Veerkrupa Jewellers Ltd Management Discussions

Introduction

Indias gold and diamond trade contributes about 7% to the countrys Gross Domestic Product (GDP), with the Gems & Jewellery sector employing nearly five million people. Recognising its immense potential for growth and value addition, the Government has identified the sector as a focus area for export promotion. To strengthen Brand India in the global market, several initiatives have been introduced, including measures to promote investment, upgrade technology, and enhance skills. The Government has also permitted 100% FDI in the sector under the automatic route, allowing foreign investors and Indian companies to invest without prior approvals. Further, the India-United Kingdom (UK) Comprehensive Economic and Trade Agreement (CETA), signed in July 2025, has eliminated import duties of 2.5-4% on plain gold and diamond jewellery, giving Indian exporters a competitive edge and is expected to more than double Indias Gems & Jewellery exports to the UK to Rs. 21,183 crore (US$ 2.5 billion) by 2027.

Market Size

Indias Gems & Jewellery market size stood at Rs. 7,31,255 crore (US$ 85 billion) in January 2026 and is projected to expand to Rs. 11,18,390 crore (US$ 130 billion) by 2030. During FY26 (April-February 2026), Indias gems and jewellery exports stood at US$ 25.93 billion.

The latest growth momentum is being driven by increasing global demand for gold jewellery and cut & polished diamonds, supported by favourable trade agreements and rising consumer spending in key markets such as the US, UK, and the Middle East.

Investments/Developments

Cumulative FDI inflows in diamond and gold ornaments in India stood at Rs. 9,727.03 crore (US$ 1.52 billion) between April 2000-December 2025.

Some of the key developments in this industry are listed below:

• Zero pearl VC led a US$ 0.65 million (Rs. 5.5 crore) pre-seed round in ONYA (Dec 2025 period), funding offline retail expansion and growth in Indias fast-growing lab-grown diamond jewellery segment.

• Blue Stone invested US$ 2.83 million (Rs. 25 crore) in lab-grown diamond brand Ethera in Feb 2026, supporting store expansion, omnichannel growth, and scaling Indias emerging lab-grown jewellery segment.

• Global institutions including Citigroup and Societe Generale invested US$ 19.30 million (Rs. 170.6 crore) in PNGS Reva (Feb 2026 IPO anchor round), backing expansion of its diamond jewellery business in India.

• In January 2026, Titan Company launched its new lab-grown diamond jewellery brand "beYon", marking its entry into the lab-grown diamond segment, targeting affordable, everyday-wear jewellery.

• Limelight Diamonds expanded aggressively into the lab-grown diamond jewellery segment, targeting over 100 stores in 2026 and 200+ by 2027, reflecting strong category diversification.

• Fashion jewellery brand Gargi expanded its footprint by launching 4 new stores across India (Palghar, Udaipur, Bhopal, Kalyan) at the start of 2026.

• Gargi expanded to 50 Shoppers Stop locations nationwide, strengthening its shop-in-shop retail model and expanding reach across multiple cities in India.

• Sabyasachi Calcutta launched its first digital fine jewellery boutique on Tata CLiQ Luxury on August 21, 2025, showcasing 18 carat gold pieces with diamonds, pearls and gemstones to expand its luxury reach.

• GemLab inaugurated its Exclusive Certified Gemstone Store in Rohtak on 20 July 2025, offering individually certified gems, each with an 8-digit GIN and trackable via the Gem Track System and plans to expand to the US, Canada, UK and Europe within two years.

• India and Thailand signed three key Memorandum of Understanding (MoUs) at the Bangkok Gem and Jewellery Fair on February 22, 2025, fostering collaboration in gemstone standardisation, coloured gemstone trade and silver jewellery to deepen bilateral cooperation.

Government Initiatives

• In September 2025, the Government kept the Goods and Services Tax (GST) rate for the jewellery sector unchanged at 3%, and industry noted that broader GST reforms and cuts in other rates would indirectly support demand for gems and jewellery.

• Under Union Budget 2025-26, the customs tariff on jewellery (HSN code 7113) was reduced from 25% to 20% and on platinum findings from 25% to 5%, making jewellery more affordable and boosting domestic demand.

• In the Union Budget 2024, the government reduced the basic customs duty on gold and silver to around 6% and on platinum to about 6.4%, which remained unchanged in Budget 2026.

