Divine Hira Jewellers Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial years ended March 31, 2024, 2023, and 2022. One should read the following discussion and analysis of our financial condition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled "Financial Information" on page no. 160 of the Draft Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page no. 23 of this Draft Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, kindly refer to the chapter titled "Forward-Looking Statements" on page no. 16 of this Draft Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Divine Hira Jewellers Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Information the financial years ended March 31,2024, 2023 and 2022 included in this Draft Prospectus beginning on page 160 of this Draft Prospectus.

BUSINESS OVERVIEW

Our Company, Divine Hira Jewellers Limited, is engaged in the business of designing and marketing of gold jewelleries. We mainly deal in 22 Karat gold jewellery, offering a wide variety of designs to suit preferences of the end customer. We have the ability to create localised product design mixes to suit various regional tastes. We cater to our customers unique preferences, through our understanding of the local and regional market. We provide an extensive range of designs. We are engaged in wholesale of gold jewellery, silver articles, bullions and coins at Mumbai, Maharashtra. Recently we have also curating and offering exquisite antique gold jewelry that transcends time, bringing the charm of historical artistry into the modern era. Currently, we cater to a large number of wholesalers, showrooms and retailers who buy our products in bulk quantities.

We procure the required gold from bullion dealers and importers. Recently we are in the process to start importing gold directly. We do not have our own manufacturing facility and we outsource the work of making jewellery and ornaments to various artisans with whom we have developed relationships. We offer a large variety of handcrafted jewellery, which are designed by our in-house designers in close collaboration with skilled local craftsman located across the country. Due to our diversity of clients and the varied regions each of our clients cater to, we have developed an ability to design our jewellery products as per latest trends, fashion and demographic preference of the end customers. We offer a wide range of products from gold jewellery for special occasions such as weddings and festivals to daily wear jewellery for all ages, genders and across various price points. We cater to a variety of customers across mid-market and value market segments and our products are designed by our in-house team of creative designers and also certain freelance designers, allowing us to manage a large and diverse portfolio of designs.

We primarily sell gold jewelry and our product range includes machine made, handmade & plain gold jewelry like necklace, mangalsutra, chains, malas, rings, pendants, bracelets, bangles, kada, coins and other wedding jewelleries. The designing and job work of our products is done either in house or by third parties on job work basis. Our primary focus has been on purity and commitment. We ensure value for money products with high quality, exquisite designs, finishing and timely deliveries. We strive to offer not just jewelry, but a connection to the past, a story in every piece, and a legacy to be cherished and passed down through generations.

The Founder of our Company, Hirachand Gulecha, had started his journey in the silver business in 1984. In the year

1997 he started a proprietorship firm "Hira Traders" and gradually entered the gold jewelery segment". He has been actively involved in the business of Jewellery since 1984 and with a vision to expand his business further, he, along with his family, incorporated a Company, "Divine Hira Jewellers Limited" as a public limited company under the provisions of Companies Act, 2013 vide Certificate of Incorporation dated July 19, 2022 bearing CIN U36999MH2022PLC387009 issued by the ROC, Mumbai, Maharashtra. Vide a Business Succession Agreement dated September 13, 2022, our Company acquired the entire assets, liabilities and business of Hira Traders with effect from the closing of September 30, 2022.

Our Company runs its operation from Zaveri Bazar, Mumbai, a market known for bullion and Jewellery and is operating from the same Registered office since incorporation. Our Promoters Hirachand Gulecha and Niraj Gulecha have around 30 years and 10 years of experience respectively in Gold and Jewellery industry and with their business notions, knowledge and management skills, we have served our customers.

A break up of our product-wise revenue from operations generated by our Company during the preceding three financials years has been provided below:

Products			Fiscal
	2024		2023		2022
	Revenue earned in ( in lakhs)	% of total revenue	Revenue earned in ( in lakhs)	% of total revenue	Revenue earned in ( in lakhs)	% of total revenue
Gold and gold products	17,616.56	96.13%	23,441.41	95.12%	12,086.41	84.88%
Silver and silver products	695.95	3.80%	1,188.62	4.82%	2,149.65	15.10%
Labour charges sales	13.10	0.07%	14.55	0.06%	4.10	0.03%
Total	18,325.61	100.00%	24,644.59	100.00%	14,240.17	100.00%

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page 23 of this Draft Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

Substantial portion of our revenues are dependent on few customers and the loss of, or a significant reduction in purchases by any one or more such customers could adversely affect our financial performance

Our dependence on few suppliers puts us at risk of interruptions in the availability of raw materials, which could adversely affect our business, financial condition and results of operations. Further, we have not entered into any long-term agreements with our suppliers for raw materials and accordingly may not be able to enjoy credit and other facilities provided by our existing suppliers.

