Sanathan Textiles Ltd

Dear Members of Sanathan Textiles Limited

Your Board of Directors is pleased to present the Directors' Report, together with the Audited Standalone and Consolidated Financial Statements of Sanathan Textiles Limited ("Sanathan Textiles" or "the Company"), for the Financial Year ended March 31, 2025.

1. FINANCIAL RESULTS:

The summarized results of your Company are given in the table below.

H in lakhs

On a Standalone basis, total Income increased to H 3,02,649 lakhs in FY 2024–25, compared to H 2,98,611 lakhs in FY 2023–24. The Profit Before Tax (PBT) stood at H23,109 lakhs, representing 22.3% growth over the previous year. On a Consolidated basis, the Profit After Tax improved by 19.9% year-on-year, reflecting stronger operating leverage and disciplined financial management. Despite modest revenue growth, the Company recorded a meaningful expansion in profitability due to process efficiencies and cost containment initiatives.

2. REVIEW OF BUSINESS OPERATIONS & FUTURE OUTLOOK:

Your Company is India's most diversified and integrated yarn manufacturer, offering a diversified portfolio across Polyester Filament Yarn, Cotton Yarn, and Yarns for Technical Textiles. With a strong backward integration model and robust infrastructure, the Company catered to a wide range of end-use sectors, including apparel, home textiles, automotive, furnishings, and industrial applications.

In FY 2024–25, the Company achieved consistent revenue growth and improved profitability, supported by operational efficiency, enhanced product mix, and strong stakeholder relationships. The successful completion of the Initial Public Offering (IPO) marked a significant milestone, strengthening the Company's capital structure and reinforcing its long-term growth vision.

For more details, refer to the Audited Standalone and Consolidated Financial Statements, which forms part of this Annual Report.

The demand for Polyester Filament Yarn is expected to grow in the coming years and to cater to the requirement, Sanathan Textiles through its Wholly Owned Subsidiary i.e. Sanathan Polycot Private Limited is expanding its manufacturing capacity at Punjab which will double the total manufacturing capacity per annum from 2,23,750 MTPA to 5,70,500 MTPA in a phased manner.

The Green field Expansion in Punjab is a strategically placed State of the art facility, which will cater to the North India Textile Market by supporting faster delivery timelines and better usage of cash flow and warehousing management for our customers. Since the expansion at Punjab is a green-field facility, a lot of automation and usage of technology has been done, and the infrastructure is designed to support such automations.

3. CHANGE IN THE NATURE OF BUSINESS:

During the financial year under review, there was no change in the nature of the Company's business.

Sanathan Textiles continues to ensure that its customers get high quality yarn and value-added yarns like Sanathan Reviro, Sanathan Puro, Born Dyed, Sanathan Drycool, Sanathan Stretch, S - Flex and Cationic Dyeable Polyester. Your Company always ensures that the Yarns required by the End-use Consumer is brought to reality by keeping an eye on the changing trends in the industry.

4. DIVIDEND AND RETENTION OF PROFITS:

Considering the ongoing expansion phase of the Company and in view of the long-term interest of the stakeholders, the Board believes that retaining the profits for internal deployment is prudent and hence wants to retain the earnings. Hence, your Board has not recommended any dividend for the financial year ended March 31, 2025.

The Company is confident that the ongoing capacity expansion will enable it to cater to the growing market demand, enhance its market share, and create sustained value for its stakeholders.

5. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:

The Company got its Equity Shares listed on December 27, 2024, on the National Stock Exchange of India Limited and BSE Limited. Prior to the listing, the Equity Shares were held closely by the Promoters and Promoter Group. As part of the Initial Public Offer, the Company raised a total of H 550 Crores for which the Promoters and the Promoter Group diluted around 21.42% stake. The Promoters will ensure that the minimum public shareholding of 25% is maintained before the timelines as mentioned in the regulation.

All the Equity Shares, either fresh or which were offered by the Promoters as part of the Offer for Sale, were in demat form. Further, no funds or Equity Shares of the Company remain unclaimed and hence there is no transfer that needs to be done to the Investor Education and Protection Fund (IEPF).

6. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED AFTER THE ENDS OF THE FINANCIAL YEAR:

There are no material changes or commitments that can affect the financial position of the Company.

7. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

With increasing demand for yarns, the Company continues to expand its capacity and cater to a diverse range of industries. The functional teams remain committed to ensuring full compliance with applicable statutory requirements and this is seen from the fact that there are no significant or material orders passed during the year that could adversely impact the Company's future operations or its status as a going concern.

8. DIRECTORS:

Your Board has the right mix of Independent Directors (which includes Woman Director) and Executive Directors, which blends and supports discussions which turn into meaningful and strategically aligning decisions. As the Executive Directors come with strong Industrial and Operational Experience, the Independent Directors have the mix of Industrial, Banking, Financial and Legal Expertise. All the Independent Directors support effective communication and governance, which culminates in better understanding and better decision-making capabilities. Mr. Dineshkumar Dattani was appointed as an Executive Director in place of casual vacancy.

Apart from the above, there were no changes at the Board for the financial year ended on March 31, 2025.

Your directors would like to inform that after the completion of FY 2024-2025, Mr. Sammir Dattani was appointed to the Board of Directors with effect from May 26, 2025, as part of the Company's strategic succession planning to strengthen Board oversight and governance in place of Mr. Dineshkumar Dattani. The Board recommends his appointment for the approval of the Members and the copy of the resolution along with the Explanatory Statement has been made part of the Notice, forming part of this Annual Report. Mr. Sammir Dattani played a key role as a spokesperson during the roadshows held in connection with the Initial Public Offering, where his insights and thought leadership were well received by stakeholders. At the operational level, in addition to his responsibilities as a Director, Mr. Sammir Dattani oversees raw material procurement for the Polyester Filament Yarn division and is actively involved in automation initiatives and the management of the Information Technology function.

A detailed note on the composition of the Board is provided in the Report of Corporate Governance forming part of the Annual Report.

9. RETIREMENT BY ROTATION:

Mr. Anilkumar Dattani (DIN: 00164175), Director, liable to retire by rotation, and being eligible, have offered himself for re-appointment at the 20th AGM. The Notice convening the 20th AGM forming part of this Annual Report, includes the proposal for reappointment and the requisite disclosures under Section 102 of the Act, Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India.

All Independent Directors are Independent and have furnished respective declaration stating that they meet the criteria of Independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and are not disqualified from continuing as Independent Directors of the Company. The Independent Directors have also confirmed that they have complied with the Company's Code of Business Conduct.

The Company has a defined policy on the Familiarization Programme for Directors, aimed at ensuring continuous awareness and engagement. The Board is regularly apprised of any amendments, regulatory changes, or emerging market trends, irrespective of the sectoral relevance. In addition, all strategic and operational communications relevant to the Company are appropriately shared with the Independent Directors. The Company also maintains updated disclosures on its website regarding the Familiarization Programmes conducted for its directors, in line with applicable regulatory requirements.

The Familiarisation Programme for Independent Directors is uploaded on the website of the Company, and is accessible at https://www.sanathan.com/ investor-relations.

The Executive Directors, Chief Financial Officer and the Company Secretary & Compliance Officer constitute the Key Managerial Personnel (KMP) of the Company as required under the Act.

The list of Key Managerial Personnel as on the date of this Report is as follows:

The Board considers that Annual Evaluation of the Board guides them not only to complete the statutory obligation but gives a different perspective of the progress they are doing and the subjects on which they should improve in their Individual Capacity and as a Board Member. The skills identified by the Board are mentioned below and the same were considered for mapping the Board Evaluation for the financial year ended on March 31, 2025:

Mr. Devendra Deshpande, a Practicing Company Secretary is an External Board Evaluator and is also a Secretarial Auditor of Sanathan Textiles. He carries an extensive knowledge of supporting and ensuring Board Management.

As part of the Board Evaluation process, Mr. Devendra Deshpande ensured that a questionnaire was shared and then a one-on-one confidential conversation was conducted, to understand those quantitative perspectives of the Board, that cannot be measured in terms of rating. Overall, the Board expressed its satisfaction on the performance evaluation process as well as performance of all Directors, Committees and Board as a whole. The Independent Directors also meet to discuss the performance of the Board, in which no Executive Directors or members of the Management were present.

The Company has adopted Code of Conduct for the Directors and Senior Management of the Company to provide clear guidance on principles such as integrity, transparency, business ethics and to set up standards for compliance of Corporate Governance.

