Vivid Mercantile Ltd Management Discussions

The Management Discussion and Analysis ( MDA ) should be read together with the audited financial statements of Vivid Mercantile Limited ( Vivid or the Company ) for the financial year ended 31st March, 2026, the accompanying notes to accounts and other disclosures forming part of the Annual Report.

The financial information discussed below is presented in lakhs, unless otherwise stated. The discussion focuses on the Company s operating performance, financial position, business environment, opportunities, risks and outlook.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

(a) Industry Structure and Developments

I. The Macroeconomic Environment

Global Economy

Global economic activity demonstrated resilience through calendar year 2025 and into the early part of 2026, notwithstanding an environment marked by episodic trade policy shifts, elevated geopolitical uncertainty and a gradual normalisation of monetary policy across major economies. As per the International Monetary Funds ( IMF ) World Economic Outlook Update of January 2026, global output is estimated to have grown by approximately 3.3% in calendar year 2025, with growth projected to remain resilient at 3.3% in 2026 and 3.2% in 2027. This marks a modest upward revision from the IMFs October 2025 assessment, supported by continued technology-led investment, accommodative financial conditions, fiscal and monetary support in several major jurisdictions, and the adaptability of the private sector to evolving trade conditions.

Growth across advanced economies is projected at approximately 1.8% for 2026, with the United States expected to expand by around 2.4%, aided by fiscal policy support, a lower policy rate environment, and the gradually diminishing impact of elevated trade tariffs introduced earlier in the cycle. The Euro area continues to face more subdued conditions, weighed down by structural headwinds in manufacturing and the lingering effects of elevated energy costs, while emerging market and developing economies, led by India, continue to outpace advanced economy growth rates by a wide margin. Global headline inflation has continued its gradual descent, though the pace of disinflation has varied meaningfully across geographies, with inflation in the United States remaining comparatively sticky relative to other major economies.

Key downside risks to the global outlook identified by multilateral agencies include a possible reevaluation of technology-sector valuations and investment expectations, renewed escalation of geopolitical tensions in the Middle East and Eastern Europe, and the possibility of further trade policy shifts that could disrupt global supply chains, capital flows and commodity markets developments of direct relevance to a gold and jewellery-linked business such as ours, given golds role as both a global commodity and a safe-haven investment asset.

Global and Indian GDP growth (Source: IMF World Economic Outlook, January 2026; Reserve Bank of India, February 2026 Monetary Policy Statement). India figures on a fiscal-year basis.

Indian Economy

India has continued to consolidate its position as the worlds fastest-growing major economy during FY 2025 26. The Reserve Bank of India ( RBI ), in its February 2026 monetary policy review, revised its GDP growth estimate for FY 2025 26 upward to 7.4%, from an earlier estimate of 7.3%, reflecting broad-based momentum across consumption, services and industrial activity. Indias real GDP grew by 8.2% in the September 2025 quarter the sharpest quarterly growth rate in six quarters following growth of 7.8% in the June 2025 quarter, underpinned by resilient rural and urban demand, softer crude oil prices, front-loaded government capital expenditure, and the consumption boost from GST rate rationalisation announced during the year. The IMF has similarly raised its FY 2025 26 growth forecast for India to 7.3%, while cautioning that growth is likely to moderate towards a more sustainable 6.4% range over the following two fiscal years as these cyclical tailwinds fade.

Retail inflation remained benign through much of FY 2025 26, with CPI inflation tracking to historic lows of around 0.25% in October 2025 before edging up to approximately 1.33% by December 2025, comfortably within the RBIs tolerance band of 2 6%. This benign inflation environment, together with the RBIs rate cut in December 2025, has supported consumer sentiment and discretionary spending a favourable backdrop for a consumption-linked, urban-centric business such as ours. The Union Budget for FY 2025 26 also introduced income tax rationalisation measures that placed additional disposable income in the hands of the middle-class consumer, a segment that forms a core part of the customer base for organised jewellery retail in India.

II. The Gems and Jewellery Industry

Global Jewellery and Gold Market

Calendar year 2025 was a landmark year for the global gold market, with total gold demand (including OTC transactions) surpassing 5,000 tonnes for the first time, against a backdrop of 53 separate record highs registered in the gold price during the year. This unprecedented demand was overwhelmingly investment-led, with central banks continuing robust net purchases and exceptional inflows into gold-backed exchange-traded funds and physical bar and coin investment, as investors globally sought safe-haven and portfolio-diversification exposure amid elevated geopolitical risk and currency volatility.

Jewellery fabrication demand, in contrast, came under pressure through 2025 and into the first half of calendar 2026, as sustained record-high gold prices weighed on affordability and prompted a shift towards lighter-weight, lower-carat and studded jewellery formats across most major consuming markets, including China and India.

