Mercury Laboratories Ltd Directors Report

Dear Shareholders,

Your Directors have pleasure in presenting the 45th Annual Report of Mercury Laboratories Limited (the Company) on the business and operations of the Company together with the audited financial statements for the financial year ended on March 31, 2026.

1. FINANCIAL SUMMARY

The financial performance of the Company for the financial year ended March 31, 2026 along with figures of previous financial year is summarized below:

Particulars	(Rs. in Lakhs)
	2025-26	2024-25
Revenue from Operations	7,593.67	7,510.12
Profit before Depreciation & Amortization, Interest & Tax	1,099.65	808.52
Less: Interest	54.48	54.77
Less: Deprecia tion & Amortization	341.96	287.58
Profit before Exceptional Items , Extra Ordinary Items & Tax	703.21	466.17
Exceptional Items	(39.49)	-
Extra-Ordinary Item	-	-
Profit before Tax	663.72	466.17
Less: Current Tax including Income Tax of Previous Year & Deferred Tax	180.32	151.68
Profit of the year	483.40	314.49
Add: Balance brought forward from the previous year	865.62	593.13
Less: Dividend paid for the previous year	(42.00)	(42.00)
Less: Transfer to General Reserve		-
Balance to be carried forward	1,307.02	865.62
*Earning Per Share
Basic	40.28	26.21
Diluted	40.28	26.21

Equity Shares are at par value of f 10 per share.

2. Dividend:

Your Directors have recommended Final Dividend of f 3.5/- (i.e. 35%) per Equity Share of f 10 each for the financial year ended on March 31, 2026. The payment of dividend is subject to the approval of members at the ensuing Annual General Meeting ("AGM") and deduction of Tax at source in accordance with applicable provisions under the Income Tax Act, 2025. Upon approval at the AGM, the dividend will be paid to those members whose names will appear in the Register of Members / Beneficial Owners as on Monday, September 21,2026 i.e. Record Date. The said dividend, if approved by the shareholders, would involve a cash outflow of f 42.00 Lakhs.

The dividend recommended is in accordance with the Companys Dividend Distribution Policy. As required under Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations) the Companys Dividend Distribution Policy is available on the Companys website at:https://mercurylabs.com/webfiles/Resource/PDF/DIVIDEND-DISTRIBUTION-POICY-2_2.pdf

3. Transfer to Reserves:

The Board of Directors has decided to retain the entire amount of profit for the financial year 2025-26 in the statement of profit and loss.

4. Financial Performance and Operations Review:

During the financial year under review, the Company recorded Growth of 1.10% in revenue as compared to the previous year. The company registered f 7,593.67 Lakhs revenue from operations compared to f 7,510.12 Lakhs in the previous year. Net profit after tax (before Other Comprehensive Income) also increased by 53.71% as compared to previous year. The Company registered a net profit after tax before Other Comprehensive Income) of f 483.39 Lakhs as compared to net profit of f 314.49 Lakhs for the previous year ended March 31, 2025.

During the financial year under review, the Company continued to demonstrate stable financial performance despite a challenging business environment and increasing competition in the pharmaceutical industry. Revenue from operations increased by 1.10% to f 7,593.67 Lakhs as compared to f 7,510.12 Lakhs in the previous financial year, reflecting the Companys ability to maintain a steady business momentum and sustain its market presence.

The Company recorded a significant improvement in profitability during the year. Net Profit after Tax (before Other Comprehensive Income) stood at f483.39 Lakhs as compared to f314.49 Lakhs in the previous financial year nearly 53.71% growth. The improvement in profitability was primarily driven by better operational efficiencies, improved product mix, effective cost optimization measures, higher productivity, and disciplined financial management.

The Board believes that the Companys consistent operational performance and strengthened profitability provide a strong foundation for sustainable long-term growth. The management remains committed to enhancing operational excellence, expanding its product portfolio and market presence, strengthening regulatory compliance, and creating enduring value for all stakeholders.

The Directors are confident that the strategic initiatives undertaken by the Company, coupled with its focus on quality, operational efficiency and customer satisfaction, will enable the Company to sustain its growth trajectory and improve shareholder value in the coming years.

The domestic business recorded sales of ?5,121.35 Lakhs as against ?5,425.83 Lakhs in the previous year, reflecting a decline of 5.61%. The decline was primarily attributable to changing market dynamics, pricing pressures, and rationalization of certain product segments. The Company continues to strengthen its domestic presence through focused marketing initiatives, customer engagement, and product portfolio optimization.

