Narbada Gems & Jewellery Ltd Management Discussions

GLOBAL ECONOMIC REVIEW:

In 2024, Indias jewellery industry was valued at around USD 89.65 billion, underscoring its strength in a country where jewellery carries deep cultural, emotional, and financial significance. Gold—including trends like pink and blush gold—remains the markets core. Over the next decade, the sector is forecasted to grow at a compound annual growth rate (CAGR) of 5.7%, expected to reach approximately USD 124.70 billion by 2030. This upward trajectory is being driven by the burgeoning middle class, rising disposable income, and strong demand for gold and diamond jewellery—particularly for weddings and traditional ceremonies.

Diamond jewellery, particularly popular in bridal segments, is expected to see a higher growth rate of 6.6% from 2024 to 2030. The rise in demand is further supported by a consumer shift towards luxury and branded jewellery, and economic factors like increased urbanization and rising GDP per capita. With a young median age of around 27 years, the demographic is driving demand in bridal and fashion jewellery segments. The future of Indias jewellery market looks promising with the integration of technology in sales and production.

Online jewellery sales in India are witnessing rapid growth, with projections indicating a compound annual growth rate (CAGR) exceeding 8%. While offline retail still accounts for more than 85% of total jewellery sales, digital platforms are steadily gaining momentum, driven by rising consumer confidence and the convenience of online shopping. Leading brands are increasingly focusing on strengthening their digital presence—leveraging websites for marketing, engaging customers through social media, and investing in digital advertising.

Innovative technologies such as augmented reality are further enhancing the online shopping experience by enabling virtual try-ons. However, key challenges like ensuring product authenticity and streamlining return processes remain critical to building broader consumer trust. As e-commerce platforms continue to innovate and mature, the online jewellery segment is expected to capture a significantly larger share of the market in the years ahead.

In parallel, the gold market showed strong activity in early 2024. In the first quarter, global mine production rose 4% year-on-year to reach 893 tonnes—setting a new quarterly record. Additionally, recycled gold supply surged by 12% to 351 tonnes, the highest level seen since Q3 2020. This increase in recycling was primarily driven by elevated gold prices, encouraging consumers to liquidate old jewellery.

INDIAN ECONOMIC REVIEW

The global economy in recent times has witnessed a turbulent recovery, challenged by instability in the financial sector, persistent inflationary pressures, and ongoing geopolitical tensions. According to the International Monetary Fund (IMF), global growth decelerated to 2.8% in 2023, down from 3.4% in 2022, with only a modest rebound to 3.0% in 2024. Advanced economies have borne the brunt of this slowdown, reflecting significant downward revisions in their growth projections.

In this climate of uncertainty, gold prices surged to record levels, reaffirming the metals long-standing reputation as a safe-haven asset. The World Gold Council reported significant rise in the average price of gold in 2025 compared to the previous year, underlining its attractiveness during periods of financial volatility.

India, however, stood out for its economic resilience, supported by strong domestic demand and robust expansion in key sectors such as manufacturing and construction. Despite the global headwinds, Indias GDP growth remained solid, buoyed by a revival in private consumption and sustained industrial output. That said, a contraction in government spending somewhat moderated the overall momentum.

The Indian jewellery market faced mixed outcomes amid these broader economic conditions. On one hand, investment demand for gold remained strong, as evidenced by significant inflows into gold exchange-traded funds (ETFs). On the other hand, the physical gold jewellery segment witnessed subdued demand in the first quarter of 2024 compared to the same period last year. Elevated domestic gold prices deterred consumers, while macroeconomic uncertainty and increased customs duties on gold imports further influenced market behaviour and purchasing patterns.

World Economic Outlook Projection:

Note: P stands for projections

OUTLOOK:

Central banks immediate priority is to manage inflation carefully, avoiding both premature policy easing and delays that could result in missing targets. As central banks shift to less restrictive policies, there should be renewed emphasis on medium-term fiscal consolidation to regain budgetary flexibility, prioritize investments, and ensure debt sustainability. Given the varying conditions across countries, policy responses must be tailored. Implementing reforms that enhance supply can help reduce inflation and debt, boost growth towards pre-pandemic levels, and support progress toward higher income levels. Multilateral cooperation is essential to mitigate the risks of geo economic fragmentation and climate change, accelerate the transition to green energy, and facilitate debt restructuring.

