Sarla Performance Fibers Ltd

To the Members,

Your Directors take immense pleasure in presenting the Thirty-First (31st) Annual Report, together with Audited Financial Statements for the financial year ended March 31, 2024 ("year under review").

1. Financial Highlights

The Company's Financial Performance for the year ended March 31, 2024 is summarized below:

(Rs in Lakhs except EPS)

2. Performance Overview

During the year under review, the company demonstrated resilience amid multiple industry challenges, including geopolitical tensions, fluctuating commodity prices, and persistent inflationary pressures. Despite these hurdles, there was merely slight deep in the revenue, primarily due to slight pressure on realisations in the global market, which was offset by volume growth. The last quarter of the financial year has been particularly encouraging, showing strong recovery trends. The marketisgraduallyabsorbingpreviouslyaccumulated inventory, consumer confidenceis rising, inflationary pressures are easing, and commodity prices have stabilised. Thus, we anticipate that next year will be a strong year for the Company, given the promising outlook. The company remains focused on increasing the share of value-added products, which will drive realisation and profitability. We are committed to growing the business while maintaining a healthy operating margin and a prudent capital structure.

During the year under review, the company set up a new plant adjacent to our existing facility at Silvassa. Additionally, the Company strategically shifted from an Export Oriented Unit (EOU) to a Domestic Tariff

Area (DTA) for the Silvassa plant, which will enhance profitability through higher export incentives.

Standalone Sales of the Company were Rs.

38,217.12 Lakhs for FY 2023-24 as compared to Rs. 38,654.70 Lakhs for FY 2022-23 witnessing a decrease of 1.13% due to the prevalent market conditions.

Consolidated Sales of the Company for FY

2023-24 were Rs. 38,326.12 Lakhs as against Rs. 38,740.02 Lakhs in the previous year i.e. FY 2022-23 thereby registering a decrease of 1.06% Value of Export stood at Rs. 21,071.50 Lakhs for FY 2023-24 as compared to Rs. 19,889.52 Lakhs for FY 2022-23 on standalone & consolidated basis.

Considerate increase of 8.85% by Sale of Wind

Power to Rs. 569.07 Lakhs from Rs. 524.27 Lakhs.

Profit before Interest, Depreciation & Tax was Rs. 7,859.30 Lakhs as compared to Rs. 6,556.91

Lakhs in the previous year on a standalone basis.

Profit before Interest, Depreciation & Tax was Rs. 7,878.46 Lakhs as compared to Rs. 6,670.59

Lakhs in the previous year on consolidated basis

3. Dividend

In order to conserve the resources of the Company by taking into account the prevailing economic situation and the need of resources for growth, the Board of Directors of the Company have not recommended any dividend on the Equity Shares of the Company for the Financial Year ended March 31, 2024.

4. General Reserves

There is no amount proposed to be transferred to Reserves out of profits for the financial year 2023 -24.

5. Share Capital

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

31, 2024 the paid-up share capital of your Company stood at Rs. 835.03 Lakhs comprising of 83,503,000

Equity Shares of Re. 1/- each fully paid.

The Company has, during the year under review, neither issued any Equity Shares with differential voting rights nor any shares (including sweat equity shares) to its employees under any scheme.

6. Deposits under Chapter V of Companies Act, 2013

The Company has not accepted any Deposit covered under Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details relating to deposits covered under Chapter V of the Act or the details of deposits which are not in compliance with Chapter V of the Act is not applicable.

7. Promoters

Incorporated in 1993, your Company is founded on the ethos of a closely knit family run business enterprise. Sarla represents a balance of family promoters, professional management and listed discipline, enjoying respect for quality, credibility and sustainability. At present, Mr. Krishnakumar M. Jhunjhunwala is holding the Key Promoter position in your Company.