We may be unable to obtain, renew or maintain statutory and regulatory permits, licenses and approvals required to operate our business which could result in an adverse effect on our results of operations. We require certain statutory and regulatory permits, licenses and approvals for our business.

The non-availability or high cost of quality gold bullion and coloured stones may have an adverse effect on our business, results of operations and financial condition.

Our income and sales are subject to seasonal fluctuations and lower income in a peak season may have a disproportionate effect on our results of operations.

DISCUSSION ON RESULT OF OPERATION

Our Significant Accounting Policies

For Significant accounting policies please refer Significant Accounting Policies, under Chapter titled "Restated Financial Information" beginning on page no. 160 of the Draft Prospectus.

Overview of Revenue & Expenditure

Our revenue and expenses are reported in the following manner:

Revenues

Revenue of operations

Our Companys revenue is primarily derived from sale of gold products and few silver items.

Other Income

Our other income mainly consists of Interest income from fixed deposits.

( In Lakhs)

			( In Lakhs)
		For the period ended
Particulars	March 31, 2024	March 31, 2023	March 31,2022
Income
Revenue from Operations	18,325.61	24,644.59	14,240.17
% of total revenue	99.92%	100.00%	100.00%
Other income	15.44	0.67	0.28
% of total revenue	0.08%	0.00%	0.00%
Total Revenue	18,341.05	24,645.25	14,240.45

Expenditure

Our total expenditure primarily consists of cost of material consumed, Changes in inventories of finished goods, Employee Benefit Expenses, Depreciation and amortization Expenses, Finance Costs, and Other Expenses.

Employment Benefit Expenses

It includes salaries and wages including bonus and allowances.

Cost of materials Consumed

This relates to the cost of raw material purchased and labour charges incurred relating to it. Our major raw material is gold.

Changes in Inventories of finished goods

This relates to the change in inventory of finished goods.

Other Expenses

It includes Hall mark Charges, Rent, Professional Fees, Repair & Maintenance, Mobile Bill, Printing & Stationery, Audit Fees and Other Audit Expenses, Insurance, Rent, Rates & Taxes, General Expense, and other expenses.

Finance Costs

Our finance costs mainly include processing charges and interest on working capital and Unsecured Loans.

Depreciation

Depreciation includes depreciation and amortization.

RESULTS OF OUR OPERATION

			( In Lakhs)
Particulars	31-Mar-24	31-Mar-23	31-Mar-22
Incomes:
Revenue from Operations	18,325.61	24,644.59	14,240.17
% of total revenue	99.92%	100.00%	100.00%
% Increase/(Decrease)	(25.64%)	73.06%	-
Other income	15.44	0.67	0.28
% of total revenue	0.08%	0.00%	0.00%
% Increase/(Decrease)	2209.49%	137.24%	-
Total Revenue	18,341.05	24,645.25	14,240.45
% Increase/(Decrease)	(25.58%)	73.07%	-
Expenses:
Cost of raw material consumed	18,066.12	24,029.94	14,124.55
% of total revenue	98.50%	97.50%	99.19%
% Increase/(Decrease)	(24.82%)	70.13%	-
Changes in inventories of finished goods work-in- progress and Stock-in-Trade	(158.99)	279.74	(81.52)
% of total revenue	(0.87%)	1.14%	(0.57%)
% Increase/(Decrease)	(156.84%)	443.17%	-
Employee Benefit expenses	36.19	30.92	15.21
% of total revenue	0.20%	0.13%	0.11%
% Increase/(Decrease)	17.06%	103.27%	-
Other expenses	50.67	44.65	19.81
% of total revenue	0.28%	0.18%	0.14%
% Increase/(Decrease)	13.49%	125.44%	-
Total Expense	17,993.99	24,385.24	14,078.05
% of total revenue	98.11%	98.94%	98.86%
% Increase/(Decrease)	(26.21%)	73.21%	-
Profit before Interest, Depreciation and Tax	347.06	260.01	162.41
% of total revenue	1.89%	1.05%	1.14%
Depreciation and amortization Expenses	3.44	2.14	2.42
% of total revenue	0.02%	0.01%	0.02%
% Increase/(Decrease)	60.77%	-11.72%	-
Profit before Interest and Tax	343.63	257.87	159.98
% of total revenue	1.87%	1.05%	1.12%
Financial Charges	145.62	135.58	121.96
% of total revenue	0.79%	0.55%	0.86%
% Increase/(Decrease)	7.41%	11.17%	-
Profit before Tax and Extraordinary Expenses	198.01	122.30	38.03
% of total revenue	1.08%	0.50%	0.27%
Extraordinary Expenses	-	-	-
% of total revenue	-	-	-
% Increase/(Decrease)	-	-	-
Restated Profit/(Loss) before tax	198.01	122.30	38.03
% of total revenue	1.08%	0.50%	0.27%
% Increase/(Decrease)	61.91%	221.60%	-
Tax expenses/(income)
Current Tax	49.42	30.47	9.58
Deferred Tax	0.41	0.60	0.15
Total tax expenses	49.84	31.07	9.72
% of total revenue	0.27%	0.13%	0.07%
Restated profit/(loss) after Tax	148.17	91.23	28.30
% of total revenue	0.81%	0.37%	0.20%
% Increase/(Decrease)	62.41%	222.33%	-

