Sarla Performance Fibers Ltd

For the Financial Year ended March 31, 2025 To

The Members,

Your directors are pleased to present the Thirty Second (32^nd) Annual Report along with the Audited Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31, 2025 ("the year under review").

1. Financial Results

The summary of the Company's Standalone and Consolidated Financial Performance for the financial year ended March 31, 2025, is as under:

(Rs in Lakhs)

2. Performance Overview

During the year under review, SARLA continued to strengthen its position as a trusted yarn supplier to leading international brands, leveraging a balanced approach of direct sales and established intermediary networks. In FY 2024-25, approximately 72 % of the Company's revenue was generated from long-standing clients with relationships extending beyond five years—underscoring its commitment to customer-centricity and quality-driven growth.

This performance was supported by a diversified product portfolio, robust customer relationships, and a favorable policy environment, including supportive tariff structures that enhanced India's competitiveness as a sourcing hub. Global sourcing dynamics continued to evolve in response to tariff escalations and geopolitical realignments, positioning India as a preferred destination due to its stable policy framework and integrated manufacturing capabilities.

Performance Highlights

During the year under review, the Company recorded Standalone Revenue from Operations of ?42,366.67 Lakhs for FY 2024-25 as against ? 38,217.12 Lakhs in FY 2023-24, reflecting a change of 10.86% primarily attributable to prevailing market conditions and global demand fluctuations.

TheConsolidatedRevenuefromOperationsforFY 2024-25amountedto?42,710.09Lakhs,asagainst ? 38,326.12 Lakhs in FY 2023-24, registering a year-on-year increase of 11.44%.

The Value of Exports stood at ? 22,793.54 Lakhs for FY 2024-25, as compared to ? 21,071.50 Lakhs for the FY 2023-24 on Standalone and Consolidated basis.

Profit before Interest, Depreciation and Tax (PBIDT) was ? 10,567.61 Lakhs for the year, as compared to ? 7,859.30 Lakhs in the previous financial year on a Standalone Basis.

Profit before Interest, Depreciation and Tax (PBIDT) was ? 11,452.45 Lakhs for the year, as compared to ? 7,878.46 Lakhs in the previous financial year on a Consolidated Basis.

3. Dividend

Your directors are pleased to recommend a final dividend of ? 3.00 (300%) per Equity Share of face value ?1.00 each for the financial year ended March 31, 2025.

The Board has recommended a Final Dividend for the financial year ended March 31, 2025, after careful consideration of the Company's profitability, internal capital requirements for ongoing expansion projects, and its overall financial position, with a view to maintaining a balanced approach to rewarding shareholders.

The proposed dividend, if approved by the members at the ensuing Annual General Meeting, will result in a total outflow of TI079.82 Lakhs (including applicable taxes, if any).

The Company has also received letters from all shareholders forming part of the Promoter and Promoter Group, voluntarily waiving their right to receive the said dividend."

4. Transfer to Reserves

The Board of Directors has not proposed any transfer to the General Reserve for the financial year ended March 31, 2025. The entire earnings for the year under review, after payment of the dividend, are proposed to be retained in the Profit & Loss Account to support future

business expansion and strategic initiatives. This approach will strengthen the Company's financial position and enhance its ability to invest in growth opportunities, including capacity expansion, technological upgradation, and potential strategic investments.

5. Share Capital

There has been no change in the Share Capital of the Company during the year under review.

As on March 31, 2025 -

? The authorized share capital of the Company stood at ?1,000.00 Lakhs, divided into 10,00,00,000 Equity Shares of fl/- each.

? The paid-up Equity Share Capital of the Company stood at ?835.03 Lakhs, comprising 8,35,03,000 Equity Shares of face value ?1/- each, fully paid-up.

The Company has not issued any Equity Shares with differential voting rights, nor has it issued any shares (including sweat equity shares) to its employees under any scheme during the year under review.

However, the Sarla Performance Fibers Limited Employee Stock Option Plan (ESOP) Scheme 2025 was approved by the Board of Directors at its meeting held on January 30, 2025. The said scheme was subsequently approved by the Members of the Company through a Postal Ballot vide Notice dated January 30, 2025, in accordance with the provisions of the Companies Act, 2013 and the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The Scheme aims to reward and retain eligible employees of the Company and its present and future subsidiaries.

No options have been granted under the Scheme as on March 31, 2025.

6. Deposits under Chapter V of Companies Act, 2013

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014. Accordingly, the disclosures required under Chapter V of the Companies Act, 2013 and the Rules made thereunder are not applicable.

Further, as on the financial year ended March 31, 2025, there were no deposits remaining unpaid or unclaimed, nor any default in repayment of deposits or payment of interest thereon.

