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.

GLOBAL ECONOMY OVERVIEW:

Global growth remained steady, yet underwhelming in FY 2024. The global economy proved resilient despite significant challenges, inflation declined and fell within targets set by the central bank and risks to outlook became more balanced, although growth remained below its longer-run average. Global growth was influenced by a mix of factors, geopolitical tensions, continued strong growth in emerging economies and the impact of monetary policy tightening in the developed countries. The global economic activity sustained modest momentum with world GDP projected to have grown by 3.2% in 2024, according to the International Monetary Fund (IMF). The world witnessed its fair share of uncertainty given the rising geopolitical tensions and rate cuts. However, the world seems to be slowly finding the right balance between spiralling inflation and return to growth. In the emerging market and developing economies, disruptions to production and shipping of commodities especially oil conflicts, civil unrest and extreme weather events resulted in downward revisions to the outlook for Middle East, Central Asia and sub-Saharan Africa. However the forecast for emerging Asia was positive. Surging demand for semiconductors and electronics, driven by significant investments in artificial intelligence propelled growth and this trend was supported by substantial public investment in China and India. Meanwhile, Emerging Market and Developing Economies (EMDEs) have undergone a remarkable transformation, as they accounting for approximately 45% of the global GDP, as compared with 25% at the turn of the century.

OUTLOOK

The forecast for FY 2025 is broadly unchanged from that in FY 2024, primarily due to the upward revision in the United States offsetting downward revisions in other major economies. As inflation moves closer to target levels and monetary easing supports economic activity, global growth is expected to stabilise. The global economy is expected to grow by 3.3% in 2025 and 2026, below the historical average of 3.7% in 2000-19. This is seen to be supported by improved household consumption, which is expected to be driven by income tax cuts, anticipated interest rate reductions and a return to positive real wage growth. However, risks and challenges may continue, such as the elevated interest rates. Although global headline inflation is anticipated to decline to 4.2% in FY 2025 and to 3.5% in FY 2026, amidst risks from geopolitical tensions, wage and services costs and trade protectionism. Driven by firmer trade and investment, a broad-based and moderate expansion of 2.7% per year in inflation is forecasted for FY 2025 and FY 2026. Persistent services and wage inflation in several regions might lead to diverging monetary policy responses.

INDIAN ECONOMIC REVIEW

India is poised to lead the global economic landscape, maintaining its position as the fastest-growing major economy. The economy is projected to grow by 6.4% in FY 2024-25, compared to 8.2% growth in FY 2023-24. At a time when global growth is expected to hover at 2.7% in 2025 and 2026, Indias remarkable performance highlights its resilience and growing significance in shaping the worlds economic trajectory. Indias continued resilience highlights its growing significance in the global economy, establishing its role as a key driver of economic stability and expansion. Indias sustained momentum continues to be driven by a thriving services sector and a revitalised manufacturing base and is well supported by transformative initiatives and key reform-based policies by the government. Infrastructure modernisation, tax simplification and policy reforms are not only fuelling domestic growth, but are also reinforcing Indias role as a key pillar in maintaining global economic stability. As Chinas economic growth slows to 4%, Indias growth is a testament to ambition, innovation and immense potential in the economy.

Indian Gems & Jewellery Industry

The Indian gems and jewellery market has been a prominent global player. It is a vital contributor to the Indian economy, accounting for 6-7% of the countrys GDP. It employs approximately 2.5 million workers and is one of the fastest-growing, highly export-oriented and labourintensive sectors. India is recognised as a global hub for the jewellery market due to its cost-effective production and highly skilled workforce. As the 8th largest exporter, which contributes to 3.2% of exports, Indias gems and jewellery market is integral to the growth of the economy. The industry, estimated to be sized at USD 100 billion in FY 2024, is flourishing at an impressive compound annual growth rate (CAGR) of 8.93%, catalysed by an increase in disposable income among consumers and a deep-seated cultural significance that elevates the role of jewellery in social and economic spheres. Growth is anticipated to be driven by strong domestic and global demand, strategic initiatives and factors like rising disposable incomes, urbanisation, increasing demand for gold, diamonds and precious stones, cultural significance, evolving consumer preferences and festive season and the fast-growing wedding market in India.

GEMS & JEWELLERY EXPORTS

According to the GJEPC, India exports 75% of the worlds polished diamonds. The sector plays a crucial role in boosting the countrys foreign exchange earnings (FEEs). To encourage further growth, the Indian government permits 100% Foreign Direct Investment (FDI) in the sector. As per data released by GJEPC, the overall gross exports in FY 2025 (un USD til February 2025) stood at USD 2,422.9 million, reaffirming its strong international presence and competitive edge in the global market. India exports gems and jewellery to key markets, including the USA, Hong Kong, UAE, Belgium, Singapore, Israel, Thailand, the UK, Switzerland and the Netherlands. Until June 2024, the USA remained the largest importer, with jewellery imports valued at USD 2.4 billion, compared to USD 2.69 billion in FY 2023-24. Hong Kong and the UAE also ranked among Indias top export destinations, with shipments worth

USD 1.1 billion and USD 1.5 billion, respectively, contributing 15.21% and 21.18% of total exports until June 2024, reaffirming

Indias strong global footprint in the gems and jewellery trade. Some of the key export destinations like Belgium, Singapore, Switzerland and the Netherlands have shown steep growth in gems and jewellery imports from India. since the pre-pandemic year. Additionally, the opening of the India Jewellery Exposition (IJEX) centre in Dubai and the signing of agreements with key export destinations such as UAE, Australia, Israel, the UK and Canada, among others continue to drive exports in the post-pandemic era too.