REVIEW OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2024

Income from Operations

Our revenue from operations for the period ended March 31, 2024 was 18,325.61 Lakhs which was about 99.92% of the total revenue and which comprises of revenue from sale of Gold & Silver Ornaments labour charges received.

Other Income

Our other income for the period ended March 31, 2024 was 15.44 Lakhs which was about 0.08% of the total revenue and which mainly includes interest on fixed deposits.

Expenditure

Cost of Material Consumed

The cost of material consumed for the period ended March 31, 2024 were 18,066.12 Lakhs which has about

98.50% of the total revenue. The primary raw material purchased by the company is gold.

Changes in inventories of finished goods, and stock-in-trade

The changes in inventories of finished goods, and stock-in-trade for the period ended March 31, 2024 was (158.99) Lakhs which was about (0.87%) of total revenue.

Employee Benefits expenses

The employee benefits expenses for the period March 31, 2024 were 36.19 Lakhs which was about 0.20% of the total revenue and which includes salaries, wages and staff welfare expenses.

Other Expenses

Other Expenses for the period ended March 31, 2024 were 50.67 Lakhs which was about 0.28% of the total revenue and which includes Profession Fees, Vehicle Repair & Maintenance, Hall Mark Charges, Mobile Bill, Printing & Stationery, Audit Fees and Other Audit Expenses, Insurance, Rent, Rates & Taxes, Licenses,Legal & Professional Fees ,General Expense,Travelling Expenses and other expenses.

Profit before Interest, Depreciation and Tax

Our Profit before Interest, Depreciation and Tax for the period ended March 31, 2024 were 347.05 Lakhs.

Financial Costs

Financial costs for the period ended March 31, 2024 were 145.62 Lakhs which was about 0.79 % of the total revenue and which consists of interest and other finance charges.

Depreciation

Depreciation for the period ended March 31, 2024 were 3.44 Lakhs which was about 0.02 % of the total revenue and which consists of depreciation and amortization expenses.

Profit after Tax

PAT for the period ended March 31, 2024 was 148.17 Lakhs which was about 0.81 % of the total revenue.

REVIEW OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2023

Income from Operations

Our revenue from operations for the fiscal year ended March 31, 2023 was 24,644.59 Lakhs which was about 99.997 % of the total revenue and which comprises of revenue from sale of Gold & Silver Ornaments & labour charges received.

Other Income

Our other income for the fiscal year ended March 31, 2023 was 0.67 Lakhs which was about 0.003 % of the total revenue and which mainly includes interest income.

Expenditure

Cost of Materials Consumed

The cost of materials consumed for the year ended March 31, 2023 were 24,029.94 Lakhs which has about 97.50% of the total revenue. The primary raw material purchased by the company is gold.

Changes in inventories of finished goods, and stock-in-trade

The changes in inventories of finished goods, and stock-in-trade for the year ended March 31, 2023 was 279.74 Lakhs which was about 1.14% of total revenue.

Employee Benefits expenses

The employee benefits expenses for the fiscal year ended March 31, 2023 were 30.92 Lakhs which was about0.13% of the total revenue and which includes salaries, wages and staff welfare expenses.

Other Expenses

Other Expenses for the fiscal year ended March 31, 2023 were 44.65Lakhs which was about 0.18% of the total revenue and which includes Profession Fees, Vehicle Repair & Maintenance, Hall Mark Charges, Mobile Bill, Printing & Stationery, Audit Fees and Other Audit Expenses, Insurance, Rent, Rates & Taxes, Licenses,Legal & Professional Fees ,General Expense,Travelling Expenses and other expenses.

Profit before Interest, Depreciation and Tax

Our Profit before Interest, Depreciation and Tax for the fiscal year ended March 31, 2023 were 260.01 Lakhs.

