Sheela Foam Ltd

Dear Members,

Your Directors' have pleasure in presenting the 53^rd Annual Report on the business, operations and financial performance of the Company along with the Consolidated Audited Balance Sheet and Statement of Profit & Loss for the year ended 31^st March, 2025.

(Rs. in Crores)

During the current year, Revenue of the Company, on standalone basis is Rs. 2587.51 Crores, last year Revenue of the Company was Rs. 1879.52 Crores. The Profit for the year for the current year decreased to Rs. 112.09 Crores as against the profit for the year of Rs. 168.23 Crores of last year.

On consolidated basis the overall Revenue increased from Rs. 2982.31 crores to Rs. 3439.19 Crores. The consolidated profit for the year decreased from Rs. 183.93 Crores to Rs. 96.70 Crores.

Board of Directors do not recommend any dividend for the year 2024-25. The entire profit is being ploughed back in the business.

During the year under review, the paid-up equity share capital of the Company has been increased from Rs. 54,34,86,705 divided into 10,86,97,341 equity shares of Rs. 5 /- each to Rs.54,35,29,980 divided into 10,87,05,996 equity shares of Rs. 5 /- each pursuant to allotment of Equity Shares under the Employee Stock Option Plans of the Company. These Equity Shares rank pari-passu with the existing Equity Shares of the Company in all respects. During the year under review, your Company has not issued any Equity Share with differential rights, Sweat Equity Shares or Bonus Shares.

As on 31^st March, 2025 the Company has seven subsidiaries and ten steps down subsidiaries. As required under the provisions of Section 129 of the Companies Act, 2013, read with Companies (Accounts) Rule, 2013, a statement containing salient features of the financial statements of subsidiaries is provided in the prescribed format AOC-1 as Annexure-A of the Board Report.

In accordance with Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (Listing Regulations), Joyce Foam Pty. Ltd (Joyce Foam) Australia, International Foam Technologies Spain, S.L.U. and Kurlon Enterprise Limited are material non-listed subsidiaries. The Company has formulated a policy for determining material subsidiaries. The policy has been uploaded on the website of the Company at https://www. sheelafoam.com/

The Board of Directors of the Company ("Board"), at its meeting held on March 28, 2024, approved the draft Composite Scheme of Arrangement. The scheme involves the amalgamation of Belvedore International Limited, Kanvas Concepts Private Limited, Kurlon Retail Limited, Komfort Universe Products and Services Limited, and Starship Value Chain and Manufacturing Private Limited into Kurlon Enterprise Limited, followed by the amalgamation of Kurlon Enterprise Limited with Sheela Foam Limited, along with their respective shareholders and creditors.

The Company filed an application with the National Company Law Tribunal (NCLT), Mumbai, on December 11, 2024. The NCLT issued its first motion order on March 12, 2025, following which a Shareholders'

Meeting was held on April 28, 2025, to obtain the approval of the shareholders. The equity shareholders of the Company approved the Scheme with the requisite majority.

The Company has acquired 17.70 % equity stake on 29^th August, 2023 in House of Kieraya Limited. During the year the equity stake has been increased to 43.89% by acquisition of additional 56,00,995 equity shares in the House of Kieraya Limited.

The Company has invested amounting H 8,37,77,265 in the shares of wholly owned subsidiary M/s Sheela Foam Trading LLC in Dubai, United Arab of Emirates.

In accordance with Section 136 of the Companies Act, 2013 and the applicable Accounting Standard on the Consolidated Financial Statements, your Directors have attached the consolidated financial statements of the Company which form a part of the Annual Report.

The financial statements including consolidated financial statements and the audited accounts of each of the subsidiary are available on the Company's website www.sheelafoam.com

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed.

b) The directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) The directors have prepared the annual accounts on a going concern basis.

e) The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

In accordance with SEBI Regulations, a separate report on Corporate Governance is given in Annexure-B along with the Practicing Company Secretaries (PCS) Certificate on its compliance. The Practicing Company Secretaries (PCS) Certificate does not contain any qualification, reservation and adverse remark.

The particulars of Contracts or Arrangements with related parties, in the prescribed form, are attached as Annexure-C

The Company has formulated a Risk Management Policy duly reviewed by the Board of Directors. The policy includes risk identification, analysis and prioritization of risk and development of risk mitigation plans. The Company has constituted a Risk Management and ESG Committee to look into the risk involved with the Company and its mitigation.

