PNGS Gargi Fashion Jewellery Ltd Management Discussions

1. IN DUSTRYSTRUCTURE AND DEVELOPMENT

The fashion jewellery market, also known as costume or imitation jewelry, is experiencing significant growth globally. Fashion jewellery primarily made from non-precious metals and synthetic stones has experienced a rise in popularity due to its affordability, accessibility and the variety of styles that appeal to different consumer segments. In the past decade, the fashion jewelry industry has shifted from being a niche market to a mainstream global phenomenon, owing to changing consumer preferences and focus on affordable luxury.

Its projected to reach approximately USD 73.8 billion by 2033, with a CAGR (compound annual growth rate) of 6.9% from 2024 to 2033. This growth is fueled by increasing fashion consciousness, rising disposable incomes, and the popularity of online shopping.

One of the key factors driving this growth is the increased consumer demand for affordable luxury products. As consumers seek products that are stylish yet cost-effective, fashion jewelry offers an accessible alternative to high-end luxury jewellery. The widespread use of digital platform for marketing and sale has further expanded the reach of fashion jewellery brands, particularly in emerging economies where middle class population are increasing rapidly.

Additionally social media platforms like Instagram and Pinterest have played a significant role in shaping trends in fashion jewellery market. Influencers and celebrities often endorse various brands, encouraging the followers to purchase similar products. As fashion jewelry aligns closely with fast fashion, it follows similar trends and response quickly to shifting consumer tastes. This ability to stay on- trend has further amplified its appeal.

Another factor contributing to the markets growth is the rising inclination towards sustainable and ethical jewellery. More consumers are choosing brands that incorporate ethical sourcing practices into their jewelry production processes. This trend is expected to gain momentum as awareness about the sustainability increases globally.

The fashion jewellery market is primarily driven by the growing preferences for affordable luxury products. Consumers are increasingly opting for fashion jewellery as a cost-effective alternative to traditional fine jewellery, which can often be prohibitively expensive. For example, while the diamond studded ring may cost lakhs of rupees, a fashion ring mimicking the same design can be available for a fraction of such price. This price sensitivity, particularly among younger generations, has boosted the demand for fashion jewellery globally.

Another major driver of the market is the increasing disposable income in emerging economies. This expanded consumer base is helping to propel demand for affordable fashion accessories like jewellery. Additionally, the rapid growth of e-commerce and online platforms has opened up new avenues for jewellery brands to reach consumer in emerging regions.

2. O PPORTUNITIES AND THREATS

The rise in fashion jewellery market value can be attributed to the various factors such as growing globalization of brands, rising prices of gold and other precious and valuable stones and pearls, growing popularity of e-commerce platforms especially in the developing economies and increasing personal disposable income. The expanding globalization of brands, rising demand for male costume jewellery are the major drivers of growth for the global fashion jewellery market.

On the flip side, interrupted supply chains, changed purchasing behavior, aggressively increasing competition – the fashion jewellery industry is faced with a multitude of challenges. Global crises dictate the market, and algorithms fuel trends.

3. S EGMENT WISE PRODUCT WISE PERFORMANCE

The Company is engaged in the business of trading fashion jewellery, articles of silver and other articles. The resources are allocated based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company.

4. OU TLOOK

At an overall level, the circumstances of Financial Year 2024-25 appear better than Financial Year 2023-24. The Company is expanding by having various locations all over India which should see increase in the retail footprint of the Company. The Management is approaching the Financial Year 2025-26, to be more focused upon the creating brand awareness, particularly around the newly opened stores.

5. R ISKS AND CONCERNS Competition Risk

Competitive risk is the chance that competitive forces could prevent the Company from achieving its goal on account of declining revenues or margins.

Mitigation: The Companys brand "Gargi by P. N. Gadgil & Sons" is synonymous with superior quality service and affordability. The Company knows its competitors and its customers and with differentiated services and marketing strategies mitigates this risk to a greater extent.