Real GDP Growth – India (FY 2024–25)

The provisional estimate for FY 2024–25 sets real GDP growth at 6.5%, marking a deceleration from FY 2023–24s 8.2% growth

THE GLOBAL JEWELLERY INDUSTRY OVERVIEW

There is an increasing trend in global jewel consumption, driven by a growing inclination towards luxury products. Jewel is valued for its ability to highlight specific body features, showcase fashion trends, enhance personal appearance, and more. Its rising popularity among high-income individuals as a symbol of status is boosting consumption rates. The market is also expanding due to the increasing demand for contemporary jewel and the influx of new designers. The global gold jewel market is expected to grow during the forecast period, fuelled by rising GDP per capita, increasing consumer disposable income, and the appeal of gold as a long-term investment.

Global Jewellery Market Share (2024–25)

The pie chart above illustrates the estimated global jewellery market composition for the year 2024–25. Gold continues to dominate with 48% market share, followed by silver at 22%, diamond at 14%, platinum at 10%, and other materials making up 6% of the market

THE INDIAN GOLD MARKET OVERVIEW:

MARKET SEGMENTATION

The Indian gold and jewellery market is diverse, segmented by product types, materials, and consumer demographics, reflecting a wide range of offerings and preferences. Among product categories, necklaces and rings lead the market, with necklaces generating substantial revenue due to their widespread appeal across different styles and age groups. Rings, deeply rooted in cultural traditions—especially for engagements and weddings—are experiencing increased demand, particularly for customized and personalized designs.

Gold continues to dominate as the preferred material, valued for its cultural, emotional, and financial significance. Emerging trends such as blush and pink gold are gaining popularity among modern consumers. The diamond jewellery segment, especially in the bridal category, is also witnessing steady growth, driven by its prominent role in engagement and wedding rituals.

While women remain the primary buyers, the mens jewellery segment is steadily expanding, with rising demand for items like rings, pendants, and bracelets, influenced by evolving fashion preferences and a growing market for premium accessories. Regionally, South India is recognized for its expertise in diamond cutting and intricate gold designs, whereas West India, particularly Surat, benefits from well-established diamond processing infrastructure, reinforcing its status as a key jewellery manufacturing hub.

CHALLENGES IN MARKET POSITIONING:

The Indian gold and jewellery industry is currently contending with a range of challenges that affect its market positioning. Economic instability and frequent regulatory changes, including fluctuating gold prices and revised customs duties, have a direct bearing on cost structures and consumer demand. The sector also faces intense global competition, particularly from countries like China, where lower labour costs and advancements in craftsmanship provide a competitive edge.

Evolving consumer preferences, especially among younger buyers who are increasingly drawn to luxury materials such as diamonds and platinum, are prompting Indian jewellers to reassess their product lines and marketing strategies. In addition, the adoption of new technologies in both manufacturing and retail has become critical. Tools like virtual reality for virtual try-ons and robust e-commerce platforms are now essential for customer engagement and operational efficiency.

The Indian jewellery sector continues its post-pandemic recovery amid persistent macroeconomic shifts and evolving global dynamics. Domestic consumer demand is rebounding strongly, with significant increase in gold jewellery consumption in fiscal 2026, despite a possible dip in volumes due to elevated gold prices.

CHANGES IN LIFESTYLE:

Indias gold and jewellery industry is undergoing a period of significant transformation, driven by evolving lifestyles and shifting consumer preferences.

At the same time, the rapid expansion of online retail is reshaping how jewellery is marketed and sold. The growing reliance on digital platforms reflects the preferences of a tech-savvy consumer base that values convenience, personalization, and immersive shopping experiences. While these modern trends are gaining momentum, traditional gold jewellery continues to maintain its strong cultural significance, particularly during festivals, weddings, and other ceremonial occasions. However, there is a clear shift towards contemporary styles and alternative materials, as jewellers aim to meet the diverse and evolving tastes of todays consumers.

Risk associated with business:

a. Economic risk: Economic slowdown can affect the demand and the sales for the company.