The Company has in place adequate Internal Financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The report on the Internal Financial Control issued by M/s. MSKA & Associates., Chartered Accountants, Statutory Auditors of the Company in view of the provisions under the Companies Act, 2013 is given in their audit report.

Appointment of directors on the Board of the Company, is based on the recommendations of the Nomination & Remuneration Committee. NRC identifies and recommends to the Board, persons for appointment on the Board, after considering the necessary and desirable competencies.

The NRC considers positive attributes like integrity, maturity, judgement, leadership position, time and willingness, financial acumen, management experience and knowledge in one or more fields of technology, law, management, sales, marketing, administration, research, etc.

Independent Directors should fulfill the obligations of independence as per the Act and Regulation 25 of the SEBI (LODR) Regulations, 2015 in addition to the general criteria stated above. All the Independent Directors of the Company are enrolled in the Databank of IDs maintained by Indian Institute of Corporate Affairs, an entity under the Ministry of Corporate Affairs. Their registrations are renewed when due. It is ensured that a person to be appointed as a director has not suffered any disqualification under the Act or any other law to hold such an office.

The composition of the Board and details of remuneration paid to the directors during the year 2024-25 are given in the Corporate Governance Report forming part of this Report.

As per the provisions of the Companies Act, 2013, Mr. Rahul Gautam will retire by rotation at the ensuing Annual General Meeting (AGM) of the Company and being eligible, seeks re-appointment. The Board has recommended his reappointment.

Nilesh Sevabrata Mazumdar had given his resignation from the post of Chief Executive Officer (India Business) 0n March 31, 2025. He will be relieved in due courses as per the policy of the Company.

All the Independent Directors (IDs) have given declarations u/s 149(6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirming that they meet the criteria of independence as laid down under the said Section/ Regulation. The Directors of the Company have also confirmed that they were not disqualified to be appointed as directors as per Section 164(2) of the Companies Act, 2013 and that they have not been debarred by SEBI or any other statutory authority to hold an office of director in a company.

The Company believes that diversity is important to the work culture at any organisation. In particular, a diverse Board, among others, will enhance the quality of decisions by utilizing different skills, qualifications and professional experience for achieving sustainable and balanced development.

M/s MSKA & Associates, Chartered Accountants (Firm Registration No. 105047W), appointed as the Statutory Auditor of the Company for the five consecutive financial years from 2021-22 to 2025-26 and they will hold office until the conclusion of the 54^th Annual General Meeting of the Company to be held in the year 2026. Material Subsi details (See Item A) provided separately.

Details of material subsidiaries including the date and place of incorporation and the name and date of appointment of the statutory auditors of such subsidiaries:

There is no adverse observation of Auditors' on financial statements of the company. The Auditors' Report, read with the relevant notes to accounts, are self-explanatory and therefore does not require further explanation.

Detail of total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/ network entity of which the statutory auditor is a part are as below: -

As per section 148 read with Companies (Audit and Auditors) Rule, 2014 M/s Mahesh Singh & Co, Cost Accountants ((Firm Registration No.: 100441),) was appointed, to conduct the cost records of the Company for the Financial Year 2024-25, by the Board of Directors. Cost Auditor will provide its report to the Board of directors. They have been reappointed as Cost Auditors for the year 2025-26. A resolution for ratification of their remuneration for the year 2025-26, as required under the Companies Act, 2013, forms part of the Notice convening the ensuing AGM.

M/s PKF Sridhar Santhanam LLP, Chartered Accountants appointed as the Internal Auditor of the company and they will report to Board of Directors or the respective committee. The internal audit will help company to review the operational efficiency and assessing the internal controls. It also reviews the safeguarding of assets of the Company.

The company had engaged M/s AVA Associates, Company Secretaries as Secretarial Auditor to conduct Secretarial audit for the year 2024-25. The report on secretarial audit is annexed as Annexure-D to the Director's Report. The report does not contain any qualification, reservation or adverse remark. As per the requirements of the SEBI (LODR) Regulations, The Report of secretarial audit of Kurlon Enterprise Limited, an unlisted material subsidiary of the Company is also annexed as Annexure - D1 and available on Company's website at www.shelafoam.com.

In terms of Companies Act, 2013, your company has to undertake Corporate Social Responsibility programme. The disclosure as per Rule 9 of the Companies (Corporate Social Responsibility Policy) Rule, 2014 is attached as Annexure-E.

