Starlineps Enterprises Ltd Management Discussions

[Pursuant to the provisions of Regulation 34(2)(e) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

This report covers the operations and financial performance of the Company for the year ended 31st March, 2026. The Company has only one segment viz. Wholesale Trading of Diamond and Jewellery. The purpose of this chapter on Management Discussion and Analysis (MD&A) is to give stakeholders a better idea of the Companys business, its strategy and performance, and how it handles risk and capital.

The following management discussion and analysis is intended to help the reader to understand the results of operation, financial conditions and other material changes of StarlinePS Enterprises Limited.

(1) ECONOMIC OVERVIEW, INDUSTRY STRUCTURE AND DEVELOPMENTS:

India operates a mixed social market economy with significant public sector presence. The diamond industry is a significant contributor to Indias economy, accounting for around 7.5% of the countrys Gross Domestic Product (GDP) and 14% of its total merchandise exports. The Government of India declared the gems and jewellery industry as a focal point for exports. India is considered a global hub for low costs and inexpensive skilled labour. India stands as the global leader in cut and polished diamonds, with an annual export value of US$ 23 billion. In fact, 14 out of every 15 diamonds set in jewellery worldwide are processed in India, demonstrating the countrys expertise in the sector.

Indian diamond exports, including diamond-studded jewellery, reach markets across the globe, including the United States, Europe, the Middle East, and Asia. The global diamond jewelry market is driven by continued demand for luxury goods, especially in markets like India, and a notable surge in the popularity of lab grown diamonds (LGD). One of the major technological developments in the Gems and Jewellery sector has been Lab grown diamonds (LGD). India is one of the leading producers of lab grown diamonds using chemical vapor deposition (CVD) technology. Lab grown diamonds accounted for a significant portion of the global diamond jewellery market, driven by lower prices and a growing consumer preference for sustainable and ethical options.

The sector is projected to grow at a compounded annual growth rate (CAGR) of 5.7% over the next decade, reaching about USD 124.70 billion by 2030. This growth reflects the expanding middle class, increasing disposable incomes, and a strong inclination towards gold and diamond jewellery as part of cultural and marriage-related traditions. According to the IMF, India is projected to become the third-largest economy by 2027 in USD terms at market exchange rates. The combination of a sustained anti-inflationary monetary policy stance and proactive supply management measures has kept headline inflation largely within the tolerance band.

India is one of the largest exporters of gems and jewellery and it contributes a major chunk to the total foreign reserves of the country and also one of the fastest growing industries in the country. It is extremely export oriented and labour intensive.

The global diamond jewellery market in 2025 was characterized by a mixed bag of challenges and opportunities. While traditional markets faced headwinds, emerging markets like India showed strong growth potential, driven by changing consumer preferences and the increasing acceptance of lab grown diamonds. A widening price gap highlights the increasing affordability of lab-grown diamonds, which is likely to shape future consumer preferences as more individuals opt for cost-effective alternatives.

The Indian government accepted the recommendation of GJEPC to promote indigenous manufacturing in the emerging Lab-grown diamond sector by providing research grants to the Indian Institute of Technology (IIT) for five years. The Government of India has reduced customs duty on cut and polished diamond, coloured gemstones, jewellery articles and parts. This move is anticipated to make jewellery more affordable, boosting domestic consumption, especially in the luxury segment. These initiatives aim to stimulate domestic demand, enhance global competitiveness, and support industry growth. The budget also addresses the rapid growth in the LGD sector by removing the Import of Goods at Concessional Rate conditions for duty-free imports of

LGD seeds. This policy change is expected to lower production costs, making LGDs more accessible to consumers and boosting their demand. The jewellery sector has responded positively to these budgetary measures.

The Company further strengthened its operations within the largely unorganized diamonds and jewellery industry by adopting more systematic and structured processes. Despite the sectors fragmented nature, India continued to hold a leading global position, comparable to its software industry, and saw growing international engagement and demand. In response, the Company focused on enhancing internal systems, ensuring compliance, and exploring new export avenues, positioning itself to capitalize on emerging opportunities and reinforcing its commitment to sustainable and organized growth in this competitive sector.