IMPORTS

Gross imports of gems and jewellery registered a decrease of 13.81% YoY to USD 22.31 billion in FY 2023-24 compared to USD 25.90 billion in FY 2022-23. Indias gold imports surged by 20% to 780.7 tonnes in 2023, primarily driven by substantial inventory buildup by the trade. Indias imports of rough diamonds stood at USD 14.26 billion in FY 2023-24 as against USD 17.3 billion recorded in the previous year. Imports of cut and polished diamonds decreased to USD 1.91 billion in FY 2023-24 compared to USD 1.30 billion in FY 2022-23. Moreover, imports of gold bars reached USD 2.90 billion FY 2023-24 compared to USD 2.22 billion in the previous fiscal year. Furthermore, in response to reduced export demand, the Indian gems and jewellery industry voluntarily suspended rough diamond imports for two months from Oct. 15, 2023. This suspension helped to address demand-supply disparities, leading to a positive impact on polished diamond prices in the fourth quarter of FY 2023-24. (Source: GJEPC, Business Standard)

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Company is a part of an Industry, which largely operates through unorganized constituents. However, unlike the industry, the Company has attempted to operate through as systematic and organized manner as possible. However, since Diamonds and Jewellery is one industry, in which India holds, commendable position in the world, akin to the software industry, one can look forward to more international involvement coming up in this industry.

OPPORTUNITIES AND THREATS:

Inflation and surge in gold prices: The surge in gold prices has significantly impacted gold consumption, particularly in jewellery, which accounts for nearly threequarters of Indias total demand. However, rising inflation and economic slowdowns in key markets could dampen consumer interest in gold, gems and jewellery. Weak demand in both domestic and international markets may also result in a decline in exports. Rising Geopolitical Tensions and G7 Sanctions on Russian Diamonds: Rising geopolitical tensions, including the Russia-Ukraine war and conflicts in the Middle East, present challenges for Indias gems and jewellery industry. The G7s sanctions on Russian diamonds - banning direct imports from 1st January, 2024 and restricting diamonds processed in third countries from 1st March, 2024 - have intensified concerns. With India heavily reliant on Russian rough diamonds, these restrictions could disrupt supply chains, impact the production of polished diamonds and weaken Indias export market. Reliance on Imports: Indias gems and jewellery industry heavily depends on imports, sourcing nearly 90% of its raw materials, including rough diamonds and gold bars. This reliance makes the sector vulnerable to regulatory changes and supply chain disruptions, which could impact the availability of essential materials for diamond and gold jewellery production. Industry Fragmentation: The Indian gems and jewellery industry remains highly fragmented and largely unorganised, dominated by small, family-run jewellery shops with longstanding customer trust. Many consumers prefer these local businesses over organised retailers due to price advantages, making it challenging for the organized sector to expand its market share.

INDUSTRY OUTLOOK

Growth of the Gems and Jewellery Industry is expected to be moderate to better in the years to come depending on the policies of the Government. However Gems and Jewellery Industry is seeing robust growth in the years to come. The Growth rate of the Gems and Jewellery Industry is closely related to the growth of the other Sector and hence movements and developments in the other sectors would also indirectly affect the future of Gems and Jewellery Industry.

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:-

RISK AND CONCERNS

Looking at the scenario in India in case of gems and jewellery industry, Risks associated with operating in a particular industry and include risks arising from demand changes, changes in customers choice and industry changes. Gold price fluctuation risk could arise on account of frequent changes in gold prices either up or downside momentum. It could have adverse impact on earnings. Forex risks could arise from the company being exposed to foreign currency fluctuations which could impact its rupee earnings. Diamond prices usually are not very volatile over a long period of time.

DISCUSSION ON FINANCIAL PERFORMANCE OF THE COMPANY:

During the year under review, the Standalone total Income was Rs.67,369.58/- Lakhs as against Rs.68,116.85 /- Lakhs for the corresponding previous year. Total Comprehensive income for the period was Rs. 739.58/-Lakhs as against Rs.516.19/-Lakhs in the corresponding previous year.

INDUSTRIAL RELATIONS AND HUMAN RESOURCES:

The companys philosophy of grooming leadership from within, and giving first right of refusal to internal talent for new open positions, inspires higher levels of loyalty to the organization. This has resulted in a very strong, deeply acculturated mid-layer with long tenures in the company. This cohort played a pivotal role in seamlessly integrating new talent in FY 2025 and added significant value through their contributions and contextual knowledge.

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.