PH Trading Ltd Management Discussions

Annexure - 5

Industry Overview

Indias jewellery industry stands as a cornerstone of the nations economy and cultural identity, deeply embedded in festivals, weddings, and milestones across the country. Domestic demand for gold and other precious jewellery remains robust, propelled by rising incomes, urbanization, and evolving fashion sensibilities among Indian consumers. The industry continues to innovate with designs that marry tradition and modernity, catering to diverse regional tastes and preferences.

Despite periodic economic fluctuations and evolving government regulations, long-term prospects in India remain strong. The jewellery market is buoyed by consistent consumer demand, expanding retail networks, and the growing popularity of branded and customized jewellery. While international exports play a role, the Indian markets sheer size and cultural affinity for gold ensure sustained growth and opportunities for industry stakeholders.

Vega Jewellers Limited (Formerly, PH Trading Limited) engaged in the business of design and retail of fine jewellery, including gold, diamond, platinum, and gemstone collections. We operate across Telangana, Andhra Pradesh with retail stores, and limited exports to the USA. Our brand is known for quality, craftsmanship, innovation and appealing designs.

Large and important sector: Indias gems & jewellery industry is a major contributor to the economy?accounting for approximately 7% of Indias GDP and employing around 5 million people. For FY?2024 25, Indias gems & jewellery exports reached ?2,43,162 crore (US$?28.5?billion), up from ?2,20,379 crore (US$?25.8?billion) in March 2025.

Ahead of a 50% U.S. tariff effective August 27, 2025, Indias gem and jewellery exports jumped 16% in July 2025, led by cut polished diamonds (+18%) and lab grown diamonds (+27.6%). Industry leaders urge diversification beyond the U.S. as tariffs and geopolitical turbulence threaten traditional trade flows. Our company is primarily dependent on domestic sales.

Gold prices hit ?1.01 lakh/10g in August 2025. This spike has pushed consumers toward lighter, daily- wear jewellery and gold exchange programs. Simultaneously, silver surged to ?1.16 lakh/kg, outperforming gold and gaining popularity among cost-conscious buyers.

With gold prices softening slightly, and price stabilising demand is picking up ahead of Dussehra and Diwali; retailers are placing renewed focus on promotional festivals and the wedding season.

Indias domestic jewellery sector stands on the cusp of significant expansion, fueled by rising demand for gold and gemstone collections?particularly during festive and wedding seasons, which remain deeply rooted in cultural traditions. The organized retail segment is set to benefit from increasing affinity for branded jewellery, with leading players anticipating robust growth rates in the coming years. Demand for innovative designs, lighter daily-wear pieces, and exchange programs is picking up as consumers adjust to fluctuating gold and silver prices.

While export opportunities to the US and UK exist, the core growth is expected to come from within India, where jewellery remains both an investment and an expression of personal style. Domestic brands that prioritize transparency, ethical sourcing, and supply chain traceability may gain a competitive edge as these values become increasingly important to local consumers. With strong cultural spending and resilient demand even in challenging economic conditions, the Indian market offers substantial opportunities for sustained revenue growth and innovation in the jewellery sector.

The 50% US tariff imposed in August 2025 poses major challenges for Indias export-oriented jewellery hubs such as Surat and SEEPZ, threatening both jobs and industry competitiveness. Exporters have responded by seeking government support, including duty drawback schemes and improved credit access, to help mitigate the impact. Domestically, sharp gold price increases?nearly 27% in 2024?have squeezed profit margins across the sector, shifting consumer preferences toward coins and lighter, daily- wear jewellery that offer lower margins for retailers. The added volatility in prices for raw materials like diamonds and platinum has further pressured earnings for jewellery businesses.

Several key threats confront the domestic jewellery industry. Volatility in gold and silver prices can disrupt demand and erode profitability, while the unorganised sectors dominance?commanding 60% of the market?creates intense price competition for organised retailers. At the same time, shifting consumer preferences, including increased enthusiasm for lab-grown diamonds and ethically sourced products, challenge the traditional jewellery business model. Changing regulations, particularly those related to GST, wastage norms, and SION, continue to add complexity and cost, especially for smaller players. Security risks have also escalated, with more frequent incidents like fake jewellery pledges and robberies raising concerns over asset protection. Finally, rising costs for materials, logistics, and skilled labour are further compressing margins and making it essential for domestic jewellers to invest in innovation, transparency, and proactive risk management to remain competitive in this evolving landscape.

The company is primarily engaged in the business of jewellery retailing.