7. Promoters

Incorporated in 1993, your Company was established as a family-driven enterprise and has since evolved into a professionally managed, publicly listed entity. Sarla Performance Fibers Limited today exemplifies a harmonious blend of promoter stewardship, professional governance, and the rigor of listed company compliance, earning industry-wide respect for its focus on quality, integrity, and long-term sustainability.

As on March 31, 2025, the Promoters of the Company are:

? Mrs. Sarladevi Madhusudan Jhunjhunwala

? Mr. Krishna Madhusudan Jhunjhunwala

Mr. Krishna Madhusudan Jhunjhunwala continues to hold a key promoter position and plays an active role in the strategic oversight and value- driven growth of the Company.

8. Change in the Nature of Business

During the year under review, there was no change in the nature of business of the Company. Your Company continues to operate in its core sectors of Textiles, Wind Power Generation, and Manufacturing, maintaining its strategic focus and operational efficiency in each of these segments.

The Company remains engaged in the production and global export of a diverse range of products, including High-Performance Yarn, Textured Polyester Yarn, Textured Nylon Stretch Yarn, High-Bulk Textured Polyester Yarn, Sewing Threads, Specialty Sewing Threads, High- Tenacity Covered Dyed Yarns and Threads, and Barre-Free Nylon Yarn. These products cater to both domestic and international markets and have been integral to reinforcing the Company's reputation as a quality-oriented and innovation- driven player in the global textile industry.

9. Subsidiaries, Joint Ventures and Associate Companies

As on March 31, 2025, the Company has a total of six overseas subsidiaries (both direct and indirect), comprising two wholly owned subsidiaries and four step-down subsidiaries, along with three overseas Joint Ventures.

The Company does not have any Indian Subsidiary, Joint Venture, or Associate Company. There has been no material change in the nature of business of the subsidiaries and joint ventures during the year under review.

In accordance with the provisions of Section 136 of the Companies Act, 2013, the Annual Report

of the Company, which includes both Standalone and Consolidated Financial Statements, is available on the Company's website at www. sarlafibers.com. As per the applicable provisions, the Annual Financial Statements of each of the subsidiary companies are also hosted on the same website and are not being annexed to this Annual Report. Shareholders desirous of obtaining a copy of the audited financial statements of the subsidiary companies may request the same by writing to the Company Secretary & Compliance Officer.

The Policy for Determining Material Subsidiaries, as approved by the Board of Directors pursuant to Regulation 16(1)(c) of the SEBI (LODR) Regulations, 2015, is also available on the Company's website and can be accessed at: https://www.sa rlafibers.com/wp-con tent/ uploads/2024/01/12.-Policy-for-Determining- Material-Subsidiary.pdf

Further, a statement containing the salient features of the financial statements of subsidiaries, associates, and joint ventures in Form AOC-1, as prescribed under the Companies Act, 2013, forms part of this Board Report as Annexure I. The details of subsidiaries and joint ventures are also provided in the Annual Return of the Company, available on the Company's website.

10. Companies which have become or ceased to be its Subsidiaries, Joint Ventures or Associate Companies during the Financial Year.

During the financial year under review, no company has become or ceased to be a Subsidiary, Joint Venture, or Associate Company of Sarla Performance Fibers Limited.

The structure of subsidiaries and joint ventures remained unchanged throughout the year, with continued operations through the existing overseas entities.

11. Consolidated Financial Statement

The Consolidated Financial Statements of the Company and its subsidiaries for the financial year ended March 31, 2025 have been prepared in accordance with the applicable provisions of the Companies Act, 2013, including the Companies (Accounts) Rules, 2014, and as per the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

The consolidated results also comply with the disclosure requirements under Regulation 33 of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 ("SEBI Listing Regulations"). These statements present the consolidated performance of the Company along with its Subsidiaries, Joint Ventures, and Associates, as applicable.

In accordance with Regulation 34 of the SEBI Listing Regulations, the Audited Consolidated Financial Statements, along with the Independent Auditors' Report thereon, form an integral part of this Annual Report and are also made available on the Company's website at www.sarlafibers.com.

12. Particulars of Loans, Guarantees and Investments

During the year under review, the Company has complied with the provisions of Section 186 of the Companies Act, 2013 in respect of loans, guarantees and investments.

Further details regarding loans, guarantees and investments, as required under Section 186 of the Act and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, are provided in the notes to the financial statements.

13. Directors

As on March 31, 2025, the Board of Directors of the Company comprised 6 (six) Directors, including 3 (three) Executive Directors and 3 (three) Non-Executive Independent Directors, with 1 (one) Woman Director in compliance with Section 149 of the Companies Act, 2013 and Regulation 17 of SEBI (LODR) Regulations, 2015.

