Swarnsarita Jewels India Ltd Management Discussions

The Management Discussion and Analysis includes statements regarding the Companys objectives, projections, estimates and expectations. These may be considered forward-looking statements under applicable securities laws and regulations. Such statements involve risks and uncertainties that could cause actual results to differ materially. The Company assumes no obligation to update these forward-looking statements unless required by law.

MACROECONOMIC OVERVIEW:

India continues to distinguish itself as one of the fastest growing major economies globally. For FY 2025-26, the International Monetary Fund projects real GDP growth at 6.6%, while the Reserve Bank of India revised its forecast upward to 7.3%, reflecting broad-based domestic momentum across manufacturing, services, and agriculture. Real GDP expanded at 8.2% in Q2 FY 2025- 26, a six-quarter high, driven primarily by robust private consumption and resilient domestic demand. Indias economic momentum is underpinned by several structural drivers. The demographic dividend remains a pivotal factor — with a population of 1.4 billion and a median age of approximately 28 years, India commands a vast, youthful, and aspirational consumer base. The middle class, now comprising over 173 million households, continues to drive discretionary spending. Per capita income has grown at a CAGR of approximately 12.2% since 2020, reaching USD 2,540 as of 2025. Headline inflation remained well contained in FY 2025-26, aided by GST rationalization, softer crude oil prices, and benign food prices. The OECD raised Indias growth forecast to 6.7% for 2025 and 6.2% for 2026. Moodys expects India to remain among the fastest-growing G20 economies. The current account deficit moderated from 2.2% of GDP in Q2 FY24-25 to 1.3% in Q2 FY25-26, underscoring external sector resilience.

Urbanization, rising female workforce participation, and income tax rationalization announced in Union Budget 2025-26 are collectively bolstering household disposable income and discretionary spending capacity.

INDIAN IEWELLERY MARKET: STRUCTURE AND GROWTH DRIVERS:

Market Size and Segmentation

Indias jewellery market is one of the largest globally, valued at approximately USD 85-95 billion as of FY 2025-26, with projections to reach USD 130 billion by 2030 and USD 151 billion by 2034, growing at a CAGR of approximately 5-6.6%. India has emerged as the worlds largest gold jewellery consumer, surpassing China, accounting for approximately 30% of global gold jewellery demand. India is also the worlds second-largest diamond jewellery market with a 12% global share, having surpassed China and Japan.

The market remains structurally heterogeneous, encompassing gold, diamond, platinum, and contemporary jewellery. While gold remains dominant at approximately 49% by material value, a visible secular shift toward diamond, lab- grown diamond, and fashion jewellery is underway — particularly among younger consumers. The organised segment is gaining market share at the expense of the unorganised sector, driven by mandatory hallmarking, GST compliance, and increasing consumer preference for certified, branded jewellery.

Key Growth Drivers:

Rising Affluence and Discretionary Spending:

As household incomes rise and income tax rates are rationalised, jewellery — as both investment and lifestyle accessory — benefits disproportionately. The discretionary retail segment is projected to grow at a CAGR of 10- 12% through 2028. Purchases above Rs.25,000 grew fastest across retail categories in FY26, reflecting a pronounced up-trading trend.

Cultural Significance and Wedding-Led Demand:

Jewellery is deeply embedded in Indian social life. The Indian wedding industry, estimated at USD 50+ billion, is the primary demand anchor — bridal jewellery alone accounts for approximately half of gold jewellery consumption. A high volume of weddings in the November 2025 to March 2026 season provided strong demand support despite elevated gold prices.

Women as Key Consumers and Decision- Makers:

Women constitute nearly 43% of Indias online shoppers and are an expanding share of the formal workforce. Their increasing financial independence is reshaping purchase patterns, with rising demand for lightweight everyday- wear jewellery alongside traditional occasion based pieces.

Favourable Government Policy:

Union Budget 2025-26 rationalised the customs tariff on jewellery (HSN 7113) from 25% to 20%, and on platinum findings from 25% to 5%. GST on the jewellery sector was maintained at 3%. AEO status was extended to gems and jewellery exporters. Mandatory BIS hallmarking continues to enhance consumer trust and quality assurance.

Trade Agreement Tailwinds:

India-UAE FTA continues to boost exports. The India-UK FTA is expected to more than double Indias gems and jewellery exports to the UK to USD 2.5 billion within two years. GCC FTA negotiations launched during FY26 are expected to further expand export opportunities.

Gold as Safe-Haven Asset and Investment:

A 67% rise in international gold prices during calendar year 2025 — the highest annual increase since 1979 — elevated golds investment appeal significantly. India recorded two consecutive quarters of bar and coin demand exceeding 90 tonnes for the first time since 2013.