The Companys export business continued to demonstrate robust growth during the year. Direct export sales increased by 18.62% to ?2,472.32 Lakhs from ?2,084.29 Lakhs in the previous financial year. The strong growth in exports was driven by increased demand from international markets, expansion of the customer base, and the Companys continued emphasis on quality, regulatory compliance, and timely execution of export orders.

The Return on Equity (ROE) ratio increased to 8.32% from 5.87% in the previous financial year, primarily due to an increase in the Companys net profit during the year under review. During FY 2024-25, the Companys profitability was adversely impacted by the creation of a provision for bad debts, which had a significant effect on the net profit and consequently on the ROE ratio.

Operating profit margin has been increased to 14.12% from 10.61%. Increase in operating margin mainly due to better efficiency and control over expenses coupled with higher exchange gain in FY 25-26 due to rupee depreciation.

Details of significant changes in key Financial ratios are given at Note No. 63 of the Notes to financial statements with the details of significant changes and reason.

5. Future Prospects:

The Indian pharmaceutical industry continues to demonstrate strong growth potential, driven by increasing healthcare awareness, rising demand for quality and affordable medicines, expansion of healthcare infrastructure, growing exports, and various policy initiatives of the Government of India promoting domestic manufacturing under the "Make in India" initiative. The increasing demand for Injectable Formulations, coupled with evolving regulatory standards and expanding global market opportunities, presents significant growth prospects for the Company.

As part of its strategic growth and capacity expansion initiatives, the Company has commenced the development of a new manufacturing facility for Injectable formulations at its Unit No. 2 located at Jarod, with an estimated project cost of ?30 Crores. The proposed facility will have an annual manufacturing capacity of 75 million units, significantly enhancing the Companys existing manufacturing capacity. The proposed expansion is expected to strengthen the Companys manufacturing capabilities, improve operational efficiencies, cater to the growing demand for parenteral products in domestic and export markets, and support its long-term growth strategy.

The Companys strong manufacturing base, experienced management team, ongoing capacity expansion initiatives, and focus on quality and compliance will position the Company favourably to capitalize on emerging opportunities in the pharmaceutical sector and sustain its growth in the years ahead.

MANAGEMENT DISCUSSIONS AND ANALYSIS

As stipulated by regulation 34(3) read with Schedule V(B) of the SEBI Listing Regulations, Management Discussion and Analysis forms parts of this report.

A) Industry Structure and Development

The Indian pharmaceutical industry continued to demonstrate resilience and sustainable growth during FY 2025-26, supported by rising healthcare expenditure, increasing disease awareness, favourable demographics, and continued government emphasis on strengthening domestic manufacturing. India remains the 3rd largest pharmaceutical producer globally by volume and 11th by value, supplying nearly 20% of the worlds generic medicines and exporting pharmaceutical products to over 190 countries.

The domestic pharmaceutical market is currently valued at around USD 60 billion and is projected to reach USD 130 billion by 2030, supported by increasing healthcare access, rising income levels, and higher demand for quality medicines.

The Indian domestic formulations market has witnessed robust growth and is expected to grow at a CAGR of 8-9% over FY 2025-2030, driven by increasing demand across acute and chronic therapies, expansion of healthcare infrastructure, wider health insurance coverage, and improved accessibility to medical services in rural and semi-urban regions.

The Companys primary focus areas, Gynecology and Pediatrics continue to offer significant long-term growth opportunities. Rising maternal healthcare awareness, increasing institutional deliveries, improved antenatal and postnatal care, higher immunization coverage, better diagnosis of womens health disorders, and growing emphasis on child nutrition and preventive healthcare are expected to sustain demand for quality formulations in these therapeutic segments. Government initiatives under the National Health Mission and various maternal and child healthcare programmes are further strengthening the growth prospects of these therapy areas.

At the same time, the industry continues to operate in a competitive environment influenced by price regulation under the Drug Price Control Order (DPCO), evolving quality and regulatory requirements, and increasing expectations for compliance with Good Manufacturing Practices (GMP). Companies are therefore focusing on product differentiation, quality excellence, operational efficiency, and expansion into niche therapeutic segments.

The Company remains committed to strengthening its portfolio of gynecology and pediatric formulations by introducing quality products, enhancing marketing and distribution capabilities, maintaining stringent regulatory compliance, and improving operational efficiencies. These initiatives are expected to enable the Company to capitalize on the growing demand in its core therapeutic segments and create sustainable long-term value for all stakeholders.