Appointment, Re-appointment, Cessation and Ratification during the Year under Review

a. Cessation of Mr. Parantap Dave (DIN: 00019472)

In accordance with the provisions of Section 149(10) of the Companies Act, 2013, Mr. Parantap Dave, Independent Director, completed his second consecutive term of five years on August 08, 2024. The Board places on record its deep appreciation for the valuable insights, support, and contributions made by Mr. Dave during his tenure with the Company.

b. Resignation of Ms. Shreya Desai (DIN: 08041995)

Ms. Shreya Desai, Independent Director, tendered her resignation from the Board with effect from September 30, 2024. The Board expresses its gratitude for her contribution and the guidance she provided during her tenure as a Director of the Company.

c. Re-appointment of Mr. Paulo Manuel Castro (DIN: 08459844)

The Board, at its meeting held on May 10, 2024, approved, subject to shareholder approval at the 31st Annual General Meeting, the re-appointment of Mr. Paulo Manuel Castro as a Non-Executive Independent Director for a second term of five years, from May 23, 2024, to May 24, 2029, pursuant to the provisions of Section 149 and 152 of the Companies Act, 2013 and applicable provisions of SEBI LODR Regulations. The shareholders, at the AGM, approved this re-appointment by an overwhelming majority.

d. Re-designation and Re-appointment of Mr. Krishna Jhunjhunwala (DIN: 09507192)

The Board, at its meeting held on May 10, 2024, approved the re-designation and reappointment of Mr. Krishna Jhunjhunwala as the Chairman and Managing Director of the Company for a term of five years, effective from October 1, 2024, to

September 30, 2029, along with approval of remuneration for the period from October 1, 2024, to September 30, 2027, in accordance with Sections 196, 197, 198, and 203 of the Companies Act, 2013 and Schedule V thereto. The shareholders approved this re-designation and reappointment at the 31^st Annual General Meeting.

e. Re-designation of Mr. Sachin Shashikant Abhyankar (DIN: 02760746)

The Board, at its meeting held on June 24, 2024, approved, subject to shareholder approval at the 31st Annual General Meeting, the re-designation of Mr. Sachin Shashikant Abhyankar as a Non-Executive Independent Director, for a term of five (5) years commencing with effect from June 24, 2024, to June 23, 2029. The shareholders, at the AGM, approved this re-designation by an overwhelming majority.

f. Ratification of Appointment of Mr. Bharat K. Jhamvar (DIN: 00211297)

The Members of the Company, at the 30th Annual General Meeting held on September 21, 2023, considered and approved the appointment of Mr. Bharat K. Jhamvar as a Non-Executive Independent

Director, effective from August 10, 2023, for a term of 5 (five) years up to August 9, 2028, not liable to retire by rotation.

However, pursuant to Regulation 25(2A) of the SEBI (LODR) Regulations, 2015, the appointment of an Independent Director of a listed entity is required to be approved by way of a Special Resolution. Accordingly, the Board recommended the ratification of Mr. Bharat K. Jhamvar's appointment by way of a Special Resolution, as set out in Item No. 6 of the Notice of the 31st Annual General Meeting. The shareholders, at the AGM, ratified the appointment of Mr. Jhamvar by a special resolution.

Retirement by Rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Neha Jhunjhunwala (DIN: 07144529), Executive Director, retires by rotation at the ensuing 32^nd Annual General Meeting of the Company. Being eligible, he offers himself for re-appointment.

The disclosures required pursuant to Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Secretarial Standards on General Meeting (‘SS-2') are provided in the Notice of the AGM, which forms part of the Annual Report.

Ms. Neha Jhunjhunwala is not debarred from holding the office of Director pursuant to any Order issued by the Securities and Exchange Board of India, Ministry of Corporate Affairs, Reserve Bank of India, or any other such authority.

The above proposal for re-appointment form part of the Notice of the 32^nd Annual General Meeting of the Company, and the relevant Resolution is recommended for members' approval.

Declaration of Independence

Pursuant to the provisions of Section 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) read with Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all Independent Directors of the Company have submitted their declarations confirming that:

? They meet the criteria of independence as laid down under the Companies Act, 2013 and SEBI Listing Regulations, as amended from time to time.

? They are not aware of any circumstance or situation which exists or may be reasonably anticipated that could impair their ability to discharge their duties independently.

Further, in compliance with Rule 6(3) of the Companies (Appointment and Cualification of Directors) Rules, 2014, as amended, all Independent Directors have confirmed registration with the Independent Directors' databank maintained by the Indian Institute of Corporate Affairs (MCA) and have completed the online proficiency self-assessment test, wherever applicable.

The Board of Directors has taken on record the declarations submitted by the Independent Directors and, in its opinion, the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and SEBI Listing Regulations and are independent of the management.

