Mini Diamonds India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

This report covers the operations and financial performance of the Company for the year ended March 31,2026. 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:

The gems and jewellery sector play a significant role in the Indian economy, contributing around 7% of the countrys Gross Domestic Product (GDP) and around 10-15% of Indias total merchandise exports. The sector has shown remarkable resilience and perseverance in the face of global challenges. Despite higher inflation and supply chain disruptions, the industry has demonstrated a commendable performance in financial year 2025-26. The sector contributes around 29% to global jewellery consumption.

India is the worlds second-largest gold consumer and the worlds leading centre for diamond cutting and polishing centre. Its gems and jewellery industry are a major global hub, supported by a large pool of skilled labour, established manufacturing clusters, competitive costs and extensive industry expertise. The sector comprises more than 300,000 players and employs millions of people across the country. To remain competitive in global markets, Indian manufacturers are increasingly combining traditional craftsmanship with modern technologies and advanced manufacturing processes.

• The Rise of Lab-Grown Diamond Exports from India

> Between 2019 and 2022, lab-grown diamond exports from India tripled in value.

> Export volumes rose by 25% between April and October 2023, up from 15% in the same period a year earlier.

> Lab-grown diamonds are gaining popularity globally due to their affordability and ethical appeal.

> Lab-grown diamonds are called ?blood-free diamonds? because they guarantee no violence and no human rights abuse.

• Market Share and Industry Impact:

> The global market share of lab-grown gems surged from 3.5% in 2018 to 18.5% in 2023. Industry analysts predict that this share will likely exceed 20% in the year 2026-27.

> This growth has added pressure to an industry already grappling with geopolitical challenges and declining demand for natural diamonds.

GOVERNMENT INITIATIVES:

The Indian government has launched several initiatives to support and promote the gems and jewellery sector. These include financial assistance for setting up common production/processing centers, design centers, and testing facilities. Other key measures include reducing customs duty on gold, silver, and platinum, promoting indigenous manufacturing of lab-grown diamonds, and facilitating international collaborations.

The gems and jewellery sector have been granted Authorised Economic Operator (AEO) status, streamlining export- import processes and reducing bank guarantees. Further research grants to IITs for promoting the lab-grown diamond sector. SEZ Act has been revised to further boost gems and jewellery exports.

The government has declared the gems and jewellery sector as a focus area for export promotion and signed a Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE) in March 2022, which will provide the industry duty-free access to the UAE market and further boost exports of Indian gems and jewellery. The government targets gems and jewellery exports of USD 100 billion by 2027.

SWOT ANALYSIS:

STRENGTHS:

1. Adequate manufacturing facilities across the jewellery hub for strengthening design.

2. Capable to venture into new markets and exploit various opportunities with the help of strong management team.

3. Customized service gives a unique identity to the company distinct from other players.

4. Use of synergy optimization at various functional verticals gives a huge advantage.

5. Advanced Technology strength to support business operations and expansion.

6. Company with Low Debt.

7. Company able to generate Net Cash - Improving Net Cash Flow for last 2 years.

8. Book Value per share Improving for last 2 years.

9. Company with Zero Promoter Pledge.

WEAKNESSES:

1. Operating in a stiff competitive environment with uncertain profit margins.

2. Unpredicted Gold price movements and their impact on the margin of the products.

3. Low-margin products

4. Limited line of business is the bottleneck to exploiting untapped markets.

5. Frequent change in customer taste and preference for jewellery designs.

6. Mixture of the organized and unorganized sectors in Jewellery Industry affects profit margins drastically.

OPPORTUNITIES:

1. Growing preference for online platform

2. Rural development

3. Customers preference in choosing hallmarked products over products made by un-organized manufacturers.

4. Concentrating in one sector makes the company mature in the industry and gain efficiency in operations.

5. Scaling of economy resultant out of Brand/ Advertisement & Publicity/Procurement of Gold, Product Mix, designs, etc.

THREATS:

Some of the key challenges facing the jewellery industry are as follows:

1. Increasing duties and cess following GST implementation.

2. Adapting to fast-changing consumer preferences and buying patterns.

3. Volatility in the market prices of gold and diamonds.

4. The jewellery industry is a working capital-intensive business and currently there are increasing restrictions by banks over lending in this sector.