8. Change in the Nature of Business

There is no change in nature of business of the Company. Your company continues to operate in the business segments of Textiles, Wind Power

Generation and Manufacturing through production and global export of High-Performance Fibers, textured Polyester Yarn, Textured Nylon Stretch Yarn, High Bulk Textured Polyester Yarn, Sewing Thread, Specialty Sewing Threads, High-Tenacity

Covered Dyed Yarns and Threads.

9. Extensive Network

As of March 31, 2024, your Company, along with its Subsidiaries/Associates/Joint Venture Companies, as the case may be, continues to grow in the South American markets, acting as lead manufacturers in hosiery and apparel applications.

10. Subsidiaries, Joint Ventures and Associate Companies

As on March 31, 2024, the Company has 6 overseas subsidiaries (direct and indirect) comprising of 2 wholly owned; 4 step down subsidiaries and 3 overseas Joint Ventures. The Company does not have any Indian Subsidiary / Joint Venture / Associate Company.

There has been no material change in the nature of the business of the subsidiaries. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at https://www. sarlafibers.com/wp-content/uploads/2024/01/12.-

Policy-for-Determining-Material-Subsidiary.pdf Details of the Subsidiaries and Associates of the Company are mentioned in the Annual Return hosted on the website of the Company.

In accordance with the provisions of the Section 136 of the Companies Act, 2013, the Annual Report of the Company, containing therein its Standalone and the

Consolidated Financial Statements has been placed on the website of the Company, www.sarlafibers.com. Further, as per the proviso of the said section, Annual

Financial Statements of each of the subsidiary companies have also been placed on the website of the Company at www.sarlafibers.com. Accordingly, the said documents are not being attached to the Annual Report. Shareholders interested in obtaining the copy of the Annual Financial Statement of subsidiaries companies may write to the Company Secretary & Compliance Officer of the Company.

A statement containing the salient features of the

Financial Statements of Subsidiaries, Associates and Joint venture as per the provisions of the Companies Act, 2013, in the prescribed Form AOC-1 is included in the Annual Report.

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

During the financial year under review, there were no additions in the subsidiaries, or associate companies. There were no Companies which ceased to be Subsidiary/Associates/Joint Ventures of the

Company.

12. Consolidated Financial Statement

The Consolidated Financial Statements of the Company and its Subsidiaries for the Financial Year 2023-24 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the Listing Regulations, as well as in accordance with the Indian Accounting

Standards notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Accounts) Rules, 2014 of the Companies Act, 2013 ("the Act"). The Consolidated Financial Statement reflects the results of the Company and that of its Subsidiary/ Associates/ Joint Ventures. As required under Regulation 34 of SEBI Listing Regulations, the

Audited Consolidated Financial Statement together with the Independent Auditors' Report thereon, forms part of this Annual Report and is also available on the website of the Company.

13. Particulars of Loans, Guarantees and Investments

The particulars of Loans, Guarantees are given in the Corporate Governance Report which forms part of the Annual Report. Further details of the loans, guarantees and investments, as required under

Section 186 of the Act and Schedule V of the SEBI

Listing Regulations, are also provided as part of the notes to the financial statements of the Company.

14. Directors

As on March 31, 2024, the company had Eight (8) directors on Board, comprising of Three (3) Executive Directors and Five (5) Non-Executive Directors out of which Four (4) are Independent Directors. Further there are Two (2) woman directors on Board amongst the 8.

Appointment and Re-appointment

In accordance with the provisions of Section 152, the Company appointed Mr. Sachin Shashikant

Abhyankar (DIN:02760746) as the Non-Executive

Non-Independent Director of the Company with effect from August 10, 2023.

Further, as per Section 149, 150, 152, 161, Schedule IV read with other Rules applicable thereunder, Mr. Bharat Jhamvar (DIN: 00211297) was appointed as an Additional Independent Director of the Company with effect from August 10, 2023. Your Board proposed and thereby Members regularized his appointment and appointed Mr. Bharat as an Independent Non-

Executive Director of the Company under Section 149 and 161(1) of the Act for a term of Five (5) Years, from August 10, 2023 to August 9, 2028, not liable to retire by rotation at the Annual General Meeting of the Company held on September 21, 2023 by way of an Ordinary Resolution.