• The sector now has AEO status from the finance ministry, easing export-import processes with quicker cargo release 50% lower bank guarantees.

• 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.

• India has signed an FTA with the UAE, which will further boost exports and is expected to reach the target of US$ 52 billion.

• The Government has reduced customs duty on cut and polished diamonds and coloured gemstones from 7.5% to 5% and NIL.

• Revised SEZ Act is also expected to boost Gems & Jewellery exports.

Road Ahead

The future of Indias Gems & Jewellery sector will be shaped by the growing dominance of large retailers and established brands, which are steadily expanding their presence across the country. Organised players are not only introducing greater variety in terms of designs and product lines but are also driving higher levels of professionalism, transparency, and consumer trust in the market.

Policy support remains a key growth catalyst. The governments liberal measures, such as easing restrictions on gold imports, reintroducing low-cost gold metal loans, and promoting exports through favourable trade agreements, are providing a strong foundation for sustained expansion.

India is already recognised as a global hub for jewellery manufacturing, supported by ~450 organised manufacturers, importers, and exporters. These players, backed by increasing government support and rising global demand, are well-positioned to cater to both domestic and international markets. With these positive developments, Indias Gems & Jewellery industry is projected to grow to Rs. 11,18,390 crore (US$ 130 billion) by 2030, reaffirming its pivotal role in the countrys exports and retail ecosystem. Sources: https://www.ibef.org/posters/gems-and-jewellery

Sources: https://www.grandviewresearch.com/industry-analysis/jewelry-market

The rise of online jewellery sales has been accompanied by more counterfeit and imitation products. At the same time, rent, utilities and staffing costs for premium retail locations remain high, physical stores carry inherent security risks, and attracting and retaining skilled sales staff remains an ongoing operational challenge.

Segment-Wise or Product-Wise Performance

The Company operates in a single business segment and therefore, separate segment-wise or product- wise performance is not applicable

Outlook

The jewellery industry enters FY2026-27 at an inflection point, shaped as much by global trade developments as by evolving consumer expectations. The recent reduction in US tariffs and the resulting prospect of a demand rebound, alongside continued diversification into markets such as the UAE, Australia and Hong Kong, provide a more constructive external environment than the sector has seen in recent years. At the same time, sustained gold price volatility and a tighter duty-free import framework mean that cost management and pricing agility will remain critical.

Looking ahead, the Company aims to evolve from a jewellery retailer into a curator of experiences that bring together heritage and modernity. This means moving beyond the transaction to build genuine emotional connections through storytelling, craftsmanship and personalised service, with stores designed as spaces where customers can explore, learn and celebrate the artistry behind each piece.

Recognising the demographic shifts and rising spending power in emerging urban and semi-urban centres, the Company plans to expand its physical footprint through stores that reflect local culture while staying true to consistent brand standards, supported by community engagement initiatives that build trust and loyalty over time.

On product development, the focus will remain on innovation rooted in tradition — introducing collections that suit contemporary lifestyles while honouring established craftsmanship. Customisation will be central to this approach, and the Company will continue to monitor the growing relevance of lab- grown diamonds and lighter-weight designs as consumers respond to elevated gold and diamond prices.

Sustainability and ethical practice will continue to be treated as core to long-term growth. By committing to responsible sourcing and transparent hallmarking, the Company aims to deepen consumer trust and contribute positively to the wider industry ecosystem.

While online sales are not currently part of the operating model, the Company continues to explore how digital tools can complement the in-store experience — from virtual consultations and design previews to appointment scheduling — building toward a cohesive, omni-channel approach without diluting the focus on personalised, face-to-face service.

In a landscape shaped by gold price volatility, shifting global trade policy and changing consumer expectations, agility and customer-centricity will remain the Companys guiding principles. Through continuous engagement with customers, responsiveness to market and policy developments, and investment in people and processes, the Company is well placed to navigate near-term uncertainty while capturing the opportunities created by a more favourable trade environment.

Internal Control Systems and Their Adequacy

The Company maintains a robust internal control framework designed to safeguard assets, ensure the integrity of financial reporting, and promote operational efficiency, particularly important given the heightened gold price volatility and evolving trade and customs regulations the sector currently faces. These systems are intended to provide reasonable assurance that financial statements are prepared reliably and in accordance with applicable accounting standards.