5. Recession affects the industry growth in general.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

As compared to the previous reporting period, there is decrease in the income of the company in the current reporting period. The Company, with superior methodologies and improved process and systems, will focus on positioning the revenues and lead towards high growth path in future. The Company is only operating in one segment.

OUTLOOK:

In the coming years, there will be a spurt in demand for Indian jewellery in the global market and the growth in the gems & Jewellery sector would be largely contributed by the development of large Manufacturers/brands due to the ongoing structural changes together with strong macro demographic trends. Regulatory changes introduced by the Government of India over the last few years are likely to rise the preference for branded jewellery and shift the scales in favour of the organized sector at the cost of the unorganized sector. The demand for jewellery is expected to remain robust, given Indias demographics and the consumers affinity towards gold for both wedding-related purchases and as store of value. Overall, India is expected to play a more important role in the global gems & jewellery sector, with significant investment seen in the manufacturing units by the domestic players, foreign players, and private equity investors. The changes expected in the product-mix portfolio of the Company auger well in the long run to improve the profits. It is expected that the positive impact of polarization on the organized sector is likely to be visible operationally within a couple of years that would go a long way in improving the margin and turnover for the industry in general and the Company.

RISKS AND CONCERNS:

The Company is exposed to price risk movements both in gold as well as its forex exposure. However, it has put rigorous systems, hedging methodology, and procedures in place to take care of these concerns. The Company has in place a comprehensive risk management framework that helps in anticipating, identifying, and evaluating business risks and challenges across the Company and finding ways to mitigate the same.

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 INR 5,67,84,91,161 /- as against INR 4,05,57,47,150/- during the previous financial year registering a growth of 40.01% over the previous financial year. The Company reported a Net Profit after Tax of INR 1,60,45,548 /- as against INR 3,43,74,929/- earned during previous financial year registering a downfall of 53.32%. 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 manpower is the most valuable resource for its growth. Industrial relations have been cordial. The Company employed 07 (Seven) personnel as on March 31,2026. The Company is committed in ensuring that the work environment at all its locations is conducive to fair, safe and harmonious relations between employees. Company strongly believes in maintaining the dignity of all its employees, irrespective of their gender or seniority.

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

Financial Ratio	2025-26	2024-25	Changes (in %)
Debtor Turnover	3.22	2.70	19.53
Inventory Turnover	9.16	14.27	-35.80
Interest Coverage Ratio	62.24	75.99	-18.09
Current Ratio	1.28	1.41	-9.82
Debt Equity Ratio	3.53	2.33	51.31
Operating Profit Margin	2.54	4.15	-38.83
Net Profit Margin	0.28	0.85	-66.66
Return on Net Worth	0.02	0.05	-54.49

Ratios have been recomputed directly from the audited financial statement line items. For year-on-year comparability, the basis used for Debt Equity Ratio and Operating Profit Margin is consistent with the basis followed in the preceding years MDAR.

Reason for change:

Inventory Turnover

Inventory Turnover declined from 14.27 to 9.16 as the average inventory base increased materially faster than revenue. Closing inventory increased from approximately INR 37.31 crore to INR 86.64 crore, while Revenue from Operations increased by approximately 40.01%. The higher average inventory carried during the year therefore resulted in a lower turnover ratio.

Debt Equity Ratio

On the basis consistently followed in the preceding years MDAR, the ratio increased from 2.33 to 3.53 primarily because total liabilities increased materially while shareholders equity remained comparatively stable. The increase in liabilities was mainly attributable to higher trade payables and other current liabilities during the year.

Operating Profit Margin

Operating Profit Margin declined from 4.15% to 2.54%. Although Revenue from Operations increased by approximately 40.01%, the aggregate direct cost of materials, stock-in-trade purchases and inventory movement increased at a comparatively higher rate, resulting in compression of the operating spread.

Net Profit Margin

Net Profit Margin declined from 0.85% to 0.28% as Profit After Tax decreased from approximately INR 3.44 crore to INR 1.60 crore despite the increase in revenue. The lower profit conversion during the year resulted in the decline in the ratio.

Return On Net Worth

Return on Net Worth declined primarily because Profit After Tax decreased by approximately 53.32%, whereas closing shareholders equity increased by approximately 2.56%. Consequently, the return generated on the Companys equity base was lower during FY 2025-26.

DISCLOSURE OF ACCOUNTING TREATMENT:

During the 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 year ended March 31,2026 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 04, 2026	DIN: 00748451