EVOLVING CONSUMER PREFERENCES:

Consumer preferences are undergoing a meaningful structural shift. High gold prices during FY 2025-26 prompted consumers to gravitate towards lighter weight, lower-carat pieces, fashion jewelry, and affordable luxury. Younger buyers increasingly moved away from pure occasion-led purchases, investing instead in versatile everyday pieces. The demand for personalization and customization has accelerated sharply — initial pendants, zodiac charms, birthstone rings, and engraved pieces grew rapidly. Brands offering personalized jewelry report customer lifetime value up to 40% higher than those with standardized collections.

INDUSTRY TRENDS AND COMPETITIVE LANDSCAPE:

Shift from Unorganised to Organised Retail

The structural migration from unorganised to organised retail continues at an accelerated pace. Regulatory reforms — including mandatory hallmarking, GST compliance, and transparent pricing — have been decisive catalysts. Organised retailers are gaining market share by offering standardised quality, certified products, transparent pricing, and superior customer experiences. Tier 2 and Tier 3 cities are emerging as the new growth frontier. Consumers in Tier 2 and Tier 3 cities now exhibit the same brand aspiration and quality consciousness as metropolitan buyers. Retailers with robust omnichannel strategies capture 30% larger consumer spending share compared to single-channel operators.

Digital Transformation and Omnichannel Growth

Digital adoption in jewellery retail has accelerated well beyond the initial post-pandemic phase. E-commerce platforms now influence over 60% of purchase decisions in metro cities. Several jewellery companies reported annual e-commerce revenue growth exceeding 100% during the festive season of FY 2025-26. Augmented reality virtual try-on technology has reduced product return rates by over 25%, improving operational efficiency. Digital gold — purchased electronically via UPI-linked platforms — saw remarkable growth, with transaction values rising from INR 8 billion in January 2025 to INR 21 billion in December 2025, a nearly threefold increase.

Gold Price Dynamics and Their Impact on Demand

Gold prices experienced a historic rally in FY 2025-26, with international prices gaining approximately 50%+ year-to-date and domestic prices rising approximately 73%, aided by a 5.6% depreciation in the INR. Domestic gold prices reached INR 1,69,403 per 10 grams as of lanuarv 2026 — the highest annual price increase for gold globally since 1979. Indias gold jewellery demand by volume declined approximately 26% year-on-year in H1 FY 2025-26, while investment demand for bars and coins rose approximately 15%. For full calendar year 2025, jewellery demand by volume fell 24% year-on-year to 430.5 tonnes, while the value of Indias gold jewellery demand climbed to an all-time high of USD 49 billion. India remained the worlds largest gold jewellery consumer by value. Large organised retailers weathered this environment better than smaller, unbranded competitors — supported by higher ticket prices, wedding-season purchases, and brand trust.

Source: World Gold Council — Gold Demand Trends Full Year 2025; ICRA-Assocham Report; Business Today

Sustainability and Ethical Sourcing

Consumer consciousness around environmental and social impact is a growing influence on purchase behaviour, particularly among younger, urban demographics. Demand for responsibly sourced materials, transparent supply chains, recycled gold, conflict-free diamonds, and eco-friendly packaging is rising. Lab- grown diamonds are increasingly positioned as the sustainable alternative — a narrative that resonates strongly with Gen Z and millennial buyers. Mandatory hallmarking has significantly improved gold purity assurance and recycling efficiency. India Good Delivery Standards (IGDS) have strengthened domestic refining and aligned Indian gold bars with global benchmarks. 3.5 Competitive Landscape The competitive landscape in Indias organised jewellery retail continues to evolve rapidly. National brands are competing aggressively on store expansion, digital capabilities, product innovation, and customer relationship management. Regional and digital first jewellers are carving niches through design differentiation, customisation, and omnichannel excellence. Consolidation is expected to accelerate as larger players acquire or partner with smaller, niche brands.

KEY RISKS AND CHALLENGES

Sustained Elevated Gold Prices & Volume Pressure

The continued rally in gold prices — up approximately 50-73% in FY 2025-26 — remains the most immediate near-term risk to jewellery volume demand. While value-based revenues benefit from higher prices, volume contraction in the mid-market and mass segments can weigh on profitability and working capital intensity. Forward hedging through MCX and gold metal loan structures is becoming increasingly critical for organised retailers to manage price risk and protect margins.