Governance and Oversight

The Board of Directors, with the support of the Audit Committee, oversees the design and functioning of the internal control framework. Management is responsible for implementing and monitoring these controls to manage risk, including risks arising from gold price movements and changes in customs or duty structures, and to support business objectives.

Financial Controls

Comprehensive financial controls ensure accurate and timely recording of transactions, including:

• Segregation of duties — authorisation, recording and custody of assets are handled by separate individuals to reduce the risk of error or fraud.

• Authorisation and approval — all transactions follow defined approval levels in line with company policy.

• Reconciliations — bank accounts, inventory and other key balances, including gold stock valuations, are reconciled regularly to identify and resolve discrepancies promptly given current price volatility.

Operational Controls

Operational controls support efficient and consistent business processes:

• Standard operating procedures — documented SOPs govern procurement, sales and inventory management to maintain consistency and quality, with periodic review to reflect changes in duty structures and import frameworks.

• Physical controls — access to physical assets is restricted, with surveillance systems in place to deter unauthorised access and theft.

• Performance monitoring — regular reviews and audits assess the effectiveness of controls and highlight areas for improvement, including monitoring of margin impact from gold price fluctuations.

Compliance and Regulatory Controls

The Company remains committed to meeting all applicable legal and regulatory requirements:

• Regulatory compliance — adherence to hallmarking standards, tax laws, customs and duty regulations, and anti-money laundering requirements, with active monitoring of recent changes to import duty frameworks.

• Internal audits — an independent internal audit function evaluates compliance with policies and procedures, identifies risks, and recommends corrective actions.

• Training and awareness — regular training ensures employees remain informed of regulatory requirements and internal policies, including updates arising from evolving trade and customs rules.

Information Technology Controls

While the Company operates primarily through offline retail, information technology remains important in supporting day-to-day operations:

• System access controls — access to information systems is role-based and restricted to prevent unauthorised use.

• Data security — appropriate measures protect sensitive information from unauthorised access, alteration or loss.

• Backup and recovery — regular data backups and recovery plans support business continuity in the event of disruption.

Financial Performance

The financial year 2025-26 unfolded against a business environment shaped by continued volatility in gold prices, evolving consumer sentiment, and a shifting cost structure across the Companys operations. The Company remained anchored to its core strategy of delivering value through quality, trust, and consistent customer engagement in the offline gold jewellery retail space, even as revenue trends moderated compared to the previous year.

For the financial year ended 31st March 2026, the Company recorded a Total Revenue of Rs.5,938.81 lakhs, compared to Rs.2,925.70 lakhs in FY 2024-25, registering strong growth of over 103%. Revenue from operations stood at Rs.5,938.79 lakhs, more than doubling from Rs.2,925.69 lakhs in the previous year, reflecting a significant increase in business volumes during the year. Other Income remained negligible at Rs.0.02 lakhs, broadly in line with Rs.0.01 lakhs in the prior year

Revenue Trends, Profitability and Cost Structure

While revenue from operations grew sharply during the year, this was accompanied by a corresponding rise in overall costs, resulting in a decline in profitability at the pre-tax level. Total expenses stood at Rs.5,928.57 lakhs, up from Rs.2,903.30 lakhs in FY 2024-25, an increase of over 104%, broadly in step with the growth in revenue.

Purchase of Stock-in-Trade increased to Rs.5,799.50 lakhs from Rs.3,374.11 lakhs, an increase of nearly 72%, in line with the higher volume of business during the year This was accompanied by a swing in Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade, which stood at Rs.77.70 lakhs as against Rs.(509.69) lakhs in the prior year, reflecting a marked change in inventory movement compared to the previous year.

Employee Benefit Expense increased to Rs.25.67 lakhs from Rs.13.61 lakhs, reflecting higher staffing costs to support the growth in business. Financial Costs rose to Rs.1.04 lakhs from Rs.0.38 lakhs, while Depreciation and Amortisation Expense declined marginally to Rs.2.29 lakhs from Rs.2.57 lakhs. Other

Administrative Expenses remained largely stable at Rs.22.36 lakhs, compared to Rs.22.33 lakhs in the previous year.

