SJ Corporation Ltd Management Discussions

(I) INDUSTRY STRUCTURE AND DEVELOPMENT: GEMS & JEWELLERY BUSINESS:

The Gems & Jewellery ("G & J") sector is one of the very important sectors of the Indian economy with a significant share of the Gross Domestic Product ("GDP"). One of the fastest growing sectors, it is extremely export oriented and labor intensive. The Indian jewellery industry has been evolving over the past few years. Traditionally a gold dominated industry, it is now showing a greater acceptance towards diamond and other precious stones jewellery as well. The new age consumers, who are well travelled, prefer frequenting the modern retail formats like malls and departmental stores. A relatively higher affinity towards branded products coupled with higher disposable incomes and a preference for trusted fine quality products are also significant contributors to the growth of the branded jewellery segment. The branded retail jewellery market is growing at a robust rate and going forward, many domestic and international brands would capture substantial market size given number of factors like increased urbanizations and changing demographics. As a matter of on- going practice, the masses still prefer to purchase jewellery from their tried and trusted jewellers but the constant exercise of branding through advertising and other sales promotional activities has ensured steady inflow of new customers in this segment of organised retailing. Indias small and independent jewellers are starting to organize themselves and expand in size to share a common brand identity and marketing strategy.

Jewellery consumption in India has been traditionally driven by the strong cultural affinity for gold, with it being the preferred form of jewellery worn. Gold jewellery is an integral part of weddings in India, and is considered as a necessity, with wedding related demand accounting for substantial portion of overall jewellery demand, especially in the South. Jewellery demand has also been supported by the increasing appetite for gold jewellery from rural and non-urban markets. Gold has also served as a means of savings especially for the rural sector, owing to the lack of any major alternative investment options supported by its anti-inflationary characteristics. However, in the past few years the demand for diamond jewellery has also been showing an increasing trend, especially in the Metros and Tier-I cities.

Lab grown diamonds are mostly high in terms of quality than mined diamonds. This is because they are created in controlled circumstances with continual monitoring and quality control. They are sustainable and environmentally friendly as they are not extracted from the ground.

Lab grown diamonds are made by using techniques such as chemical vapor deposition (CVD) and high pressure and high temperature (HPHT). They are identical to natural diamonds in their appearance and composition. These diamonds are also called as cultured diamonds and synthetic diamonds.

In the last two years, nearly half of the units that were in the cutting and polishing of natural diamonds have partly shifted their business to lab-grown diamonds. This has already led to a slowdown, and prices have already slumped

The lab-grown industry Supply has skyrocketed and prices have dropped drastically, with wholesale prices down by 58% in 2023 alone Surats lab-grown diamond industry, already grappling with oversupply issues after a shift from natural diamonds. The prices of diamonds have been on a constant decline in the last two years.

India exports lab-grown diamonds to the USA, Hong Kong, UAE, Israel, and Belgium, with the USA accounting for nearly 70% of Indias exports. With a majority of the natural diamond cutting and polishing companies in Surat starting to parallelly produce lab-grown diamonds,

REAL ESTATE BUSINESS:

The Indian economy is getting bigger and better. Going with the estimates that Asias third largest economy will become the worlds third largest by 2050; a need for more robust and vast infrastructure is inevitable. Indian real estate sector faces several threats, risks and concerns. The rising interest rates and scanty land availability in India, and the subsequent global turmoil are creating pressure on the Indian real estate sector.

Due to slowdown in the market condition and price rise it was very difficult for the company to go in a big way in the new business arena.

There are several factors which may affect our results of operations, financial condition and cash flows. These factors may include:

• Economic conditions, business cycles

• Ability to control cost and attain high productivity

• Pricing Pressure due to competition / competitive bidding.

• Human Resource Management

• Our relationship with clients - companies, banks, institutions, individuals, etc.

• Capital expansion and capital expenditure

• Industry Structure and Development

• Key Strategic Highlights

• Risk and Concerns

• Internal Control Systems and Adequacy

• Outlook Opportunities and Threats

• Cautionary Statement

As a Company is optimistic about the future as well as its growth path. The Company is confident in its ability to grow its business organically enhancing the production by adopting new technologies. The Company constantly looks at margin improvement and risk mitigation initiatives through specific projects and global support.

The prices of our services, real estate are determined principally by market forces of supply and demand. We feel that over a period of time there might be increase in competition and it might affect the profitability of our Company. Our Company has been concentrating on receiving the orders from the Government Registered Companies. These Companies generally follow the system of tenders, wherein the contracts will be granted to lowest bidder. This may affect the profit margins of our Company in percentage terms.

(II) OPPORTUNITIESANDTHREATS:

Some of the opportunities for the retail jewellery industry are as follows: (a) Growing consciousness amongst customers for branded jewellery. (b) Limited penetration of organized jewellery in the country. (c) Increase in purchasing power of the customers in the Tier I & II locations. (d) Increasing demand for diamond jewellery, which is a high margin product as compared to the gold jewellery. (e) Favorable demographics leading to increasing demand for jewellery in the country. Some of the key challenges facing the retail jewellery industry are as follows:

(a) Adapting to fast changing consumer preferences and buying patterns. (b) Volatility in the market prices of gold and diamonds. (c) Limited availability of high-end retail space.

As of for Real Estate business of the Company, our vision is to achieve leadership position in the state of Gujarat and explore the opportunities out of India. We committed to building long term relationships based on performance and value, as well as client satisfaction. To be one of the premier infrastructure companies in Gujarat, executing various vertical of development activities.

(III) CAUTIONARYSTATEMENT:

Statement in this Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results 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, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labor negotiations.