Notwithstanding softer volumes, the value of global jewellery demand has generally held up well, reflecting the extent of the price appreciation in gold during the year. Gold supply, meanwhile, touched a six-year low, with ample above-ground inventories and a marked increase in recycling activity helping to balance the market as higher prices encouraged the return of old gold into the supply chain a dynamic that is also increasingly visible in the Indian market through exchange/buyback transactions.

Indian Gems and Jewellery Industry

India remains the worlds second-largest consumer market for gold jewellery and has now emerged as the worlds second-largest diamond jewellery market by value, commanding an approximately 12% global share as of early 2026, having overtaken both China and Japan on the strength of rising incomes, a large and growing base of organised retail, and enduring cultural demand for jewellery as both adornment and investment. Indias gems and jewellery market was valued at approximately 7,31,255 crore (US$ 85 billion) as of January 2026 and is projected to expand to approximately 11,18,390 crore (US$ 130 billion) by FY 2030, implying a healthy forward compound annual growth rate.

Indias gems & jewellery market size, current and projected (Source: India Brand Equity Foundation, January 2026; industry estimates).

The Indian gold jewellery market experienced a divergence between volume and value through FY 2025 26, mirroring the global trend. Domestic gold prices (MCX spot) rose sharply during the year up approximately 81% year-on-year in the March 2026 quarter alone, touching a record quarterly average of over 1,51,000 per 10 grams which weighed on jewellery purchase volumes even as overall consumer spending on gold reached record levels in value terms. Industry data for the quarters comprising FY 2025 26 indicate that while jewellery demand volumes softened year-on-year (reflecting affordability pressures at elevated price points), overall spending on jewellery rose sharply, supported by wedding-related and festive purchases as well as continued demand from higher-income consumers. Retailers across the industry, including our Company, responded to this environment through a greater emphasis on lighter-weight and studded designs, increased exchange/buyback volumes, and continued customer engagement around occasion-led buying (weddings, festivals and Akshaya Tritiya).

On the policy front, the Union Budget 2025 26 reduced customs duty on jewellery (HSN 7113) from 25% to 20% and on platinum findings from 25% to 5%, improving affordability and supporting domestic demand for the sector as a whole. The Governments continued push on mandatory BIS hallmarking has strengthened consumer confidence in purity standards across the organised trade, a development that structurally benefits compliant, BIS-registered jewellers such as our Company relative to unorganised participants.

The Indian gems and jewellery sector remains highly fragmented, with the organised trade comprising an estimated 450-plus organised manufacturers, importers and exporters together with a growing base of BIS-hallmarked retail jewellers continuing to gain share from the unorganised segment, a trend that plays to the structural advantage of listed, governance-compliant entities operating in the sector.

OVERVIEW OF THE COMPANY AND ITS BUSINESS:

Vivid Mercantile Limited has evolved over a period of several decades in response to changing market conditions and business opportunities. The Company commenced operations in 1994 in graphic designing and printing, subsequently diversified into infrastructure and real estate-related activities and, in line with its business strategy, has progressively transitioned towards trading activities. Its current business focus is on the buying, selling, reselling, transporting, storing, marketing and trading of commodities, principally gold, silver, jewellery and related products, on both retail and wholesale basis in India.

The Company s jewellery portfolio comprises gold and silver jewellery, including products with precious and semi-precious stones. The business caters to traditional, modern and Indo-Western preferences and serves customers across value, mid-market and premium categories. The Company sources gold and silver through established bullion markets and procures gemstones and other materials from suppliers considered reliable for quality and authenticity.

The Indian gems and jewellery industry remains an important component of the domestic consumption and manufacturing ecosystem. India is among the world s largest consumers of gold jewellery and that long-term demand is influenced by economic growth, income levels, wealth distribution and urbanisation. It also notes the significant size of the Indian gems and jewellery market and the continued importance of India in global jewellery trade.

The industry is, however, characterised by substantial sensitivity to gold and other precious-metal prices, consumer purchasing power, seasonal demand, competition, availability of skilled labour and regulatory developments. These factors have a direct bearing on procurement costs, inventory values, pricing, margins, liquidity and customer demand.

The Management also identifies various government and industry initiatives affecting the sector, including changes in customs duties, GST treatment and measures intended to support domestic jewellery demand and the development of the gems and jewellery ecosystem.

For Vivid, the operating environment therefore presents a combination of opportunities arising from the depth of the domestic jewellery market and challenges arising from price volatility, competition and the working-capital-intensive nature of the business.

BUSINESS OVERVIEW

Vivid presently operates as a trading-oriented enterprise with a focus on gold, silver, and Commodity related products. The Company s business model is based on sourcing products, maintaining appropriate availability for customers and undertaking retail and wholesale transactions.

The nature of the Company s business requires careful management of inventory, procurement, customer credit, pricing and cash flows.