The Board further affirms that all Independent Directors possess integrity, relevant expertise, experience, and proficiency as required under applicable laws and corporate governance standards.

Letters of appointment/re-appointment have been issued to the Independent Directors in compliance with the provisions of the Companies Act, 2013, and in accordance with the terms and conditions of appointment applicable to Independent Directors of Sarla Performance Fibers Limited (the 'Company'). The same are available on the Company's website at: https://www.sarlafibers.com/wp-

content/uploads/2024/01/2.Terms-Conditions- for-appointment-of-ID.pdf

Familiarization Program for Independent Directors

In accordance with the requirements of Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has conducted familiarization programs for Independent Directors to enable them to understand their roles, rights, responsibilities in the Company, the nature of the industry in which the Company operates, and the business model of the Company.

The details of the familiarization program, including the number of sessions and hours spent by Independent Directors, are provided in the Corporate Governance Report forming part of this Annual Report and are also available on the Company's website.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the performance of its Committees, and of the individual Directors.

The evaluation process was conducted based on criteria derived from the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. The evaluation covered various aspects such as Board composition and structure, effectiveness of Board processes, Board culture, dynamics, and functioning, as well as the performance of individual Directors and the Committees of the Board.

The performance of the Board, its Committees, and individual Directors, including the Chairman, was found to be satisfactory. The Independent Directors expressed satisfaction with the overall functioning and effectiveness of the Board and its Committees, which demonstrated a high level of commitment, engagement, and governance.

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company as on the date of this Report are:

? Mr. Krishna Madhusudan Jhunjhunwala,

Chairman & Managing Director

Mr. Krishna Madhusudan Jhunjhunwala was re-designated and re-appointed as the Chairman and Managing Director of the Company with effect from October 1, 2024.

? Mr. Kanav Jhunjhunwala, Whole-Time

Director

Mr. Kanav Jhunjhunwala was redesignated from Executive Director to Whole-Time Director of the Company with effect from April 25, 2025, i.e., the date of the Board Meeting in which this Report is approved.

? Mr. Kayvanna Shah, Chief Financial Officer

Mr. Kayvanna Shah was appointed as the

Chief Financial Officer of the Company with effect from June 24, 2024, in place of Mr. Mukesh Deopura, who resigned with effect from March 26, 2024.

? Mr. Kapil Raj Yadav, Company Secretary & Compliance Officer

Mr. Kapil Yadav is proposed to be appointed as the Company Secretary and Compliance Officer of the Company with effect from April 25, 2025, i.e., the date of the Board Meeting in which this Report is approved.

Chief Financial Officer (CFO)

? Mr. Kayvanna Shah was appointed as CFO with effect from June 24, 2024.

Company Secretary and Compliance Officer (CS)

? Ms. Radhika Sharma resigned with effect from September 13, 2024.

? Ms. Meena Bharat Jain was appointed with effect from December 10, 2024, and subsequently resigned with effect from March 31, 2025.

? Mr. Kapil Raj Yadav was appointed with effect from April 25, 2025.

15. Meetings of the Board

During the Financial Year ended March 31, 2025, seven (7) meetings of the Board of Directors were held on the following dates: April 27, 2024; May 10, 2024; June 24, 2024; July 29, 2024; October 28, 2024; December 10, 2024; and January 30, 2025.

The requisite quorum was present at all the meetings. The interval between any two consecutive Board meetings did not exceed one hundred and twenty (120) days, thereby complying with the requirements of the Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the applicable provisions of Secretarial Standard-1 (SS-1) issued by the Institute of Company Secretaries of India (ICSI).

Further details regarding the composition of the Board, attendance of Directors at the Board meetings, and other relevant disclosures are provided in the Corporate Governance Report, which forms part of this Annual Report.

16. Committees of Board

Pursuant to the provisions of the Companies Act, 2013, the rules framed thereunder, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company

has constituted the following statutory and non- statutory committees of the Board:

? Audit Committee

? Nomination and Remuneration Committee

? Corporate Social Responsibility Committee

? Risk Management Committee

? Stakeholders' Relationship Committee

? Finance and Investment Committee*

During the year under review, all recommendations made by the aforementioned Committees were accepted and approved by the Board.

* The Finance and Investment Committee was dissolved with effect from May 10, 2024, and was reconstituted again in the Board meeting dated April 25, 2025. Additionally, during the year, the remaining Committees were reconstituted to align with the changes in the managerial structure of the Company.

