PC Jeweller Ltd Management Discussions

INDUSTRY OVERVIEW

The gems and jewellery industry forms an integral part of Indias cultural and economic landscape, supported by the countrys longstanding affinity for gold, large consumer base and established capabilities across jewellery designing, manufacturing, processing and retailing. The industry encompasses a diverse range of products, including gold, diamond and studded jewellery, silver, platinum, coloured gemstones, traditional jewellery and lab- grown diamonds. India also occupies an important position in the global gems and jewellery value chain, particularly in diamond processing and jewellery manufacturing.

Jewellery demand in India is deeply linked to weddings, festivals and other milestone occasions. Rising disposable incomes, urbanisation, evolving lifestyles and increasing consumer preference for branded and certified products have contributed to the development of the organised jewellery market. Consumers are also increasingly seeking contemporary, lightweight and versatile designs suitable for wedding, occasion and everyday wear.

Gold-price volatility often shapes consumer purchasing patterns, encouraging demand for lightweight, lower-grammage and value-conscious jewellery. Consumers increasingly seek products that balance design, utility and affordability, driving the growth of contemporary, lightweight and everyday-wear collections alongside traditional and wedding jewellery. Gold bars and coins also continue to attract investment-oriented consumers seeking wealth preservation.

The shift towards organised and branded jewellery retailing continues to gain momentum, supported by greater consumer awareness of purity, certification, transparent pricing and reliable exchange policies. Authenticity, quality assurance, traceability and consistent service standards have become increasingly important purchase considerations, strengthening the position of established brands and compliant retailers.

The global gems and jewellery industry continues to evolve in response to changing consumer preferences, precious- metal price movements and evolving retail formats. Demand is increasingly driven by lightweight and design-led products, value-added offerings, personalisation and responsible sourcing, while jewellery continues to retain its significance as a symbol of adornment, self-expression and long-term value preservation.

Technology is playing an increasingly important role across the jewellery value chain. Advancements in computer-aided design and manufacturing, digital marketing, virtual try-ons, omnichannel retailing and data-driven consumer engagement

are enhancing customer experience, supporting product innovation and enabling greater customisation.

Government initiatives continue to support the development, transparency and global competitiveness of the gems and jewellery sector. Measures such as the expansion of mandatory hallmarking, strengthening of quality and certification standards, digitalisation of trade-related processes, promotion of exports and facilitation of ease of doing business are contributing to greater consumer confidence and industry formalisation.

Policy support for skill development and entrepreneurship is also gaining momentum, as reflected in initiatives such as the Chief Minister Yuva Udyami Vikas Abhiyan (CM YUVA) of the Government of Uttar Pradesh and the National Entrepreneurs Empowerment Drive (NEED) of the National Skill Development Corporation (NSDC), which aim to promote franchise-led entrepreneurship, employment generation and the development of a skilled entrepreneurial ecosystem within the gems and jewellery sector. Collectively, these initiatives are expected to strengthen the industrys long-term growth prospects and reinforce Indias position as a major global jewellery manufacturing and export hub.

Overall, the Indian gems and jewellery sector continues to benefit from strong cultural affinity, evolving consumer preferences and increasing formalisation. Growing demand for branded, certified and design-led jewellery, supported by digital adoption, technological advancements and favourable government initiatives, is strengthening the sectors competitiveness and long-term growth prospects in both domestic and international markets.

INDUSTRY DATA

The global gems and jewellery industry operated in a challenging environment during 2025-26, largely influenced by elevated gold prices and changing consumer purchasing patterns. While global gold jewellery consumption declined to a five-year low of 1,542 tonnes during 2025, the value of jewellery demand increased by 18% to a record US$172 billion as higher gold prices offset lower volumes. This divergence between value and volume was evident across major gold-consuming markets.

Despite near-term volatility, the long-term outlook for the industry remains favourable. The global gems and jewellery market was estimated at approximately US$254 billion in 2025, having grown at a CAGR of around 5.50% between 2020 and 2025. The market is projected to reach approximately US$332 billion by CY2030, supported by rising disposable incomes in emerging economies, increasing demand for innovative and differentiated designs and growing consumer preference for responsibly sourced jewellery.

In India, domestic gold prices increased significantly during 2025, influencing consumer purchase behaviour. Jewellery demand remained supported by weddings, festivals and traditional occasions, however, consumers moderated purchase volumes and increasingly relied on exchange schemes to manage affordability. Despite lower physical consumption, expenditure on gold jewellery reached a record level during the year, reflecting the impact of higher gold prices.