Technology Risk

This risk includes a disruption of Companys business due to operational inefficiencies in existing technologies and IT processes.

Mitigation: The Company emphasizes on the analysis of security threats and their impact using the latest technologies which are periodically upgraded.

Market Risk

Market risk is the risk of losses in positions arising from movements in market prices.

Mitigation: The Director of the Company are vigilant on roles and responsibilities in understanding the movements and market situations.

Workforce Risk

Workforce risks can arise from issues such as critical skill shortages, increasing staff attrition or significant workforce retirement.

Mitigation: The Company trains its employees and ensures best HR practices, while carrying out improvements and rewards to attract and retain the best talent in the industry.

Policy Risk

Policy risk concerns the possibility that national governments — acting in their sovereign capacity amend policy environments in ways that adversely impacts the financial stability of the Company.

Mitigation: The Company is proactive in monitoring and abiding by policies in a timely manner.

Supply chain risk

Supply chain risks include logistical, economic, political, cultural, competitive and infrastructural concerns.

Mitigation: The Company is continuously working on a comprehensive management strategy to counter supply chain disruptions through a holistic approach. By diversifying its suppliers the Company expects to moderate risk factor.

Compliance Risk

Compliance risk captures the legal and financial penalties for failing to act under internal and external regulations and legislature.

Mitigation: The Company is aware of the legal, financial, reputational, and business impact due to non-compliance risk. The Company has a system to ensure regular compliance and monitoring thereof.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control system is an integral part of the general organizational structure of the Company. The system is highly structured and totally in sync with the size and nature of its business. This process is aimed at pursuing the values of both procedural and substantial fairness, transparency and accountability. The internal control system is basically a set of rules, regulations, policies which allows enhanced monitoring. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.

7. G ARGISFINANCIAL PERFORMANCE A) A nalysis of Statement of Profit and Loss

Total Income: Total income of the Company stood at Rs. 12,844.85Lakhs in FY 2024-25 increasing by 151.36% compared to Rs. 5110.12 Lakhs in FY 2023-24.

Revenue from Operations: Revenue from Operations stood at Rs. 12,634.80 Lakhs in FY2024-25, increasing by 150.15% compared to Rs. 5,048.49 Lakhs in FY 2023-24.

Depreciation: Depreciation for the year under review stood at Rs. 59.53 Lakhs in FY 2024-25 as compared to Rs.33.21 Lakhs in the previous year, up by Rs. 26.32 Lakhs.

Finance Cost: Finance cost for the year under review stood at Rs. 26.18 Lakhs in FY2024-25 as compared to Rs. 14.67 Lakhs in previous year.

Other Income: Other income for the year under review stood at Rs.210.05 Lakhs for the FY 2024-25 as compared to Rs. 59.18 Lakhs in FY 2023-24.

Net Profit: Net Profit for the year under review stood at Rs. 2,878.81 Lakhs as compared to Rs.845.85 Lakhs in FY2023-24.

B) A nalysis of Balance Sheet

Net Worth: The Net Worth of the Company stood at 9,968.61 Lakhs as on 31^st March, 2025 as compared to Rs.2904.13 Lakhs as on 31^st March 2024. The Net worth comprised of paid-up equity share capital amounting to Rs. 1035.78 Lakhs as on 31^st March, 2025 and other equity for the year stood at Rs. 8932.83 Lakhs.

Loan Profile: For FY 2024-25, the Company has not availed any secured loan facility and has repaid the Overdraft facility (secured) of Rs. 173.13 Lakhs availed during the previous year.

Total Assets: Total assets of the Company are increased to Rs. 11,719.70 Lakhs as on 31^st March, 2025 from Rs.3,863.94 Lakhs in FY 2023-24 with an increase of Rs.7,855.76 Lakhs during the year.

Inventories: Inventories stood at Rs. 3,177.81 Lakhs as on 31^st March, 2025 as compared to Rs.3,210.60 Lakhs in FY 2023-24.