As a result of these movements, Profit before exceptional and extraordinary items and tax declined to Rs.10.24 lakhs from Rs.22.40 lakhs in the previous year, a decrease of over 54%, reflecting the impact of higher costs relative to the revenue growth achieved during the year There were no exceptional or extraordinary items during the year.

After accounting for a Current Tax expense of Rs.2.91 lakhs (as against Rs.3.50 lakhs in FY 2024-25) and a Deferred Tax credit of Rs.9.32 lakhs (as against Nil in the prior year, which had instead recorded an Earlier Tax credit of Rs.1.02 lakhs), Profit for the period stood at Rs.16.65 lakhs, compared to Rs.19.92 lakhs in the previous year, a decline of over 16%. Basic and Diluted Earnings Per Share stood at Rs.0.01 for the year, compared to Rs.0.02 in the previous year

The Companys performance during the year reflects a period of strong revenue growth accompanied by a corresponding rise in cost structure, resulting in a moderation in bottom-line profitability despite the significant expansion in topline revenue.

Accounting Treatment

In the preparation of its financial statements for the financial year, the Company has followed all applicable Accounting Standards (AS) as prescribed under the Companies Act, 2013. There has been no deviation or alternative treatment adopted in the accounting of any transaction that differs from the prescribed standards. Accordingly, no disclosure is required regarding any alternate accounting treatment, as the financial statements present a true and fair view of the state of affairs of the Company in full compliance with the applicable accounting framework.

Material Developments in Human Resources / Industrial Relations

The Company continues to maintain cordial and harmonious relations with its employees and considers its human resources to be an important asset for the sustained growth and development of the Company. During the year under review, there were no material developments in Human Resources or Industrial Relations requiring specific disclosure. The Company had 5 employees as at the end of the financial year.

Key Financial Ratios

Pursuant to Schedule V, Part B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the 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, are given below:

Explanation for ratios where the variance is beyond 25% compared to previous year:

Inventory Turnover (%)

The ration was increased due to substantial increase in revenue, compared to the inventory. This indicates improved inventory planning, stock management and leading to faster inventory movement and more efficient utilization of inventory.

Trade Receivables Turnover (%)

The change in attributable to the increased in revenue. There is also increase in trade receivables but the revenue is increased at higher rate. This reflects improved efficiency in receivables management, faster collection of outstanding dues resulting into quicker collection from receivables and improved working capital efficiency.

Trade Payables Turnover (%)

The ratio is increased due to higher purchase during the year The lower turnover ratio reflects an increase in average trade payables due to higher procurement volumes and improved utilization of supplier credit terms, resulting in a longer payment cycle and more efficient working capital management.

Net Working Capital Turnover Ratio (%)

Although Net Working Capital increased marginally by only 0.51%, turnover increased by 102.99% during the year This significant improvement reflects more efficient utilization of working capital, driven by higher business volumes, improved inventory and receivables management, and effective working capital optimization, enabling the Company to generate substantially higher revenue with almost the same level of net working capital.

Net Profit Margin (%)

The change is attributable to the increase in revenue and decrease in cost of purchase. This reflects better cost management, and results in increased net profit.

Return on Capital Employed (%)

The reduction is primarily due to decrease in PBIT. Consequently, the returns generated from the capital employed were lower during the year. The decline in PBIT was mainly due to reduced operating margins and higher operating costs, which impacted overall profitability despite efficient management of the capital base.

Operating Profit Margin (%)

Operating Profit Margin declined significantly mainly due to operating expenses and cost of goods sold increasing at a much faster pace than revenue from operations, resulting in a lower operating profit relative to sales as compared to the previous year.

Cautionary Statement

Statements in the Management Discussion and Analysis (MD&A) that describe the Companys objectives, expectations, forecasts, or predictions may be deemed to be "forward-looking statements" within the meaning of applicable securities laws and regulations. These forward-looking statements are based on certain assumptions and expectations of future events, and are subject to a number of known and unknown risks, uncertainties, and other factors — many of which are beyond the Companys control — that could cause actual results, performance, or achievements to differ materially from those projected. Such factors include, but are not limited to, changes in macroeconomic conditions, fluctuations in market demand, changes in government policies and regulations, technological developments, competitive dynamics, and geopolitical events. The Company does not undertake to update any forward-looking statements to reflect future events or circumstances, except as required by law.