Indias gold jewellery retail market has shown steady value growth over the past few years, rising from Rs. 3,740 billion in 2020 to Rs. 5,732 billion in 2025, reflecting a CAGR of 8.90% despite pandemic-related disruptions and price volatility. Formalisation, premiumisation, omni-channel retailing and increasing disposable income in smaller cities continue to shape the market.

Indias gems and jewellery export performance remained mixed during FY2026. Gross exports increased marginally by 0.93% in rupee terms to Rs. 2,44,827 crore, while declining by 3.32% in US- dollar terms to US$27.72 billion.

The geographical mix of exports also continued to evolve. The UAE emerged as Indias largest gems and jewellery export destination during FY2026, with exports increasing by 10.52% to US$8.70 billion. Exports to Hong Kong grew by 30.99% to US$5.97 billion, while Australia and Canada also recorded growth, partially offsetting weaker shipments to the United States. These trends reflect the industrys increasing diversification across export markets and reduced dependence on any single geography.

Gross gems and jewellery imports increased to approximately US$22.83 billion during FY2026 from US$19.71 billion in the previous year, reflecting continued requirements for raw materials and inventory replenishment across the value chain.

Cut and polished diamonds continued to be the largest export category, accounting for 43.90% of total exports, although exports from the segment declined by 8.52% to US$12.16 billion amid softer global demand.

Product category performance reflected evolving consumer preferences. Aggregate exports of plain and studded gold jewellery remained broadly stable at US$11.36 billion. Within this, plain gold jewellery exports declined by 7.42% to US$4.84 billion, while studded gold jewellery exports grew by 6.27% to US$6.52 billion, indicating stronger demand for value-added and design-led products.

Silver jewellery and platinum jewellery exports recorded robust growth of 52.21% and 39.32%, respectively, highlighting increasing diversification across jewellery categories.

Mandatory hallmarking continued to expand during FY2026. The fifth phase added 12 districts and increased coverage to 373 districts and the sixth phase further added seven districts, taking the total number of districts covered under mandatory hallmarking to 380. The framework now covers gold jewellery and artefacts across six recognised caratages (14K-24K), strengthening quality assurance, traceability and consumer confidence.

OPPORTUNITIES AND THREATS

Indias jewellery demand is underpinned by its cultural importance during weddings, festivals and auspicious occasions. Rising incomes, urbanisation and discretionary spending are expanding demand across bridal, occasion-wear and daily-wear categories, while jewellerys role as both adornment and a store of value sustains its household relevance.

The retail market is expected to maintain its growth momentum, supported by domestic consumption, gold prices and evolving preferences. Lightweight, contemporary, diamond-studded and affordable jewellery are enabling the industry to serve diverse price points and purchase occasions. The shift towards organised retailers offers significant growth potential. Hallmarking, transparent pricing, certification, purity assurance and buyback policies are strengthening consumer confidence. The organised segments relatively smaller market share provides substantial headroom for further gains.

Rising incomes, improving infrastructure and greater awareness of branded jewellery are creating opportunities beyond metropolitan cities. Organised jewellers can expand through company-owned and franchise formats, supported by wedding and festival demands.

Younger and urban consumers increasingly prefer lightweight, contemporary, personalised and daily-wear jewellery. This enables

jewellers to address gifting, self-purchase and lifestyle occasions, while growing interest in diamond-studded jewellery, gemstones, silver and customised collections supports product diversification. Digital platforms, social media, virtual consultations and try-on technologies are reshaping the purchase journey. Omnichannel models can expand reach and engagement, while technology can improve inventory management, design responsiveness, traceability and transparency.

Indias jewellery manufacturing and diamond-processing expertise provide a strong base for international growth. Expanding beyond the United States into the UAE, other Middle Eastern and underpenetrated markets can reduce concentration risk, while global branding, trade fairs and product innovation can enhance competitiveness.

Initiatives covering hallmarking, exports, skill development, jewellery parks, foreign investment and duty rationalisation can support formalisation, quality improvement and capacity addition. Integrated infrastructure and technology-led manufacturing can further improve productivity and export readiness.

Sharp fluctuations in gold prices can affect consumer affordability, purchase timing and demand volumes. Elevated prices also increase the value of inventory held by jewellers, resulting in higher working-capital requirements and financing costs. Although higher prices may support revenue realisations, they can encourage customers to postpone discretionary purchases or shift towards lower-weight products.