A copy of same is available at the website of the Company at https://www.sanathan.com

All members of the Board of Directors and Senior Management Personnel had affirmed compliance with the Code of Conduct and a declaration to this effect signed by the Managing Director forms part of this Corporate Governance Report, which forms part of this Annual Report.

Further, Company has adopted a Code of Conduct for Prohibition of Insider Trading to regulate, monitor and report trading by insiders for prevention misuse of Unpublished Price Sensitive Information. A copy of same is available at the website of the Company at https://www.sanathan.com.

The Company has in place the system to trace the movement of Unpublished Price Sensitive Information and regular awareness is created for the Directors, Promoters, Key Managerial Personnel and designated employees/ persons.

The Board of Directors used to meet quarterly to deliberate on the strategy and overall operations of the Company during its meetings. However, for the financial year ended March 31, 2025, the Board met more than often and the reason for frequent meetings was associated with the Initial Public Offering. Accordingly, the Board met a total of ten (10) times during the year. All meetings were duly convened and conducted in compliance with the applicable provisions of the Companies Act, 2013 and the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

TheparticularsofMeetingsheldandattendedbyeach Director are detailed in the Corporate Governance Report, which forms part of this Annual Report.

The Committees of the Board are guided by their respective terms of reference, which outline their composition, scope, power, duties, functions and responsibilities. Basis recommendations, suggestions and observations made by these Committees, the Board of Directors take an informed decision on the matters under their consideration.

As on March 31, 2025, there were Five Board Committees, namely:

(a) Audit Committee

(b) Nomination and Remuneration Committee (c) Stakeholders' Relationship Committee (d) Corporate Social Responsibility Committee (e) Risk Management Committee

The Company Secretary acts as the Secretary to the abovementioned Committees.

During the year, the Board accepted all the recommendations / inputs made by Committees.

A detailed note on the composition of the Board and its Committees, including its terms of reference, number of committee meetings held during the FY 2024-25, and attendance of the members, is provided in the Report of Corporate Governance forming part of the Annual Report. The composition and terms of reference of all the Committees of the Board of Directors of the Company are in line with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations.

Apart from being on the Board and approving strategic and operational decisions, your Directors have certain responsibilities as well towards you, our fellow Members and hence pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. the Directors selected such accounting policies and applied them consistently and made judgments and estimates that are 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 and loss of the company for that period.

c. proper and sufficient care of 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 annual accounts are prepared on a going concerning basis.

e. internal financial controls to be followed are laid down by the company and such internal financial controls are adequate and were operating effectively and

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

During the financial year under review:

a. The Company has not bought back any of ts securities.i

b. The Company has not issued any Sweat Equity Shares.

c. No Bonus Shares were issued.

d. The Company has not granted any new Stock Option to the employees.

e. The Company has not issued Equity Shares with differential rights as to dividend, voting or otherwise as per Section 43(a)(ii) of the Companies Act, 2013.

The Company successfully completed its Initial Public Offering (IPO) and, on December 24, 2024, issued and allotted 1,24,61,059 Equity Shares of face value of H 10 each. After the IPO, the Equity Shares of the Company were listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) with effect from December 27, 2024.

Pursuant to the IPO, the Paid-up Share Capital of the Company increased to H 84,40,40,590, comprising 8,44,04,059 equity shares of H10/- each.

During the financial year under review the Company received following Credit Ratings by ICRA Limited (‘ICRA') reaffirming the rating while the outlook has been revised to positive:

The Credit Rating Agency has assigned a Positive Outlook to the Sanathan Textiles Group (here Sanathan Textiles Group means – Sanathan Textiles Limited and Sanathan Polycot Private Limited) reflecting its expectations of an improvement in the Group's revenues and profit margins in the near term. This anticipated growth is primarily driven by the commercialisation of the new manufacturing facility.

Upon the completion of the ongoing expansion project at Sanathan Polycot Private Limited (SPPL), the the Sanathan Textiles Group production capacity is expected to double. This expanded capacity is expected to enhance the the Sanathan Textiles Group operating profile through a more diversified product mix and strategic proximity to both raw material sources and key consumption markets.

Management further anticipates improved operating profit margins at the new facility, attributable to reduced freight expenses, due to closer customer locations and lower fuel costs using rice husk as an energy source. The ability of Sanathan Polycot Private Limited to efficiently and profitably scale up operations at the expanded facility remains a key area of focus from a credit rating standpoint.

