Your Directors have pleasure in presenting the Thirty-Third (33rd) Annual Report of Sarla Performance Fibers
Limited ('the Company' or 'SPFL'), together with the Audited Standalone and Consolidated Financial Statements
for the financial year ended March 31, 2026.

1. FINANCIAL PERFORMANCE

The Audited Standalone and Consolidated Financial Statements of your Company as on March 31,
2026, are prepared in accordance with the relevant applicable Indian Accounting Standards (“Ind AS”)
and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (“SEBI Listing Regulations”) and the provisions of the Companies Act,
2013 (“Act”).

The summarised financial highlights are depicted below:

(? in Lakhs, unless otherwise stated)

Note:

1. Previous year figures have been regrouped/re-arranged wherever necessary.

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
2025-26, 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 encompassing Textured
Polyester Yarn, Textured Nylon Stretch Yarn,
High-Bulk Textured Polyester Yarn, Sewing
Threads, Specialty Sewing Threads, High-
Tenacity Covered Dyed Yarns and Threads,
Barre-Free Nylon Yarn, and Covered Yarns.

The Company's robust customer relationships
and a favourable policy environment — including
supportive tariff structures that enhanced India's
competitiveness as a sourcing hub — provided a
strong foundation for sustained growth.

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:

Q The Standalone Revenue from Operations
stood at '39,634.33 Lakhs for FY 2025-26,
as against '42,366.67 Lakhs in FY 2024¬

25.

Q The Consolidated Revenue from
Operations for FY 2025-26 amounted to
'40,123.22 Lakhs, as against '42,710.09
Lakhs in FY 2024-25.

Q The Value of Exports stood at '23,991.01
Lakhs for FY 2025-26 on a Standalone
basis, as against '23,604.24 Lakhs in FY
2024-25. The Actual Foreign Exchange
Inflows (cash basis) for FY 2025-26 were
'13,418.56 Lakhs, as disclosed in Annexure
III. The difference between the value of
exports and actual inflows represents
export receivables outstanding at year-
end, which are in the process of being
realised.

Q Profit Before Interest, Depreciation and
Tax (PBIDT) was '11,569.86 Lakhs on a
Standalone basis, as against '10,567.61
Lakhs in FY 2024-25.

Q Profit Before Interest, Depreciation and
Tax (PBIDT) was '9,972.83 Lakhs on a
Consolidated basis, as against '11,452.45
Lakhs in FY 2024-25.

5. DIVIDEND

The Board of Directors of the Company,
at its meeting held on April 22, 2026, has
recommended a Final Dividend of '2.00
(Rupees Two Only) per equity share of face
value of '1.00 each, i.e., at the rate of Two
Hundred Percent (200%), for the financial year
ended 31st March 2026, subject to approval of
the Members at the ensuing 33rd Annual General
Meeting.

The Board has recommended the Final Dividend
after careful consideration of the Company's
financial performance, profitability, future
growth plans, and liquidity position, ensuring
an appropriate balance between shareholder
returns and capital requirements for business
operations.

The proposed Final Dividend, if approved by the
Members at the ensuing 33rd Annual General
Meeting, will result in a total cash outflow
of approximately '7,16,31,586/- (to public
shareholders, after accounting for Promoter/
Promoter Group waiver, as detailed below).

The Promoter and Promoter Group have, as a
gesture of support to the Company's growth
objectives, voluntarily waived their entitlement
to the Final Dividend for FY 2025-26. The
Company has received letters in writing from all
members of the Promoter and Promoter Group
expressing their intention to voluntarily waive
their entitlement to the Final Dividend for FY
2025-26. The waiver letters have been duly taken
on record by the Board of Directors. Necessary
disclosures in this regard have been made to
the Stock Exchanges pursuant to Regulation 30
of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ('SEBI LODR').

The Final Dividend, if declared at the 33rd AGM,
shall be paid within the statutory timelines
prescribed under the Companies Act, 2013 and
the SEBI LODR.

Dividend Distribution Policy

Pursuant to Regulation 43A of the Securities and
Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations,
2015, the mandatory formulation and disclosure
of a Dividend Distribution Policy is presently
applicable to the top 1,000 listed entities by
market capitalisation. As the Company does
not currently fall within the top 1,000 listed
entities, this requirement is not applicable to the
Company at this time.

The Board of Directors, however, endeavours to
maintain a consistent and transparent approach
to dividend declaration, balancing the interests
of shareholders with the Company's capital
requirements for growth and operations, as
reflected in the dividend recommendation for
FY 2025-26.

k TRANSFER TO RESERVES

The Board of Directors has not proposed any
transfer to the General Reserve for the financial
year ended 31st March 2026. The entire earnings
for the year under review, after payment of the
dividend, are proposed to be retained in the
Profit & Loss Account.

5. SHARE CAPITAL

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

As on 31st March 2026:

Q The Authorised Share Capital of the
Company stood at '1,000.00 Lakhs,
divided into 10,00,00,000 (Ten Crore)
Equity Shares of '1/- each.

Q The Paid-Up Equity Share Capital of
the Company stood at '835.03 Lakhs,
comprising 8,35,03,000 (Eight Crore
Thirty-Five Lakhs Three Thousand) Equity
Shares of '1/- each, fully paid-up.

The Company has not issued any Shares or
convertible securities, including Equity Shares
with differential voting rights, nor has it issued
any sweat equity shares or shares under any
employee stock option or stock appreciation
scheme during the year under review.

6. DEPOSITS UNDER CHAPTER V OF THE
COMPANIES ACT, 2013

The Company has not accepted any deposits
within the meaning of Section 73 of the
Companies Act, 2013 ('the Act'), read with the
Companies (Acceptance of Deposits) Rules,
2014. Accordingly, the disclosures required
under Chapter V of the Act are not applicable.
As on 31st March 2026, there are no deposits
remaining unpaid or unclaimed, nor any default
in repayment of deposits or payment of interest
thereon.

