Sheela Foam Ltd

Dear Members,

Your Directors' have pleasure in presenting the 52^nd Annual Report on the business, operations and financial performance of the Company along with the Consolidated Audited Balance Sheet and Statement of Profit & Loss for the year ended 31^st March, 2024.

FINANCIAL INFORMATION

During the current year, Net Revenue of the Company, on standalone basis is H 1880 Crores, last year Net Revenue of the Company was H 2039 Crores. The Profit for the year for the current year decreased marginally by 1.67% to H 168 Crores as against the profit for the year of H 171 Crores of last year.

On consolidated basis the overall Revenue increased from H2873 crores to H 2982 Crores. The consolidated profit for the year decreased from H 201 Crores to H 184 Crores.

DIVIDEND

Board of Directors do not recommend any dividend for the year 2023-24. The entire profit is being ploughed back in the business.

SUBSIDIARIES

As on 31^st March, 2024 the Company has seven subsidiaries and ten steps down subsidiaries. As required under the provisions of Section 129 of the Companies Act, 2013, read with Companies (Accounts) Rule, 2013, a statement containing salient features of the financial statements of subsidiaries is provided in the prescribed format AOC-1 as Annexure-A of the Board Report.

MATERIAL SUBSIDIARIES

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

*Kurlon Enterprise Limited became the subsidiary of our company from October 20, 2023.

AMALGAMATION OF WHOLLY OWNED SUBSIDIARY WITH THE COMPANY

The Board of Directors of the Company ('Board') at its meeting held on November 08, 2022, has approved the Scheme of Amalgamation of the wholly owned subsidiary of the Company, i.e., International Comfort Technologies Private Limited ("ICTPL" or "Transferor Company") with Sheela Foam Limited ("SFL" or "Transferee Company") and their respective Shareholders and Creditors under sections 230 to 232 and other applicable provisions of the Companies Act, 2013 ("Scheme"). A joint application of amalgamation of International Comfort Technologies Private Limited, wholly owned subsidiary with Sheela Foam Limited was filed with the National Company Law Tribunal (NCLT) Delhi on December 06, 2022. Accordingly, the aforesaid scheme of arrangement has been approved by National Company Law Tribunal, Bench at Delhi ("NCLT") vide order date February 09, 2024. Subsequently with effect from March 01, 2024 the ICTPL merged into SFL.

ISSUE OF EQUITY SHARE

The Company has raised money by the way of Qualified Institutions Placement ("QIP") and allotted 1,11,31,725 equity shares of face value H 5/- each to the eligible qualified institutional buyers (QIB) at a price of H 1,078/- per equity share (including a premium of H 1,073 per equity share) aggregating to H 1,200.00 Crores on September 26, 2023. The issue was made in accordance SEBI (Issue of Capital and Disclosure

Requirements) Regulations, 2018. QIP proceeds were for part-funding the acquisition of equity shares of Kurlon Enterprise Limited and for general corporate purposes. As on March 31, 2024, 100% funds have been utilised for acquiring equity stake in 'Kurlon Enterprise Limited'.

ISSUE OF DEBENTURE

The Company has further raised the additional required funds through issue of 72,500(Seventy-Two Thousand Five Hundreds) unsecured Non-Convertible Debentures in four tranches of 18,125(Eighteen Thousand One Hundreds Twenty Five) each having a fixed coupon rate of 8.45%, of face value of H 1,00,000(Rupees One Lakhs only) amounting H 725.00 Crores (Rupees Seven Hundreds Twenty-Five Crores Only) on October 06, 2023 through private placement within the borrowing limits of the Company as approved by the shareholders. The said funds were utilised acquiring equity stake in 'Kurlon Enterprise Limited'.

INVESTMENT MADE BY THE COMPANY IN SHARE CAPITAL

During the year, the Company has acquired 35% stake of 'House of Kieraya Private Limited (Furlenco)' on fully diluted basis w.e.f. August 29, 2023.

The Company has acquired 3,46,05,369 equity shares representing 94.67% shareholding in 'Kurlon Enterprise Limited' for a consideration of H 1,940.78 Crores resulting in transfer of its control to the company w.e.f. October 20, 2023. The Company has additionally acquired 9,40,582 equity shares and 67,569 equity shares representing 2.58% and 0.18% shareholding for the consideration of INR 55.33 crores and INR 3.92 crores respectively, resulting in total equity shareholding of 97.43% as at March 31, 2024.