The composition of Audit Committee is provided in the Corporate Governance Report that forms part of this Director's Report. There was no instance of the Board not accepting the recommendation of the Audit Committee

The Company has established a vigil mechanism through a Whistle Blower Policy. The Company can oversee the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who may express their concerns pursuant to this policy. The policy is uploaded on the website of the Company at http://www. sheelafoam.com.

The Company has in place an Anti-Sexual Harassment policy in line with the requirements of sexual harassment of women at Workplace (Prevention, Prohibition and Redressal) Act 2013. The Internal system has been set up to redress complaints received regarding sexual harassment. No complaint was received under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

During the year, 7 meetings of the Board of Directors were held.

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of the Financial Statements.

A. Following measures were taken by company for energy conservation in the year 24-25:

The disclosure related with energy is mentioned in the Business Responsibility & Sustainability Report (BRSR) forming part of Directors' Report.

B. The expenses incurred on Research and Development have been included in BRSR annexed forming part of Directors' Report.

C. The earnings from exports were Rs. 12.45 Crore (Previous Year Rs. 23.15 crores) and payments in foreign exchange were Rs. 156.83 Crore (Previous Year Rs.184.24 crores).

Your Company has entered into agreements with Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE), in compliance with Regulation 109 of the SEBI LODR Regulations 2015.

The information as required under Section 197 of the Companies Act 2013 read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure-G to the Board's Report.

In terms of provisions of Regulation 34 of the Listing Regulations, the Management's discussion and analysis is set out in this Annual Report.

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

There are no significant and material orders passed by regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Neither any application was made, nor any proceedings were pending under the IBC Code during the year.

The Company has not entered into any one-time settlement of debt during the year under review.

Applicable Secretarial Standards i.e. SS-1 and SS-2 relating to ‘Meeting of the Board of Directors' and ‘General Meetings', respectively, have been duly followed by the Company

Pursuant to the provisions of Companies Act, 2013 and the Listing Regulations, the Board has carried out annual performance evaluation of its own performance, those of directors individually and of various committees.

The performance of individual directors was evaluated on parameters, such as, number of meetings attended, contribution in the growth and formulating the strategy of the Company, independence of judgement, safeguarding the interest of the Company and minority shareholders, time devoted apart from attending the meetings of the Company, active participation in long term strategic planning, ability to contribute by introducing best practices to address business challenges ESG and risk etc. The directors expressed their satisfaction with the evaluation process.

The company had not issued any bonus shares during the year.

The Company's Employee Stock Option Schemes are in line with Company's philosophy of sharing benefits of growth with the growth drivers and are in compliance with the applicable Securities and Exchange Board Of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Companies Act, 2013. Disclosures with respect to Stock Options, as required under Rule 12(9) of The Companies (Share Capital and Debentures) Rules, 2014 and Regulation

14 of the Regulations, are available in the Annexure H to this Report, Notes to the Financial Statements and can also be accessed on the Company's website at https://www.sheelafoam.com/index.html

The company has adopted Dividend Distribution Policy and there is no change in policy during the year. As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the policy is hosted at our website of the Company and following is web link: https:// backend.sheelafoam.com/wp-content/uploads/2025/03/dividend-distribution-policy-sfl.pdf

Business Responsibility Report/Sustainability Report is annexed as Annexure-I.

The company managed its finances prudently, meeting the business needs and maintaining sufficient liquidity at all times to navigate the impact of external challenges. The Company prudently managed its finances in rising interest rate scenario.,

A credit rating agency has given ‘IND AA/Stable' rating to the debenture of the Company on March 21, 2025, same is available on https://www. sheelafoam.com/corporate-announcement.html

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2023-24 is uploaded on the website of the Company and the same is available on https://www.sheelafoam.com/annual-return.html

The Board wish to express and place on record their thanks to the Company's Distributors, Dealers and Business Associates for their excellent effort and the customers for their continued patronage of the Company's products. Your Directors also wish to place on record their appreciation for the devoted services of the Executive, Staff, and workers of the Company at all levels enabling the Company to achieve the excellent performance during the year.

The Board's also appreciate the valuable co-operation and continued support received from Company's bankers and all the government agencies and departments.

The Board also express their sincere thanks to all the Shareholders for the continued support and trust they have reposed in the Management.