However, pursuant to Regulation 25(2A) of the SEBI (LODR) Regulations, 2015 appointment of an Independent Director of a listed entity shall be subject to the approval of shareholders by way of a Special Resolution. Accordingly, your Board has recommended to the Members, ratification for appointment of Mr. Bharat Kishore Jhamvar as the Independent Director of the Company, on same terms and conditions and tenure, via Special Resolution at the ensuing Annual General Meeting.

Post March 31, 2024, the following are the key changes during the Financial Year

In accordance with the provisions of Section 149(10) of the Companies Act, 2013, read with Rules made thereunder, Mr. Parantap Dave (DIN: 00019472),

Independent Director will be completing period of

Two (2) terms of five years each at your company the ensuing 31st Annual General Meeting ("AGM").

Mr. Dave was re-appointed in the Company vide

Members Approval dated 27th September, 2019 to hold office for a period of Five (5) consecutive years till the conclusion of forthcoming 31st AGM of the Company.

The Board expresses and places on record its appreciation to Mr. Dave for his valuable inputs, insights and guidance to the Company during his tenure.

The Board of Directors vide its resolution dated

May 10, 2024, approved the following, subject to the approval of shareholders at the 31st Annual General Meeting of the Company:

- Re-appointment of Mr. Paulo Manuel Ferreira

Moura De Castro (DIN: 08459844) as the Non-Executive Independent Director of the Company for a second term of Five (5) years with effect from May 23, 2024 to May 22, 2029.

- Re-appointment and Re-designation of Mr.

Krishnakumar Jhunjhunwala (DIN: 09507192), as the Chairman & Managing Director of the

Company for a period of Five (5) years from October 1, 2024 to September, 30, 2029 and payment of remuneration and minimum remuneration for a period of Three (3) years from October 1, 2024 to September 30, 2027.

The Board of Directors vide its resolution dated

June 24, 2024, approved the following, subject to the approval of shareholders at the 31st Annual General Meeting of the Company:

- Redesignation of Mr. Sachin Shashikant

Abhyankar (DIN:02760746) as the Non-Executive Independent Director of the Company with effect from June 24, 2024

Retirement by Rotation

In accordance with the provisions of Section 152 of the Act and in terms of the Articles of Association of the Company, Mr. Neha Jhunjhunwala, (DIN: 07144529), Executive Director retires by rotation at the ensuing 31st AGM of the Company and being eligible, offers herself for re-appointment.

The disclosures required pursuant to Regulation 36 of the SEBI Listing Regulations and the Secretarial

Standards on General Meeting (‘SS-2') are given in the Notice of this AGM, forming part of the Annual

Report.

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

Declaration of Independence

The Company has received necessary declarations from all the Independent Directors on the Board of the Company confirming that they meet the criteria of Independence as prescribed under Section 149 of the Companies Act, 2013 and the Rules made there under and Regulation 16(1)(b) and other applicable regulations, if any, of the Securities and Exchange

Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. The Independent Directors have also confirmed that 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.

Further, the Independent Directors have also submitted a declaration in compliance with the provision of Rule 6(3) of Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, which mandated the inclusion of an

Independent Director's name in the data bank of persons offering to become Independent Directors, of Indian Institute of Corporate Affairs ("IICA") for a period of one year or five years or life time till they continue to hold the office of Director andalsocompletedtheonlineproficiency test, conducted by Indian Institute of Corporate Affairs, wherever applicable.

The Board of Directors, based on the declaration(s) received from the Independent Directors, have verified the veracity of such disclosures and confirmed that the Independent Directors fulfill the conditions of independence specified in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013, as amended and are independent from the management of the Company.

In the opinion of the Board, all the Independent Director are persons possessing attributes of integrity, expertise and experience (including proficiency) as required under the applicable laws, rules and regulations.

The Company has issued letters of appointment/ reappointment to Independent Directors in the manner as provided under Companies Act, 2013.