A wholly owned subsidiary M/s Sheela Foam Trading LLC in Dubai, United Arab of Amirates was incorporated and invested AED 5,00,000.

CONSOLIDATED FINANCIAL STATEMENTS

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

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

DIRECTORS' RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

CORPORATE GOVERNANCE

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

RELATED PARTIES TRANSACTIONS

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

RISK MANAGEMENT

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

INTERNAL FINANCIAL CONTROLS

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

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

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

Nilesh Sevabrata Mazumdar had appointed as the Chief Executive Officer (India Business) and Amit Kumar Gupta had appointed as Group Chief Financial Officer during the year under review.

AUDITORS

M/s MSKA & Associates, Chartered Accountants, appointed as the Statutory Auditor of the Company for the five consecutive financial years from 2021-22 to 2025-26 and they will hold office until the conclusion of the 54^th Annual General Meeting of the Company to be held in the year 2026.

AUDITORS' REPORT

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

CONSOLIDATED FEES PAID TO STATUTORY AUDITORS

Detail of total fees for all services paid by the listed entity and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/ network entity of which the statutory auditor is a part, as mentioned in Note 43 of Consolidated Financial Statement published through annual reports for the Financial Year 2023-24, are as below:-

Consolidated H ( in Lakhs)

Rule 9 of the Companies (Corporate Social Responsibility Policy) Rule, 2014 is attached as Annexure-E

AUDIT COMMITTEE

The composition of Audit Committee is provided in the Corporate Governance Report that forms part of this Director's Report.

VIGIL MECHANISM

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

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti-Sexual Harassment policy in line with the requirements of sexual harassment of women at Workplace (Prevention, Prohibition and Redressal) Act 2013. The Internal system has been set up to redress complaints received regarding sexual harassment.

MEETINGS OF THE BOARD

During the year, 9 meetings of the Board of Directors were held.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

A. Following measures were taken by company for energy conservation in the year 23-24:

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

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

C. The earnings from exports were H 23.15 Crore (Previous Year H

14.03 crores) and payments in foreign exchange were H 184.24 Crore (Previous Year 164.05 crores).

LISTING AGREEMENTS

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

PARTICULARS OF EMPLOYEES

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

MANAGEMENT DISCUSSION AND ANALYSIS

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

PUBLIC DEPOSITS

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

SIGNIFICANT AND MATERIAL ORDERS

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

BOARD EVALUATION MECHANISM

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

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

BONUS SHARE

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

EMPLOYEE STOCK OPTION SCHEME

The Company's Employee Stock Option Schemes are in line with Company's philosophy of sharing benefits of growth with the growth drivers and are in compliance with the applicable Securities and Exchange Board Of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Companies Act, 2013. The Company on November 02, 2023 and February 06, 2024 granted 1,02,592 and 1,57,260 shares respectively to various employees who exercised their options.

Disclosures with respect to Stock Options, as required under Rule 12(9) of The Companies (Share Capital and Debentures) Rules, 2014 and Regulation 14 of the Regulations, are available in the Annexure H to this Report, Notes to the Financial Statements and can also be accessed on the Company's website at https://www.sheelafoam.com/index.html

DIVIDEND DISTRIBUTION POLICY

The company has adopted Dividend Distribution Policy and there is no change in policy during the year. As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the policy is hosted at our web site at www.sheelafoam.com and is also attached as Annexure-I.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT(BRSR)

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

FINANCE AND CREDIT RATING

The company managed its finances prudently, meeting the business needs and maintaining sufficient liquidity at all times to navigate the impact of external challenges. The Company prudently managed its finances in rising interest rate scenario. The Company did raise 72500 debenture on October 06, 2023. India Rating & Research, a credit rating agency has given 'IND AA/Stable' rating to the debenture of the Company on September 25, 2023, same is available on https://www.sheelafoam.com/corporate-announcement.html

ANNUAL REPORT

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2022-23 is uploaded on the website of the Company and the same is available on https://www.sheelafoam.com/annual-return.html

ACKNOWLEDGEMENT

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

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

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