Details of the composition, terms of reference, and meetings of each Committee are provided in the Corporate Governance Report, which forms part of this Annual Report. The current structure of the reconstituted Committees is also available on the Company's website at https://www.sarlafibers.com/

17. Listing of Securities

As on the date of this Report, the Equity Shares of the Company are listed on the following Stock Exchanges:

? BSE Limited

? National Stock Exchange of India Limited

The Company has duly paid the annual listing fees for the financial year 2024-25 to both the Stock Exchanges where its equity shares are listed.

18. Internal Financial Control System and their adequacy

The Company has in place adequate internal financial controls with reference to financial statements. These controls are commensurate with the size, scale, and complexity of its operations and are designed to provide reasonable assurance regarding the reliability of financial reporting, compliance with applicable laws and regulations, and the safeguarding of assets.

The operating effectiveness of these internal financial controls is periodically reviewed by

the management and the internal auditors, and corrective actions, if any, are undertaken promptly.

Further details on the internal financial control systems and their adequacy are provided in the Management Discussion and Analysis Report, which forms an integral part of this Annual Report.

a) Statutory Auditors

The Members of the Company at the 29^th Annual General Meeting ("AGM") had re-appointed M/s. CNK & Associates LLP, Chartered Accountants, Mumbai

(Firm Registration No.: 101961W) as the Statutory Auditors of the Company for a second term of five (5) consecutive years, to hold office from the conclusion of the 29^th AGM until the conclusion of the 34^th AGM of the Company.

Pursuant to the MCA Notification dated May 7, 2018, the requirement to ratify the appointment of Statutory Auditors at every AGM has been dispensed with and hence, no such resolution is being proposed at the ensuing 32^nd AGM.

M/s. CNK & Associates LLP have issued their reports on the standalone and consolidated financial statements of the Company for the financial year ended March 31, 2025. The Auditor's Report does not contain any qualification, reservation, or adverse remark. The Notes to the Financial Statements referred to in the Auditor's Report are self-explanatory and do not call for any further explanation or comments by the Board.

The Auditors have also confirmed compliance with the applicable RBI regulations on downstream investments, and no qualifications were made in this regard.

b) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed CS Swati Gupta, Practicing Company Secretary (C.P. No. 12245), to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2025.

The Secretarial Audit Report in Form MR-3 pursuant to Regulation 24A of the SEBI Listing Regulations for the year ended March 31, 2025, are annexed as Annexure - VI' to this Report.

There were no qualifications, reservations, observations, or adverse remarks in the Secretarial Auditor's reports.

The Company does not have any material subsidiary as per the definition under Regulation 16(1)(c) of the SEBI Listing Regulations.

c) Cost Auditor:

The Company has duly prepared and maintained cost records as prescribed under Section 148(1) of the Companies Act, 2013 for the financial year ended March 31, 2025.

The Cost Audit Report for the financial year 2024-25 is in progress and the report will be filed with the Ministry of Corporate Affairs, Government of India, within the statutory timeline.

The Board of Directors, on recommendation of the Audit Committee, had re-appointed M/s. Kasina & Associates, Cost Accountants (Firm Registration No.: 104088), as Cost Auditors of the Company to conduct the audit of cost records for the financial year 2024-25, at its meeting held on June 24, 2024. Their remuneration was placed for ratification by the shareholders at the 31^st AGM of the Company and the said resolution was also approved by the shareholders.

Subsequently, based on the continued satisfactory performance, the Board at its meeting held on April 25, 2025, approved the re-appointment of M/s. Kasina & Associates as the Cost Auditors for the financial year 2025-26, subject to ratification of their remuneration by the Members at the 32^nd Annual General Meeting of the Company. The necessary resolution for ratification of remuneration is included in the Notice of the 32^nd AGM forming part of this Annual Report.

20. Reporting of Frauds

Pursuant to the provisions of Section 143(12) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, the Statutory Auditors have not reported any instance of fraud to the Audit Committee or board of the Company or to the Central Government during the financial year ended March 31, 2025.

21. Particulars of Employees and related Disclosures

In accordance with Section 197 of the Companies Act, 2013, and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details regarding remuneration and other disclosures are provided in Annexure - II to this Report.

A statement containing the particulars of employees as required under Section 197 of the Act, and Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is included as part of this Report.

As per the provisions of Section 136 of the Act, the Annual Report is being sent to the Members and other stakeholders entitled thereto, excluding the Statement containing particulars of employees. Any Member who wishes to obtain a copy of such details may request the Company Secretary at investors@sarlafibers.com.

22. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors hereby confirms that, to the best of their knowledge and belief, and according to the information and explanations obtained:

a. In the preparation of the annual accounts for the financial year ended March 31, 2025, the applicable accounting standards have been followed, along with proper explanations relating to material departures, if any.

b. Appropriate accounting policies have been selected and applied consistently, and judgments and estimates are made reasonably and prudently so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025, and of the profit of the Company for that financial year.

c. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

d. The annual accounts for the financial year ended March 31, 2025, have been prepared on a "going concern" basis.

e. Proper internal financial controls were devised, implemented and maintained to

ensure compliance with the provisions of all applicable laws and that such controls are adequate and operating effectively.

f. Proper systems were devised to ensure compliance with the provisions of all applicable laws, and such systems are adequate and operating effectively.

23. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

The particulars relating to conservation of energy, technology absorption, and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are annexed hereto as Annexure III to this Report.

24. Particulars of contracts or arrangements with Related Party Transactions

Pursuant to the Company's Policy on Related Party Transactions, all contracts, arrangements, and transactions entered into with related parties during the financial year under review were on an arm's length basis and in the ordinary course of business. There were no materially significant related party transactions with Promoters, Directors, or Key Managerial Personnel that could give rise to a potential conflict of interest.

In compliance with Section 188 of the Companies Act, 2013 and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

? All related party transactions were presented to the Audit Committee for its prior approval, including those covered under Section 188 of the Act.

? Omnibus approvals were obtained for transactions that are repetitive in nature and were foreseen in terms of the Audit Committee's omnibus approval framework.

Details of the related party transactions as required under sub-section (1) of Section 188 of the Companies Act, 2013 are furnished in Form AOC-2, annexed as ‘Annexure IV' to this Report.

The Board-approved Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions is available on the Company's website at: https:/4/vww.sarlafibers. com/wp-content/uploads/2024/01/14.Related- Party-Transaction-Policy.pdf

25. Corporate Social Responsibility

During the financial year 2024-25, the total CSR obligation of the Company, as per Section 135 of the Companies Act, 2013, amounted to ?91.92 lakhs.

Out of this, ?45.11 lakhs was available as a set-off from the CSR surplus accumulated in previous years, in accordance with the applicable provisions under the Companies Act, 2013 and CSR Rules. After adjusting this surplus, the net CSR amount required to be spent during the year stood at ?46.81 lakhs.

Against this net obligation, the Company spent ?53.15 lakhs on various CSR initiatives during FY 2024-25.

As a result, after accounting for the expenditure and adjustments, the Company has an excess CSR spend of ?6.34 lakhs at the end of the financial year. This excess amount will be carried forward and can be set off against CSR obligations in future years, as permitted under the CSR Rules.

The Company remains committed to its CSR objectives and ensures full compliance with the applicable laws, while undertaking impactful initiatives aimed at sustainable social development.

Corporate Social Responsibility (CSR) Committee and Policy

In compliance with Section 135 of the Companies Act, 2013, and the applicable rules, the Company has reconstituted its CSR Committee in light of recent changes in the management. The CSR Committee ensures that the Company's CSR activities align with its values and commitments towards sustainable development and social welfare. Details of the Committee's composition and its responsibilities are provided in the Corporate Governance Report, which forms part of this Annual Report for the financial year 2024-25.

The CSR Policy, approved by the Board based on the recommendations of the CSR Committee, outlines the framework for the Company's CSR initiatives. The policy is available on the Company's website and can be accessed via the following link: https://www.sarlafibers.com/.

CSR Activities for FY 2024-25

The Company has undertaken various CSR activities during the financial year 2024-25, in alignment with its corporate social responsibility goals. The detailed report on these CSR activities, as required under the Companies (Corporate

Social Responsibility Policy) Rules, 2014, will be included as ‘Annexure - V' to this Report. This annexure will provide a comprehensive overview of the projects undertaken and their impact during the year.

26. Corporate Governance Report and Management Discussion and Analysis Report

Your Company remains steadfast in its commitment to good corporate governance, aligning with the best practices in the industry and adhering to the standards set by the Securities and Exchange Board of India (SEBI) and the Stock Exchanges on which its securities are listed.

For the financial year ended March 31, 2025, the Company has fully complied with all applicable corporate governance requirements as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In accordance with Regulation 34(3) read with Schedule V of the said Regulations, a comprehensive report outlining the corporate governance practices adopted by the Company is annexed to this Annual Report as Annexure VII.

A certificate from Ms. Swati Gupta, Practicing Company Secretary (COP No. 12245), confirming compliance with the corporate governance norms and certificate of non-disqualification of directors under the SEBI Listing Regulations, is appended as annexure B and C to corporate governance Report.

Additionally, the Management Discussion and Analysis Report required under Regulation 34(2) of the SEBI Listing Regulations forms an integral part of Annual Report of the company.

27. Policy for Determining Materiality of Events

To enhance shareholder democracy and investor awareness, the Securities and Exchange Board of India (SEBI) introduced amendments to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 via a notification dated June 14, 2023. This notification introduced quantitative criteria for determining the materiality of events/information that need to be disclosed to investors and stock exchanges. SEBI also revised the list of events and information deemed material and required to be disclosed.