The Company s operating model is closely linked to:

prevailing prices of gold, silver and other precious materials;

customer demand and purchasing power;

inventory availability and turnover; procurement relationships;

pricing and gross margin management;

working-capital availability;; and

the competitive environment.

OPPORTUNITIES AND THREATS

The Companys business is influenced by developments in the gold, diamond and Commodity markets, gold prices, macroeconomic conditions, regulatory developments and the competitive environment. The management continuously evaluates emerging opportunities and potential threats and seeks to align its business strategy with changing market conditions.

Opportunities

1. Growing Demand for Gold and Jewellery

Gold continues to have significant cultural, social and financial importance in India and remains an important component of household wealth and jewellery consumption. Demand for gold jewellery is supported by weddings, festivals, social occasions, gifting and investment-related considerations.

The Companys presence in the gold, diamond and jewellery business provides an opportunity to participate in the long-term . Continued urbanisation, increasing disposable income and evolving consumer preferences may provide opportunities for organised players to expand their customer base and strengthen their market presence.

2. Expansion of Organised Jewellery Market

The Indian jewellery market continues to evolve towards greater organisation, transparency, quality assurance and customer-centric retailing. Increasing consumer awareness regarding purity, hallmarking, pricing transparency and product quality provides an opportunity for organised businesses to differentiate themselves from less organised market participants.

The Company may benefit from this structural shift by strengthening its systems, product quality, customer service and transparency in transactions.

3. Opportunity from Product and Design Diversification

Changing customer preferences are creating demand for a wider range of jewellery designs, lightweight jewellery, contemporary designs, traditional jewellery, customised products and products catering to different price points.

The Company can leverage these changing preferences by maintaining an appropriate product portfolio and introducing products that address different customer requirements. Greater emphasis on design, quality, customisation and customer experience may provide opportunities to improve customer engagement and strengthen revenues.

4. Digitalisation and Technology Adoption

The increasing use of digital platforms, technology-enabled inventory management, customer relationship management, digital marketing and online engagement is changing the way customers discover and evaluate jewellery products.

Adoption of appropriate technology may provide opportunities to improve inventory visibility, customer engagement, operational efficiency and decision-making. Digital channels may also enable the Company to expand its customer reach beyond its traditional geographical markets, subject to the Companys business model and strategic priorities.

5. Strengthening Supply and Procurement Capabilities

Efficient procurement and inventory management are particularly important in the gold and jewellery business because gold represents a high-value inventory item and changes in gold prices can significantly affect working capital requirements.

The Company has an opportunity to strengthen supplier relationships, procurement processes, inventory controls and sourcing arrangements to improve operational efficiency and manage its exposure to market price volatility.

6. Opportunity from Rights Issue and Strengthening of Capital Base

During FY 2025-26, the Company initiated the process of raising funds through a rights issue. The Board approved a rights issue of up to approximately 5.01 crore Equity Shares at an issue price of 5 per Equity Share, aggregating to approximately 25.06 crore, with an entitlement ratio of

1 Equity Share for every

2 Equity Shares held, subject to the applicable terms, approvals and completion of the issue process.

The proposed fund raising provides an opportunity to strengthen the Companys capital base and provide additional financial resources. Effective utilisation of the proceeds may support the Companys working capital requirements, business initiatives and overall financial flexibility, subject to the final utilisation and implementation of the stated objects.

7. Increasing Consumer Preference for Transparency and Quality

Increasing consumer awareness regarding purity, hallmarking, certification, product authenticity and transparent pricing is creating an environment in which businesses with robust quality and compliance systems can strengthen customer trust.

The Company can leverage this opportunity through continued focus on product quality, appropriate certification and hallmarking requirements, transparent customer practices and effective grievance redressal mechanisms.

8. Opportunities from Changing Gold Investment Behaviour

Gold continues to be viewed by Indian consumers not only as jewellery but also as a store of value and a traditional form of wealth preservation. Periods of economic uncertainty, inflationary concerns and market volatility can influence consumer interest in gold.

The Companys exposure to the gold and jewellery ecosystem provides an opportunity to benefit from sustained long-term interest in gold, subject to the impact of gold prices and consumer affordability.

Threats

1. Gold Price Volatility

The Companys business is inherently exposed to fluctuations in gold prices. Gold prices are affected by international economic conditions, inflation, interest rates, currency movements, geopolitical developments, central bank policies, investment demand and other factors beyond the Companys control.

A sharp increase in gold prices may affect affordability and consumer demand, while a decline in gold prices may affect the value of inventory held by the Company. Significant volatility may also increase working capital requirements and create challenges in inventory and procurement management.

2. Highly Competitive Market

The gold and jewellery industry is highly competitive and includes organized jewellery retailers, established regional players, local jewellers and other unorganised market participants.