The Rating Agency has also acknowledged Sanathan Textiles Group strong and long-standing relationships with both customers and suppliers. These relationships are expected to support consistent and repeat business, thereby enabling optimal utilisation of the Group's manufacturing assets.

The Company has not accepted any deposit as per the provisions of Companies Act, 2013 read with the Companies (Acceptance of Deposit Rules) 2014.

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return, for the FY 2024-2025 is available on the website of the Company at https://www.sanathan.com

As on March 31, 2025, the Company has only two Wholly Owned Subsidiaries - Sanathan Polycot Private Limited and Universal Texturisers Private Limited of which Sanathan Polycot Private Limited is an Unlisted Material Subsidiary as per Regulation 24 of the SEBI Listing Regulations. The Company's policy on Material Subsidiaries is made available on the Company's website at https://www.sanathan. com.During the year, the Company has nominated one of its Independent Director named Mr. Khurshed Thanawalla as an Independent Director of Sanathan Polycot Private Limited as required under Regulation 24(1) of SEBI Listing Regulations, further all the required compliances pertaining to an Unlisted Material Subsidiary have been completed as on March 31, 2025 and your Board is updated on the operational updates of Sanathan Polycot.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 ("the Act") read with rules made thereunder, a report on the performance and financial position of each of the subsidiary companies of your Company is included in the Consolidated Financial Statements presented in Form AOC-1 attached as Annexure 1 to this Report and to the Consolidated Financial Statements of the Company for the reference of the members.

Further the Company does not have any Joint ventures or Associate Companies during the period under review.

The members of the Company in the Annual General Meeting held on November 25, 2021, have granted approval to the Board for providing loan for an amount not exceeding H1,000 Crore (Rupees

One Thousand Crores Only). Further, the Audit Committee annually reviews the limit and the Company has not exhausted the said limit as on the date of this report. The Company has complied with the provisions of Section 186 of the Companies Act, 2013 regarding loans, investments made and guarantees provided during the year under review. Details have been furnished and form part of the Company's Financial Statements.

The Compliance and Finance teams collaboratively assess related party relationships and transactions, evaluate their terms and value, by comparing them with similar third-party transactions. The Audit Committee grants omnibus approval for all Related Party Transactions, which are an ordinary course of business while ensuring they are at arm length and reviews them periodically during the meetings.

Further, there were no transactions which were not in the ordinary course of business and not at arm's length basis, hence Form AOC-2 is not annexed to this report. The details of the related party transactions entered during FY 2024 - 2025 are disclosed in the Notes of Financial Statement, which form part of this Annual Report.

The Company's policy on Related Party Transactions as approved by the Board is hosted on Company's website and a web link is www.sanathan.com/ investors-relations

The Company continues to foster a performance-driven and inclusive culture, placing strong emphasis on employee development, engagement, and overall well-being. The Board of Directors places on record its sincere appreciation for the dedication, professionalism, and commitment demonstrated by all employees, which has been instrumental in driving the Company's sustained performance and long-term growth. Disclosures with respect to under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, and Details of employees' remuneration under Rule 5(2) & 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure 2 to this Report.

The Company's policy on Nomination and Remuneration as approved by the Board is hosted on Company's website and a web link is www.sanathan. com/investors-relations

The Board of Directors firmly believes that a robust and transparent policy framework is essential for sound corporate governance and effective organizational functioning. The Company has implemented a comprehensive set of policies that serve as the foundation for ethical conduct, regulatory compliance, risk management, and strategic decision-making. Key policies include:

1. Code of Conduct for Directors and Senior Management – Establishes the standards of ethical behaviour and professional integrity expected from leadership.

2. Insider Trading Policy – Regulates trading in securities and ensures compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015.

3. Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information – Reinforces our commitment to transparency in market communication.

4. Vigil Mechanism / Whistleblower Policy – Provides a secure and confidential channel for employees and stakeholders to report concerns or unethical practices.

5. Policy on Obligations of Directors and Senior Management – Clarifies the roles, responsibilities, and obligations of individuals in key leadership positions.

6. Risk Management Policy –Enables the proactive identification, assessment, and mitigation of potential business risks.

7. Nomination and Remuneration Policy – Ensures that appointments and compensation structures are merit-based, fair, and aligned with long-term organizational goals.