The terms and conditions of the said appointment are hosted on website of the Company https://www. sarlafibers.com/wp-content/uploads/2024/01/2. Terms-Conditions-for-appointment-of-ID.pdf.

Familiarization program for Independent Directors

Your company has conducted necessary familiarisation program for the Independent

Directors onboard with regards to their roles, duties and responsibilities. The details of the training and familiarization program are provided in the Corporate Governance Report, which forms part of the Annual

Report.

Board Evaluation

The Board of Directors have carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 and basis the criteria mentioned in the Guidance Note on Board Evaluation issued by the Securities and

Exchange Board of India.

The Independent Directors were satisfied with the overall functioning of the Board, which displayed a high level of commitment and engagement.

15. Key Managerial Personnel

Pursuant to the provisions of the Section 203 of the

Companies Act, 2013, the Key Managerial Personnel of the Company as on the date of this Report are:

- Mr. Krishnakumar M. Jhunjhunwala, Managing

Director^

- Ms. Radhika Sharma, Company Secretary & Compliance Officer*

- Mr. Kayvanna Shah, Chief Financial Officer# Independent ^Mr. Krishnakumar Jhunjhunwala is proposed to be re-designated and re-appointed as the Chairman and Managing Director of the Company with effect from October 1, 2024.

*Ms. Radhika Sharma was appointed as the Company Secretary & Compliance Officer with effect from November 4, 2023 in place of Ms. Neha Somani (resigned on September 22, 2023)

#Mr. Kayvanna Shah was appointed as Chief

Financial Officer with effect from June 24, 2024 in place of Mukesh Deopura (resigned on March 26, 2024)

16. Meetings of the Board

During the F.Y. 2023-24, four (4) Meetings of Board of Directors were convened. The details of the said meetings are mentioned in the Corporate Governance Report forming part of this Annual Report.

The intervening gap between two consecutive meetings was not more than 120 (One Hundred and

Twenty) days as prescribed by the Companies Act,

2013 and the SEBI Listing Regulations.

17. Committees of Board

Pursuant to the provisions of the Companies

Act, 2013, rules framed there under and the SEBI Listing Regulations, the Company has the following committees of the Board of Directors and the details pertaining to such committees are mentioned in the

Corporate Governance Report, which forms part of the Annual Report:

• Audit Committee;

• Nomination and Remuneration Committee;

• Corporate Social Responsibility Committee;

• Risk Management Committee;

• Stakeholders' Relationship Committee;

During the year, all recommendations made by the aforesaid committees were approved by the Board. The reconstitutes committee structure is available on the website of the company at - https://www. sarlafibers.com/composition-of-committee/

18. Listing of Securities

As on the date of this report, the Company has its Equity Shares listed on the following Stock

Exchanges:

- BSE Limited;

- The National Stock Exchange of India Limited; The listing fees for the financial year under review have been paid to the Stock Exchanges where the Equity Shares of the Company are listed. The securities of the Company were not suspended from trading during the FY 2023-24.

19. Internal Financial Control System and their adequacy

The details on Internal Financial Control System and their adequacy are provided in the Management

Discussion and Analysis Report of the Company, which forms part of the Annual Report

20. Auditors a) Statutory Auditors

The members of the Company at 29th Annual

General Meeting ("AGM") re-appointed M/s. CNK & Associates LLP, Chartered Accountants, Mumbai (Firm Registration No.: 101961W) as the Statutory Auditors of the Company for a term of five (5) years to hold office from the conclusion of 29th the conclusion of 34th AGM of the Company.

Further, vide Ministry of Corporate Affairs (MCA) notification dated May 7, 2018, the requirement for ratification of appointment of Statutory Auditors by members at every AGM has been dispensed with.

Accordingly, no such item has been considered in the

AGM Notice for the Financial Year 2023-24.