The company is optimistic about the key factors contributing to positive outlook which include market expansion, product diversification and technology advancement. Looking ahead to 2025 and 2026, the outlook for jewellery gold demand is closely tied to price trends and economic sentiment. Should gold prices stabilize or retreat from current highs, a rebound in volume is likely, particularly in emerging markets where gold jewellery is deeply embedded in cultural and financial practices. However, if prices remain elevated, the sector may continue to see a bifurcation: affluent consumers will drive demand for high- value, designer pieces, while mass-market demand could remain subdued. Sustainability and ethical sourcing are also becoming increasingly important, with more consumers seeking assurances that their gold jewellery is responsibly produced. As a result, brands that prioritize transparency and traceability in their supply chains may gain a competitive edge in the years ahead.

Operationally, the industry faces mounting costs related to sourcing finished jewellery, logistics, and skilled retail staff, all of which are putting pressure on operating margins. Organised retailers?especially those focused on both domestic sales and exports?have seen revenue growth for FY 2024-25 moderate to 10%, down from previous years when growth often exceeded 20%. In addition, interest coverage ratios are expected to decline. Security and fraud-related issues have also risen, with an increase in incidents such as fake jewellery pledges and thefts at retail outlets, heightening concerns over store safety and asset protection.

Shifting consumer preferences further complicate the landscape. Shoppers are increasingly interested in lab-grown diamonds, sustainable materials, and digital-first jewellery experiences, requiring retailers to consistently invest in product curation and marketing to remain competitive. However, the importance of natural diamonds remains especially for key events such as weddings. The dominance of the unorganised sector, which continues to hold nearly 60% of the market, creates ongoing price competition even for established retail and export players. These varied risks?spanning export market volatility, financial pressures, operational challenges, regulatory changes, and evolving consumer trends?demand strategic agility and proactive risk management for retail and export-focused jewellery businesses aiming to sustain growth and profitability in the years ahead.

The Management continuously reviews the Internal Control Systems and procedures for the efficient conduct of the Companys business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses.

Internal Control System are implemented in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting and the Standards on Auditing issued by ICAI to safeguard the Companys assets from loss or damage, to keep a constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and implement accounting standards.

M/s Sudheer Chunduru & Co., Chartered Accountants, have conducted the Internal Audit of the Company. The report thereof is placed before the Audit Committee for evaluation of internal financial controls and risk management systems.

Your Board is of the opinion that the Internal Financial Controls, affecting the Financial Statements of your Company are adequate and are operating effectively.

During the year under review, the Company has recorded a total income of Rs. 1064.40 Lakhs and Profit of Rs. 18.60 Lakhs as against the total income of Rs. 33.47 Lakhs and Profit of Rs. 16.14 Lakhs in the previous financial year ending 31.03.2024.

The global business landscape continues to evolve at a rapid pace, demanding agility in execution while maintaining a steadfast focus on long-term strategic goals. In this dynamic environment, your Company is guided by a team of seasoned and visionary leaders with a consistent track record of delivering sustainable growth amidst complex and competitive market conditions.

• Diverse and inclusive, drawing on a wide range of perspectives and experiences.

• Agile and future-ready, capable of responding quickly to changing market needs.

• Learning-oriented, through our internal growth philosophy: "Stretch - Learn - Grow".

• Respectful and collaborative, with a people-first ethos supported by structured programs in Capacity Building, Performance Management, and Leadership Development.

We have consciously positioned ourselves as a learning organization, with ongoing investments in capability enhancement, upskilling, and employee engagement. Our initiatives are aimed at cultivating an environment where individuals are empowered to excel, encouraged to innovate, and supported in their personal and professional growth.

With a robust and future-focused HR framework, we are confident in our ability to attract, retain, and develop top talent while staying aligned with our strategic objectives and operational excellence.

An analysis of key analytical ratios has been made in Note 29 of the attached Financial Statements including the % of variance of such ratios with respect to ratios of the previous financial year as at March 31,2025. *The financial ratios for the year ended March 31,2025, are not directly comparable with those of the previous year, as the Company, during the year, added an additional business objective relating to the trading, manufacturing, making, buying, selling, importing, exporting, and dealing in ornaments and jewellery of all kinds, and commenced operations in the said line of business.

Return on Net Worth (RoNW) for the financial year ended March 31,2025, stood at 0.38%, as compared to 0.34% in the previous financial year ended March 31, 2024. This represents a [increase] of 0.4% percentage points year-over-year.

During the preparation of Financial Statements of F.Y 2024-25 the treatment as prescribed in Indian Accounting Standards have been followed by the Company. There are no significant changes in Accounting Treatment as followed by the Company in current financial year as compared to previous financial year.

The statements made in this report describe the Companys objectives and projections that may be forward looking statements within the meaning of applicable laws and regulations. The actual results might differ materially from those expressed or implied depending on the economic conditions, government policies and other incidental factors, which are beyond the control of the Company.