Increased competition may result in pricing pressure, higher customer acquisition costs, reduced margins and difficulty in retaining or expanding market share.

The Companys ability to compete effectively will depend upon its product quality, pricing, design, customer service, supplier relationships, operational efficiency and ability to respond to changing customer preferences.

3. Changing Consumer Preferences

Consumer preferences in the jewellery market are continuously evolving. Demand may shift towards lightweight jewellery, contemporary designs, customised products, branded products, alternative investment avenues or digital forms of gold.

Failure to anticipate and respond effectively to changing customer preferences may result in slower sales growth, excess inventory or loss of customer relevance.

4. Regulatory and Policy Changes

The gold and jewellery industry is subject to various regulatory requirements relating to taxation, import duties, hallmarking, purity standards, customer identification, anti-money laundering requirements and other applicable laws.

Changes in import duties, taxation, hallmarking requirements or other government policies may affect gold prices, consumer demand, procurement costs, margins and the Companys operating model.

The Company is required to continuously monitor regulatory developments and adapt its systems and processes accordingly.

5. Inventory and Working Capital Risk

Gold and jewellery are high-value inventory items. Maintaining adequate inventory is necessary to meet customer requirements, while excessive inventory may result in significant working capital being blocked.

Changes in gold prices, slower inventory movement, changes in product preferences and inventory ageing may affect working capital efficiency and profitability.

The Company therefore needs to maintain a balance between product availability, customer requirements and efficient utilisation of capital.

6. Security, Theft and Pilferage

Gold and jewellery inventory has a high intrinsic value and therefore the Company is exposed to risks relating to theft, burglary, pilferage, misappropriation, fraud and unauthorised movement of inventory.

Any material loss of inventory may adversely affect the Companys financial performance and reputation and may also result in operational disruption and potential legal or regulatory consequences.

7. Purity and Quality Risk

Customer confidence in the jewellery business depends substantially on the purity, authenticity and quality of products.

Any failure to maintain appropriate quality standards, errors in purity assessment, non-compliance with applicable hallmarking requirements or customer complaints regarding product quality may adversely affect the Companys reputation and business.

8. Supplier and Procurement Risk

The Company depends on the timely availability of gold, diamonds and other materials from appropriate suppliers. Disruptions in supply, changes in supplier terms, quality issues, concentration of procurement or adverse movements in procurement costs may affect the Companys operations and margins.

The Company needs to maintain reliable supplier relationships and appropriate procurement controls to minimise such risks.

9. Liquidity and Interest Rate Risk

The gold and jewellery business can require substantial working capital because of the high value of inventory. Any significant increase in gold prices may increase the amount of capital required to maintain inventory.

Higher interest rates or restricted availability of working capital finance may increase finance costs and adversely affect profitability.

Effective cash-flow forecasting, inventory management and liquidity planning are therefore important for maintaining financial flexibility.

10. Foreign Exchange Risk

International gold prices are generally influenced by movements in global markets and currency exchange rates. To the extent that the Companys procurement or transactions have direct or indirect foreign currency exposure, fluctuations in exchange rates may affect procurement costs and margins.

The Company therefore needs to monitor foreign exchange movements and associated exposures on an ongoing basis.

11. Technology and Cybersecurity Risk

Increasing reliance on technology for accounting, inventory management, billing, customer information, business communication and other operational activities exposes the Company to risks relating to system failure, cyberattacks, unauthorised access and data breaches.

Any significant technology disruption or cybersecurity incident may affect business continuity, customer confidence and financial performance.

12. Reputational Risk

Trust and reputation are critical to the gold and jewellery business. Any adverse incident relating to product quality, purity, customer service, regulatory compliance, pricing, employee conduct, theft or other business practices may negatively affect customer confidence.

Loss of customer trust may have a longer-term impact on the Companys ability to retain existing customers and attract new customers.

13. Economic and Consumer Spending Risk

Gold jewellery is partly discretionary in nature and demand may be influenced by disposable income, inflation, interest rates, employment conditions, consumer confidence and broader economic conditions.

An economic slowdown or reduction in discretionary spending may adversely affect jewellery demand and consequently the Companys revenues and profitability.

14. Strategic and Execution Risk

The Companys future growth depends on its ability to execute its business strategy effectively, manage its capital efficiently and respond to changing market conditions.

The proposed strengthening of the Companys capital base through the rights issue provides additional financial resources; however, the benefits of such fund raising will depend upon effective deployment of the proceeds, implementation of the proposed business initiatives and the Companys ability to achieve the intended operational outcomes.

Any delay in implementation, ineffective utilisation of resources or inability to achieve the intended objectives may affect the expected benefits from the Companys strategic initiatives.

Risk Management Approach

The Company recognises that risks are an inherent part of its business environment and that certain risks, particularly those relating to gold prices, consumer demand, macroeconomic conditions and regulatory developments, are beyond its direct control.