The Statutory Auditors, M/s CNK & Associates LLP,

Chartered Accountants have issued their reports on

Financial Statements for the financial year ended March 31, 2024. The Report does not contain any qualifications, reservations or adverse remarks on the financial statements of the Company. Further, the

Company is in compliance with the RBI regulations on downstream investments issued from time to time and no qualification were made by the Statutory

Auditors in their report. Notes on Accounts referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Members are therefore requested to approve the Auditors' Report. b) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies

(Appointment and Remuneration of Managerial

Personnel) Rules, 2014, the Board of Directors have appointed M/s. Mayank Arora & Co., Company Secretaries in Practice (COP: 13609) to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2024. with the

The Report of Secretarial Auditor in Form MR-3 in accordance with Section 204 of Companies

Act, 2013 and Secretarial Compliance Report in accordance with Regulation 24A of the SEBI Listing

Requirements for the financial year ended March 31, 2024 is annexed herewith and marked as ‘Annexure -I' to this Report.

In terms of Regulation 16(1)(c) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the

Company does not have any material subsidiary.

There were no qualifications/ adverse remarks made by the Secretarial Auditor in their report for the financial year ended March 31, 2024.

However, the Secretarial Auditor have made an observation in their report which is self- explanatory and doesn't require any clarification:

NSE Limited. However, the Company have submitted the same on 22/08/2023 on NSE Limited. NSE through their Notice dated August 21, 2023 imposed penalty of Rs. 58,000 + 18% GST. The Company has applied for waiver by paying sum of Rs 11,800 with NSE Limited and the response is awaited therewith." c) Cost Auditor:

The Company has prepared and maintained cost until records as prescribed under Section 148(1) of the Companies Act, 2013 for the year 2023-24. The Board of Directors, on recommendations of the Audit Committee, appointed M/s. Balwinder & Associates, Cost Accountants, (Firm Registration No: 000201), as Cost Auditors of the Company, for the FY

2023-24, vide its Resolution dated May 13, 2023 for conducting the audit of the cost records maintained by the Company for the products as mandated by the Central Government at a remuneration as mentioned in the Notice of 30th AGM of the Company.

However, the Company received resignation from the said auditors on March 29, 2024, due to non-receipt of any communication from the previous auditors

M/s V. B Modi & Associates, in accordance with the provisions of clause (8) of Part 1 of the First Schedule to the Cost and Works Accountants Act, 1959.

In this regard, the Company had vide its Board Meeting dated April 27, 2024 appointed M/s Kasina

& Associates as the Cost Auditors in place of M/s. Balwinder & Associates to carry out Cost Audit for the Financial Year 2023-24 at such remuneration as decided by the Board, subject to the ratification of the Members at the 31st AGM.

The Company has further vide Board Meeting dated

June 24, 2024 had appointed same auditors viz., M/s

Kasina & Associates as the Cost Auditors for the

Financial Year 2024-25, subject to the ratification of the Members at the 31st AGM.

The Cost Audit Report for the financial year 2023-24 is in progress and the report will be filed Ministry of Corporate Affairs, Government of India, within the statutory timeline.

21. Reporting of Frauds

There have been no instances of fraud reported by the Statutory Auditors under Section 143 (12) of the Act and Rules framed thereunder, either to the Audit

Committee/ Company or to the Central Government.

22. Particulars of Employees and related Disclosures

Disclosure pertaining to remuneration and other details as 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 is given in

‘Annexure–II ' to this Report.

A Statement containing Particulars of Employees as required pursuant to the provisions of Section

197 of the Act, and Rule 5(2) & 5(3) of Companies

(Appointment and Remuneration of Managerial

Personnel) Rules, 2014, are not provided in this

Report.

As per the provisions of Section 136 of the Act, the Annual Report is being sent to Members of the

Company and other stakeholders entitled thereto, excluding the Statement containing Particulars of Employees. Any Member interested in obtaining such details may write to the Company Secretary of the Company at investors@sarlafibers.com.

