Nanavati Ventures Ltd Management Discussions

This chapter on Managements Discussion and Analysis ("MD&A") is to provide the stakeholders with a greater understanding of the Companys business, the Companys business strategy and performance, as well as how it manages risk and capital.

The following management discussion and analysis is intended to help the reader to understand the results of operation, financial conditions of Nanavati Ventures Limited.

(1) COMPANY OVERVIEW:

The Company is engaged in Business of Trading of Precious Metals, Stones & Jewellery. We procure the rough and unpolished diamonds in several categories, colours, cuts, sizes and shapes from the suppliers and then the processing and polishing of rough gemstone is done by skilled workers on job-work basis.

Operations of Company include sourcing of polished and uncut diamonds from primary and secondary source suppliers in the domestic market and sale of diamond to the retail and wholesale operations in Gujarat. We primarily sell diamonds to a customer base spread across domestic markets that includes various jewellery manufacturers, large department store chains, retail stores and wholesalers.

The Company expects that these businesses will persist in the coming years. The Company is a part of an Industry, which largely operates through unorganized constituents. However, unlike the industry, the Company has attempted to operate through as systematic and organized manner as possible. Since, Diamond and Jewellery is one industry, in which India holds commendable position in the world, one can look forward to more international involvement coming up in this industry.

GLOBAL ECONOMIC REVIEW:

According to the International Monetary Fund (IMF) World Economic Outlook (April 2025), the global economy grew by a moderate 3.3% in 2024, navigating a complex and often challenging macroeconomic environment. Key headwinds included persistent geopolitical tensions, trade route disruptions, and high interest rates in major economies, all of which weighed on global trade and consumption.

Despite these challenges, several factors helped sustain global economic activity:

Resilient labour markets, particularly in advanced economies

Easing inflationary pressures, supporting real incomes

Stable private consumption, especially in emerging markets

The US economy has been resilient, driven by strong growth in the services sector, a robust labour market, and high real wages. Europe, including the UK, faced softer growth due to the war in Ukraine, high energy prices, and slowdowns in manufacturing and services. Chinas growth was weaker than expected, with a slowdown in the real estate sector and industrial activity.

Outlook

In its latest estimates released in April 2025, the IMF projects the global economic growth to be 2.8% in 2025 and 3% in 2026. The global economy will face challenges as rising tariffs are expected to increase inflation, while economic growth may slow down. Cross-border trade and investment flows will likely weaken, leading to higher costs, lower productivity, and slower improvements in efficiency. This will create a difficult environment for policymakers and central banks.

INDIAN ECONOMY REVIEW:

Indias economy demonstrated strong momentum amid global uncertainty, expanding by 7.4% year-on-year in the March 2025 quarter, surpassing expectations. For the full fiscal year 2025, the economy grew by 6.5%, in line with the governments February projection.

This robust performance was driven by several domestic factors:

Strong private consumption, both rural and urban

Increased infrastructure investment, particularly in public capital expenditure

Continued policy reforms, enhancing business confidence and structural resilience

Despite external headwinds such as global trade disruptions and high interest rates abroad, inflation moderated, and domestic demand remained firm, underscoring Indias position as one of the fastest growing major economies in the world.

Outlook

The IMF projects Indias GDP growth at 6.2% in 2025 and 6.3% in 2026, driven by strong agricultural and industrial performance, resilient rural demand, and rising consumer confidence. While external risks such as trade barriers, supply chain disruptions, and geopolitical tensions persist, Indias growth outlook remains robust. The countrys ability to adapt to global shifts and leverage its domestic strengths will be key to sustaining growth in a sustainable manner.

INDUSTRY STRUCTURE AND DEVELOPMENTS: Indian Gems & Jewellery Industry INDUSTRY STRUCTURE:

The gems and jewellery industry are one of the most important sectors of the Indian economy, contributing about 7% to the GDP and employing over 5 million people. The industry is also a major source of foreign exchange earnings, accounting for about 15% of the total exports. The industry consists of various segments, such as gold, diamond, silver, platinum, and coloured gemstones, and caters to different markets, such as domestic, export, and tourism.