The management therefore continuously monitors the Companys operating environment and assesses financial, market, operational, regulatory, security, technology and strategic risks. Appropriate internal controls, inventory management systems, compliance mechanisms, liquidity planning, supplier management and operational processes are implemented to minimise the potential impact of identified risks.

The Company remains focused on strengthening its risk management framework, improving operational and financial controls, monitoring market developments and responding proactively to emerging risks and opportunities.

The above risks are not exhaustive and may arise from circumstances not presently known to the Company or which may become material in the future. The Company continues to review and monitor its risk profile and take appropriate measures to mitigate identified risks.

Segment-Wise / Product-Wise Performance

The Company operates as a single reportable business segment, comprising the wholesale, retail and trading of gold and silver, commodities and related articles, in accordance with Ind AS 108 Operating Segments. Revenue is predominantly derived from the sale of gold, silver, commodities and other allied articles such as utensils. As the Companys operations, resources and performance are reviewed by the Chief Operating Decision Maker on a consolidated, single-segment basis, no separate segment-wise financial disclosures have been made in the financial statements for the year under review. Accordingly, no segment-wise or product-wise performance disclosure is required beyond the financial statements presented elsewhere in this Annual Report.

Outlook

The Company s immediate strategic priority is to consolidate its position in its current trading activities while improving the efficiency with which working capital is deployed.

The outlook remains dependent on customer demand, commodity-price movements, competitive intensity, economic conditions and the Company s ability to execute its business plans effectively. Management intends to focus on sustainable revenue growth, disciplined working-capital deployment, customer relationships and prudent financial management.

The Company does not represent that the growth opportunities discussed above will necessarily result in a particular level of future revenue or profitability.

Risk & Concerns

The Company operates in the gold, diamond and jewellery business and is exposed to various risks arising from fluctuations in gold prices, changes in consumer demand, competitive intensity, regulatory developments, inventory management, liquidity requirements and operational factors. The Company also remains exposed to broader economic and financial market conditions that may affect its business and financial performance.

The management continuously evaluates the risks associated with the Companys business and monitors developments in the industry, regulatory environment and financial markets. Appropriate systems, processes and internal controls are implemented to identify, assess and mitigate risks to the extent practicable.

I. Gold Price and Market Risk

The Companys business is inherently exposed to fluctuations in the price of gold. Gold prices are influenced by several factors, including global economic conditions, inflation, interest rates, geopolitical developments, movements in international commodity and currency markets, central bank policies and investment and consumer demand. Such factors are largely outside the Companys control.

Significant volatility in gold prices may affect the Companys inventory value, working capital requirements, procurement costs, selling prices and margins. A substantial increase in gold prices may also affect consumer affordability and demand, while a decline in prices may adversely affect the value of gold inventory held by the Company.

The Company seeks to mitigate this risk through close monitoring of gold price movements, disciplined inventory management, appropriate procurement planning and regular review of its working capital requirements.

Key mitigation strategies include:

Continuous monitoring of domestic and international gold price movements;

Prudent inventory and procurement management;

Regular review of inventory levels and ageing;

Aligning procurement with business requirements and anticipated demand;

Maintaining appropriate liquidity and working capital planning; and

Periodic review of pricing and margin strategies.

II. Competition and Market Position Risk

The gold and jewellery industry in India is highly competitive and comprises organised jewellery retailers, regional players and a large number of local and unorganised market participants. The Company may face competition in terms of product range, quality, pricing, design, customer service, distribution and brand recognition.

Increased competition may result in pressure on selling prices and margins and may affect the Companys ability to retain existing customers or attract new customers. The Companys future performance will depend, among other factors, on its ability to respond effectively to changing market conditions and customer preferences.

The Company seeks to address competitive risks through continued focus on pricing discipline and operational efficiency.

III. Consumer Demand and Changing Preferences

Demand for gold and jewellery is influenced by consumer confidence, disposable income, gold prices, economic conditions, wedding and festive demand and prevailing consumer preferences.

The jewellery market is also witnessing changes in customer preferences, including demand for contemporary designs, lightweight jewellery, customised products, quality assurance and greater transparency in pricing and purity.

Any inability to anticipate or respond to changing customer preferences may adversely affect the Companys sales and profitability.

The Company seeks to mitigate this risk by monitoring market trends, customer preferences and competitive developments and by maintaining an appropriate product and customer strategy.

IV. Inventory and Working Capital Risk

Gold and jewellery constitute high-value inventory and consequently require significant working capital. The Companys ability to maintain adequate inventory while ensuring efficient utilisation of funds is important for its operations.

Excessive inventory may result in higher working capital requirements and increased exposure to gold price movements, while inadequate inventory may affect the Companys ability to meet customer requirements.