23. Directors' Responsibility Statement

Pursuant to Section 134 of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: a. in the preparation of annual accounts for the financial year ended March 31, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. appropriate accounting policies have been selected and applied consistently and judgments and estimates are made reasonably and prudently so as to give a true and fair view of the state of affairs of the Company as on March

31, 2024 and of the profit of the Company for the year ended on that date; 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 have been prepared for the financial year ended March 31, 2024 on a ‘going concern' basis; e. proper internal financial controls are devised to ensure compliance with all the provisions of the applicable laws and that such internal financial controls are adequate and are operating effectively; and f. proper systems are devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

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

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

25. Particulars of contracts or arrangements with Related Party Transactions

PursuanttoPolicyonRelatedPartyTransactionofthe

Company, all contracts/ arrangements/ transactions entered by the Company during financial year with related parties were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

Pursuant to the provisions of applicable SEBI Listing

Regulations, all related party transactions are placed before the Audit Committee for prior approval including the transactions covered under section

188 of the Companies Act, 2013 and Regulation 23 of the SEBI Listing Regulations. Prior omnibus approval of the Audit Committee has also been obtained for transactions which are foreseen and are repetitive in nature.

The particulars of contracts or arrangements with related parties referred to in sub-section 1 of Section

188 of the Companies Act, 2013 are furnished in Form

AOC-2 in ‘Annexure-IV' to this report.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: https://www. sarlafibers.com/wp-content/uploads/2024/01/14.

Related-Party-Transaction-Policy.pdf

Committee

In compliance with the requirements of Section

135 of the Companies Act, 2013 read with the applicable rules made there under, the Company has a duly constituted CSR Committee. The details of the CSR Committee are provided in the Corporate

Governance Report of the Company, which forms part of the Annual Report.

CSR Policy

The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company and can be accessed through the web link at https://www.sarlafibers.com/investors/.

CSR initiatives undertaken during the financial year 2023-24, if any

The CSR Obligation of the Company for the Financial

Year 2023-24 was Rs. 100.61 Lakhs. The excess CSR amount spent in previous financial years amounted to Rs. 144.47 Lakhs, and hence the Company was not bound by any obligation during the year under review.

However, your Company considers its responsibility towards the community and environment in which it operates and consistently contributes to the economic development of society at large. In line with this commitment, the Company is pleased to inform that it has made surplus contributions during the year under review towards the promotion of healthcare including preventive healthcare. impact The Annual report on CSR activities in the format prescribed in the Companies (Corporate Social

Responsibility Policy) Rules 2014 has been appended as ‘Annexure – V' and forms an integral part of this Report.

27. Corporate Governance Report and Management Discussion and Analysis Report

Your Company continues to be committed to good corporate governance aligned with the best corporate practices. It has also complied with various standards set out by Securities and Exchange Board of India and the Stock Exchanges where its Securities are listed. For the financial year ended March 31, 2024, your Company has complied with all the requirements as applicable, with respect to

Corporate Governance

As per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, a separate section on corporate governance practices followed by the

Company, together with a certificate from M/s. Mayank Arora & Co., Practicing Company Secretary, on compliance with corporate governance norms under the SEBI Listing Regulations, forms an integral part of this Annual Report as ‘Annexure - VI' &

‘Annexure – VI(A)' respectively.

Further, Management Discussion and Analysis Report on the operations of the Company, as required under the Regulation 34 (2) of the SEBI

Listing Regulations, is provided in a separate section and forms an integral part of Annual Report .

28. Policy for Determining Materiality of Events

To boost shareholder democracy and investor awareness, the Securities and Exchange Board of India by way of a Notification dated June 14, 2023, amended the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Vide this Circular SEBI introduced

Quantitative Criteria for Determining Materiality of

Events/ Information, necessary to be disclosed to investors and stock exchanges. In its consonance,

SEBI also introduced/ amended List of Information and/or Events that are deemed material.

