES

The Government sustained facilitation for common production/processing and testing infrastructure, supported indigenous capability building in high-value segments (including LGD), and progressed formalisation through hallmarking expansion. Trade agreements and economic partnerships remained important for market access, while exporters aligned operations with enhanced traceability and customs compliance in major destinations.

SWOT ANALYSIS STRENGTHS

• Indias entrenched scale in cutting, polishing and manufacturing, supported by skilled labour across key hubs.

• Strengthening testing/certification and hallmarking frameworks that enhance trust in both natural and LGD products.

• Expanding LGD ecosystem, improving process technology and certification penetration.

• Mature design capabilities and faster refresh cycles enabling responsive product-mix management.

• Cost competitiveness and integrated supply relationships across domestic and export channels.

WEAKNESSES

• Working-capital intensity and exposure to receivable and inventory cycles.

• Margin variability in the natural midstream amid price normalization phases.

• Fragmented industry structure with uneven process and compliance maturity among smaller players.

• Sensitivity to bullion and polished price movements that affect procurement and pricing.

OPPORTUNITIES

• Organized retails share gains aided by hallmarking and certification, driving premiumization and repeat purchase behavior.

• LGDs expanding consumer acceptance enabling new design narratives and accessible price points.

• Omni-channel adoption, digital discovery and analytics-led merchandising improving sell-through and inventory turns.

• Policy tailwinds from gold duty rationalization supporting formal flows and compliant sourcing.

• Portfolio diversification by geography and product, leveraging trade arrangements and new formats.

THREATS

• Evolving global traceability/sanctions regimes increasing compliance cost and operational complexity.

• Tariff exposure in key destinations and policy-linked demand risks in export markets.

• Rapid shifts in consumer preference across markets; substitution risk from LGD for certain natural categories.

• Macroeconomic slowdowns affecting discretionary spends and retailer order cycles.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

Lab-Grown Diamonds (LGD). LGD delivered +262.8% YoY growth, with the categorys mix expanding ~320 bps YoY to ~5.9% and contributing ~10.6% of the years incremental growth.

Overall exports rose +314% YoY, underpinned by early traction in jewellery shipments and stronger overseas linkages.

New Jewellery Lines. Diamond-Studded Jewellery and Silver Jewellery were introduced in FY24 25, establishing a presence in these categories and supporting the retail-led strategy.

The retail engine was scaled through the wholly owned subsidiary Namra Jewels Private Limited, with a flagship Mumbai store and an online platform, supported by 300+ new 14KT LGD designs. In-house manufacturing of larger-size LGDs (0.50 10.00 CTS) commenced, improving quality control and margins. Overseas distribution broadened via partnership with A V Palace DMCC (Dubai), alongside select B2B wins, including a 2,000-piece export to Canada. Net effect: FY24–25 growth was broad-based, led by Cut & Polished and Rough, with LGD scaling as the third engine and the sales mix diversifying across channels and geographies in line with the integrated LGD strategy and retail expansion.

OUTLOOK:

Global diamond markets continue to see normalised demand for natural diamonds alongside rising adoption of lab-grown diamonds (LGD), with retailers segmenting assortments and tightening traceability and certification standards. At the same time, the operating backdrop reflects evolving tariff measures and trade-policy uncertainty in certain destinations (including the U.S.), which can influence pricing, lead times and order flows.

As of now, the Company is executing an integrated LGD value chain, from sourcing/processing rough through manufacturing to sale of finished jewellery-across retail and B2B channels in India and overseas. We have reduced dependence on the U.S. market and strengthened alternative routes with a greater focus on Dubai and Singapore, while deepening domestic distribution. Retail penetration is being actively scaled through our wholly owned subsidiary, Namra Jewels Private Limited, and its online platform, complemented by design refresh cycles, certification-led trust and agile merchandising. The product mix is shifting toward LGD jewellery, while retaining selective natural assortments where appropriate, supporting broader market access, margin resilience and diversified revenue streams.

RISKS AND CONCERNS:

The Company is exposed to price movements in gold, polished diamonds (natural and lab-grown) and foreign exchange. To address these, it has instituted a comprehensive risk-management framework with defined policies for procurement, inventory governance, and hedging methodologies, supported by rigorous systems and procedures.