The Company therefore places emphasis on inventory monitoring, physical verification, reconciliation and efficient working capital management.

Key mitigation strategies include:

Regular monitoring of inventory levels and movement;

Periodic physical verification and reconciliation;

Monitoring of slow-moving and ageing inventory;

Prudent procurement planning;

Regular working capital and cash-flow reviews; and

Strengthening internal controls over inventory.

V. Gold Inventory Security, Theft and Pilferage Risk

Gold and jewellery are high-value commodities and therefore the Company is exposed to risks relating to theft, burglary, pilferage, fraud, misappropriation and unauthorised movement of inventory.

Any significant loss of inventory could have an adverse impact on the Companys financial performance and may also affect its reputation and customer confidence.

The Company seeks to mitigate such risks through appropriate physical security measures, controlled access, inventory verification, segregation of duties, surveillance systems and internal controls.

VI. Regulatory and Compliance Risk

The gold and jewellery business is subject to various laws and regulations relating to taxation, hallmarking, purity standards, import and trade requirements, customer identification, anti-money laundering, financial reporting and other applicable matters.

Changes in government policies, taxation, customs duties, hallmarking requirements or other regulatory provisions may affect the Companys procurement costs, selling prices, working capital requirements, customer demand and profitability.

Non-compliance with applicable laws and regulations may expose the Company to penalties, regulatory action and reputational risk.

The Company seeks to mitigate regulatory risks through continuous monitoring of applicable laws and regulations, timely statutory compliance, internal review mechanisms and professional advice wherever required.

VII. Anti-Money Laundering and Customer Due Diligence Risk

The high-value nature of gold and jewellery transactions exposes businesses operating in the sector to increased regulatory expectations relating to customer identification, transaction monitoring, record keeping and anti-money laundering requirements.

Failure to comply with applicable requirements could result in regulatory action, financial penalties and reputational damage.

The Company seeks to mitigate this risk through appropriate customer identification and verification procedures, maintenance of transaction records, monitoring of transactions and employee awareness regarding applicable compliance requirements.

VIII. Supplier and Procurement Risk

The Companys business depends on the availability of gold, diamonds and other materials from appropriate suppliers. Any disruption in supply, deterioration in supplier relationships, quality issues, delays in procurement or significant changes in procurement costs may adversely affect the Companys operations and margins.

The Company seeks to mitigate this risk through appropriate supplier evaluation, procurement planning, monitoring of market conditions and development of reliable sourcing relationships.

IX. Liquidity and Financial Risk

The Companys business requires adequate liquidity, particularly because gold and jewellery are high-value inventory items. Significant increases in gold prices may increase the amount of working capital required to maintain inventory.

Any inability to obtain adequate working capital or other financing on commercially reasonable terms could affect the Companys ability to maintain inventory and conduct its business efficiently.

The Company therefore continuously monitors its cash flows, working capital requirements, funding position and financial commitments.

X. Human Resource Risk

The Companys ability to effectively conduct its business depends upon the availability and retention of competent personnel. Loss of key personnel, employee attrition or inability to attract appropriately skilled employees may affect operational efficiency and business continuity.

The Company seeks to mitigate such risks through employee engagement, training and development, appropriate allocation of responsibilities and continuous strengthening of its human resource capabilities.

Overall Risk Management

The Company recognises that risks are an inherent part of its business and that certain risks, particularly those relating to gold prices, market conditions, consumer demand and regulatory developments, cannot be completely eliminated.

The management continuously identifies, evaluates and monitors material risks affecting the Companys business and financial performance. Appropriate internal controls, inventory management systems, compliance mechanisms, financial controls and operational procedures are implemented to reduce the potential impact of identified risks.

The Company remains focused on strengthening its risk management framework and continuously reviewing its risk profile in light of changes in the gold market, consumer behaviour, regulatory environment, financial conditions and the Companys business strategy.

The risks described above are not exhaustive and additional risks and uncertainties, including those that are presently unknown or considered immaterial, may adversely affect the Companys business, financial condition, results of operations and prospects.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established internal financial and operational controls commensurate with the nature and scale of its business.

The control environment is particularly relevant to the Company s business because of its exposure to inventory, procurement, sales, customer collections, cash management and financial reporting.

The Company s internal control framework is intended to provide reasonable assurance regarding:

safeguarding of assets;

accuracy and reliability of financial reporting; proper authorisation of transactions; prevention and detection of errors and irregularities; appropriate inventory management; compliance with applicable laws and regulations; and timely preparation and review of financial information.

The Company s internal control framework is subject to periodic review and is intended to evolve with the Company s scale of operations.

The Statutory Auditors, in their report on internal financial controls over financial reporting under Section 143(3)(i) of the Companies Act, 2013, have expressed an unqualified opinion that the Company had adequate internal financial controls over financial reporting and that such controls were operating effectively as at 31st March, 2026.