(2) OPPORTUNITY AND THREATS:

The Indian jewellery sector is facing increasing competition from lab-grown diamonds and sustainable jewellery. With the rise of eco-conscious consumers, lab-grown diamonds have become a popular alternative to traditional diamonds. To stay competitive, Indian jewellers need to adapt to these changing market trends and offer sustainable and eco-friendly jewellery options. In recent years after the entry of Lab grown Diamonds, our business has changed significantly. Earlier we were in to the only natural diamonds trading but in year 2024, we started trading in to the lab grown diamonds as well. It boosted the margins and also helped us to grow.

Opportunities

Diamond and jewellery volumes in India continued to remain resilient during the year, supported by the nations cultural affinity towards precious metals and gemstones, and the perception of these assets as stable stores of value. Key factors contributing to the Companys growth and the broader industry outlook include:

Cultural Significance and Traditions

Indias deep-rooted cultural association with jewellery, especially during weddings, festivals, and family occasions, sustained steady demand. This enduring cultural sentiment, reinforced by regional bridal exhibitions and jewellery shows held across major cities, helped strengthen retail volumes.

Economic Growth and Rising Disposable Incomes

The Indian economy maintained robust growth in 2025-26, leading to higher disposable incomes among middle and upper-middle-class consumers. This economic momentum encouraged increased discretionary spending on luxury goods, including diamond and branded designer jewellery collections.

Strengthened Board and Personnel

The Company inducted experienced professionals and technical advisors to its Board and Senior Management, enhancing governance and operational oversight. This strategic move positioned the Company to better respond to changing market dynamics and consumer preferences.

Innovative Design Introduction

Ability to capitalize on current trends and offer unique, trendy designs specifically to attract younger demographics.

Stable Investment Returns

Diamonds and gold retained their appeal as safe-haven assets, particularly amid global economic uncertainties. This sustained the trend of individual and institutional investment in jewellery as a store of value.

Technological Advancements in Manufacturing and Retail

The Company accelerated the adoption of AI and digital tools during the year, including AI-powered design customization and virtual try-on platforms. These initiatives improved operational efficiency and enhanced customer experience, attracting younger, tech-savvy buyers.

Government Policies and Industry Support

Favourable policy measures including initiatives to formalize the sector, lower import duties on select diamond categories, and the expansion of jewellery parks. The Union Budget, introduces several measures poised to influence Indias diamond and jewellery sector. These collectively created a supportive environment for domestic demand and business growth. A significant highlight is the reduction of customs duty on jewellery articles and parts.

Growing E-commerce and Digital Presence

The share of online sales increased, driven by consumer preference for convenience and digital engagement. Significant opportunity to leverage online platforms to increase sales reach and enhance brand visibility

Threats

Fast-changing fashion trends

The diamond and jewellery sector continued to face challenges from rapidly evolving global fashion trends, particularly among younger consumers who increasingly prefer modern, minimalist, or non-traditional designs. This required the Company and the broader industry to frequently refresh product lines and collections, leading to higher design and inventory costs. Additionally, the growing popularity of lower-priced costume jewellery and lab-grown diamonds further impacted demand for certain high-value, traditional pieces.

Shifting Consumer Preferences and Product Substitution:

Growing acceptance and market penetration of lab-grown diamonds (LGDs) as a more affordable and ethically positioned alternative to natural diamonds, potentially impacting demand and margins for traditional diamond jewellery. Increasing consumer interest in silver jewellery and imitation/fashion jewellery as more afford able and versatile options for everyday wear, potentially diverting spending from natural diamond/gold.

Regulatory framework

The regulatory environment remained dynamic during the year, with new compliance requirements related to hallmarking and strengthened anti-money laundering (AML) norms. While these measures aim to enhance transparency and consumer confidence, they also resulted in increased operational complexity and compliance costs for businesses in the sector.

Liquidity and funding challenges

The industry continued to experience tightening of credit lines from financial institutions, partly due to broader economic caution and past incidents in the sector affecting lender sentiment. Reduced liquidity directly impacted the working capital cycle, making it more challenging for smaller players and even mid-sized firms to maintain large inventories of high-value diamond and gold products.

Despite these sector-wide threats, the Company remained focused on agile product strategies, strengthened compliance systems, and prudent financial management to mitigate potential risks and protect shareholder value.