Price volatility in natural and LGD categories is additionally mitigated through portfolio and market diversification, reducing dependence on the U.S. market and increasing focus on domestic demand and alternate export hubs such as Dubai and Singapore, enabling timely identification, evaluation, and mitigation of business risks across the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Our Company ensures that appropriate risk management limits, control mechanisms and mitigation strategies are in place through its efficient and effective Internal Control System and the same completely corresponds to its size, scale and complexity of operations. The Company strives to put several checks and balances in place to ensure that confidentiality is maintained. Effective procedures and mechanisms are rolled out by a full-fledge Internal Audit System to ensure that the interest of the Company is safeguarded at all times. In addition to this, the Risk Assessment policy of the organization is reviewed on a quarterly basis by the Audit Committee / Board of Directors of our Company.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the financial year under review, our Company has achieved a turnover of 4,05,57,47,150/- as against

2,45,57,78,780/- during the previous financial year registering a growth of 65.15% over the previous financial year. The Company reported a Net Profit after Tax of 3,43,74,929/- as against 2,14,69,028/- earned during previous financial year registering an increase in growth by 60.11%. We have also started Lab Grown Diamonds to take advantage of growing demand and market space. We also plan to manufacture the lab grown jewellery with silver, gold and other precious metals.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The Company believes that its people are the most valuable resource driving sustainable growth. Industrial relations remained cordial during the year across all locations. The Company is committed to a fair, safe and harmonious workplace and upholds the dignity of every employee irrespective of gender, role or seniority.

As on March 31, 2025, the Company maintained a lean on-roll team, reflecting a focused operating model. During the year, the Company enrolled multiple job-work partners across key manufacturing hubs, enabling employment upliftment in the wider ecosystem while adding capacity, specialist skills and geographic flexibility. In addition, more than 20 professionals were engaged on a freelance/consultancy basis (including design, merchandising, quality, technology and compliance), strengthening execution without materially increasing fixed overheads. This blended staffing model, core employees, job-work partners and freelance experts, supports agility, quality and prudent cost management.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLATION THEREOF:

Financial Ratio	2024-25	2023-24	Changes (in %)
Debtor Turnover	2.70	2.04	32.18
Inventory Turnover	14.27	11.81	20.85
Interest Coverage Ratio	75.99	81.67	-6.96
Current Ratio	1.41	1.04	35.97
Debt Equity Ratio	2.33	19.35	-87.94
Operating Profit Margin	4.15	3.38	22.92
Net Profit Margin	0.85	0.87	-2.66
Return on Net Worth	0.05	0.25	-78.09

Reason for change:-DEBTOR TURNOVER

Significant increase in Debtor Turnover Ratio implies reduction in average outstanding receivables as compared to sales which we think is a result of improvement of credit terms that we have been able to close the sales at instead of significant increase in Revenue. It is a positive result of our constant efforts to ensure healthy operating cashflow is maintained despite pushing for increase in sales.

CURRENT RATIO

Increase in Current ratio, implying significant increase in Current Assets as compared to Current liabilities has been a result of utilization of equity funds from preferential issue received during the year. It has already resulted in significant positive growth in Top Line Items i.e. Revenue and we intend to improve the efficiency of utilization to push bottom line growth too.

DEBT EQUITY RATIO

Significant reduction in Debt-to-Equity Ratio, stating reduction or slower increase in Debt as compared to the expansion in equity is a positive factor enabled by companys constant effort to raise funds through equity rather than financing. It is a positive sign of share holders confidence on company and companys determination to reduce as much dependency on borrowed funds as possible.

RETURN ON NET WORTH

The Return on Net Worth Figure appears low for the current financial year as compared to previous financial year is due to the technical factor of expansion in equity capital due to receipt of funds against preferential shares issued. As the Funds have been received during the current financial year and the same shall be diligently and gradually deployed, the positive effect of the same on Net Income to Share Holders i.e. Numerator shall be visible in coming financial years.

DISCLOSURE OF ACCOUNTING TREATMENT:

During the financial year under review, there has been no changes in Accounting Policies and Practices. These Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 notified under Section 133 of the Act and other relevant provisions of the Act. The Financial Statements up to and for the financial year ended March 31, 2025 were prepared to comply in all material aspects with the Accounting Standards specified under Section 133 of the Act read with the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act. The previous year figures have been regrouped/ reclassified or restated, so as to make the figures comparable with the figures of current year.

For and on behalf of the Board of

Mini Diamonds (India) Limited

	Sd/-
	Upendra Narottamdas Shah
Place: Mumbai	Chairman and Managing Director
Date: September 02, 2025	DIN: 00748451