India depends substantially on imports to meet its gold requirements and also imports rough diamonds for processing. Consequently, the industry remains exposed to movements in international commodity prices, exchange rates, customs duties, overseas supply conditions and geopolitical developments.

Consumer interest is expanding towards lightweight jewellery, affordable fashion jewellery, digital gold, gold exchange-traded funds and other financial assets. These alternatives could moderate demand for traditional, high-value jewellery categories.

International demand may be affected by economic slowdowns, inflation, trade restrictions, tariff changes and geopolitical tensions in key markets. Concentration of exports in a limited number of destinations increases vulnerability to country-specific developments. The diamond segment is particularly exposed to weak demand in major overseas markets and competition from lab-grown diamonds.

SEGMENT WISE PERFORMANCE

The Company is among the leading participants in Indias organised jewellery retail sector and is engaged in the manufacturing, trading and retailing of gold, diamond, studded jewellery and silver articles. As on March 31, 2026, it operated a

network of 52 showrooms, including 4 franchisee outlets under the PC Jeweller brand, across 37 cities in India.

The Companys operations during the year were focused exclusively on the domestic market, generating revenue from operations of Rs. 3,352.88 crore.

OUTLOOK

The global gems and jewellery industry is expected to maintain a steady growth trajectory, supported by rising disposable incomes in emerging economies, growing demand for innovative and ethically sourcedjewellery, increasing digital adoption and evolving consumer preferences. The global market, estimated at approximately US$254 billion in 2025, is projected to reach around US$332 billion by 2030. Demand is expected to be driven by premiumisation, product innovation, online retail channels and increasing preference for customised and contemporary jewellery designs.

In India, the retail gems and jewellery industry remains well positioned to benefit from favourable structural drivers and is projected to grow at a CAGR of 12.20% between 2025 to 2030, aided by rising household incomes, rapid urbanisation and evolving consumer preferences toward branded and design- oriented jewellery, along with a gradual shift towards, organized retail channels.

Gold jewellery is expected to remain the cornerstone of demand, supported by its cultural significance, investment appeal and role in weddings and celebrations. At the same time, consumer preferences are evolving towards lightweight, design-led and daily-wear jewellery. Rising acceptance of studded jewellery, silver jewellery and other premium categories is expected to diversify growth opportunities across the sector.

Technology adoption, evolving consumer preferences and supportive government initiatives are accelerating the shift towards organised players in the gems and jewellery sector. Coupled with Indias strong manufacturing capabilities and diversified export base, these factors are expected to enhance the industrys competitiveness and support longterm growth.

With the Indian retail jewellery industry poised for sustained growth, the Company remains well positioned to capitalise on emerging opportunities while navigating evolving market dynamics. Supported by its strong brand presence, expanding market reach, focus on innovation and customer-centric approach, the Company is well placed to drive sustainable growth and further strengthen its competitive position in the industry.

RISK AND CONCERNS

The Indian gems and jewellery industry operates in a dynamic environment influenced by evolving consumer preferences, raw material price volatility and regulatory developments. Rapid shifts towards lightweight, contemporary and personalised jewellery require retailers to continuously refresh product offerings, while changing fashion trends may increase inventory management challenges and working capital pressures. The industry also faces a shortage of skilled artisans and craftsmen, which can impact production efficiency, quality consistency and product development capabilities.

The Company undertook various operational rationalisation and cost optimisation initiatives to strengthen its financial position and meet its working capital requirements. These measures included the closure of underperforming showrooms and optimisation of manpower costs. Further, following the execution of the Joint Settlement Agreement with its Consortium Lenders on September 30, 2024, the Company continued to witness a significant improvement in its operational and financial performance during FY2026. The turnaround in business operations enabled the Company to report a net profit of Rs. 710.62 crore for the year.

The Company has continued to make meaningful progress towards its objective of becoming debt-free, with outstanding debt being reduced by more than 80% till March 31,2026 since the execution of the settlement agreement with the consortium lenders. Further, the successful conversion of approximately 69% of the Fully Convertible Warrants issued under the Rs. 2,702.11 crore preferential issue till March 31, 2026, has significantly strengthened the Companys capital base, providing additional momentum to its deleveraging efforts and reinforcing its financial position.

The Companys core strengths, including its manufacturing and design capabilities, operational infrastructure, skilled workforce and customer-centric practices, remain intact. Leveraging its established brand reputation and stakeholder trust, the Company delivered a strong recovery in business operations during the year.