The details in respect of Financial Performance and Operations Review are mentioned at point no 4 of Board report is a part of Management Discussion & Analysis, which forms part of this report.

b) Outlook

The outlook for the Indian pharmaceutical industry remains positive, supported by favourable demographics, increasing healthcare awareness, expanding healthcare infrastructure, higher health insurance penetration, and rising demand for affordable and quality medicines. The Governments continued emphasis on strengthening domestic pharmaceutical manufacturing, enhancing healthcare accessibility, and promoting the "Make in India" initiative is expected to provide further impetus to the industrys long-term growth.

c) Risks and concerns

The pharmaceutical industry continues to operate in an increasingly dynamic and uncertain global environment. Ongoing geopolitical tensions, evolving international trade policies, including tariff-related measures by major economies such as the United States, fluctuations in foreign exchange rates, inflationary pressures, and disruptions in global logistics and supply chains may impact the availability and cost of Active Pharmaceutical Ingredients (APIs), packaging materials, freight, and other critical inputs. Additionally, the industry remains subject to stringent regulatory requirements, quality standards, and price control mechanisms under the Drug Price Control Order (DPCO) and the National Pharmaceutical Pricing Authority (NPPA), which may influence operating margins and business performance.

The Company continuously monitors these external developments and has implemented appropriate risk mitigation measures through diversified sourcing, efficient inventory management, stringent quality systems, robust internal controls, and regular review of regulatory and market developments. With a strong focus on operational excellence, regulatory compliance, cost optimization, and strengthening its portfolio in the Gynecology and Pediatrics segments, the Company remains well-positioned to address emerging challenges and capitalize on long- term growth opportunities while safeguarding stakeholder value.

d) Economic overview & Global pharma landscape

The global economy remained resilient during FY 2025-26 despite persistent headwinds arising from geopolitical conflicts, evolving trade policies, inflationary pressures, and supply chain disruptions. The escalation of geopolitical tensions in certain regions, uncertainty surrounding tariff measures and trade negotiations by major economies, particularly the United States, and volatile energy prices continued to influence global trade and business sentiment. Nevertheless, economic activity was supported by easing inflation in several economies, improving financial conditions, and sustained domestic demand in emerging markets. India continued to outperform most major economies, supported by strong domestic consumption, infrastructure investment, stable macroeconomic fundamentals, and policy reforms, reinforcing its position as one of the fastest-growing major economies globally.

The global pharmaceutical industry continued to demonstrate resilience, driven by increasing healthcare expenditure, ageing populations, rising prevalence of chronic diseases, and growing demand for affordable medicines. At the same time, pharmaceutical companies faced challenges from evolving regulatory expectations, pricing pressures, supply chain diversification, and geopolitical developments affecting the sourcing of Active Pharmaceutical Ingredients (APIs) and other critical inputs. These developments have further strengthened Indias position as a preferred global pharmaceutical manufacturing hub owing to its strong generic manufacturing capabilities, cost competitiveness, skilled workforce, and reliable supply base. The Company believes that these structural strengths, coupled with sustained demand in the Gynecology and Pediatrics segments, present significant long-term growth opportunities while necessitating continued focus on quality, compliance, supply chain resilience, and operational excellence.

e) Internal Control System and its adequacy

The Company has adopted policies and procedures covering all financial, operating and compliance functions. Mercury Laboratories believes that internal control is a prerequisite for governance and that business plans should be exercised within a framework of checks and balances. The Company has adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business.

The internal control system provides for all documented policies, guidelines, authorization and approval procedures. Recognizing the evolving business environment and increasing operational complexity, the Company periodically reviews and upgrades its internal control systems. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Further 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.

f) Human Resources

The Company firmly believes that its employees are its most valuable asset and continues to focus on building a competent, motivated, and performance-driven workforce. During the year, the Company strengthened its human resource practices through continuous learning and development initiatives, performance management systems, employee engagement programmes, and skill enhancement activities aimed at improving operational excellence and productivity. The Company also continued to emphasize workplace safety, ethical conduct, diversity, and compliance with applicable labour laws and regulatory requirements.