In compliance with these amendments, the Company aligned its policies with the updated provisions of the SEBI Listing Regulations. Accordingly, the Policy for Determination

of Materiality for Disclosure of Events or Information was amended and approved by the Board at its meeting held on January 24, 2024. The Board also introduced quantitative thresholds for material events and information that require disclosure to the exchanges and investors. The updated Materiality Policy can be accessed on the Company's website at this link.

28. Related Party Transaction Policy

Related Party Transactions (RPTs) play a crucial role in ensuring good governance and maintaining the integrity of listed entities. To safeguard the interests of all stakeholders and promote transparency, SEBI, under Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board of Directors review the Related Party Transaction (RPT) Policy at least once every three years or whenever there are updates to it.

In line with this requirement, the Board has reviewed and approved the recent amendments to the Related Party Transaction Policy. This updated policy is available on the Company's website at https://www.sarlafibers.com/wp- con t en t/up I oads/2 024/01/14. Related-Pa rty- Transaction-Policy.pdf.

29. Whistle Blower / Vigil Mechanism Policy

The Company is committed to conducting its business with the highest standards of professionalism, integrity, and ethical behaviour. To further strengthen transparency and fairness, the Board of Directors has implemented a Whistle Blower/Vigil Mechanism Policy as per Section 177(9) of the Companies Act, 2013, read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and Regulation 22 of the SEBI Listing Regulations. This mechanism provides safeguards against the victimization of Directors, employees, or any person who utilizes the mechanism to report unethical behavior or any actual or suspected fraud.

The Whistle Blower Policy is accessible on the Company's website at https:/A/vww.sarlafibers. com/wp-content/uploads/2024/01/15-Whistle- Blower-Policy.pdf. It allows all Directors, Officers, and Employees of the Company to report any concerns related to unethical practices or fraud.

30. Code of Conduct for Prohibition of Insider Trading

The Company has implemented a Code of Conduct for Prohibition of Insider Trading to regulate, monitor, and report the trading of securities by its Designated Persons. This Code ensures that employees do not engage in trading on the basis of Unpublished Price Sensitive Information (UPSI). It also lays down procedures for investigating any potential leakage of UPSI, along with the Code of Practices and Procedures for Fair Disclosure of UPSI.

The amended Code is available on the Company's website at this link, and it provides the necessary framework for maintaining transparency and integrity in securities trading.

31. Compliance Management Framework

The Company has instituted a compliance management system to monitor compliance and provide updates to Senior Management/ Board on a periodic basis. The Board of Directors monitors the status of compliance with applicable laws on a quarterly basis.

Compliance with Secretarial Standards

During the financial year 2024-25, the Company has complied with all applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India.

Risk Management

The Company has an adequate Risk Management framework to identify, measure, manage, and mitigate business risks and opportunities. This framework seeks to create transparency, minimize adverse impacts on business strategy, and enhance the Company's competitive advantage.

The risk framework helps in managing market, credit, and operational risks while quantifying potential impacts at the Company level. The details and the process of Risk Management as implemented in the Company are provided as part of the Management Discussion and Analysis, which forms part of the Annual Report.

The Risk Management policy of the Company is availableonitswebsiteathttps://www.sarlafibers. com/wp-content/uploads/2024/01/13.Risk- Management-Policy.pdf

Extract of the Annual Return

In accordance with the provisions of Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 and Rules framed thereunder, the annual return for the financial year 2024-25 is available on the website of the Company at https://www.sarlafibers.com/ reports/

32. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance towards sexual harassment at the workplace and has a policy on prevention, prohibition, and redressal of sexual harassment in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, and the Rules thereunder. All women employees, whether permanent, temporary, or contractual, are covered under the above policy. The said policy has been uploaded on the website of the Company at https://www.sarlafibers.com/ wp-content/uploads/2024/01/POSH-Policy- Sarla.pdf and intimated to all female employees. An Internal Complaint Committee (ICC) has been set up in compliance with the Act and the rules framed thereunder to redress complaints received on sexual harassment.

During the year under review, no cases were received or resolved pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013.

33. Internal Financial Control Systems, their Adequacy and Risk Management:

Adequate Internal Financial Control systems, commensurate with the nature of the Company's business, size, and complexity of its operations, are in place and have been operating satisfactorily and effectively. During the financial year under review, no material weaknesses in the design or operation of the Internal Financial Control system were reported.

The Company's Internal Auditor monitors and evaluates the internal control system and submits quarterly reports, which are regularly placed before the Audit Committee of the Board for review and necessary action.