The Board and management remain focused on strengthening controls as the scale and complexity of the Company s operations develop

FINANCIAL PERFORMANCE

The financial performance of the Company for FY 2025-26, compared with FY 2024-25, is summarised below:

Particulars	FY 2025-26	FY 2024-25	Absolute Change	% Change
Revenue from Operations	4,691.06	1,370.99	3,320.07	242.17%
Other Income	172.90	304.27	(131.37)	(43.18%)
Total Income	4,863.96	1,675.26	3,188.70	190.34%
Total Expenses	3,562.58	1,515.82	2,046.76	135.03%
Profit Before Tax	1,301.38	159.44	1,141.94	716.22%
Tax Expense	222.58	21.74	200.84	923.83%
Profit After Tax	1,078.80	137.70	941.10	683.44%
Other Comprehensive	151.74	981.97	(830.23)	(84.55%)
Income
Total Comprehensive Income	1,230.54	1,119.67	110.87	9.90%
EPS Basic & Diluted ( )	1.08	0.14	0.94	671.43%

Revenue from Operations

Revenue from operations increased by 3,320.07 lakhs, representing a growth of 242.17%, from 1,370.99 lakhs in FY 2024-25 to 4,691.06 lakhs in FY 2025-26.

The increase represents a substantial expansion in the Company s operating revenue base. The movement is particularly significant in the context of the Company s transition towards and increasing focus on trading activities in gold, silver, jewellery and related commodities.

The scale of growth in operating revenue also indicates a significantly larger working-capital requirement because the Company s trading model requires adequate inventory to service customer demand. The Company s proposed fund raising is accordingly substantially directed towards working capital.

Other Income

Other income declined by 131.37 lakhs, or 43.18%, from 304.27 lakhs in FY 2024-25 to 172.90 lakhs in FY 2025-26.

The reduction in other income did not prevent the Company from achieving strong growth in total income because the decline was more than offset by the substantial increase in revenue from operations. The composition of income consequently shifted further towards operating revenue, which is a significant feature of the year s performance.

Total Income

Total income increased by 3,188.70 lakhs, or 190.34%, from 1,675.26 lakhs to 4,863.96 lakhs.

The growth in total income was overwhelmingly driven by the Company s operating business rather than other income. Revenue from operations represented approximately 96.44% of total income in FY 2025-26, compared with approximately 81.84% in FY 2024-25.

This indicates a substantial increase in the contribution of the Company s core operating activities to its overall income profile.

Total Expenses

Total expenses increased by 2,046.76 lakhs, or 135.03%, from 1,515.82 lakhs in FY 2024-25 to 3,562.58 lakhs in FY 2025-26.

Despite the substantial increase in expenses, the rate of increase in total expenses was lower than the 242.17% growth in revenue from operations. This operating relationship contributed materially to the significant improvement in profitability during the year.

Profit Before Tax

Profit Before Tax increased by 1,141.94 lakhs, from 159.44 lakhs in FY 2024-25 to 1,301.38 lakhs in FY 2025-26, representing an increase of 716.22%.

PBT margin increased from approximately 9.52% of total income in FY 2024-25 to approximately 26.76% in FY 2025-26.

The improvement in PBT was considerably higher than the growth in total income, indicating a significant improvement in the conversion of income into pre-tax earnings. The principal drivers should be read together with the detailed expense notes forming part of the audited financial statements.

Profit After Tax

Profit After Tax increased by 941.10 lakhs, from 137.70 lakhs in FY 2024-25 to 1,078.80 lakhs in FY 2025-26, representing growth of 683.44%.

PAT margin based on revenue from operations increased from approximately 10.04% in FY 2024-25 to approximately 23.00% in FY 2025-26.

The significant improvement in PAT reflects the substantial increase in pre-tax profitability. Tax expense also increased materially during the year, broadly in line with the higher taxable profit.

Other Comprehensive Income

Other Comprehensive Income declined by 830.23 lakhs, from 981.97 lakhs in FY 2024-25 to 151.74 lakhs in FY 2025-26, a decline of 84.55%.

The movement in OCI was substantial and largely offset the growth in PAT when viewed at the Total Comprehensive Income level. As a result, Total Comprehensive Income increased by only 110.87 lakhs, or 9.90%, from 1,119.67 lakhs to 1,230.54 lakhs.

The specific components responsible for the movement in OCI should be referred to in the Statement of Other Comprehensive Income and the relevant notes to accounts.

Earnings Per Share

Basic and diluted EPS increased from 0.14 in FY 2024-25 to 1.08 in FY 2025-26.

The increase in EPS is consistent with the substantial increase in profit attributable to shareholders. However, the EPS movement should be considered together with changes in the Company s equity capital and weighted average number of shares during the year.