Global Trade Policy and Export Risk

US tariff hikes to 50% levels represent a significant headwind for Indias gems and jewellery exports, particularly polished diamonds. India accounts for approximately 90% of the worlds rough diamond processing and 25% of global cut and polished exports, with the US absorbing over 40% of Indias polished diamond exports. The India diamond jewellery industry saw a 15% drop in annual revenues during FY 202425 due to weak US and EU demand. Ongoing trade policy uncertainty introduces volatility into both exports and domestic supply chains.

Regulatory and Compliance Risk

The regulatory environment continues to evolve. New BIS terminology standards for lab-grown diamonds (IS 19469:2025), updates to hallmarking requirements, import duty structures, and GST applicability require continuous monitoring and compliance investment. Staying ahead of regulatory changes is a prerequisite for operating with integrity in the organised segment.

Competition from Unorganised Sector

Despite structural consolidation, the unorganised sector remains formidable — particularly in Tier 2, Tier 3, and rural markets. Price sensitivity in these markets can constrain the ability of organised players to pass on cost increases. Regulatory and tax compliance burden, while necessary, can create transitional cost disadvantages relative to unorganised competitors.

SEBI Caution on Digital Gold

In November 2025, SEBI issued a public advisory noting that digital gold products are not regulated under existing market frameworks. This creates regulatory uncertainty for an emerging segment that has seen significant transaction growth — UPI-linked digital gold purchases tripled during 2025. Platforms and jewellers active in this space must monitor regulatory evolution closely.

Changing Consumer Preferences and Design Obsolescence

The rapid pace of change in consumer tastes — driven by digital exposure, influencer culture, and global fashion trends — requires continuous investment in design innovation. Failure to anticipate and respond to preference shifts, particularly among Gen Z and millennial segments, carries meaningful revenue risk over the medium term.

Geopolitical and Macroeconomic Tail Risks

Elevated geopolitical tensions simultaneously drive gold investment demand and constrain consumer sentiment. Potential trade slowdowns due to US tariff policies and global financial market volatility represent tail risks. The IMF has cautioned that prolonged trade tensions and protectionist policies could dampen the global and Indian economic outlook

OPPORTUNITIES AND STRATEGIC PRIORITIES:

Tier 2 and Tier 3 Market Expansion:

Approximately 50% of Indias retail jewellery market remains unorganised, with the highest concentration in non-metro markets. Consumers in Tier 2 and 3 cities now exhibit the same brand aspiration and quality preference as metropolitan buyers. Targeted retail expansion with locally relevant designs, competitive pricing, and strong post-sale service will be key differentiators.

Omnichannel and Digital Excellence:

Seamless integration of online and offline purchase journeys, personalised digital marketing, AI-driven inventory management, and virtual try-on experiences will be decisive capabilities. Retailers with robust omnichannel models currently capture 30% more consumer spending than single-channel peers. E-commerce in Indias jewellery sector continues to grow at a CAGR of 19-21%.

Product Innovation and Premiumisation:

Lightweight everyday-wear collections, customised and personalised jewellery, mens jewellery, and childrens jewellery are underpenetrated categories with material growth potential. The fastest-growing retail purchase tier in FY26 is above INR50,000, indicating pronounced premiumisation that rewards design investment and brand building.

Sustainability as a Competitive Advantage:

Embedding responsible sourcing, circular gold practices, eco-friendly packaging, and transparent supply chain disclosures into brand positioning will resonate with the growing cohort of ethically conscious consumers — particularly among younger demographics — and support premium pricing.

Customer Engagement, Loyalty and CRM:

Deep customer relationships, driven by data-enabled CRM platforms, gold accumulation and savings schemes, loyalty programmes, and exceptional after-sales service, are foundational to driving repeat purchases and increasing share-of-wallet in a market where customers have multi-generational relationships with their jewellers.

LONGTERM OUTLOOK

Indias jewellery sector enters with a complex and fundamentally resilient outlook. Elevated gold prices create nearterm volume headwinds for jewellery, but the sectors cultural anchoring, investment appeal of gold, and rising consumer affluence provide structural support. Indias position as the worlds largest gold jewellery market by value and the worlds second-largest diamond jewellery market is expected to strengthen over the coming years. Organised players are clearly gaining market share from unorganised competitors — a trend that is structurally irreversible given regulatory and consumer preference tailwinds. The emergence of lab-grown diamonds as a mainstream affordable luxury category, the deepening of digital and omnichannel retail, and the opening of Tier 2 and 3 markets provide multiple avenues of growth that are not dependent on a single driver. Investment demand for gold — across physical bars and coins, ETFs, and digital gold — will remain a strong pillar of overall gold demand in India. Record-high gold prices, while compressing jewellery volumes, are simultaneously reinforcing golds stature as the premier store-of- value asset for Indian households. Your Company is well-placed to participate in this growth story, anchored by brand heritage, customer trust, financial discipline, and ongoing investments in product, retail, and digital capabilities. The Management remains committed to delivering sustained, profitable growth while upholding the highest standards of corporate governance and stakeholder value creation.