8. Policy on Board Diversity – Promotes inclusivity and diverse representation within the Board.

9. Succession Policy – Facilitates continuity in leadership through planned and structured succession planning.

10. Board Evaluation Policy – Supports continuous improvement through structured evaluation of the Board's performance and effectiveness.

11. Corporate Social Responsibility (CSR) Policy – Guides the Company's approach to social impact, sustainability, and community engagement initiatives.

12. Dividend Distribution Policy – Ensures a balanced approach to rewarding shareholders while retaining resources for growth.

13. Related Party Transaction Policy – Establishes safeguards and transparency in transactions involving related parties.

14. Archival Policy – Defines guidelines for the preservation and retrieval of documents and disclosures.

15. Policy for Determination of Material Events and Information – Ensures timely and accurate disclosure in compliance with SEBI Listing Regulations.

16. Policy on Material Subsidiaries – Governs the monitoring and oversight of material subsidiaries to ensure aligned governance.

These policies collectively form the backbone of the company's governance ecosystem, ensuring clarity, consistency, and accountability in all aspects of corporate functioning. By embedding these principles into our processes, we strengthen stakeholder trust and position the Company for sustainable, long-term growth.

The abovementioned policies are available on the Company's website and can be viewed at https:// www.sanathan.com and are made accessible to all stakeholders.

As part of our periodic review of archival records maintained in line with the Company's Archival Policy, it was observed that a portion of the system-generated audit logs relating to FY 2023–24 is not currently retrievable. The information pertains to post-audit system records and has no bearing on statutory filings or disclosures made during the period.

The Company has since taken necessary steps to review and strengthen its data retention protocols to align with best practices. There has been no impact on the completeness or accuracy of any regulatory or financial reporting.

The Company has in place a robust risk management framework to identify, evaluate, and mitigate various risks across its operations. The framework is designed to safeguard the Company's assets, ensure regulatory compliance, and support the achievement of strategic objectives. Key risks are periodically reviewed by the management and the Risk Management Committee, and appropriate mitigation strategies are implemented to address emerging risks. These include, but are not limited to, risks related to market volatility, raw material price fluctuations, regulatory changes, operational disruptions, environmental and sustainability factors, information security threats, and financial liquidity. Considering the ongoing expansion and diversification initiatives, the Company continues to strengthen its risk management practices by:

Enhancing internal controls and operational oversight mechanisms

Improving supply chain resilience and customer credit monitoring

Embedding sustainability and ESG-related risks into strategic decision-making

Leveraging technology for real-time risk assessment and mitigation

Monitoring geopolitical developments that may affect supply chains, export-import regulations, energy pricing, and investor sentiment.

The Board of Directors affirms that the Company's risk management system is adequate and commensurate with the size and complexity of its operations and provides reasonable assurance that risks are being effectively monitored and managed.

The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Annual Report.

The Company acknowledges cyber security as a strategic priority and an essential element of its enterprise risk management. With the growing reliance on digital systems and data-driven operations, safeguarding information assets, protecting customer and stakeholder data, and ensuring business continuity have become integral to the Company's governance practices.

To oversee its cyber risk management framework, the Company has constituted a dedicated Cyber Security Committee, comprising members from Senior Management, Information Technology, and Compliance teams. The Committee is responsible for steering the Company's cyber security strategy, reviewing threat landscapes, ensuring adherence to regulatory norms, and driving awareness across the organisation.

Key measures undertaken include:

Implementation of advanced security tools (firewalls, endpoint protection, intrusion detection systems)

Regular internal and third-party audits, vulnerability assessments, and penetration testing

Information Security Policy aligned with ISO 27001, subject to periodic review and Board oversight.

Organisation-wide cyber hygiene and awareness campaigns, phishing simulations, and training programs

Deployment of secure backup, disaster recovery, and business continuity plans

The Cyber Security Committee meets periodically to monitor threat intelligence, review security controls, and evaluate emerging risks. The Company continues to invest in strengthening its digital infrastructure and has not encountered any security breach during the year. Through a combination of preventive, detective, and responsive measures, the Company is committed to upholding high standards of cyber governance and safeguarding stakeholder interests in an increasingly connected environment.