In this regard, in order to keep the policies of the

Company in line with the provisions of the SEBI

(Listing Obligations and Disclosure Requirements)

Regulations, 2015 the Policy for Determination of

Materiality for Disclosure of Events or Information as maintained by the Company was amended and approved by Board at its Meeting held on January 24, 2024. Further, the Board vide its resolution introduced quantitative thresholds and amended matters which necessitated disclosure to exchanges and investors.

The Materiality Policy of the Company is available on the website of the Company at https://www. sarlafibers.com/wp-content/uploads/2024/01/8.

Determination-of-Material-Events.pdf

29. Related Party Transaction Policy

Related Party Transactions have a significant on the governance and integrity of listed entities.

Hence, in order to ensure transparency and protect the interests of all stakeholders, SEBI pursuant to Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandated the Board of Directors to review its

Related Party Transaction (RPT) Policy at least once in every three years or whenever there is any updation thereof.

In this regard, the Board perused and accordingly approved recent amendments in its Related Party Policy.

The Related Party Transaction Policy is available on the website of the Company at https://www. sarlafibers.com/wp-content/uploads/2024/01/14.

Related-Party-Transaction-Policy.pdf

30. Whistle Blower / Vigil Mechanism Policy

The Company believes in conducting its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. Pursuant to Section 177(9) of the

Act read with Rule 7 of the Companies (Meetings of

Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Board of Directors have implemented a vigil mechanism through the adoption of Whistle Blower/Vigil Mechanism Policy. The policy provides for adequate safeguards against victimization of Director(s) or employee(s) or any other person who avail the Mechanism. The Code applies to all Directors, Officers and Employees of the

Company.

The Code of Conduct is available on Company's website - https://www.sarlafibers.com/wp-content/ uploads/2024/01/15.Whistle-Blower-Policy.pdf to report any concerns about unethical behaviour, any actual or suspected fraud.

31. Code of Conduct for Prohibition of Insider Trading

Your Company has in place a Code of Conduct for

Prohibition of Insider Trading, which lays down the process of trading in securities of the Company by the Designated Persons and to regulate, monitor and report trading by the employees of the Company either on his/her own behalf or on behalf of any other person, on the basis of Unpublished Price Sensitive

Information. Also it lays down the procedure for Inquiry in case of leak of Unpublished Price Sensitive Information including Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information.

The aforementioned amended Code is available on the website of the Company at https://www. sarlafibers.com/wp-content/uploads/2024/01/10.

Code-of-Insider-Trading.pdf

32. Compliance Management Framework

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

Compliance of Secretarial Standards

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

Risk Management

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

This risk framework thus helps in managing market, credit and operationalrisksandquantifiespotential and Material Orders passed by impact at a Company level.

The details and the process of the Risk Management as implemented in the Company are provided as part of Management Discussion and Analysis which forms part of the Annual Report. The risk management policy of the Company is available on its website at - https://www.sarlafibers.com/wp-content/uploads/2024/01/13.Risk-Management-Policy.pdf

Extract of the Annual Return

In accordance with the provisions of Section 92(3) read with section 134(3)(a) of the Companies Act, 2013 and Rules framed thereunder, an annual return in the prescribed format for the financial year 2023-

24 is available on the website of the Company at https://www.sarlafibers.com/reports/

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

The Company has zero tolerance towards sexual harassment at the workplace and have a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace

(Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. All women employees whether permanent, temporary or contractual are covered under the above policy. The said policy has been uploaded on website https://www.sarlafibers.com/ wp-content/uploads/2024/01/POSH-Policy-Sarla. pdf of the Company for ready reference of female employees. An Internal Complaint Committee (ICC) has been set up in compliance with the said Act and rules framed thereunder to redress complaints received on sexual harassment.

During the year under review, the committee reviewed on the policy and matters pertaining thereto, if any. It was noted that there were no cases received pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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

Adequate Internal Financial Control systems, commensurate with the nature of the Company's business, size and complexity of its operations, are in place and have been operating satisfactorily and effectively. During the financial year under review, no material weaknesses in the design or operation of Internal Financial Control system was reported. The Company's Internal Auditor also monitors and evaluates the internal control system and submits Reports/ Presentations which are placed before the Audit Committee and thereafter for discussion on Board.