7. PROMOTERS

Incorporated in 1993, the 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 listed company compliance,
earning industry-wide recognition for its focus

Employees' Stock Option Scheme 2025

The Company has in place the Sarla Performance
Fibers Limited — Employees' Stock Option
Scheme 2025 ('ESOP Scheme 2025'), approved
by the Board of Directors at their meeting held
on January 30, 2025 and subsequently approved
by the Members through Postal Ballot on March
06, 2025, in compliance with the Securities and
Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021
('SEBI ESOP Regulations') and Section 62(1)

(b) of the Companies Act, 2013. There has been
no material change to the ESOP Scheme 2025
during the year under review.

During the financial year ended 31st March 2026,
no stock options have been granted, vested,
exercised, or lapsed under the ESOP Scheme
2025. The details required under Regulation 14
of the SEBI ESOP Regulations are set out below:

on quality, integrity, and long-term sustainability.

As on 31st March 2026, the Promoters / Promoter
Group of the Company are as under:

Q Krishna Madhusudan Jhunjhunwala

Q Vrinda Krishna Jhunjhunwala

Q Kanav Krishna Jhunjhunwala

Q Neha Krishna Jhunjhunwala

Q Sarladevi Madhusudan Jhunjhunwala

Q Sarladevi Madhusudan Jhunjhunwala (as
Partner of Hindustan Cotton Company)

Q Krishnakumar and Sons HUF

Q Madhusudan Jhunjhunwala and Sons HUF

Q Satidham Industries Private Limited

Q Sarla Estate Developers Private Limited

Q Harmony Estates Private Limited

As of 31st March 2026, the Promoter and
Promoter Group collectively held 57.11% of
the total paid-up Equity Share Capital of
the Company. There were no changes in the
classification of Promoters during the year
under review.

8. CHANGE IN THE NATURE OF BUSINESS

During the year under review, there was no change
in the nature of business of the Company. The
Company continues to operate in its core business
segments of Speciality Yarn Manufacturing and
Wind Power Generation, maintaining its strategic
focus and operational efficiency. The Company
remains engaged in the production and global
export of Textured Polyester Yarn, Textured Nylon
Stretch Yarn, High-Bulk Textured Polyester Yarn,
Sewing Threads, Specialty Sewing Threads, High-
Tenacity Covered Dyed Yarns and Threads, Barre-
Free Nylon Yarn, and Covered Yarns, catering to
both domestic and international markets.

9. SUBSIDIARIES, JOINT VENTURES AND
ASSOCIATE COMPANIES

As on 31st March 2026, the Company has a total
of six (6) overseas subsidiaries (both direct and
indirect), comprising two (2) wholly owned
subsidiaries and four (4) step-down subsidiaries,
along with three (3) 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.

Performance Overview of Subsidiaries

Sarlaflex Inc. (SFI), USA: SFI is a 100% directly
held wholly owned subsidiary of the Company,
which in turn holds 100% of its own step-down
subsidiaries. The subsidiary continues to have
a negative networth, reported Revenue from
Operations of '926.92 Lakhs and Profit/(Loss)
After Tax of '(1,622.46) Lakhs for the year under
review.

Sarla Overseas Holding Ltd. (SOHL), British Virgin
Islands: SOHL, a 100% wholly owned holding
subsidiary, reported Revenue from Operations
of '337.29 Lakhs and Profit/(Loss) After Tax of
'(42.47) Lakhs for the year under review. The
subsidiary's performance remains down for this
year but the management continues to assess
strategic options for this entity.

Joint Ventures — Update

SOHL holds investments in three overseas
Joint Ventures: Sarla Tekstil Filament Sanayi Ve

Tic. (Turkey, 45%), MRK S.A. De C.V. (Mexico,
33.33%), and M/s. Savitex, S.A. De C.V. (Mexico,
40%). The total investment in the JVs stands
at '542.22 Lakhs. Updated audited financial
statements of the Joint Ventures for the years
subsequent to FY 2021-22 have not been made
available to the Company despite management's
continued efforts. The Board has assessed that
no additional impairment is warranted based
on the information available. The management
continues to actively pursue receipt of updated
financial information from the Joint Ventures.

In accordance with Section 136 of the Companies
Act, 2013, the Annual Report, including
Standalone and Consolidated Financial
Statements, is available on the Company's
website at www.sarlafibers.com. Annual
Financial Statements of each subsidiary are
also hosted on the same website. Shareholders
desirous of obtaining copies may write to the
Company Secretary & Compliance Officer at
investors@sarlafibers.com.

A statement containing the salient features
of the financial statements of subsidiaries,
associates, and joint ventures in Form AOC-1 is
annexed hereto as Annexure - I.

10. COMPANIES WHICH BECAME OR CEASED
TO BE SUBSIDIARIES, JOINT VENTURES OR
ASSOCIATES

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.

11. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the
Company and its subsidiaries for the financial
year ended 31st March 2026 have been
prepared in accordance with Section 129(3)
of the Companies Act, 2013, the Companies
(Accounts) Rules, 2014, and the Indian
Accounting Standards (Ind AS) as notified
under the Companies (Indian Accounting
Standards) Rules, 2015. The consolidated
financial statements comply with Regulation
33 of the SEBI LODR. In accordance with
Regulation 34 of the SEBI LODR, the Audited
Consolidated Financial Statements, along with
the Independent Auditors' Report thereon,
form an integral part of the Annual Report
and are 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. Details as required
under Section 186(4) of the Act and Schedule
V of the SEBI LODR are provided in the Notes
to the Financial Statements forming part of this
Annual Report.

13. DIRECTORS

As on 31st March 2026, the Board of Directors
of the Company comprises six (6) Directors,

Re-designation of Mr. Kanav Krishna
Jhunjhunwala (DIN: 09507192)

The Board of Directors, at their meeting held on
April 25, 2025, approved the re-designation of
Mr. Kanav Krishna Jhunjhunwala from Executive
Director to Whole-Time Director of the Company,
with effect from April 25, 2025, for a term of five
(5) years up to April 24, 2030. Mr. Kanav Krishna
Jhunjhunwala continues to be a Key Managerial
Personnel of the Company within the meaning
of Section 203 of the Companies Act, 2013. He is
not debarred from holding the office of Director
pursuant to any order of SEBI, MCA, RBI, or any
other authority.

Retirement by Rotation

In accordance with Section 152 of the Companies
Act, 2013 and the Articles of Association of
the Company, Ms. Neha Krishna Jhunjhunwala

(DIN: 07144529), Director (Executive), retires
by rotation at the ensuing 33rd Annual General
Meeting and, being eligible, offers herself for
re-appointment. The disclosures required
under Regulation 36(3) of the SEBI LODR
and Secretarial Standard on General Meetings
(SS-2) are provided in the Notice of the 33rd
AGM forming part of this Annual Report. Ms.
Neha Krishna Jhunjhunwala is not debarred
from holding the office of Director pursuant
to any order of SEBI, MCA, RBI, or any other
authority.

including three (3) Executive Directors
and three (3) Non-Executive Independent
Directors, with one (1) Woman Director on the
Board, in compliance with Section 149 of the
Companies Act, 2013 and Regulation 17 of the
SEBI LODR.

The Independent Director requirement for a
woman independent director is applicable
only to the top 1,000 listed entities; since the
Company does not fall within the top 1,000, this
additional requirement is not applicable

The current composition of the Board of
Directors is as under:

Declaration by Independent Directors

Pursuant to Section 149(6) and Section 149(7)
of the Companies Act, 2013, and Regulation
16(1)(b) read with Regulation 25(8) of the SEBI
LODR, all Independent Directors have furnished
declarations confirming that:

Q They meet the criteria of independence
as prescribed under Section 149(6) of the
Companies Act, 2013 and Regulation 16(1)
(b) of the SEBI LODR, as amended from
time to time.

Q They are not aware of any circumstance
or situation which exists, or may be
reasonably anticipated, that could impair
or impact their ability to discharge their
duties with an objective independent
judgement and without any external
influence.

In compliance with Rule 6(3) of the Companies
(Appointment and Qualification of Directors)
Rules, 2014, all Independent Directors have
confirmed registration with the Independent
Directors' Databank maintained by the
Indian Institute of Corporate Affairs (IICA)
and confirmed compliance with the online
proficiency self-assessment test requirement.

The Board of Directors has taken on record the
declarations submitted by the Independent
Directors and, in its opinion pursuant to
Regulation 25(9) of the SEBI LODR, the

Independent Directors fulfil the conditions of
independence specified under the Companies
Act, 2013 and SEBI LODR 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.

Familiarisation Programme for Independent
Directors

In accordance with Regulation 25(7) of the SEBI
LODR, the Company has conducted a structured
Familiarisation Programme for Independent
Directors to enable them to understand their
roles, rights, and responsibilities, the nature of
the industry in which the Company operates,
and the business model of the Company.
Details of the programme, including the number
of sessions and hours, are disclosed in the
Corporate Governance Report forming part
of this Annual Report and are available on the
Company's website.

Annual Performance Evaluation of the Board

Pursuant to Section 134(3)(p) and Section
178(2) of the Companies Act, 2013 and
Regulation 17(10) of the SEBI LODR, the Board
carried out the Annual Performance Evaluation
of its own performance, the performance of
its Committees, and of individual Directors,
including the Chairman, for FY 2025-26. The
evaluation was conducted based on structured
questionnaires covering Board composition and

diversity, quality and timeliness of information
flow, effectiveness of Board processes, individual
Director contribution, and adherence to terms
of reference by Committees. The process
was informed by the SEBI Guidance Note on
Board Evaluation dated 5th January 2017. The
performance of the Board, its Committees, and
individual Directors was found to be satisfactory.

14. KEY MANAGERIAL PERSONNEL

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

Q Mr. Krishna Madhusudan Jhunjhunwala
— Chairman & Managing Director (re¬
designated and re-appointed w.e.f. October
01, 2024 for a term up to September 30,
2029).

Q Ms. Neha Krishna Jhunjhunwala — Director
(Executive) (appointed on March 31, 2015;
current term up to February 11, 2027).

Q Mr. Kanav Krishna Jhunjhunwala — Whole¬
Time Director (re-designated from Director
(Executive) w.e.f. April 25, 2025; term up
to April 24, 2030).

Q Mr. Kayvanna Shah — Chief Financial
Officer.

Q Mr. Mustafa Yusuf Manasawala,
(Membership No. A76344) — Company
Secretary & Compliance Officer (appointed
w.e.f. November 11, 2025).

Postal Ballot — Special Resolutions passed
during FY 2025-26

The Board, at their meeting held on February
04, 2026, approved the dispatch of a Postal
Ballot Notice for passing the following Special
Resolutions through remote e-voting, pursuant
to Sections 108 and 110 of the Companies Act,
2013 read with the Companies (Management
and Administration) Rules, 2014 and Regulation
44 of the SEBI LODR:

Q Creation of charges / mortgages /
hypothecation on the movable and/or
immovable assets of the Company, both
present and future, in favour of its lenders,
pursuant to Section 180(1)(a) of the
Companies Act, 2013.

Q I ncrease in the overall borrowing limits of

the Company, pursuant to Section 180(1)

(c) of the Companies Act, 2013.

During the year under review, all
recommendations made by the aforementioned
Committees were accepted and approved by
the Board. Details of the composition, terms of
reference, and meetings of each Committee are
provided in the Corporate Governance Report
forming part of this Annual Report.

17. LISTING OF SECURITIES

The Equity Shares of the Company are listed
on BSE Limited (BSE Code: 526885) and the
National Stock Exchange of India Limited
(NSE Symbol: SARLAPOLY). The ISIN of the
Company's equity shares is INE453D01025. The

The remote e-voting was conducted through
National Securities Depository Limited (NSDL)

as the authorised e-voting agency for the said
Postal Ballot, from February 12, 2026 to March
13, 2026. CS Vyoma Desai (Membership No.
F11166, COP No. 23010), Partner, M/s. Abbas
Lakdawalla & Associates LLP, Practising
Company Secretaries, was appointed as
Scrutinizer for the said Postal Ballot. Both Special
Resolutions were approved by the Members
with an overwhelming majority of approximately
99.99% of votes cast in favour. The resolutions
are deemed to have been passed on 13th March
2026, being the last date of the remote e-voting
period. The results were declared on March 14,
2026 and communicated to BSE and NSE.

Note: For the 33rd Annual General Meeting, the
Company has appointed MUFG Intime India
Private Limited (formerly Link Intime India
Private Limited) as the e-Voting agency.

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

16. STATUTORY COMMITTEES OF THE BOARD

Pursuant to the Companies Act, 2013 and the
SEBI LODR, the Company has constituted the
following Statutory Committees of the Board:

Company has duly paid the annual listing fees
for FY 2025-26 to both BSE and NSE within the
prescribed time.

18. INTERNAL FINANCIAL CONTROL SYSTEMS
AND THEIR ADEQUACY

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

effectiveness of these controls is periodically
reviewed by management and the Internal
Auditor. Corrective actions, where required, are
undertaken promptly. During FY 2025-26, no
material weaknesses in the design or operation of
internal financial control systems were reported.
The Internal Auditor submits quarterly reports,
which are regularly placed before the Audit
Committee. Further details are provided in the
Management Discussion and Analysis Report
forming part of this Annual Report.

19. AUDITORS

(a) Statutory Auditors

The Members of the Company at the 29th
Annual General Meeting re-appointed
M/s. CNK & Associates LLP, Chartered
Accountants, Mumbai (Firm Registration
No.: 101961W), as Statutory Auditors for a
second term of five (5) consecutive years,
to hold office from the conclusion of the
29th AGM until the conclusion of the 34th
AGM. Pursuant to the MCA Notification
dated 7th May 2018, the requirement for
ratification of the Statutory Auditors'
appointment at every AGM has been
dispensed with; accordingly, no such
resolution is proposed at the ensuing 33rd
AGM.

M/s. CNK & Associates LLP have
issued a qualified audit opinion on the
standalone and consolidated audited
financial statements of the Company for
the financial year ended March 31, 2026.
Following are as under:

1. The Statutory Auditors, CNK &
Associates LLP, have issued a
qualified audit opinion on the
standalone audited financial
statements of the Company for the
financial year ended March 31, 2026.
The qualification relates to the sale by
the Company of 11 Non-Cumulative
Redeemable Preference Shares held
in its wholly owned subsidiary, Sarla
Flex Inc. (United States of America),
for a consideration of USD 1,21,000,
resulting in a loss of '5,433.16 lakhs
which has been fully recognised as
an Exceptional Item in the financial
statements for the year ended March
31, 2026. The Company has applied
to the Regulators for the necessary
approvals in respect of the said sale,
write-off of investment, and credit of

the sale proceeds to the Company's
account, which approvals are
pending as on date.

2. The Statutory Auditors, CNK &
Associates LLP, have issued a
qualified audit opinion on the
consolidated audited financial
statements of the Company for the
financial year ended March 31,2026.
The qualification relates to the sale by
the Company of 11 Non-Cumulative
Redeemable Preference Shares held
in its wholly owned subsidiary, Sarla
Flex Inc. (United States of America),
for a consideration of USD 1,21,000,
resulting in a loss of '7,713.26 lakhs
which has been fully recognised as
an Exceptional Item in the financial
statements for the year ended March
31, 2026. The Company has applied
to the Regulators for the necessary
approvals in respect of the said sale,
write-off of investment, and credit of
the sale proceeds to the Company's
account, which approvals are
pending as on date.

The Board has taken note of the
qualification made by the Statutory
Auditors. The Company had
consulted its Authorised Dealer
Bank, IndusInd Bank, regarding the
regulatory requirements for the
sale of the preference shares. Based
on the guidance received, the sale
of the preference shares did not
require prior RBI approval. However,
the Company had applied for the
necessary regulatory approval in
respect of the write-off of investment
and related matters.

The Authorised Dealer Bank has
informed the Company that the
approval process is a routine
regulatory matter and is expected
to be completed in due course.
As on the date of this Report, the
approval is awaited. The Board and
the management do not foresee any
uncertainty regarding the receipt of
the requisite approvals.

During the year under review, no
orders were issued by the National
Financial Reporting Authority
(NFRA) in respect of the Company.

(b) Secretarial Auditor

Pursuant to Section 204 of the Companies
Act, 2013, read with Rule 9 of the Companies
(Appointment and Remuneration of
Managerial Personnel) Rules, 2014, and
Regulation 24A of the SEBI LODR, the
Members at the 32nd AGM held on June
25, 2025 approved the re-appointment
of CS Swati Gupta, Practising Company
Secretary (Membership No. F5766,
C.P. No. 12245), as Secretarial Auditor
of the Company for a period of five (5)
consecutive years commencing from FY
2025-26 up to FY 2029-30.

CS Swati Gupta has conducted the
Secretarial Audit of the Company for FY
2025-26 and has issued the Secretarial
Audit Report in Form MR-3, which is
annexed hereto as Annexure - VI. The
Secretarial Audit Report contains certain
observations. The key highlights thereof
are as follows:

O Statutory Compliance: The

Company has generally complied
with the provisions of the Companies
Act, 2013, SEBI Regulations, and
other applicable laws.

O Board Processes: The Board of
Directors was duly constituted with
an appropriate balance of Executive,
Non-Executive, and Independent
Directors. While Board Meeting
notices and agendas were generally
sent seven days in advance, in a few
instances notes on agenda items
were circulated at shorter notice with
the consent of the Board members.

O Specific Observations:

o The Company sold preference

shares held in its Wholly
Owned Subsidiary; however,
approval for the transaction
and the credit of sale proceeds
remains pending with the
Authorised Dealer.

o Management has consulted

Authorised Dealers to resolve
discrepancies in previously
reported Annual Performance
Reports (APRs).

o The Secretarial Auditor has

advised the Company to
ensure all paid-off charges
are duly satisfied on the MCA
portal to accurately reflect the
Company's position.

The Board has taken note of
the observations made by the
Secretarial Auditor and informs that
necessary steps are being taken to
address the same. The Company
is actively pursuing the pending
approvals from the Authorised
Dealer Bank in relation to the sale
of preference shares held in its
wholly owned subsidiary and related
regulatory compliances. Necessary
actions are also being undertaken
to rectify discrepancies identified
in the Annual Performance Reports
filed in previous years. Further, the
Company is in the process of filing
the requisite forms with the Registrar
of Companies to ensure that all
satisfied charges are appropriately
reflected on the MCA portal. The
Board is closely monitoring these
matters and is committed to ensuring
timely compliance with all applicable
regulatory requirements.

The Company does not have
any material subsidiary as per
Regulation 16(1)(c) of the SEBI
LODR; accordingly, secretarial
audit of material subsidiaries is not
applicable.

(c) Cost Auditors

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, 2026.

Pursuant to the provisions of Section 148
of the Companies Act, 2013 and the rules
made thereunder, the Board of Directors,
on the recommendation of the Audit
Committee, had re-appointed M/s. Kasina
& Associates, Cost Accountants (Firm
Registration No. 104088), as the Cost
Auditors of the Company for the financial
year 2025-26 at its meeting held on April
25, 2025. The remuneration payable to the
Cost Auditors was subsequently ratified by
the Members at the 32nd Annual General
Meeting of the Company.

The Cost Audit Report for the financial
year 2025-26 is under finalisation
and shall be filed with the Ministry of
Corporate Affairs within the prescribed
statutory timelines.

Further, based on the recommendation
of the Audit Committee, the Board of
Directors at its meeting held on April 22,
2026, approved the re-appointment of M/s.
Kasina & Associates, Cost Accountants
(Firm Registration No. 104088), as the
Cost Auditors of the Company for the
financial year 2026-27. In accordance with
Section 148 of the Companies Act, 2013,
the remuneration payable to the Cost
Auditors is required to be ratified by the
Members and accordingly, a resolution
seeking such ratification forms part of the
Notice convening the 33rd Annual General
Meeting."

(d) Internal Auditor

The Board of Directors, on the
recommendation of the Audit

Committee, appointed M/s. KD Practice
Consulting Private Limited (Ms. Pooja
Dharewa, Chartered Accountant,
Membership No. 135998, CIN:
U74999MH2017PTC290264), Bhayandar
West, Thane, as Internal Auditor of the
Company for FY 2025-26, pursuant to
Section 138(1) of the Companies Act,
2013 read with Rule 13 of the Companies
(Accounts) Rules, 2014. The Internal

Auditor reports directly to the Audit
Committee and submits quarterly reports,
which are regularly placed before the
Audit Committee for review and action.

20. REPORTING OF FRAUDS

Pursuant to Section 143(12) of the Companies
Act, 2013, the Statutory Auditors, Cost Auditors

and Secretarial Auditor have not reported

any instance of fraud committed against the
Company by its officers or employees to the
Audit Committee, the Board or the Central
Government during the financial year 2025-26.

21. PARTICULARS OF EMPLOYEES AND RELATED
DISCLOSURES

The disclosures required under Section 197 of the
Companies Act, 2013 read with Rule 5(1) of the
Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are provided
in Annexure - II to this Report.

DISCLOSURE OF EXCESS MANAGERIAL
REMUNERATION UNDER SECTION 197

During FY 2025-26, the remuneration paid
to Ms. Neha Krishna Jhunjhunwala exceeded
the limits prescribed under Section 197(1) of
the Companies Act, 2013, as computed in

accordance with Section 198 of the Act. The net
profit computed under Section 198 for FY 2025¬
26 was ' 14,34,35,168/-, and the permissible
limit of 1% of such net profit worked out to '
14,34,352/-. The remuneration paid to the said
Director was '37,05,000, resulting in an excess of
' 22,70,648/-

The Board of Directors has noted the said
position. The Statutory Auditors have reported
the same pursuant to Section 197(16) of the
Companies Act, 2013. The Board is seeking
approval of the Members by Special Resolution
at the ensuing 33rd Annual General Meeting for
waiver of recovery of the remuneration paid in
excess of the prescribed limits, in accordance
with Section 197(10) of the Companies Act, 2013.
Members are requested to refer to Item No. 6 of
the Notice of the 33rd AGM.

The statement of particulars of employees as
required under Rule 5(2) and 5(3) of the said
Rules forms part of this Report.

22. NOMINATION AND REMUNERATION POLICY

In terms of Section 178(3) of the Companies
Act, 2013, the Board of Directors, on the
recommendation of the Nomination and
Remuneration Committee (NRC), has framed
a Nomination and Remuneration Policy ('NRC
Policy'). The salient features of the Policy are as
under:

Q Qualifications & Experience: Directors

and KMPs shall possess appropriate
qualifications, expertise, and experience
relevant to their roles. Independent
Directors shall additionally meet the criteria
of independence prescribed under the Act
and SEBI LODR at all times.

Q Positive Attributes: Directors shall

demonstrate integrity, ethical conduct,
financial literacy, and commitment to the
Company's governance standards.

Q Independence: Independent Directors shall

satisfy all criteria specified under Section
149(6) of the Act and Regulation 16(1)(b) of
the SEBI LODR.

Q Remuneration Structure: Remuneration to

Executive Directors and KMPs is determined
based on the Company's performance,
industry benchmarks, individual
performance, and applicable statutory
limits. Independent Directors receive sitting
fees within the limits prescribed under the
Act. No commission was paid to any Non¬
Executive Director during FY 2025-26.

The full NRC Policy is available on the Company's
website at: https://www.sarlafibers.com/wp-
content/uploads/2024/01/9.Nomination-and-
Remuneration-Policy.pdf

23. 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 FY 2025-26, 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.
Judgements and estimates have been

made reasonably and prudently so as to
give a true and fair view of the state of
affairs of the Company as at 31st March
2026, 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 fraud
and other irregularities.

d) The annual accounts for FY 2025-26 have
been prepared on a 'going concern' basis.

e) Proper internal financial controls have

been laid down and are followed by the
Company, and such internal financial
controls are adequate and are operating
effectively.

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

For the purpose of this statement, the term
"internal financial controls" means the policies
and procedures adopted by the Company for
ensuring the orderly and efficient conduct of its
business, including adherence to the Company's
policies, the safeguarding of its assets, the
prevention and detection of frauds and
errors, the accuracy and completeness of the
accounting records, and the timely preparation
of reliable financial information.

24. 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.

25. PARTICULARS OF CONTRACTS OR
ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions ('RPTs') entered
into during FY 2025-26 were on an arm's length
basis and in compliance with Section 188 of the
Companies Act, 2013 and Regulation 23 of the
SEBI LODR. All RPTs were placed before the
Audit Committee for prior / omnibus approval,
and the Audit Committee reviewed such
transactions on a quarterly basis.

During the year, certain transactions, while
conducted on an arm's length basis, were not in
the ordinary course of business and accordingly
required and received Board approval under
Section 188 of the Companies Act, 2013, on the
recommendation of the Audit Committee. These
transactions relate to:

Q Leasing of office premises from Mr. Krishna
Madhusudan Jhunjhunwala, Managing
Director.

Q Leasing of office premises from

Madhusudan Jhunjhunwala and Sons HUF.

Q Leasing of premises from M/s. Hindustan
Cotton Company.

Q CSR Contribution to Shivchandrai

Jhunjhunwala Charitable Trust

The details of the aforesaid Related Party
Transactions are disclosed in Form AOC-2,
annexed hereto as Annexure - IV. There were no
materially significant Related Party Transactions
that had any potential conflict with the interests
of the Company at large.

The Related Party Transaction Policy is available
at: https://www.sarlafibers.com/wp-content/

uploads/2024/01/14.Related-Party-Transaction-
Policy.pdf. Details of all RPTs as required under
Ind AS 24 are provided in the Notes to the
Financial Statements.

26. CORPORATE SOCIAL RESPONSIBILITY (CSR)

During FY 2025-26, the total CSR obligation
of the Company under Section 135 of the
Companies Act, 2013 amounted to '86.31 Lakhs

(being 2% of the average net profit of '4,315.60
Lakhs for the preceding three financial years).
After adjusting the carried-forward set-off
surplus of '6.33 Lakhs from previous years, the
net CSR obligation for FY 2025-26 stood at
'79.97 Lakhs. The Company spent '82.00 Lakhs
on CSR activities during FY 2025-26, focused
primarily on promoting healthcare in and around
its areas of operation.

Pursuant to Rule 7(3) of the Companies
(Corporate Social Responsibility Policy) Rules,
2014, the Company has spent '2.02 Lakhs in
excess of its net CSR obligation for FY 2025-26.
This excess amount, duly recorded in Section
8(g) of the Annual CSR Report (Annexure V),
is eligible to be set off against CSR obligations
for the three immediately succeeding financial
years (FY 2026-27 to FY 2028-29).

The Annual Report on CSR Activities as required
under Rule 8 of the Companies (Corporate
Social Responsibility Policy) Rules, 2014 is
annexed hereto as Annexure - V. The CSR
Policy approved by the Board is available at:
https://www.sarlafibers.com/wp-content/
uploads/2024/01/11.-CSR-Policy.pdf

27. CORPORATE GOVERNANCE AND

MANAGEMENT DISCUSSION & ANALYSIS
REPORTS

The Company is committed to maintaining the
highest standards of corporate governance in
letter and spirit, in compliance with the SEBI
LODR. A comprehensive Corporate Governance
Report is annexed hereto as Annexure - VII.

A certificate from CS Swati Gupta, Practising
Company Secretary (COP No. 12245, UDIN:
F005766H000089883), confirming compliance
with corporate governance norms, and a
Certificate of Non-Disqualification of Directors
(UDIN: F005766H000089806), both dated
April 14, 2026, are appended as Annexure B
and Annexure C respectively to the Corporate
Governance Report.

The Management Discussion and Analysis
Report required under Regulation 34(2)(e) of
the SEBI LODR forms an integral part of this
Annual Report.

Business Responsibility and Sustainability
Report (BRSR): Pursuant to Regulation 34(2)(f)
of the SEBI LODR, the Business Responsibility
and Sustainability Report is mandatorily
required for the top 1,000 listed entities by
market capitalisation. As the Company does not
fall within the top 1,000 listed entities by market
capitalisation, as per the list published by the
Stock Exchanges in accordance with Regulation

3 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (based on
average market capitalisation for the period July
2025 to December 2025) in terms of the SEBI
(LODR) (Third Amendment) Regulations, 2024,
the BRSR is not applicable to the Company for
FY 2025-26.

28. POLICY FOR DETERMINATION OF
MATERIALITY OF EVENTS / INFORMATION

In compliance with SEBI Circular No. SEBI/HO/
CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13,
2023, which, inter alia, introduced quantitative
thresholds for determination of materiality of
events and information under Regulation 30
of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Board of
Directors of the Company reviewed and updated
the Policy for Determination of Materiality
for Disclosure of Events or Information at its
meeting held on January 24, 2024. The updated
Policy is available on the Company's website at
www.sarlafibers.com.

29. RELATED PARTY TRANSACTION POLICY

In accordance with Regulation 23(1) of the
SEBI LODR, which requires the Board to
review the Related Party Transaction Policy
at least once every three years, the Board
has reviewed and confirmed that the current
policy remains appropriate. The Policy is
available at: https://www.sarlafibers.com/wp-
content/uploads/2024/01/14.Related-Party-
Transaction-Policy.pdf

30. WHISTLE BLOWER / VIGIL MECHANISM
POLICY

The Company has in place a Vigil Mechanism
/ Whistle Blower Policy as required under
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 LODR. The Policy
provides a formal mechanism for Directors,
employees, and stakeholders to raise concerns
about unethical behaviour, actual or suspected
fraud, or violations of the Code of Conduct.
Adequate safeguards against victimisation of
complainants are provided. During FY 2025¬
26, the Board affirms that no personnel were
denied access to the Audit Committee. The
Policy is available at: https://www.sarlafibers.
com/wp-content/uploads/2024/01/15-Whistle-
Blower-Policy.pdf

31. CODE OF CONDUCT FOR PROHIBITION OF
INSIDER TRADING

The Company has a Code of Conduct for

Prohibition of Insider Trading, framed in
accordance with the Securities and Exchange
Board of India (Prohibition of Insider Trading)
Regulations, 2015 ('PIT Regulations'), to
regulate, monitor, and report trading of
securities by Designated Persons. The
Code lays down procedures for maintaining
Unpublished Price Sensitive Information (UPSI),
prevention of its leakage, and procedures
for fair disclosure of UPSI. Mr. Mustafa Yusuf
Manasawala, Company Secretary & Compliance
Officer, has been designated as the Compliance
Officer under the PIT Regulations. The Code is
available on the Company's website at www.
sarlafibers.com.

Mr. Kayvanna Shah, Chief Financial Officer
was designated as interim Compliance Officer
under PIT Regulations during the transition
period i.e. September 4, 2025 - November 11,
2025.

32. COMPLIANCE MANAGEMENT FRAMEWORK

The Company has instituted a structured
compliance management framework to monitor
adherence to applicable laws and regulations and
provide periodic updates to Senior Management
and the Board. The Board reviews the status of
compliance on a quarterly basis.

Compliance with Secretarial Standards

During FY 2025-26, the Company has complied
with the applicable Secretarial Standards issued
by ICSI, viz. SS-1 and SS-2. Certain agenda notes
were circulated at shorter notice with the prior
consent of the Board members, as recorded in
the minutes. Such instances have been noted in
the Secretarial Audit Report.

Risk Management

The Company has an adequate Risk
Management framework to identify, assess,
monitor, and mitigate business risks. The
Board periodically reviews the Company's risk
profile and the adequacy of risk mitigation
measures at each quarterly meeting. Pursuant
to Regulation 21 of the SEBI LODR, the
mandatory requirement to constitute a Risk
Management Committee (RMC) applies
to the top 1,000 listed entities by market
capitalisation. As the Company does not fall
within the top 1,000 listed entities by market
capitalisation as per the list published by the
Stock Exchanges based on average market
capitalisation for the period July 2025 to
December 2025 in terms of the SEBI (LODR)
(Third Amendment) Regulations, 2024, the
mandatory constitution of a Risk Management
Committee is not applicable to the Company.

The Board, however, ensures that risk
governance is embedded in its regular agenda
through its internal risk oversight process.
The Risk Management Policy is available at:
https://www.sarlafibers.com/wp-content/
uploads/2024/01/13.Risk-Management-Policy.
pdf.

Based on the risk assessments conducted during
FY 2025-26, the Board is of the opinion that the
following elements of risk, if not adequately
mitigated, may in the Board's opinion threaten
the existence of the Company:

(i) significant volatility in raw material prices,
which could adversely compress operating
margins;

(ii) material adverse movements in foreign
exchange rates, given the substantial
proportion of the Company's revenue
denominated in foreign currencies;

(iii) adverse regulatory changes including
modifications to export/import
duty structures, FEMA compliance
requirements pertaining to overseas
investments, or adverse regulatory
actions by SEBI or MCA;

(iv) supply chain disruptions arising from
geopolitical developments or global
logistics constraints affecting key
international markets; and

(v) cyber security breaches or IT system
failures that could impact business
continuity, data integrity, or regulatory
compliance.

The Company has put in place appropriate risk
mitigation strategies for each of the above, as
detailed in the Management Discussion and
Analysis Report forming part of this Annual
Report

Cyber Security and Information Technology
Risk

The Company recognises that cyber security
and information technology risks are an integral
part of its overall risk management framework.
The Company has in place appropriate IT
security measures, access control mechanisms,
data backup and recovery protocols, and
network security systems to protect its digital
assets and sensitive business information.

Periodic reviews of IT infrastructure and
security protocols are conducted to identify
vulnerabilities and implement corrective
measures. The management ensures that
adequate controls are in place to mitigate risks

arising from cyber threats, data breaches, and
IT system failures. No material cyber security
breach or IT failure was reported during FY
2025-26.

The Company continuously reviews and
strengthens its cyber security and information
technology risk management framework in line
with evolving business requirements, emerging
cyber threats, and generally accepted industry
practices.

33. ANNUAL RETURN

The Annual Return of the Company in Form MGT-
7 for the financial year ended 31st March 2026
will be filed with the Registrar of Companies
within sixty (60) days from the conclusion of
the 33rd Annual General Meeting. Upon filing,
the Annual Return shall be made available and
accessible on the Company's website at https://
www.sarlafibers.com/reports/. Members may
access the said URL after filing for inspection of
the current Annual Return.

34. DISCLOSURE UNDER THE SEXUAL
HARASSMENT OF WOMEN AT WORKPLACE
ACT, 2013

The Company has zero tolerance towards
sexual harassment at the workplace. A Policy on
Prevention, Prohibition, and Redressal of Sexual
Harassment ('POSH Policy') has been adopted
in line with the Sexual Harassment of Women
at Workplace (Prevention, Prohibition and
Redressal) Act, 2013, and the Rules thereunder.
An Internal Complaints Committee (ICC) has
been duly constituted in accordance with the
said Act, including the appointment of an
external member as required. The POSH Policy
is available at: https^www.sarlafibers.com/wp-
content/uploads/2024/01/POSH-Policy-Sarla.
pdf

35. MATERNITY BENEFIT COMPLIANCE

The Company affirms its compliance with the
Maternity Benefit Act, 1961 and rules made
thereunder. All eligible women employees are
provided maternity leave and associated benefits
in accordance with statutory requirements and
the Company's internal policies.

36. SIGNIFICANT AND MATERIAL ORDERS
PASSED BY REGULATORS OR COURTS

During FY 2025-26, no significant or material
order was passed by any Regulator, Court, or
Tribunal that would impact the going concern
status of the Company or its future operations. The
Company's ongoing legal matters are disclosed
in the Corporate Governance Report (Section 4,
Clause iii) forming part of this Annual Report.

37. MATERIAL CHANGES AND COMMITMENTS
AFFECTING FINANCIAL POSITION

The Board of Directors of the Company, at
their meeting held on April 22, 2026, has
recommended a Final Dividend of '2.00 (200%)
per Equity Share of face value of '1.00 each for
the Financial Year ended 31st March 2026, as
detailed in Section 3 of this Report, subject to
approval of the Members at the 33rd AGM. Save
and except the aforesaid, there are no other
material changes or commitments affecting the
financial position of the Company which have
occurred between the end of the financial year
(March 31, 2026) and the date of this Report.

39. INVESTOR EDUCATION AND PROTECTION
FUND (IEPF)

During FY 2025-26, the Company transferred
'12,22,358/- to the IEPF Authority, pertaining to
the Final Dividend for FY 2017-18. Additionally,
78,518 underlying Equity Shares were transferred
to the IEPF Authority as per applicable
provisions of the Companies Act, 2013 and the
IEPF Authority (Accounting, Audit, Transfer and
Refund) Rules, 2016.

Pursuant to Rule 7(2A) of the IEPF Authority
(Accounting, Audit, Transfer and Refund) Rules,
2016, Mr. Krishna Madhusudan Jhunjhunwala,
Chairman & Managing Director (DIN: 00097175),
has been designated as the Nodal Officer
and Mr. Mustafa Yusuf Manasawala, Company
Secretary & Compliance Officer (A76344), has
been designated as the Deputy Nodal Officer of
the Company for the purposes of the said Rules.

40. INSURANCE

All the properties of the Company, including
buildings, plant and machinery, and inventories,
have been adequately insured against risks and
contingencies during FY 2025-26.

41. PROCEEDINGS UNDER THE INSOLVENCY AND
BANKRUPTCY CODE, 2016 AND ONE-TIME
SETTLEMENT

There were no proceedings initiated or pending
against the Company under the Insolvency and
Bankruptcy Code, 2016 during FY 2025-26.
There were no instances of one-time settlement
with any bank or financial institution during the
year; accordingly, details of valuation are not
applicable.

42. DISCLOSURE PURSUANT TO SEBI CIRCULAR
ON FUND RAISING BY LARGE CORPORATES

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

Shareholders may reclaim their dividends and/
or shares transferred to IEPF by filing Form
IEPF-5 (available at www.iepf.gov.in) along
with the requisite documents. No claim shall lie
against the Company in respect of amounts or
shares duly transferred to IEPF. The table below
provides details of outstanding unclaimed
dividends and the respective last dates for
claiming before transfer to IEPF:

43. ACKNOWLEDGEMENTS AND APPRECIATION

Your Board of Directors takes this opportunity
to place on record its deep appreciation for
the continued support, trust, and confidence
reposed by the Members, customers, suppliers,
bankers, business associates, and all other
stakeholders. The Directors also express their
sincere gratitude to BSE Limited, the National
Stock Exchange of India Limited, the Securities
and Exchange Board of India, the Ministry of
Corporate Affairs, the Ministry of Finance, the
Government of India, State Governments, and
all other regulatory and statutory authorities
for their valuable guidance and continued
support. The Directors place on record their
wholehearted appreciation for the commitment,
dedication, and hard work of all employees
across all levels, who remain the driving force
behind the Company's sustained performance.

FOR AND ON BEHALF OF THE BOARDKrishna Madhusudan Jhunjhunwala

Chairman & Managing Director
DIN: 00097175

Kanav Krishna Jhunjhunwala

Whole time Director
DIN: 09507192

Place: Mumbai
Date: April 22, 2026