During the year, the Company entered into a MoU with the National Skill Development Corporation, under the Ministry of Skill Development & Entrepreneurship, Government of India, to serve as an Industry / Franchise Partner for the Gems & Jewellery sector. Through this initiative, the Company plans

to enable the development and on boarding of up to 2,00,000 micro-entrepreneurs across India over five years under the PC Jeweller brand. This will provide the Company an opportunity to expand its retail presence as well as contribute to the society by employment generation, entrepreneurship development and local economic growth through a nationwide network of entrepreneurs. It will also help in creating a pool of skilled artisans and craftsmen,

During the year, the Company also signed a MoU with the Government of Uttar Pradesh under the Chief Minister - Yuva Udyami Vikas Abhiyan (CM-YUVA) and has also been onboarded as a franchise brand on the CM-YUVA portal. As part of the initiative, PC Jeweller will support trained goldsmith entrepreneurs in rural and semi-urban areas of Uttar Pradesh to establish 1,000 jewellery retail franchise units thereby promoting entrepreneurship, youth employability and economic development, while enhancing the Companys visibility, scalability and retail network.

The sector remains significantly dependent on imported gold and other precious materials, making it vulnerable to fluctuations in global commodity prices, currency movements, changes in import duties and geopolitical developments that may disrupt supply chains.

While the business remains exposed to fluctuations in gold prices and foreign exchange rates, appropriate risk management systems and internal controls have been implemented by the Company to manage these exposures effectively including through supplier diversification, increasing localisation by purchase of old jewellery from the customers, careful and sensible inventory planning etc.

The rising instances of cyberattacks, like hacking, malware attacks and phishing swindles, poses a significant threat to the individuals, associations and organisations etc. To protect the finances, private data and vital structure, it is critical to implement effective defensive measures.

The Company has taken various measures for countering cyber security related risks including maintaining data on secure and reliable cloud server, protecting the computer systems and networks by firewall and advanced anti-virus softwares, automated backups etc. No incidents of cyber security, breach or loss of data have taken place in the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a robust internal control framework, which is regularly reviewed by Internal Auditor and periodically evaluated by Audit Committee. In addition, comprehensive audits of inventories, cash and other key operational areas are conducted periodically.

The Company has also implemented adequate internal financial controls commensurate with the size and nature of its operations.

Based on an independent assessment and managements evaluation thereof, the Board of Directors is of the opinion that the Companys internal controls over financial reporting were adequate and operating effectively as at March 31,2026.

FINANCIAL PERFORMANCE

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (IND AS) specified under Section 133 of the Companies Act, 2013 and the applicable Rules, as amended from time to time and other applicable provisions.

FY 2025-26 was an important year for the Company, as it regained its momentum and delivered a strong performance throughout the year. The revenue from operations stood at Rs. 3,352.88 crore, as against Rs. 2,243.25 crore in FY 2024-25, representing a strong operational growth of more than 49%. This significant growth in revenue resulted in to an increased net profit of Rs. 710.62 crore, as against Rs. 575.09 crore during FY 2024-25, reflecting an increase of more than 23%. This broad-based growth was driven by strong execution across the business, supported by continued consumer demand throughout the year, marking a meaningful progress in the Companys ongoing turn around journey.

The summary of standalone financial performance of the Company during the year under review as compared to FY2025 is as under:

KEY FINANCIAL RATIOS

Key financial ratios of the Company, changes therein as compared to previous financial year along with explanations for the ratios having change of 25% or more are as under:

Note 1: Current assets increased by 16% (approx.) mainly due to increase in inventory, trade receivables and other current assets and current liabilities decreased by 46% (approx.) mainly due to significant reduction in current borrowings from the banks, which contributed to the increase in this ratio.

Note 2: Total debt decreased by 48% (approx.) due to significant reduction in bank borrowings and total equity increased by 32% (approx.) mainly due to allotment of equity shares, which contributed to decrease in this ratio.

Note 3: Turnover increased by 49% (approx.), which contributed to increase in this ratio.

Note 4: In FY 2024-25, the Company booked interest for 3 months only as per the terms of one time settlement agreement with consortium lenders whereas in FY 2025-26 the interest is booked for 12 months. This resulted in reduction in this ratio.

HUMAN RELATIONS & INDUSTRIAL RELATIONS

The Company considers its employees to be its key strength and is committed to fostering a high-performance culture driven by accountability, capability development and employee engagement. The Company provides a safe, healthy and productive work environment to support employee well-being and growth. As on March 31,2026 the total employee strength of the Company was 700. The industrial relations had remained harmonious throughout the year in the Company.

References - Industry reports and websites including GJEPC, IBEF etc.