Regulators or Courts:

During the period under review, no such order is passed by any Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations except one

GST recovery order for Rs 643.51 lakhs (Rs. 585.01

Lacs and Rs. 58.50 Lacs as a penalty) plus interest from GST department pertaining to the GST refund availed on exports on payment of IGST in EOU unit for FY 2018-19 to 2021-22. Based on legal advice, the Company has moved to Bombay High court challenging the above order and asking for stay of the demand. Simultaneously the company has filed necessary appeals with the Commissioner (Appeal) Central Excise & Customs. The company believes that its' refund claim was proper and the recovery order is not maintainable.

Company and date of this report

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

37. Credit Rating

Acuite Ratings and Research Ltd (Formerly Known as SMERA Ratings Limited) have reaffirmed the

Company's long-term borrowings rating to ‘ACUITE

A' and reaffirmed the short-term borrowing rating as

‘ACUITE A1'.

These ratings are considered to have low credit risk and are considered stable in nature.

38. Investor Education and Protection Fund (IEPF)

Pursuant to Sections 124 and 125 of the Act read with the Investor Education and Protection Fund

Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), dividend, if not claimed for a period of seven years from the date of transfer to

Unpaid Dividend Account of the Company, are liable to be transferred to IEPF.

Further, all the shares in respect of which dividend has remained unclaimed for seven consecutive years or more from the date of transfer to unpaid dividend account shall also be transferred to IEPF Authority. The said requirement does not apply to shares in respect of which there is a specific order of Court, Tribunal or Statutory Authority, restraining any transfer of the shares.

In the interest of the shareholders, the Company sends periodical reminders to the shareholders to claim their dividends in order to avoid transfer of dividends/shares to IEPF Authority. Notices in this regard are also published in the newspapers and the details of unclaimed dividends and shareholders whose shares are liable to be transferred to the IEPF

Authority, are uploaded on the Company's website https://www.sarlafibers.com/

The details of unclaimed dividends and shares transferred to IEPF during FY 2023-24 are as follows:

Shareholders /claimants whose shares, unclaimed dividend have been transferred to the aforesaid IEPF

Suspense Account or the Fund, as the case may be, may claim the shares or apply for refund by making an application to the IEPF Authority in Form IEPF-

5, along with requisite fee as decided by the IEPF

Authority from time to time.

Further, the Company shall be transferring the unclaimed Dividend for the financial year 2016-17 to the IEPF Account on or before December 03, 2024. The Company shall also be transferring the shares, on which the dividend has remained unclaimed for a period of seven (7) consecutive years, to the IEPF

Account simultaneously on the same date.

39. Insurance

All the properties including buildings, plant and machinery and stocks of the Company are adequately insured.

40. Other Disclosures a) There are no proceedings made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or

Financial Institution, during the year under review. b) The Equity shares of your Company continues to be listed on BSE Limited and the National Stock

Exchange of India Limited. The applicable listing fees for the F.Y. 2023-24 have been duly paid to the

Exchanges. c) Pursuant to SEBI Circular No. SEBI/HO/DDHS/ CIR/P/2018/144 dated November 26, 2018, your Directors confirm that the Company is not defined as a "Large Corporate" as per the framework provided in the said Circular. Moreover, your Company has not raised any fund by issuance of debt securities.

41. Acknowledgement and appreciation

Your Board takes this opportunity to thank the

Company's Members, Customers, Vendors and all other Stakeholders for their continued support throughout the FY 2023-24. The Directors also thank the Stock Exchanges, Banks, Ministry of Corporate Affairs, State Governments, Government of India, and all other Government agencies and Regulatory authorities for the support extended by them and also look forward to their continued support in future.

Your Directors wish to place on record their appreciation of the dedicated efforts by employees at all levels.

For and on behalf of the Board