Sanathan Textiles is deeply committed to sustainable manufacturing practices, with energy and resource conservation at the core of its operational philosophy. Through the adoption of Zero Liquid Discharge (ZLD) systems, the Company ensures complete recycling of wastewater, thereby significantly reducing the water usage and this aligns strongly with environmental sustainability by reducing freshwater consumption and ensuring responsible reuse of treated water. The adoption of Zero Liquid System will be done at Punjab as well. The use of Global Recycled Standard (GRS) certified materials further underscores our commitment to circular economy principles and efficient resource utilization. To harness renewable energy, we have installed rooftop solar panels with an aggregate capacity of 2.35 MW, reducing dependence on conventional power sources, to the extent possible. Complementing these efforts are our tree plantation drives, which help enhance green cover, regulate local temperatures, and improve ecosystem balance.

At the forefront of innovation, Sanathan Textiles also deploys Dope Dyed technology for coloured yarns, wherein pigments are added directly into the polymer melt during yarn production. This method eliminates the need for traditional dyeing processes, leading to significant water savings and lower energy consumption. As environmental awareness grows, many global brands and conscious consumers are increasingly advocating for yarns manufactured through such responsible methods, further validating Sanathan Textiles efforts toward low impact textile production.

As part of its ongoing efforts toward backward integration and process optimization, the Company successfully commissioned a Solid-State Polymerisation (SSP) plant to produce high intrinsic viscosity PET chips required for Technical Textiles Yarn production. This SSP unit is equipped with a fully automated direct conveying system, enabling seamless transfer of hot chips from the SSP unit to the Technical Textiles line. By eliminating intermediate stages such as cooling, bagging, conveying, and drying, this innovation significantly reduces energy consumption and enhances operational efficiency. The integration of SSP not only supports quality consistency in high-performance yarns but also aligns with the Company's commitment to energy conservation and sustainable manufacturing practices.

Thissustainabilityfirstapproachisfurtherexemplified by our wholly owned subsidiary, Sanathan Polycot Private Limited, where the upcoming plant in Punjab will utilize rice husk, a renewable agricultural byproduct, as a fuel source for heating processes. This transition to biomass energy not only reduces carbon emissions but also promotes clean energy adoption, reinforcing Sanathan Textiles mission to lead the industry toward a more energy efficient and environmentally responsible future.

The particulars as required under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure 3 which forms part of this Report.

The Company has constituted Vigil Mechanism to report genuine concerns or grievances and to provide adequate safeguards against victimization of persons who may use such mechanism and the oversight of the same is with the Audit Committee of the Company. The Company is committed to adhering to the highest standards of ethical, moral, and legal conduct of business operations. The Company has adopted Vigil Mechanism policy, which provides that any Directors, Employees, Stakeholders who observe any unethical behavior, actual or suspected, fraud or violation may report the same to Chairman of the Audit Committee or e-mail on the email-Id: whistleblower@sanathan. com. The detailed procedure is provided in the policy and the same is available on website of the Company https://www.sanathan.com.

During the financial year under review, there were no instances of fraud reported to the Audit Committee or the Board.

Aligned with the Company's core value of Good Corporate Citizenship, your Company actively embraces its social responsibilities through a variety of initiatives aimed at creating a positive impact on society. Guided by the Company's CSR Policy and its defined focus areas, our efforts were concentrated on critical domains such as eradicating hunger, promoting healthcare, encouraging sports, preserving culture, and protecting the environment. Through well-structured programs, the Company is dedicated to contributing to societal well-being, fostering sustainable development, and supporting social upliftment.

In alignment with its CSR focus on community welfare and crisis management, the Company contributed to the procurement of a fully equipped fire tender. This initiative is aimed at strengthening emergency response capabilities in the region surrounding the Company's factory at Silvassa and Punjab. The fire tender has played a critical role in safeguarding life and property in industrial, residential, and public areas. Through this contribution, the Company aims to enhance employee safety, improve public safety measures, strengthen emergency preparedness within the factory and its surrounding areas, and support development of a more robust and responsive disaster management framework.

The Company focused on eradicating hunger and supporting underprivileged communities. The Company undertook food distribution drives aimed at providing nutritious meals for those in need. These efforts were directed towards marginalized sections of society, including daily wage earners, homeless individuals, and low-income families. Through this initiative, the Company sought to alleviate food insecurity and contribute to the well-being of vulnerable communities.

As part of its CSR initiatives in the healthcare sector, the Company extended support to Masina Hospital by contribution of essential medical equipment. The support included the provision of an ECG machine, ICCU beds, ventilator, infusion pump, syringe pump, MGPS line, and patient monitor. This initiative was undertaken to strengthen the hospital's critical care capabilities and enhance its overall healthcare infrastructure, thereby contributing to improved medical services for the community.

In alignment with its focus in education, the Company extended infrastructure support to a school with the objective of creating a more conducive learning environment. The assistance included the development and enhancement of basic facilities to improve the overall educational infrastructure. This initiative was aimed at fostering a better academic atmosphere for students and supporting their holistic growth and learning outcomes.

As part of its ongoing Corporate Social Responsibility (CSR) initiatives, Sanathan Textiles Limited had undertaken a heartfelt project in support of the Veer Naris of the Indian Navy. This initiative was aimed at providing sustained household support to these courageous women, ensuring financial stability and dignified living conditions until their children are independent and capable of earning a livelihood. This long-term commitment reflects the Company's deep respect for the sacrifices made by the families of our armed forces and its resolve to contribute meaningfully to their welfare. Accordingly, as part of the CSR tradition, sports equipment's to Indian Navy associated schools, are given to facilitate sports culture to the extent possible.

As part of its environmental sustainability efforts, the Company organized a Plastic-to-Plant Exchange Drive at its Mumbai and Silvassa locations. The initiative community members, referred to as "green champions," exchange a minimum of two hundred grams of plastic waste for a plant, thereby promoting awareness and initiative-taking engagement in responsible waste management. Through this drive, the Company successfully collected five hundred kilograms of plastic waste and distributed 2,500 plants, making a significant contribution towards environmental conservation and fostering community participation.

Further, the Company has shared the Annual Report pertaining to the Corporate Social Responsibility for the financial year 2024-2025 as per the applicable provisions of the Companies Act, 2013, the details of which are mentioned in Annexure 4 which forms part of this report.

The CSR Policy is available on the website of the Company and can be viewed at www.sanathan.com/ investors-relations.

The Members of the Company on the recommendation of the Board, in the Annual General Meeting held on November 25, 2021 approved the appointment of M/s. Walker Chandiok & Co., LLP, (ICAI FRN 0 0 1 0 7 6 N / N500013) as the Statutory Auditors of the Company for a period of five years which is up to the conclusion of the Annual General Meeting scheduled to be held on 2026. The Reports given by M/s. Walker Chandiok & Co., LLP, Chartered Accountants on the Standalone and Consolidated Financial Statements of the Company for FY 2024-2025 is forming part of the Financial Statements, which is made part of this Annual Report. The Statutory Auditor Report does not contain any qualification, reservation or adverse remarks. Further, no frauds have been reported by the Statutory Auditors during the Financial Year 2024-2025 pursuant to the provisions of Section 143(12) of the Act.

The Board, on the recommendation of the Audit Committee had appointed M/s. DVD & Associates, Practising Company Secretaries to undertake the Secretarial Audit of the Company for the FY 2024- 2025.

The Report of Secretarial Audit in form MR-3 in accordance with Section 204 of Companies Act, 2013 and Secretarial Compliance Report in accordance with Regulation 24A of SEBI Listing Regulations, for the FY 2024- 2025 is annexed as Annexure 5 to the Annual Report. The Secretarial Auditor Report does not contain any qualification, reservation or adverse remarks Further as per the recent amendment under SEBI Listing Regulations pertaining to Appointment of Secretarial Auditor, M/s DVD and Associates had given their consent to act as Secretarial Auditors, accordingly, the Board in the meeting held on May 26, 2025 recommended their appointment for a team of five years, which is subject to approval of the members. The resolution pertaining to the appointment forms part of the Notice convening the Annual General Meeting.

The Board, on the recommendation of the Audit Committee, has appointed M/s. Saroj K Babu

& Co, Cost Accountant (Firm Registration No. 100591) as the Cost Auditor of the Company. And the Company has duly prepared and maintained cost records as prescribed under Section 148(1) of the Companies Act, 2013. Further, as required under the Companies Act, 2013, a resolution seeking members approval for the ratification of remuneration payable for the FY 2025-26 to the Cost Auditors forms part of the Notice convening the Annual General Meeting.

The Board of Directors on the recommendation of Audit Committee pursuant to section 138 of the Companies At, 2013 appointed M/s. Mahajan & Aibara, Chartered Accountants LLP for performing Internal Audit of the Company. Further the Internal Audit Report prepared by the Internal Auditor was examined by the Audit Committee and noted by the Board of Directors on a timely basis.