Current Liabilities: Current liabilities stood at Rs. 1081.59 Lakhs as on 31^st March, 2025 as compared to Rs. 869.73 Lakhs in FY 2023-24.

Non-Current Liabilities: Non-current liabilities stood at Rs. 669.50 Lakhs as on 31^st March, 2025 as compared to Rs.90.08 Lakhs as on 31^st March 2024.

8. D ISCUSSION ON FINANCIAL PERFORMANCE WITHRESPECT TO OPERATIONAL PERFORMANCE

Financial Year 2024-25 was marked by a strong performance across all geographies and product categories, with market share gains and improvement in operating margins, as compared to the previous Financial Year. The Revenue from operations has increased from Rs. 5,050.94 Lakhs for financial year ended 31^st March 2024 to Rs. 12,634.80 Lakhs for the Financial year ended 31^st March, 2025. While net profit growth shows a much stronger acceleration in profitability aided by higher operating leverage.

Our focus remains on strengthening our balance sheet as we fund our expansions through our internal accruals. The strong cash flow generation has led to an improvement in overall financial ratios.

The details of Financial Performance are mentioned elsewhere in this report.

9. HUM AN RESOURCES

The Company provides a conducive work environment with equal opportunities for growth, recognizing and appreciating its employees achievements. Gargi encourages its employees to learn and share their knowledge and invests in learning and development initiatives to make them future-ready. The Company has currently has 43 number of employees.

10. D ETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE

IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR

Particulars	2025	2024	Explanation
Debtors Turnover	16.05%	52.99%	This decline is due to increase in Accounts Receivables which is due to change in model.
Inventory Turnover	2.38%	1.37%	This increase is due to higher sales leading to quick stock movement.
Interest Coverage	148.83%	84.79%	Significant improvement reflects a strong growth in operating profits while maintaining a low level of finance cost. It demonstrates ability to meet its interest obligations underlining its sound financial position
Current	10.01%	4.24%	This rise is due to increase in Current assets which due to short term investments made out of receipts from Preferential Allotment. Trade receivables has been increased due to change in model of trade.
Debt Equity	-	0.06%	The decline is on account of company repaying all its bank overdrafts and has no amount outstanding as on the date.
Operating Profit Margin (%)	30.84%	22.76%	Increase is primarily attributable to higher operational efficiency, increase in revenue base leads with improved profitability margin
Net Profit Margin (%)	22.81%	16.75%	Increase is due to higher operating efficiency and improved scale of operations. Growth in revenue is accompanied by a proportionally higher return in profit after tax, reflecting stronger margins and improved profitability.
Debt Service Coverage	108.62%	34.18%	This rise is due to increase in to amount of net profit and amount available for servicing the debt.
Return on Equity	44.76%	34.09%	The Return on Equity (ROE) has increased due to a significant rise in net profit, which grew at a higher rate than shareholder equity.
Net Capital turnover ratio	1.30	1.79	The decline is driven by a sharp rise in working capital, which increased more significantly than net sales.
Net Profit Ratio	22.81%	16.75%	The increase is due to significant sales growth and efficient cost management.
Return on Capital employed	36.67%	36.18%	Broadly stable improvement is a result of higher operating profits generated during the year, supported by effective utilization of the capital base.
Return on Net Worth	28.88%	29.13%	Marginal decline in the ratio is due to a significant increase in shareholders equity. Net profit has grown substantially; higher equity base has lead to a slightly lower return percentage.

11. D ISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with Indian Accounting Standard ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 read with Section 133 of the Companies Act, 2013.

12. CAUTIONARY STATEMENT

Statements in this ‘Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or industry conditions or events are ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, competitors pricing, changes in government regulations, tax regimes, and economic conditions within India.

The Company assumes no responsibility to publicly update, amend, modify or revise any forward-looking statements, based on any subsequent development, new information or future events or otherwise except as required by applicable law. Unless the context otherwise requires, references in this document to ‘the Company, ‘we, ‘us or ‘our refers to PNGS Gargi Fashion Jewellery Limited.