Financial Costs

Financial costs for the year ended March 31, 2023 were 135.58 Lakhs which was about 0.55% of the total revenue and which consists of interest and other finance charges.

Depreciation

Depreciation for the fiscal year ended March 31, 2023 were 2.14 Lakhs which was about 0.01% of the total revenue and which consists of depreciation and amortization expenses.

Profit after Tax

PAT for the period ended March 31, 2023 was 91.23 Lakhs.

FISCAL YEAR ENDED MARCH 31, 2024 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023

Income

Revenue has decreased both in terms of value and percentage by 6318.97 Lakhs and 25.64%, from 24,644.59 Lakhs in the fiscal year ended March 31, 2023 to 18,325.61 Lakhs in the fiscal year ended March 31, 2024. The decrease in revenue was on account of decrease in sale of bullion and silver products as these products were of low margin, and the aim was to focus on high margin products.

Expenditure

Total Expenditure has decreased both in terms of value and percentage by 6,391.26 Lakhs and 26.19 %, from 24,385.25 Lakhs in the fiscal year ended March 31, 2023 to 17,993.99 Lakhs in the fiscal year ended March 31,2024.This was mainly on account of decrease in cost of material consumed.

Cost of materials Consumed

Cost of Materials consumed decreased by 5,963.82 Lakhs and 24.82% from 24,029.94 Lakhs in the fiscal year ended March 31, 2023 to 18,066.12 Lakhs in the fiscal year ended March 31, 2024. This was mainly on account of decrease in purchase of bullion for further sale and of silver.

Changes in inventories of finished goods, and stock-in-trade

Changes in inventories of finished goods, and stock-in-trade decreased from 279.74 Lakhs in FY2023 to (158.99) Lakhs in FY2024

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage increased by 5.27 Lakhs and 17.06 % from 30.92 Lakhs in the fiscal year ended March 31, 2023 to 36.19 Lakhs in the fiscal year ended March 31, 2024. Overall employee cost was increased due to general increment in salary levels.

Other Expenses

Other Expenses in terms of value and percentage increased by 6.02 Lakhs and 13.49% from 44.65 Lakhs in the fiscal year ended March31, 2023 to 50.67 Lakhs in the fiscal year ended March31, 2024. Other Expenses was increased mainly due to increase in Hall Mark charges and commission.

Profit before Interest, Depreciation and Tax

Profit before Interest, Depreciation and Tax has increased by 87.05 Lakhs and 33.48% from 260.01 Lakhs in the fiscal year ended March 31, 2023 to 347.06 Lakhs in the fiscal year ended March 31, 2024. Profit before Interest,

Depreciation and Tax was increased due to increased margin

Finance Costs

Finance Costs in terms of value and percentage increased by 10.04 Lakhs and 7.41% from 135.58 Lakhs in the fiscal year ended March 31, 2023 to 145.62 Lakhs in the fiscal year ended March 31, 2024. Finance Costs was increased mainly due to higher interest outgo and increased credit limit.

Depreciation & Amortization Expenses

Depreciation in terms of value & percentage increased by 1.30 Lakhs and 60.77% from 2.14 Lakhs in the fiscal year ended March 31, 2023 to 3.44 Lakhs in the fiscal year ended March 31, 2024. Increase in depreciation is due to increase in assets and is general in nature.

Net Profit after Tax

Net Profit has increased by 56.94 Lakhs and 62.41% from profit of 91.22 Lakhs in the fiscal year ended March 31, 2023 to profit of 148.17 Lakhs in the fiscal year ended March 31, 2024. Net profit was increased due to increased margin.

FISCAL YEAR ENDED MARCH 31, 2023 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2022

Income

Revenue from operations has increased by 10,404.41 Lakhs and 73.06%, from 14,240.17 Lakhs in the fiscal year ended March 31, 2022 to 24,644.59 Lakhs in the fiscal year ended March 31, 2023. The increase in revenue was on account of higher revenue from operations.

Expenditure

Total Expenditure increased by 10,307.19 Lakhs and 73.21%, from 14,078.05 Lakhs in the fiscal year ended March 31, 2022 to 24,385.24 Lakhs in the fiscal year ended March 31, 2023. Overall expenditure was increased mainly due to higher raw materials consumed.

Cost of Material Consumed

Cost of Material Consumed increased by 9,905.39 Lakhs and 70.13%, from 14,124.55 Lakhs in the fiscal year ended March 31, 2022 to 24,029.94 Lakhs in the fiscal year ended March 31, 2023. Cost of Material Consumed was increased mainly due toincrease in raw material purchased on account of increased sale of finished goods.