34. Significant and Material Orders passed by the Regulators or Courts:

During the financial year 2024-25, the Company paid a sum of ?359.85 lakhs, inclusive of interest and penalty, towards liabilities arising from the disallowance of input tax credit pursuant to an audit conducted by the GST authorities for the financial years 2018-19 to 2022-23. Except for the aforementioned matter, no significant order was passed by any Regulator, Court, or Tribunal during the financial year under review that would impact the going concern status of the Company or its future operations.

Update on GST Recovery Order

In the previous Financial Year, the Company received a recovery order from the GST Department amounting to ?643.51 lakhs, comprising ?585.01 lakhs towards tax and ?58.50 lakhs towards penalty, along with applicable interest. The said demand pertains to GST refunds availed on exports made under payment of IGST from the Company's EOU unit for the financial years 2018-19 to 2021-22.

Based on legal advice, the Company has filed a writ petition before the Hon'ble Bombay High Court seeking a stay on the recovery proceedings. Concurrently, an appeal has been filed before the Appellate Tribunal, and the matter remains pending adjudication. The Company firmly believes that the refund claims were made in compliance with the applicable provisions of the GST law, and that the recovery order is not legally tenable.

35. Material changes and commitments, if any, affecting financial position have occurred between the end of the financial year of the Company and date of this report

There were no Material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report.

36. Credit Rating

During the financial year 2024-25, Acuite Ratings & Research Limited issued two credit rating updates for Sarla Performance Fibers Limited (SPFL):

1. February 3, 2025: Acuite downgraded SPFL's long-term rating to 'ACUITE BB+' from 'ACUITE A-' and the short-term rating to 'ACUITE A4+' from 'ACUITE A2+'. This downgrade was due to the company's non-cooperation in providing necessary information, leading to the ratings being flagged as "Issuer Not Cooperating".

2. February 24, 2025: Acuite upgraded SPFL's long-term rating to 'ACUITE A' from 'ACUITE BB+' and the short-term rating to 'ACUITE A1' from 'ACUITE A4+' on the ?225.00 crore bank facilities. The outlook was marked as 'Stable'. This upgrade reflects the company's improved cooperation and positive developments in its financial and operational performance.

Additionally, Acuite assigned new ratings for fresh bank facilities totalling TI12.00 crore, comprising ?47.00 crore in long-term facilities

rated 'ACUITE A' with a 'Stable' outlook and ?65.00 crore in short-term facilities rated 'ACUITE AT.

These ratings indicate a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.

37. Investor Education and Protection Fund (IEPF)

During the financial year 2024-25, the Company transferred an amount of ?14,51,735 to the IEPF Authority, pertaining to the Final Dividend for FY 2016-17. Additionally, 25,655 underlying equity shares were also transferred to the IEPF Authority.

Process for Claiming Dividends and Shares from IEPF

Shareholders may reclaim their dividend and/ or shares transferred to the IEPF by submitting a duly filled Form IEPF-5 (available on www. iepf.gov.in) along with requisite documents. Upon verification, the Company will issue an Entitlement Letter to enable submission of the claim to the IEPF Authority.

It is to be noted that no claim shall lie against the Company in respect of the dividends or shares once transferred to the IEPF in accordance with applicable laws.

The table below provides details of outstanding dividends and their respective last dates for claim before transfer to IEPF:

38. Insurance

All the properties of the Company, including buildings, plant and machinery, and inventories, have been adequately insured during the financial year 2024-25 to safeguard against risks and contingencies.

a. There were no proceedings initiated or pending against the Company under the Insolvency and Bankruptcy Code, 2016 during the financial year 2024-25. Further, there were no instances of onetime settlement with any bank or financial institution during the year and therefore no details of Valuation in this regard is available

b. The equity shares of the Company continue to remain listed on BSE Limited and the National Stock Exchange of India Limited. The applicable listing fees for the financial year 2024-25 have been duly paid to both stock exchanges.

c. Pursuant to SEBI Circular No. SEBI/HO/ DDHS/CIR/P/2018/144 dated November 26, 2018, the Company does not fall under the category of "Large Corporate" as defined in the said circular. Furthermore, the Company has not raised any funds through the issuance of debt securities during the year under review.

39. Acknowledgement and appreciation

Your Board takes this opportunity to thank the Company's Members, Customers, Vendors, and all other Stakeholders for their continued support throughout the financial year 2024-25. The Directors also express their sincere gratitude to the Stock Exchanges, Banks, Ministry of Corporate Affairs, State Governments, Government of India, and all other regulatory and statutory authorities for their valuable guidance and support extended to the Company. The Board looks forward to their continued cooperation in the future as well.

Your Directors also wish to place on record their deep appreciation for the commitment, dedication, and efforts of employees at all levels, who have contributed to the sustained growth and performance of the Company.