The Indian gems and jewellery market is expected to grow at a compound annual growth rate (CAGR) of 9.3% from 2020 to 2025, reaching a value of US$ 103.06 billion by 2025, according to a report by Research and Markets. The market is driven by several factors, such as rising disposable income, increasing urbanization, growing fashion consciousness, rising demand for branded and customized products, and favourable government policies. The market is also influenced by the changing preferences of consumers, who are shifting from traditional to modern and western designs, and from unorganized to organized retail channels.

India is the worlds second-largest gold consumer and the worlds largest diamond cutting and polishing centre. It is the hub of the global jewellery market because of its low costs and availability of cheap labour. The gems and jewellery sector are home to more than 3,00,000 gems and jewellery players in India. To keep up with global market trends, India has been deploying modern techniques to its traditional know-how and processes.

The industry is seeing increased penetration of branded and organized players due to rising brand consciousness, adoption of Western lifestyles by consumers and rising urbanization.

DEVELOPMENTS:

The Indian Gems & Jewellery industry witnessed a year of steady growth and structural transformation in FY 2024 25, supported by strong domestic demand, policy reforms, and evolving global trade dynamics. The industry, which remains one of the countrys largest export-oriented sectors, benefitted from a combination of rising consumer confidence, festive and wedding-driven consumption, and increased international demand for high-quality jewellery.

During the year, gold jewellery continued to dominate the domestic market despite high price volatility. Consumers showed a marked shift towards lightweight, contemporary, and customized designs, reflecting changing lifestyle preferences of younger demographics. Meanwhile, demand for diamond jewellery remained stable in urban centres, with growth driven by branded players and organized retail expansion. Lab-grown diamonds (LGDs) also gained significant traction, supported by affordability, sustainability narratives, and government recognition of LGDs as a sunrise sector.

On the export front, India consolidated its position as a global hub for diamond cutting and polishing, while also expanding its share in finished jewellery exports. The signing of trade agreements with key markets, government incentives under the PLI scheme, and digital adoption by manufacturers enhanced competitiveness.

The year also saw significant policy and regulatory initiatives. The Indian governments efforts to promote transparency, traceability, and sustainability particularly through digital hallmarking, stricter compliance measures, and support for LGD production strengthened long-term industry prospects. Simultaneously, increased investments in technology, automation, and blockchain-based supply chain management improved efficiency and global trust in Indian gems and jewellery.

Overall, FY 2024 25 has been a period of transformation, where traditional strengths of craftsmanship merged with innovation, branding, and sustainability to redefine growth pathways for the Indian Gems & Jewellery sector.

(3) OPPORTUNITY AND THREATS:

OPPORTUNITIES

Diamond and Jewellery volumes in India have remained resilient over the years aided by strong cultural affinity for the yellow metal and stable returns from the asset class. The major growth drivers for the industry are:

Stable asset class: Diamond and Jewellery has historically been one of the most stable assets providing investors best returns over a long-term horizon, compared to other assets.

Increasing affordability: Rapidly expanding economy, increasing urban per capita income and governments focus to double farmers income by 2025, huge opportunities will open up with increasing affordability of this segment.

E-commerce: With the rising internet penetration in the country, e-commerce is gaining significant boost with rising consumer confidence along with the advantage of ease in shopping, lucrative discounts, access to wider variety, free shipping, and quality assurance. Though, an online sale through online channel is currently miniscule, it is gaining importance facilitating jewellers in reaching out to more customers.

An essential part of Indian culture: Diamond and Jewellery in India has traditionally been an integral part of weddings and festivals. Indian customers often purchase contemporary jewellery as a form of self-expression and this has led to evolution of distinct targeted collections including wedding wear, work wear, regular or daily wear and fashion wear as well as very premium limited edition signature collections.