Changes in inventories of finished goods, and stock-in-trade

Changes in inventories of finished goods, and stock-in-trade increased from (81.52) Lakhs in FY2022 to 279.74

Lakhs in FY2023.

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage increased by 15.71 Lakhs and 103.27% from 15.21 Lakhs in the fiscal year ended March 31, 2022 to 30.92 Lakhs in the fiscal year ended March 31, 2023. Overall employee cost was increased due to general increment in salary and directors remuneration.

Other Expenses

Other Expenses in terms of value and percentage increased by 24.84 Lakhs and 125.44% from 19.81 Lakhs in the fiscal year ended March31, 2022 to 44.65 Lakhs in the fiscal year ended March 31, 2023. Other Expenses was increased mainly due to increase in Hall Mark charges, stamp duty and rent.

Profit before Interest, Depreciation and Tax

Profit Before Interest, Depreciation and Tax has increased by 97.60 Lakhs and 60.10% from 162.12 Lakhs in the fiscal year ended March 31, 2022 to 260.01 Lakhs in the fiscal year ended March 31, 2023. Profit Before Interest, Depreciation and Tax has increased due to increase in sale of finished products.

Finance Costs

Finance Costs in terms of value and percentage increased by 13.62 Lakhs and 11.17% from 121.96 Lakhs in the fiscalyear ended March 31, 2022 to 135.58 Lakhs in the fiscal year ended March 31, 2023. Finance Costs was increased mainly due to higher interest outgo and increased borrowings.

Depreciation & Amortization Expenses

Depreciation in terms of value decreased by 0.28 Lakhs and 11.72 % from 2.42 Lakhs in the fiscal year ended March 31, 2022 to 2.14 Lakhs in the fiscal year ended March31, 2023.

Net Profit after Tax

Net Profit has increased by 62.93 Lakhs and 222.33% from profit of 28.30 Lakhs in the fiscal year ended March 31, 2022 to profit of 91.23 Lakhs in the fiscal year ended March 31, 2023. Net profit was increased due to increase in revenue from operations and sales volume.

Cash Flows

(Amount in lakhs)

Particulars	For the year ended March 31,
	2024	2023	2022
Net Cash from Operating Activities	(209.32)	(10.82)	133.62
Net Cash from Investing Activities	12.57	(16.03)	(6.75)
Net Cash used in Financing Activities	318.37	77.07	(128.12)

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2024 was at (209.32) lakhs as compared to the Profit before Tax at 198.00 lakhs, while for fiscal 2023, net cash from operating activities was at (10.82) lakhs as compared to the Profit Before Tax at 122.30 lacs. For fiscal 2022, the net cash from operating activities was 133.62 lakhs compared to Profit before Tax of 38.03 lakhs.

Cash Flows from Invesingt Activities

Net cash from investing activities for fiscal 2024 was at 12.57 lacs while for fiscal 2023, net cash from investing activities was at (16.03). For fiscal 2022, the net cash from investing activities was (6.75) lacs due to investment in fixed Assets.

Cash Flows from Financing Activities

Net cash from financing activities for fiscal 2024 was at 318.37 lakhs due to increase in borrowings, while for fiscal 2023, net cash from financing activities was at 77.07 lakhs which was due to issue of equity shares. For fiscal 2022, the net cash from financing activities was (128.12) lakhs due to decrease in borrowings.

OTHER MATTERS

1. Unusual or infrequent events or transactions

Except as described in this Draft Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

2. Significant economic changes that materially affected or are likely to affect income from continuing Operations Other than as described in the Section titled "Financial Information"and chapter titled "Managements Discussion and Analysis of Financial Conditions and Results of Operations", beginning on Page no. 160 and 187 respectively of this Draft Prospectus, to our knowledge there are no significant economic changes that materially affected or are likely to affect income from continuing Operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations Other than as described in the chapter titled "Risk Factors" and "Managements Discussion and Analysis of Financial Conditions and Result of Operations", beginning on Page no. 23 and 187 respectively of this Draft Prospectus, best to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

4. Future relationship between Costs and Income

Other than as described in the chapter titled "Risk Factors" beginning on Page no. 23 of this Draft Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. Competition Conditions

Our Industry is fragmented consisting of large established players and small niche players. We compete with organized as well as unorganized sector on the basis of availability of product, product quality and product range. Further, there are no entry barriers in this industry and any expansion in capacity of existing manufacturers would further intensify competition. Industry is very competitive and we expect competition to continue and likely to increase in the future.