Industrial relations remained cordial and harmonious throughout the financial year. The Company maintained a positive work environment through open communication, employee participation, and constructive engagement at all levels. There were no significant industrial disputes or disruptions affecting business operations during the year. As on March 31,2026, the Company had 510 permanent employees on its rolls. The Company remains committed to fostering a culture of collaboration, innovation, employee well-being, and continuous professional development to support its long-term business objectives

g) Opportunities and Threats

The Indian pharmaceutical industry continues to present significant growth opportunities, driven by increasing healthcare awareness, rising disposable incomes, expanding health insurance coverage, favourable demographics, and greater emphasis on preventive and specialized healthcare. The Companys focus on Gynecology and Pediatrics positions it advantageously to benefit from increasing maternal and child healthcare initiatives, higher institutional deliveries, improved access to quality healthcare services, and growing demand for affordable, high- quality formulations. Additionally, government initiatives promoting domestic pharmaceutical manufacturing, expanding healthcare infrastructure, and strengthening the "Make in India" programme are expected to create further opportunities for sustainable business growth. The increasing adoption of digital healthcare platforms and the potential to expand into new domestic and international markets also offer avenues for future growth.

At the same time, the Company operates in a highly competitive and regulated environment. The business is exposed to risks arising from stringent regulatory requirements, price controls under the Drug Price Control Order (DPCO), evolving quality standards, and intense competition from domestic and multinational pharmaceutical companies. Global geopolitical uncertainties, changing trade policies, including tariff-related measures by major economies, fluctuations in foreign exchange rates, inflationary pressures, and disruptions in the supply of Active Pharmaceutical Ingredients (APIs) and other raw materials may impact costs and supply chain efficiency. The Company continues to mitigate these challenges through a strong focus on quality, regulatory compliance, diversified sourcing, operational efficiency, prudent cost management, and continuous strengthening of its product portfolio and market presence.

h) Cautionary Statement

Certain statements in the above Report may be forward looking and are stated as required by the legislations in force. The actual results may be affected by many factors that may be different from what is envisaged in terms of future performance and the outlook presented above.

6. Directors Responsibility Statement

As required by Section 134(3) of the Act, your Directors, to the best of their knowledge and belief, confirm that:

a. In the preparation of annual accounts for the year ended March 31, 2026, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. Your Directors have 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 March 31,2026 and of the Profit of the Company for the year ended on that date;

c. Your 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. Your Directors have prepared the annual accounts on a going concern basis;

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

7. Directors

As on March 31,2026, the Board comprised of Six Directors, out of Six, One is Executive Directors, Two are Non-Executive Independent Directors and Three are Non-Executive Non- Independent Directors.

During the year under review, following changes occurred in the position of Directors of the Company:

• Mr. Bharat Mehta (DIN: 07180906) completed his second term as an Independent Director and ceased to be Director and Chairperson of the Board effective close of business hours on May 14, 2025.

• Mr. Sanjay Patel (DIN: 00283429) was appointed as an Independent Director of the Company for a period of five (5) years from May 14, 2025 and also appointed as Chairperson of the Board with effect from May 15, 2025. His appointment was approved by the shareholders at the 44th AGM held on August 13, 2025

• In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Dilip R Shah (DIN: 00257242), Non- Executive Director of the Company is liable to retire by rotation at the ensuing 45th Annual General Meeting and being eligible, offered himself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the Companies Act, 2013.

The Board and Management express their deepest gratitude to Mr. Bharat Mehta for his guidance, consistent value creation, and direction to the Company during his association with the Company.

There were no changes in Chief Financial Officer and Company Secretary of the Company during the year under review.

Necessary resolutions for re-appointment of Mr. Dilip R Shah (DIN: 00257242), Non- Executive Director of the Company is liable to retire by rotation at the ensuing 45th Annual General Meeting and being eligible, offered himself for reappointment offered himself for reappointment, his detailed profiles as required under Regulation 36(3) of the SEBI Listing Regulations and SS - 2 (Secretarial Standards on General Meetings) have been included in the notice convening the ensuing AGM and details of proposal for reappointment are mentioned in the explanatory statement of the notice. Your directors commend their re-appointment.

None of the Directors of the Company are disqualified from being appointed as Directors as specified under Section 164(1) and 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualifications of Directors) Rules, 2014 or are debarred or disqualified by the Securities and Exchange Board of India (“SEBI”), Ministry of Corporate Affairs (“MCA”) or any other such statutory authority. Further, none of the Directors of the Company are required to vacate office as a Director of the Company under Section 167 of the Act.

During the year, the non-executive directors of the Company had no pecuniary relationship or transaction with its Non-Executive Directors and Independent Directors other than payment of sitting fees for attending Board and Committee meetings with the Company except Mr. Paresh J Mistry & Ms. Janaki R Shah, Director of the Company who is being paid of holding position and discharging the duties of Manager - Purchase and Head of Export of the Company respectively, constituting an office/place of profit under the applicable provisions of the Companies Act, 2013.

