Shoora Designs Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Gems & Jewellery sector continues to play a vital role in the Indian economy, contributing about 7% of GDP and employing over 5 million people. During FY 2024-25, Indias gems & jewellery exports stood at US$ 28.5 billion (?2.41 lakh crore), registering a decline of 11.7% compared to FY 2023-24. Within this:

1. Exports of cut and polished diamonds fell by 16.8% to US$ 13.29 billion.

2. Lab-grown diamond shipments declined by 9.6%.

3. Gold jewellery exports remained broadly stable, with plain jewellery down 13.1%, offset by a 14.1% growth in studded gold jewellery (Monthly).

Strategic policy support continues to bolster the sector: The Government allows 100% FDI under the automatic route, and under CEPA with the UAE, duty-free access is anticipated to significantly lift exports to that market IBEF. In January 2024, the Bharat Ratnam Mega CFC was inaugurated in SEEPZ-SEZ, Mumbai. This Common Facility Centre aims to create world-class infrastructure to enhance export capabilities and support the "Aatmanirbhar Bharat" initiative. The industrial ecosystem is poised for substantial growth. A recent outlook projects Indias gems & jewellery industry to swell from around US$ 83 billion in 2024 to US$ 128 billion by 2029, growing at a CAGR of 9.5%. Key growth is anticipated from lab-grown diamonds, expected to rise at a 15%.

OUTLOOK

Although FY 2024-25 witnessed a downturn in gems and jewellery exports owing to global headwinds, encouraging signs of resilience have emerged. In July 2025, exports registered a growth of 16% year-on-year, reaching US$ 2.17 billion, supported by proactive shipments ahead of impending U.S. tariffs and sustained demand for cut and polished diamonds, lab-grown diamonds, and gold jewellery. Nevertheless, the proposed imposition of tariffs of up to 50% by the United States on imports of gems and jewellery from India remains a significant concern. This development poses risks particularly for Surats diamond-processing hubs, which account for a substantial share of global processing, raising apprehensions about market access and employment stability.

On a positive note, the recently concluded UK-India Free Trade Agreement (FTA) is expected to provide fresh impetus to the sector. Exports to the UK are projected to more than double?from US$ 941 million to US$ 2.5 billion?which will further enhance Indias competitive position in global markets. Additionally, the growing focus on digitalization, brand-building, and the increasing penetration of organised retail are reshaping the sector. Shifts toward sustainable offerings, particularly in lab-grown diamonds, are also expected to support long-term growth and industry transformation.

OPPORTUNITIES & THREATS, RISKS & CONCERNS

The Gems & Jewellery sector in India continues to derive significant strength from its inherent advantages. The industry benefits from synergy optimization across its various functional verticals, which enables operational efficiency and competitive advantage. India remains the worlds largest centre for diamond cutting and polishing, supported by robust infrastructure and an abundant pool of highly skilled manpower. With an established global reputation as a hub for gems and jewellery manufacturing and exports, the sector is further strengthened by favourable government policies, including 100% FDI under the automatic route and duty-free access under CEPA with the UAE. The increasing penetration of organised retail and the growth of brand-driven jewellery businesses have also enhanced consumer trust and provided the sector with additional momentum.

At the same time, certain structural weaknesses persist. The industry continues to be highly dependent on international markets, making it vulnerable to global demand fluctuations. Profitability is exposed to volatility in the prices of gold and diamonds, while the fragmented nature of the industry? dominated by small and medium enterprises?limits economies of scale. Further, the lack of widespread adoption of modern technology and design innovation among unorganised players, combined with heavy reliance on imported raw materials such as gold and rough diamonds, adds to the challenges.

Despite these weaknesses, the sector presents significant opportunities for growth. Rising domestic demand, supported by Indias expanding middle class and increasing disposable incomes, offers strong potential for sustained consumption. On the export front, trade agreements such as the UAE CEPA and the anticipated UK-India FTA are expected to open up new geographies and strengthen Indias global footprint. Consumer preference is also shifting towards lab-grown diamonds and sustainable jewellery, creating new market avenues. Additionally, technology-led transformations? including e-commerce, digital retail platforms, and the use of blockchain for supply chain transparency?are reshaping industry practices. The proposed introduction of a gold spot exchange further presents an opportunity for India to establish itself as a global price influencer.

However, the sector also faces material threats. The imposition of steep tariffs of up to 50% by the United States on imports of gems and jewellery from India poses a substantial risk to export performance, particularly given the importance of the U.S. market. Broader geopolitical uncertainties and economic slowdowns in key markets such as the U.S., EU, and Middle East also heighten business risks. India faces rising competition from other global jewellery hubs, including Dubai, Antwerp, and China, while stricter regulatory requirements around sourcing, traceability, and environmental standards are expected to increase compliance costs. Furthermore, volatility in foreign exchange rates continues to affect export realisations, adding to the sectors financial risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place an adequate internal control system commensurate with the size and nature of its business. The system comprises well-documented policies and standard operating procedures covering all financial and operational functions. These controls are designed to provide reasonable assurance regarding the accuracy and reliability of financial reporting, safeguarding of assets from unauthorized use or losses, adherence to applicable laws and regulations, and efficient conduct of business operations. The Company continues to strengthen and align its internal processes with globally recognized best practices. Regular internal audits are conducted, and their findings, along with implementation of corrective actions, are reviewed by the Audit Committee to ensure the effectiveness of the internal control environment.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATION PERFORMANCE

During the year under review, total earnings has been ? 443.95 Lakhs as compared to ? 210.60 Lakhs in the previous year. Profit/Loss of the Company after tax stood at ? (3.56) Lakhs as compared to Profit of ? 11.30 Lakhs in the previous year.

HUMAN RESOURCE

The Companys Human Resources philosophy is to foster a strong performance- and competency- driven culture with a greater sense of accountability and responsibility at all levels. The Company has undertaken pragmatic measures to strengthen organizational capabilities through active employee

involvement, skill development, and by establishing effective systems aimed at improving productivity, efficiency, and accountability across functions. Efforts to rationalize and streamline the workforce remain an ongoing process in line with business requirements. During the year under review, industrial relations within the Company continued to be cordial and harmonious.

DETAILS 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

Note - 25 - Accounting Ratios: