S P Apparels Ltd

To

The Members,

The Directors of your Company are pleased to present the 20th Annual Report on the business and operations of the Company together with the Audited Financial Statements (Standalone & Consolidated) for the year ended 31st March, 2025.

The Company's financial performance for the year ended 31st March, 2025 is summarised below:

(in Million)

Financial Year 24 - 25, Garment division had an operational revenue of Rs 9816.23 million and have achieved a growth of 3% revenue for the current year. Margins were under pressure due to the low efficiency, level of workmen and also air freight.

Spinning Division and the Processing division was utilised 100% and had improved on their margins comparing the previous years.

Young Brand Apparels (P) Ltd, was acquired on 21st of June

2024 and have been successful in improving the revenue and the margins for the current year. During the current Financial Year 2024 - 25 they have achieved a total revenue of Rs 3243.18 million and a PAT of Rs 324.44 million.

Financial year 24 - 25 has also been a very tough year for the Retail sector. Inflation and higher interest cost is showing some stress in the retail industry.

The new brands that were added into the portfolio of brands had impacted the margins of the S.P. Retail Ventures Limited. This is mainly due to the brand HEAD where the minimum guaranteed sales were not achieved, and we were also losing margins due to lack of sales. However, we have exited brand “HEAD” effective from December 2024.

We are confident that SP Retail ventures will be able to raise capital during the current financial year to support their aspiration of growth and cash flows.

S.P. Apparels (UK) Ltd has reported a revenue of GBP 6.8 million, However high Interest cost & higher Overheads are putting pressure in the margins of the company. The team has been changed in S.P. Apparels (UK) Ltd. They also have move to a new premises which is in London. They have also added couple of new customers to their portfolio and will increase on both revenue and margins during the next financial year.

Currently our focus is on Sri Lanka operation and we are very confident of increasing our capacity in Sri Lanka. The next line of growth is expected to come from Sri Lanka.

The Company achieved a total revenue of Rs.9890.06 million as against Rs.9639.84 million in the previous year. The Company's Profit Before Tax is Rs.1117.47 million during the year, as compared to Rs. 1356.94 million in the previous year. The Company earned a Net Profit of Rs.835.32 million, as against a Net Profit of Rs. 1037.62 million in the previous year.

There was no change in the nature of business of the Company during the financial year ended 31st March 2025.

The Board of Directors recommends a dividend of Rs.2/- per Equity Share having a face value of Rs.10/- each (20%) on the Equity Share Capital of Rs.250.93 Million for the financial year ended on 31st March 2025 aggregating to Rs. 50.19 Million. As per Finance Act, 2020, the Dividend is taxable in the hands of the Shareholders. Dividend on Equity Shares is subject to the approval of the Shareholders at the ensuing Annual General Meeting.

As per the requirements of SEBI notification no. SEBI/LAD/

NRO/GN/2016-17/008 dated 8th July 2016, the Company has formulated a Dividend Distribution Policy which has been duly approved by the Board of Directors. A copy of the Dividend Distribution Policy is available on the Company's website: http://www.s-p-apparels.com/assets/img/docs/Dividend- Distribution-Policy.pdf

As at March 31, 2025 the Company had reserves of Rs.8346.60 million. During the year under review, the company has transferred Rs.835.32 million to Retained Earnings (Other Equity).

As required under the provisions of Section 125 and other applicable provisions of Companies Act, 2013 (hereinafter “the Act”), dividend that remains unpaid/ unclaimed for a period of seven years, are to be transferred to the account administered by the Central Government viz: Investor Education and Protection Fund (“IEPF”).

Accordingly, the company has transferred Rs. 4,922.50/- to the Investor Education and Protection Fund on 24.09.2024 pertaining to the financial year 2016-17, that remained unpaid or unclaimed for seven consecutive years.

The Authorised Share Capital of the Company is Rs. 47,25,00,000/- divided into 4,72,50,000 equity shares of Rs. 10/- each and the issued share capital of the Company as at 31.03.2025 stood at Rs.25,09,26,000/- divided into 2,50,92,600 Equity Shares of Rs.10/- each and the subscribed and paid-up share capital of the Company as at 31.03.2025 stood at Rs.25,09,26,000/- divided into 2,50,92,600 Equity Shares of Rs.10/- each.

The Annual Return of the Company for the financial year 2024-25 as required under Section 92(3) of the Companies Act, 2013 is available on the website of the Company at the link http://www.sp-apparels.com

As on 31st March, 2025, the gross fixed assets block stood at Rs.8259.10 Million and net fixed assets block at Rs.4587.05 Million. Additions to Fixed Assets during the year amounted to Rs.538.02 Million.

The details of meetings of Board of Directors and Committees thereof and the attendance of the Directors in such meetings have been enumerated in the Corporate Governance Report.

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards. Such systems are found to be adequate and are operating effectively. The Company has duly complied with Secretarial Standards issued by the Institute of Company Secretaries of India in respect of the meeting of the Board of Directors (SS-1) and General Meetings (SS-2).

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures from those standards;

(b) the directors had 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 of the company for that period;

(c) the directors had taken proper and sufficient care 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 directors had prepared the annual accounts on a going concern basis;

(e) the directors laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and operating effectively and

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

There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuant to Section 143(12) of the Companies Act, 2013.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that their name is included in the data bank as per Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Based on the confirmation / disclosures received from the Directors and on the evaluation of the Board, the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013 and also complied with the Code of Conduct for directors and senior management personnel formulated by the company.

The Board of Directors have evaluated the Independent Directors during the year 2024-25 and opined that the integrity, expertise and experience (including proficiency) of the Independent Directors is satisfactory.

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 and in terms of Regulation 19(4) of the SEBI Listing Regulations has formulated a policy on Nomination and Remuneration for its Directors, Key Managerial Personnel and senior management. The Nomination and Remuneration Policy of the Company can be accessed on the Company's website at the link https://www.s-p-apparels.com/wp/wp- content/uploads/bsk-pdf-manager/2025/05/NOMINATION- AND-REMUNERATION-POLICY-10-02-2025.pdf

There are no qualifications, reservations or adverse remarks or disclaimers made by ASA & Associates LLP, Statutory Auditors in their report.

Regarding the remarks made by MDS & Associates LLP, Secretarial Auditors of the Company in their report (Annexure D), your Director's ensure timely compliance going forward.

The maintenance of cost record as specified by the Central Government under Section 148(1) of the Companies Act, 2013 is applicable to the Company and accordingly the cost accounts and records are made and maintained. However, the appointment of Cost Auditor under the provisions of Section 148 is not applicable to the Company.

The Company has given loans, provided guarantees and made investments including investments in mutual funds and complied with the provisions of section 186 of the Companies Act 2013 and as required therein the details of the loans given, guarantees provided and investments made are annexed by way of notes to accounts. However, the Company has not provided security in connection with a loan to any other body corporate or person during the year under review.

All transactions entered into with related parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (as amended) during the financial year 2024-25 were in the ordinary course of business and on an arm's length basis and not material in nature and thus a disclosure in Form AOC- 2 is not required.

The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Company's website and may be accessed through the link at https://www.s-p-apparels.com/wp/wp-content/ uploads/bsk-pdf-manager/2025/05/RPT-Policy-amended- dt-10022025.pdf

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year as on 31st March 2025 and the date of the report.

The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under section 134(3)(m) of the Companies Act,

2013 read with Rule 8(3) of the Companies (Accounts) Rules,

2014 is furnished in Annexure-A and is attached to this report.

The Committee has formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day- to-day operations of the Company. The Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk management

procedure is reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company.

The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, which has been approved by the Board. For other details regarding the CSR Committee, refer to the Corporate Governance Report, which is a part of this report. The annual report on CSR activities is annexed in Annexure-B herewith. The CSR policy may be accessed on the Company's website https://www.s-p-apparels.com/wp/wp- content/uploads/bsk-pdf-manager/2025/05/CSR-Policy.pdf

Pursuant to the provisions of the Act and SEBI Listing Regulations, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of nonindependent directors and the Board as a whole based on various criteria. The performance of each independent Director was evaluated by the entire board of directors on various parameters like engagement, leadership, analysis, decision making, communication, governance etc. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory.

The performances of all the Committees were evaluated by the Board having regard to various criteria such as committee composition, committee processes, committee dynamics, degree of fulfillment of key responsibilities, effectiveness of meetings etc. The Board was of the unanimous view

that all the committees were performing their functions satisfactorily.

Mr.S.Chenduran (DIN: 03173269), Joint Managing Director retires by rotation at the Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment.

During the year under review, based on the recommendation of Nomination and Remuneration Committee, the Board of Directors appointed Mr. Ravishankar Balaraman (DIN: 07148483) as an Additional Director in the capacity as Independent Director of the Company with effect from 7th March 2025 and recommended to the members for appointment as Independent Director of the Company for the first term of consecutive Five (5) years with effect from 7th March 2025. Subsequently, the same was approved by the members with effect from the aforementioned date.

Mr. V. Sakthivel, (DIN: 00005720), retired as Independent Director on 29th March 2025 consequent to completion of his 2nd term of consecutive five years. The Board of Directors placed on record its sincere appreciation for the invaluable services rendered by him during his tenure.

Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors reappointed Mr. Sundararajan Chenduran (DIN: 03173269) and Smt. Sundararajan Shantha (DIN: 00088941) as Joint Managing Director(s) of the Company for a further period of 3 years with effect from 11th August 2025 and the same was approved by the members subsequently.

Key Managerial Personnel of the Company as required pursuant to Section 2 (51) and 203 of the Companies Act, 2013 are:

Mr.P.Sundararajan - Chairman and Managing Director.

Mrs.S.Latha - Executive Director

Mr.S.Chenduran - Joint Managing Director

Mrs.S.Shantha - Joint Managing Director

Mrs.P.V.Jeeva - Chief Executive Officer - Garments Division.

Mr.V.Balaji - Chief Financial Officer and

Mrs.K.Vinodhini - Company Secretary.

The Company has Five subsidiaries viz. Crocodile Products Private Limited, S.P.Apparels (UK) Private Limited, S.P Retail Ventures Limited, Young Brand Apparel Private Limited and S.P Apparels International Private Limited.

The consolidated financial statements of the company and its subsidiaries were prepared in accordance with the applicable accounting standards have been annexed to the Annual Report.

The annual accounts of the subsidiary companies are posted on the website of the Company viz. https://www.s-p- apparels.com/wp/financial-information/ and will also be kept open for inspection by any shareholder at the Registered Office of the Company.

A report containing the salient features of the subsidiaries as required under Section 129(3) of the Companies Act, 2013 has been annexed herewith in Form AOC - 1 and is attached as Annexure-C to this report.

The Company has formulated a Policy for determining Material Subsidiaries. The Policy may be accessed at: https://www.s-p-apparels.com/wp/wp-content/uploads/ bsk-pdf-manager/2025/05/POLICY-FOR-DETERMINATION- OF-MATERIALITY-OF-INFORMATION-OR-EVENTS-amended- dt-10022025.pdf

The Company does not have Joint Venture or Associate Company.

Directors have attached the Consolidated Financial Statements in the Annual Report pursuant to the provisions of the Companies Act, 2013. They are prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard. The Consolidated Financials also shows a significant increase in revenue.

Since the Company has not accepted any fixed deposit covered under Chapter V of the Companies Act, 2013, there are no deposits remaining unclaimed or unpaid as on 31st March, 2025 and accordingly, the question of default in repayment of deposits or payment of interest thereon during the year does not arise.

Prompt repayments, facilitated by healthy cash flows, elevated the standing of your Company. It enabled prudent application of funds and better negotiation strength. This trend is expected to continue.

No significant and material order was passed by any Regulators that have any impact on the going concern status and the operations of the Company.

The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the Internal Financial Control Systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.

The directors confirm that the Internal Financial Control (IFC) is adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3)(i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditors Report.

M/s. ASA & Associates LLP, Chartered Accountants, Chennai

were appointed as the Statutory Auditors of the Company for a period of five years at the Annual General Meeting of the Company held on 19th September 2022 from the conclusion of the 17th Annual General Meeting till the conclusion of the 22nd Annual General Meeting to be held in the year 2027.

The Company has received a certificate from the Statutory Auditors to the effect that their appointment as the Statutory Auditors of the Company, would be within the limits prescribed under section 139 of the Companies Act, 2013.

Pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the provisions of Sections 179 & 204 of the Companies Act, 2013, read with the Companies (Meetings of Board and its Powers) Rules, 2014, and subject to the approval of Shareholders in the ensuing Annual General Meeting, the Board of Directors of the Company have recommended the appointment of MDS & Associates LLP, Company Secretaries, Coimbatore as Secretarial Auditors of the Company for a first term of 5 (five) consecutive financial years commencing from the financial year 2025-26.

The report of the Secretarial Auditors for the financial year 2024-25 is annexed as Annexure-D to this Report.

The Board has appointed BM & Associates, Chartered Accountants, Coimbatore as Internal Auditors for the financial year 2025-26 pursuant to the provisions of Section 138 of the Companies Act, 2013.

The Employee Welfare Initiatives and practices followed by the Company is among the best in the Corporate sector. The strength of company's employees is close to 14004.

The Company has implemented the SPAL Employee Stock Option Plan 2024 (SPAL ESOP 2024). The Nomination and Remuneration Committee administers and monitors the SPAL ESOP 2024 of the Company. The disclosure pursuant to

the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is given in Annexure-E to this report.

The Company has received a Certificate from the Secretarial Auditors of the Company that the above referred Scheme had been implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolutions passed by the members in this regard.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to define the policy and redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee or third parties during the Financial Year.

1. Number of complaints received - Nil

2. Number of complaints disposed of - NA

The statement pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure-F attached to this report.

As per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Management Discussion and Analysis Report outlining the business of your Company forms part of this Annual Report.

At a time and age when enterprises are increasingly seen as critical components of the social system, they are

accountable not merely to their shareholders from a revenue and profitability perspective but also to the larger society which is also its stakeholders. The Business Responsibility and Sustainability Report describing the initiatives taken by the Company from an environmental, social and governance perspective, in the format as specified by SEBI Master Circular vide SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024 (as amended) forms part of this Annual Report.

A report on Corporate Governance is annexed and forms part of this report. The Company has complied with the conditions relating to Corporate Governance as stipulated in Regulation 27 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 (as amended).

The Audit Committee of the Board of Directors has been duly constituted in accordance with the provisions of Section 177 of the Companies Act, 2013. The details relating to the composition, meetings and functions of the Committee are set out in the Corporate Governance Report forming part of this Annual Report. The Board has accepted the Audit Committee recommendations during the year whenever required and hence no disclosure is required under Section 177(8) of the Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by the Board.

The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behaviour or any violation of the Company's Code of Conduct. During the year under review, there were no complaints received under this mechanism. The policy can be accessed on the Company's website at https://www.s-p-apparels.com/wp/wp-content/uploads/ bsk-pdf-manager/2025/05/Vigil-Mechanism-Policy_Revised. pdf

No applications has been made and no proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016.

The disclosure under this clause is not applicable as the Company has not undertaken any one-time settlement with the banks or financial institutions.

The relationship between the management and the employees at all levels during the year under review has been cordial and productive.

Certain statements in “management discussions and analysis” section may be forward looking and are stated as required by law and regulations. Many factors, both external and internal, may affect the actual results which could be different from what the directors envisage in terms of performance and outlook.

Your Directors would like to place on record their sincere appreciation for the dedication, commitment, and hard work of all employees across every level of the organization. The Company's accomplishments during the year would not have been possible without their unwavering support and tireless efforts. Your Directors also wish to thank its customers, suppliers and bankers for their continued support and faith reposed in the Company.