The Business Responsibility and Sustainability Report (BRSR) outlines a company's environmental, social, and governance initiatives and practices. It aims to provide transparency on how businesses operate responsibly and contribute to sustainable development. As per SEBI's circular dated May 10, 2021, the BRSR framework is applicable to the top 1,000 listed entities by market capitalization. The Company was classified among the top 1,000 listed entities as of December 31, 2024.

The BRSR is a new requirement applicable to the Company from April 1, 2025, in accordance with Regulation 34 (2) (f) of the SEBI Listing Regulations. Hence, the Company will provide the BRSR in upcoming year. The Company is focused on integrating responsible and sustainable business practices and will proactively align with the BRSR framework in the upcoming reporting period.

The Company recognizes the importance of attracting, retaining, and motivating high-caliber employees who contribute to the company's long-term success. In line with its objective, your Company had Sanathan Textiles Limited- Employee Stock Option Plan- 2021 ‘ESOP SCHEME 2021'. The ESOP Scheme 2021 have been duly approved by the members and post the Initial Public Offer, the ESOP Scheme has been ratified by the Members and is fully compliant with the Companies Act, 2013 and the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The disclosure under the said SEBI Regulations is available on the website of the Company. The certificate of Secretarial Auditor confirming compliance of the ESOP Scheme with the Act and abovementioned SEBI Regulations is given in Annexure 6 which forms part of this report.

Your Company always endeavors and provides conductive work environment that is free from discrimination and harassment including sexual harassment. Your Company has zero tolerance towards sexual harassment at workplace and has adopted a policy for prevention of Sexual Harassment of Women at workplace. To facilitate the reporting of grievances, a physical complaint box has also been installed at all the Company's premises. The Company has set up an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to address complaints of sexual harassment at the workplace and to ensure a safe, secure, and respectful working environment for all employees.

The Company is also registered on the SHe-Box portal launched by the Ministry of Women and Child Development, Government of India to provide an additional channel for reporting complaints. During the Financial Year under review, no complaints were received, and no complaints were pending. The Company acknowledges its statutory obligations under the Maternity Benefit Act, 1961, in line with its focus on employee welfare. The Company confirms that all applicable provisions of the Act were duly complied with during the FY 2024–2025.

The Company has adequate internal financial controls in place, commensurate with its size and the nature of its business. The Internal Financial Controls, with reference to financial statements as designed and implemented by the Company, are adequate. During the year under review, no material or serious observation has been received from the Statutory Auditors of the Company for inefficiency or inadequacy of such controls.

The Company has complied with the Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI). The Company has devised proper systems to ensure compliance with its provisions and follows the same.

Management Discussion and Analysis Report on the operations of the Company, is provided as a separate section and forms part of this Annual Report.

Pursuant to Regulation 34 of the SEBI Listing Regulations, the Corporate Governance Report for the year ended March 31, 2025 along with a Certificate from the Secretarial Auditor of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Schedule V of the SEBI Listing Regulations, is provided in a separate section and forms an part of Annual Report.

During the period under review the Company has not made any application, and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016.

During the year, there has been no one-time settlement of Loan and therefore this point is not applicable.

During the year under review, there is no loan taken from the Directors or their relatives by the Company.

As required under Regulation 17(8) of the SEBI Listing Regulations, the CFO of the Company has certified the accuracy of the Financial Statements, the Cash Flow Statement and adequacy of Internal Control Systems for financial reporting for the financial year ended March 31, 2025 and the certificate forms part of the Corporate Governance Report.

Your Company has paid the requisite Annual Listing Fees to National Stock Exchange of India Limited (Symbol: SANATHAN) and BSE Limited (Scrip Code: 544314), where its securities are listed.

The Board of Directors places on record its sincere appreciation for the unwavering support and continued cooperation extended by our banking partners. The Directors also express their heartfelt gratitude to all stakeholders including our valued customers, resolute employees, trusted vendors, esteemed consultants, and respected shareholders, whose steadfast confidence and contributions have been instrumental in the Company's growth journey. The Board is especially thankful for the overwhelming response received during the Company's Initial Public Offering (IPO), marking a significant milestone in our corporate evolution. We remain committed to upholding the trust placed in us and driving sustainable value for all stakeholders.