RISK ASSOCIATED WITH BUSINESS AND MITIGATION PLANS:

To mitigate the adverse impact, SJIL has spearheaded certain tangible initiatives like adoption of technology to the hilt, high value product diversification like studded items, MRP, third party branded items in the portfolio etc. It has also directed its resources to improve efficiency and productivity metrics to improve the performance on a sustainable basis. The monsoon impact is limited to agricultural income-based customers profile. There are two seasons for harvesting in Indian terrain, if one harvest failed, there is a likelihood that the next one will give bountiful yields in agricultural activities. Other than the Agri based customers, a lot of income is generated out of service sector engagement and also external remitters from natives employed outside the home town. For the reasons stated above, SJIL does not find it difficult to manage the vagaries of monsoon. This aspect is well captured in the last five years of growth in the company.

COST MANAGEMENT

The Company is improving meticulously its focus on cost through a resourceful operating system, increase in the production Capacity and strengthening of manufacturing units and various sourcing points are being pursued to reduce manufacturing costs and also delivering quality product at lower price. Logistics facilities are strengthened. Synergy optimization in various cost components is achieved. Internal control systems and their adequacy The Company has in place adequate system of internal control. It has documented procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with global best practices in these areas as well.

Some significant features of the internal control systems are:

• Documenting Major Business Process including financial reporting, Computer Controlling, Security Checks and Top Committee level Plans.

• A comprehensive information security policy and continuous upgrades to IT system.

• Audit Committee of the Board of Directors, comprising independent directors, which is functional since its applicability, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with Accounting Standards, as well as, reasons for changes in accounting policies and practices, if any.

• A well-established multi-disciplinary Internal Audit team, which reviews and reports to management and the Audit

• Committee about the compliance with internal controls and the efficiency and effectiveness of operations and the key process risks.

• Monthly meeting of the top management committee to review operations and plans in key business areas

• Corporate policies on accounting and major processes.

• Well-defined processes for formulating and reviewing annual and long term business plans.

• The Board takes responsibility for the total process of risk

• management in the organization. The Audit Committee

• reviews reports covering operational, financial and other business risk areas. Taking into Consideration the high risk associated with this business, the organization and management have taken necessary measures towards achieving an environment free of fraud. This is also facilitated by internal audit. The business risks are managed through cross functional involvement and intense communication across businesses. Results of the risk assessment and residual risks are presented to the senior management.

INFORMATION TECHNOLOGY

SJIL has a jewellery wholesale and retail-based information technology savvy department deploying the best solutions in the market to enhance, develop support and maintain our business activity across all our outlets / branches SJIL has developed an information technology team to test and maintain our own solutions across the branches. As a base platform for our ERP we used Business solution softwares across the all branches. End to end application to meet the requirements of Jewellery business needs, right from purchase of ornament to sale of it, customer management and inventory handling.

HUMAN RESOURCES & INDUSTRIAL RELATIONS

The Companys Human Resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility. The Company has taken pragmatic steps for strengthening organizational competency through involvement and development of employees as well as installing effective systems for improving the productivity, equality and accountability at functional levels. With the changing and turbulent business scenario, the Companys basic focus is to upgrade the skill and knowledge level of the existing human assets to the required level by providing appropriate leadership at all levels motivating them to face the hard facts of business, inculcating the attitude for speed of action and taking responsibilities. In order to keep the employees skill, knowledge and business facilities updated, ongoing in house and external training is provided to the employees at all levels. The effort to rationalize and streamline the work force is a continuous process. The industrial relations scenario remained harmonious throughout the year.

CHANGES IN KEY FINANCIAL RATIOS:

Pursuant to provisions of Regulation 34(3) of SEBI (LODR) Regulation, 2015 read with Schedule V part B (1) details of changes in Key Financial Ratios is given hereunder: -

DISCUSSION ON FINANCIAL PERFORMANCE OF THE COMPANY:

During the year under review, the Standalone total Income was Rs. 78527.46/- Lakhs as against Rs. 67,369.58/- Lakhs for the corresponding previous year. Total Comprehensive income for the period was Rs.1148.46/-Lakhs as against Rs.739.59/-Lakhs in the corresponding previous year.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be 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, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which it operates, changes in the Government regulations, tax laws and other statutes, any epidemic or pandemic, natural calamities over which we do not have any direct/indirect control.