Mitigation: The Company has a diversified product portfolio that generates robust sales from either category to balance any uncertain circumstances. The present Indian economy

b. Gold price fluctuation risks: Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. Your Board will take appropriate action in managing the fluctuation impact in gold price movement from time to time.

c. Change in Government Policies New government regulations pertaining to taxation and banking stringent norms will affect the demand and supply chain. Your company with help of well-experienced IT and managerial personnel, the implications of all these regulations are clearly analysed, interpreted and necessary compliance measures are undertaken.

d. Human Resources: Employee attrition may affect the operation of the Company. Mitigation: The Company encourages new talent and provides specialised training to the sales force to ensure the roots are grounded well, improving the performance standards, improving incentive scheme to the employees and positively contribute towards growth of the company.

e. Seasonal Risk: Sluggish sales of products due to seasonal changes may affect profitability of the Company. Mitigation: The wide ranged designed product profile and customized product will help against the seasonal ups and downs.

f. Compliance risk Non-compliance of regulations may raise the operation risk for the Company.

Mitigation: The Company has a structured internal control system in place to ensure all statutory rules and regulations are met including changes in taxation and other regulatory framework.

Localized Strategy at Narbada Gems and Jewellery Limited

At Narbada Gems and Jewellery Limited, we recognize that Indias cultural and regional diversity requires a highly localized approach. Our targeted local strategy is designed to cater to varied geographies and customer segments across the country. We run state- and city-specific brand campaigns, incorporating regional languages to ensure our messaging resonates with local audiences. Our product offerings are tailored to suit regional tastes, crafted in collaboration with local artisans who bring cultural authenticity to every piece.

Additionally, our showrooms are staffed with personnel fluent in local languages and familiar with regional customs, helping create a welcoming and culturally relevant shopping experience. This end-to-end localization strategy enables us to form deeper connections with our customers, strengthening our position as a trusted and respected jeweller.

Engaging Rural and Semi-Urban Markets

In Indias rural and semi-urban regions, jewellery is more than adornment—it is a reflection of cultural heritage and financial security. These markets account for over half of the nations gold jewellery demand, presenting immense opportunities for long-term growth.

Government initiatives aimed at revitalizing the rural economy—through investment in infrastructure, agriculture, and livelihood enhancement—are expected to boost income levels and, in turn, increase demand for gold and jewellery. However, the sector continues to face challenges, notably the limited presence of organized jewellery retailers in rural areas. High operational and setup costs have slowed penetration into these regions.

Despite these barriers, the growth potential in rural India remains vast. Overcoming these challenges could unlock a new era of expansion for the industry, allowing us to bring the craftsmanship and elegance of fine jewellery to underserved markets.

COMPANY OVERVIEW:

Narbada Gems and Jewellery Limited (NGJL) is a prominent entity within the Hyderabad-based Sanghi Global Group (SG Group), a legacy business now led by the fourth generation of professionals in the gems and jewellery industry. The Company is renowned for its specialization in the design, manufacturing, and trade of diamond and coloured gemstone-studded jewellery.

NGJL operates a fully integrated, state-of-the-art production facility in Hyderabad, equipped with advanced machinery and technology. This facility supports the manufacturing of a wide assortment of jewellery pieces, including rings, earrings, bracelets, bangles, short and long necklaces, and choker sets, with a total installed capacity of approximately 40 kilograms per month.

As a leading manufacturer and exporter in the niche market of premium flat diamond and coloured stone-studded jewellery, NGJL has established itself as a significant player in a space marked by limited organized competition.

The Company upholds its longstanding tradition of craftsmanship and quality, delivering products that meet the highest standards along with exceptional customer service. Our emphasis on localization, cultural relevance, and customer satisfaction continues to strengthen NGJLs reputation as Indias trusted jeweller, committed to exceeding the expectations of a diverse and evolving clientele.

SWOT ANALYSIS:

Strengths:

1. Wide Range of Products: Offering a diverse range of jewellery products, from traditional to contemporary designs, caters to various customer preferences, enhancing market reach.

2. Extensive Network: NGJL has a broad geographical footprint that facilitates accessibility for a wide customer demographic.

3. Precision Tools: State-of-the-art machinery and precision tools ensure high-quality craftsmanship and consistency in jewellery manufacturing. This minimizes defects and enhances the overall quality of the products.

4. Advanced Design Software: Cutting-edge design software enables intricate and accurate designs, allowing for the creation of unique and customized jewellery pieces that meet high standards.

Weaknesses:

1. Dependence on Global Supply Chains: Vulnerable to disruptions from geopolitical tensions, natural disasters, and trade policy changes.