Changes in lifestyle: Diamond and Jewellery sector is witnessing changes in consumer preferences due to adoption of western lifestyle.

Government support: Realizing the sectors potential, the Government has identified it to be a focused area for export promotion. Adopting policies of ‘Make in India and ‘Design in India there is a strong intent to push growth. The Government has also undertaken various measures to promote investments and upgrade technology & skills to promote ‘Brand India in the international market.

THREATS

Fast-changing fashion trends: Diamond and Jewellery being a vital fashion and lifestyle statement, demands the players to be more agile, and responsive to the constantly evolving trends and consumer preferences.

Regulatory framework: Changes in regulations and stringent compliances may cause temporary blip in sales during the transition period.

Liquidity crisis: The industry is highly capital intensive in nature with long working capital cycles, since the jewellery conversion from gold typically requires 15 days. Strength of the balance sheet and access to easy credit is often required to facilitate and sustain ease in operations.

(4) RISK AND CONCERNS:

Your Company is of the view that most of the regulatory un-certainties have already played out and with a stable GST, things would only improve in the long term. Further the organized/branded market may see better gains because of indirect tax reforms however there are certain concerns that may impact the Company-

1. The Companys ability to execute its strategy.

2. Consumer sentiments and economic stability in the Country.

Further, Your Company is exposed to a number of risks such as economic, regulatory, taxation and environmental risks. Following can be some of the risk and concern the Company needs to be keeping in mind:

- The largely unorganized structure of the market can affect the systematic functioning of the Company.

- Likely opening up of the economy, which can be a double-edged sword. The Diamond market in India is heavily influenced by the US Markets and other Countrys Market.

- Increasing competition among the Indian Exporters in this industry.

Some of the risks that may arise in its normal course of its business and impact its ability for future developments include inter-alia, credit risk, liquidity risk, counterparty risk, regulatory risk, commodity inflation risk, currency fluctuation risk and market risk. Your Company has chosen business strategy of focusing on certain key products and geographical segments are also exposed to the overall economic and market conditions. Accordingly, your

Company has established a framework and process to monitor the exposures to implement appropriate measures in a timely and effective manner.

(5) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition, there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls. An extensive programme of internal audits and management reviews supplements the process of internal financial control framework. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal financial control framework has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

In addition, the Company has identified and documented the risks and controls for each process that has a relationship to the financial operations and reporting. The Company also has an Audit Committee to interact with the Statutory Auditors, Internal Auditors and Management in dealing with matters within its terms of reference. This Committee mainly deals with accounting matters, financial reporting and internal controls.

(6) HUMAN RESOURCES & INDUSTRIAL RELATIONS:

The Companys human resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility. The Company acknowledges that its principal asset is its employees. The expertise of the management team, the professional training provided to the staff, their personal commitment and their spirit of teamwork together enhance the Companys net worth. The Company has taken various steps for strengthening organizational competency through the involvement and development of employees as well as installing effective systems for improving their productivity and accountability at functional levels. Ongoing in-house and external training is provided to employees at all levels to update their knowledge and upgrade their skills and abilities. The effort to rationalize and streamline the workforce is a continuous process. The industrial relations scenario has remained harmonious throughout the year. The total numbers of employees as on 31^st March, 2025 were 3 (Three).

(7) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year, Net Income of your Company was decrease to Rs. 89,155.00 thousand as against Net Income of

Rs. 2,61,503.00 thousand of the previous year. However, the Companys Net Profit after tax has been increase to Rs. 2,322.00 thousand for the current year as against the Net Profit after tax of Rs. 1,957.00 thousand of the previous year due to increase in profit margin against lower expenditure incurred.

(8) DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIO:

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

(9) CAUTIONARY STATEMENT:

This document contains forward-looking statements about expected future events, financial and operating results of the Company. These forward-looking statements are based on assumptions and the Company does not guarantee the fulfillment of the same. These statements may be subject to risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Nanavati Ventures Limiteds Annual Report, 2024-25.