(3) OUTLOOK:

The Company achieved steady growth, supported by technology adoption and customer-focused strategies. The outlook remains optimistic, with expectations to surpass average industry growth and inflation rates. Favourable government initiatives and rising domestic demand further strengthened market confidence. The Company also leveraged AI tools and digital platforms to cater to evolving consumer preferences. Overall, robust sector fundamentals and strategic initiatives position the Company for sustained growth in the coming years.

(4) RISK AND CONCERNS:

Following can be some of the risks and concerns the Company needs to be wary of:

The largely unorganized structure of the market can affect the systematic functioning of the Company. Political instability, which has a tremendous impact on the capital markets. Likely opening up of the economy, which can be a double-edge sword.

Geo political tensions and impact of war is seen in fluctuating raw materials prices. Also, currency rate fluctuations due to this global scenario can impact business.

(5) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition, there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls. An extensive programmed of internal audits and management reviews supplements the process of internal financial control framework. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal financial control framework has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

In addition, the Company has identified and documented the risks and controls for each process that has a relationship to the financial operations and reporting. The Company also has in place an Audit Committee to have a periodic overview of the internal control procedures of the Company. The Audit committee is accessible at all times to the employees of the Company for any improvement to be recommended in the procedures in place

(6) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year under review, the Company has posted higher Revenue from Operation of Rs. 97,44,232.01/- Hundreds as compared to Rs. 73,34,817.49/- Hundreds in the corresponding previous year. The Company has posted Net Profit after tax of Rs. 1,11,791.59/- Hundreds in the current year as compared to the Net Profit after Tax of Rs. 6,57,520.40/- Hundreds in the corresponding previous year. Your Company has recorded lower Net Profit after tax (Standalone & Consolidated) due to write off the amount of Capital Work-in Progress of Rs. 5,29,360.00/- Hundreds which was initially capitalized and noted against the Capital Work-in-progress and appearing in the books of accounts of the Company. Your directors are hopeful to earn rational profit in the years to come.

(7) HUMAN RESOURCES & INDUSTRIAL RELATIONS:

The Company firmly believes that its most valuable asset is its human capital, and it remains committed to fostering a performance-driven and competency-focused culture. As of 31st March, 2026, Companys most valuable asset remains its dedicated workforce, whose professional expertise and commitment have played an essential role in meeting operational and strategic objectives during the year.

The Company maintained cordial and harmonious industrial relations across the business environment throughout the year, promoting an inclusive and collaborative work environment built on trust and mutual respect. Further, by aligning individual growth opportunities with organizational priorities, the Company continued to recognize and reward merit, encourage innovation, and promote cross-functional teamwork as part of its human resource strategy. The Board places on record its sincere appreciation for the dedication, professionalism, and teamwork of all employees, whose contributions remain central to the Companys continued growth.

(8) DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIO:

Pursuant to provisions of Regulation 34(3) of SEBI Listing Regulations read with Schedule V part B(1) details of changes in Key Financial Ratios is given hereunder:

* Previous years Figures have been regrouped / rearranged wherever necessary.

Notes for change in Ratios:

1. Debtors Turnover Ratio - This ratio is decreased due to delayed collection of receivables from the customers.

2. Inventory Turnover Ratio - It is decreased due to high holding of stock.

3. Current Ratio - Current Ratio is increased due to increase in the current assets of the Company.

4. Operating Profit (EBIDTA) and Net Profit Margin - Both ratios are decreased due to high material cost during the year under review

5. Return of Net Worth - It is decreased due to high material cost during the year under review and increased of capital base.

(9) CAUTIONARY STATEMENT:

Management discussion and analysis report describing the statements relating to the business, financial performance, strategy, and operations of StarlinePS Enterprises Limited. These statements are based on the managements current expectations, estimates, and assumptions regarding future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. Actual results may differ materially from these expressed in the statement due to various known and unknown risks, uncertainties, and other factors beyond the Companys control. The Company does not undertake to update, amend, modify or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable laws. Accordingly, readers and investors are cautioned not to place undue reliance on these forward-looking statements, which should be read in conjunction with the assumptions, risk factors, and disclaimers provided in the Management Discussion and Analysis section of this Annual Report.