2. Price Volatility: Subject to fluctuations due to market speculation and changing demand, impacting profitability and stability.

Opportunities:

1. Category Expansion: We will be looking for opportunities in the emerging categories within the jewellery segment, such as lightweight and everyday wear jewelleries.

2. Rising Popularity of Customized and Ethical Jewellery: Growing consumer preference for personalized and ethically sourced jewellery creates demand for customized designs and conflict-free stones.

3. Luxury Market Growth: The expanding luxury market, driven by high-net-worth individuals, presents opportunities for premium and high-value gemstone and diamond products.

4. Diversification of Product Offerings: Expanding product lines to include fashion jewellery, high-tech wearable tech, and collectibles to capture a broader customer base.

Threats:

1. Economic Fluctuations: Economic downturns or instability can reduce consumer spending on luxury items, including gemstones and diamonds.

2. Supply Chain Disruptions: Dependence on complex global supply chains makes the industry vulnerable to disruptions from geopolitical tensions, trade barriers, and natural disasters.

3. Intense Competition: The jewellery market is highly competitive with numerous players, both large and small, which can impact market share and pricing strategies.

Internal Control Systems and their Adequacy:

Narbada Gems and Jewellery Limited has established robust internal control systems that are well-aligned with the size and nature of its operations. These controls govern key areas such as the procurement of raw materials, components, plant and machinery, equipment, and other assets, as well as the sale of finished goods. These procedures are designed to ensure operational efficiency, regulatory compliance, and protection of the Companys assets.

The Company has constituted an Audit Committee, comprising independent directors, which provides periodic oversight of the internal control framework. The committee is accessible to all employees, encouraging transparency and facilitating the suggestion of improvements to the existing control systems.

Key highlights of the Companys internal control and audit mechanisms include:

• Audit Committee Oversight: The Audit Committee regularly reviews internal and external audit plans, key findings, the adequacy of internal controls, compliance with applicable accounting standards, and any changes in accounting policies and practices.

• Internal Audit Function: A dedicated multi-disciplinary Internal Audit team continuously monitors compliance with internal control procedures. The team assesses the efficiency and effectiveness of various operations and identifies key process risks, reporting their findings to both management and the Audit Committee.

• Management Review Meetings: The Company conducts monthly meetings of the top management committee to evaluate ongoing operations and review strategic plans across critical business functions, enabling proactive decision-making and performance tracking.

These systems collectively ensure that the Company operates with integrity, efficiency, and accountability.

• Operational Performance

Narbada Gems and Jewellery Limited demonstrated resilient performance during the year, achieving a Net Profit of 488.76 Lakhs, maintaining operational stability in line with the previous years profit of 508.48 Lakhs. The Company also recorded a notable increase in revenue, reaching 8,563.52 Lakhs, reflecting continued business growth. With a strong foundation in place, the Company remains committed to delivering enhanced results in the years ahead.

CHANGES IN KEY FINANCIAL RATIOS:

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:

9. Net Profit/Operating Profit Ratio 5.73% 6.03% -4.92% 10. Return on Capital Employed 8.97% 9.55% -6.11% 11. Return on Investment 56.60% 22.21% 154.85%

SHARE CAPITAL

During the year under review, the Paid-up Share Capital of the Company stands at Rs. 21,15,73,100 divided into 2,11,57,310 Equity shares of Rs. 10 each.

SECURED LOANS

The Company has 2776.58 Lakhs secured loans at the end of the 2024-25.

FIXED ASSETS

The Fixed Asset (Gross Block) as on 31st March 2025 amounts to Rs. 428.00 lakhs/-.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Manpower is biggest strength in any Sector. The Company has maintained cordial relations with its employees across all levels of the organization during the period under review. Human resource continues to be core strength and always endeavors to work towards having satisfied workforce. The key HR objective is to ensure that our employees are aware of the role they are expected to play in the organization to be able to drive organizational momentum. Going ahead, the Company will continue to invest in its people to strengthen its delivery model.

As on 31st March,2025, the manpower strength of the Company was 97 members which comprises professionals from diverse backgrounds like finance, taxation, secretarial, legal, management, business, supervisors, skilled and semi-skilled workers.

Disclaimer:

The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation, etc. The shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward looking statements made from time to time on behalf of the Company.