Financial Performance at a Glance

The key message emerging from the FY 2025-26 financial performance is the substantial strengthening of the Company s operating revenue and profitability.

Revenue from Operations: 1,370.99 lakhs ? 4,691.06 lakhs Profit Before Tax: 159.44 lakhs ? 1,301.38 lakhs Profit After Tax: 137.70 lakhs ? 1,078.80 lakhs Total Comprehensive Income: 1,119.67 lakhs ? 1,230.54 lakhs

The following chart-ready data can be used for the Annual Report s graphical presentation:- Please do the same

Metric	FY 2024-25	FY 2025-26
Revenue from Operations	1,370.99	4,691.06
Profit Before Tax	159.44	1,301.38
Profit After Tax	137.70	1,078.80

Recommended graphic: a three-series comparative column chart showing Revenue from Operations, PBT and PAT for FY 2024-25 and FY 2025-26.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company recognises that human resources are important to maintaining effective customer service, operational discipline and compliance.

The Company operates with a relatively lean organisational structure appropriate to its present business model. Its human-resource requirements are influenced by the nature of its trading activities, customer service requirements, compliance responsibilities and financial-control environment.

During FY 2025-26, industrial relations remained cordial.

The Company s future growth will require continued attention to employee capability, product knowledge, customer service, compliance awareness and financial and operational controls.

The Company also recognises the importance of maintaining appropriate workplace standards and ensuring that employees operate in accordance with applicable policies and statutory requirements.

KEY FINANCIAL RATIOS AND ANALYSIS

In accordance with the applicable SEBI disclosure requirements, the Company is required to disclose significant changes in key financial ratios, generally being changes of 25% or more compared with the immediately preceding financial year, together with explanations for such changes.

Based on the financial information presently available, Net Profit Margin can be calculated. However, the remaining prescribed ratios require specific balance sheet and detailed profit and loss components that have not been made available in the source information currently accessible for this MDA.

Ratio	FY 2025-26	FY 2024-25	Change	Explanation
Debtors Turnover	7.93	2.14	271%	Trade Receivable Turnover ratio improved significantly mainly due to a substantial increase in revenue from operations coupled with a relatively stable average trade receivables, driven by higher sales during the year resulting in faster collection cycle.
Inventory Turnover	2.85	0.77	270%	Inventory Turnover ratio increased sharply as cost of goods sold grew at a much faster pace compared to the average inventory held during the year, on account of higher sales volume relative to the stock levels maintained, as closing inventory reduced significantly from previous year.
Interest Coverage Ratio	-	-	-	The same is not applicable to the company.
Current Ratio	5.16	13.51	-62%	Current ratio declined significantly mainly due to a substantial increase in current liabilities coupled with a relatively moderate increase in current assets, driven by higher trade payables and short-term obligations during the year.
Debt Equity Ratio	0.001	0.05	-98%	Debt-Equity ratio declined significantly mainly due to a substantial reduction in total borrowings coupled with a relatively stable total equity, driven by repayment of borrowings during the year resulting in the company becoming nearly debt-free as at 31st March, 2026.
Operating Profit Margin	27.74	11.63	139%	Operating Profit Margin ratio improved significantly mainly due to a substantial increase in profit before tax growing at a much faster pace compared to the increase in revenue from operations, driven by improved operational efficiency and better cost management during the year.
Net Profit Margin	0.23	0.10	+130%	Net Profit ratio improved significantly mainly due to a substantial increase in net profit after tax growing at a much faster pace compared to the increase in revenue from operations, driven by improved operational efficiency and better cost management during the year.
Return on Net Worth	0.20	0.03	567%	Return on Equity ratio improved significantly mainly due to a substantial increase in net profit after tax coupled with a relatively stable average shareholders equity, driven by higher revenue from operations and improved profitability during the year.

ACCOUNTING TREATMENT

The financial statements of the Company for the financial year 2025-26 have been prepared in accordance with the applicable Indian Accounting Standards (Ind AS) and the relevant provisions of the Companies Act, 2013. The accounting policies and other significant accounting principles followed by the Company are set out in the Notes to the Financial Statements forming part of this Annual Report.

CAUTIONARY STATEMENT

Certain statements made in this Report relating to the Company s outlook, estimates, predictions etc. may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such estimates, whether express or implied. Several factors that could make a difference to Company s operations include climatic conditions and economic conditions affecting demand and supply, changes in Government regulation tax regimes, natural calamities, etc. over which the Company does not have any direct control.

Place: Ahmedabad	For and on behalf of the Board of Directors
Date: 02/09/2026	Vivid Mercantile Limited

Satishkumar Ramanlal Gajjar	Geetaben Satishbhai Gajjar
Managing Director & CFO	Whole-Time Director
DIN: 05254111	DIN: 05254107