Key Managerial Personnel as at March 31,2026 are as under:

1. Mr. Rajendra R Shah, Managing Director

2. Mr. Ashish Vasavada, Chief Financial Officer

3. Ms. Krishna Shah, Company Secretary

8. Independent Directors

The Independent Directors of the Company have given the declaration and confirmation to the Company as required under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 confirming that they meet the criteria of independence and that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board of Directors of your company confirms that the Independent Directors fulfill the conditions specified in Section 149 (6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management.

9. Familiarisation Program for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation program are provided in the Corporate Governance Report and is also available on the website of the Company at https://mercurylabs.com/webfiles/Resource/PDF/Director-Familirazation-Programme_05.05.2023.pdf

10. Number of Meetings of the Board and Committees

Four Meetings of the Board were held during the year on May 14, 2025, August 13, 2025, November 11,2025 & February 11,2026. For details of the meetings of the Board and Committees, please refer to the Corporate Governance Report, which forms part of this report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act and Listing Regulations.

11. Nomination Remuneration Policy

The Policy on appointment and remuneration of directors, Key Managerial Persons (KMP) and senior management including criteria for determining qualifications, positive attributes and directors independence as required under Section 178(3) of the Act, and Regulation 19 read with Schedule II Part D of SEBI Listing Regulations has been formulated by the Company. Policy on Nomination and Remuneration of Directors, Key / Senior Managerial Personnel may be accessed on the Companys website at: https://mercurylabs.com/ /Webfiles/Resource/PDF/NOMINATION-AND-REMUNERATION-POUCY_2.pdf

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the SEBI Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report.

12. Board Evaluation and Senior Management

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated. Further, the Nomination and Remuneration Committee has carried out the performance evaluation of Senior Management including the Company Secretary and Chief Financial Officer of the Company.

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by the SEBI under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, Information and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee (NRC) reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.

13. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

14. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

15. Share Capital

During the financial year 2025-26, there was no change in the authorised, issued, subscribed, and paid-up share capital of the Company. The paid-up Equity Share Capital of the Company as at March 31,2026 is ? 120 Lakhs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

16. Risk Management

Risks are events, situations or circumstances which may lead to negative consequences on the Companys businesses. Risk management is a structured approach to manage uncertainty. A formal enterprise wide approach to Risk Management is being adopted by the Company and key risks is getting managed within a unitary framework. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

17. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs are carried out in the manufacturing facilities on safety, environment and health.

18. Particulars of Loans, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013 during the year ended on March 31,2026. Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the Financial Statements.

19. Particulars of contracts or arrangements with related parties:

The Company has been entering into transactions with related parties, including entities directly and/or indirectly controlled by members of the Promoter(s) & Promoter(s) Group, for its business purposes. These transactions primarily include transactions relating to the sale of goods, Lease Rent, Consultancy Services and such other transactions permissible and provided for under the provisions of the Act, the Listing Regulations, and the Income-Tax laws.

All the transactions are undertaken for the benefit of the Company and in compliance with the applicable laws. None of the transactions are prejudicial to the interest of the Company.

As a part of the Companys annual planning process, before the beginning of a financial year, details of all the transactions proposed to be executed with related parties, including the estimated amount of transactions to be executed, manner of determination of pricing and commercial terms, etc. are presented to the Audit Committee for its consideration and approval, as required. The details of said transactions are also placed before the Board of Directors for their information. The Director, if interested in a transaction, does not participate in the meeting during the discussions relating to that transaction. Further approval is sought during the year for any new transaction/modification to the previously approved limits/ terms of contracts with the related parties. This is followed by a quarterly review of the related party transactions by the Audit Committee and the Board of Directors.

All contracts/arrangements/transactions entered into by the Company during the year with related parties were in the ordinary course of business and on arms length basis in terms of the provisions of the Act. All such contracts or arrangements were entered into with prior approval of Audit Committee. No material contract or arrangement with related parties was entered into during the year under review. Form AoC-2 pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, is set out in ‘Annexure-A to this Report.

The Company in terms of Regulation 23 of the Listing Regulations submits on the date of publication of its standalone financial results for the half year, disclosures of related party transactions, in the format specified by the SEBI. The said disclosures are available on the Companys website at https://mercurylabs.com/mercury-investor-shareholders-information.aspx

As a matter of policy, your Company carries out transactions with related parties on an arms length basis. Statement of these transactions is given at Note No. 49 of the Notes to financial statements.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Companys website and can be accessed at https://mercurylabs.com/webfiles/Resource/PDF/Related-Party-Transaction-Policy_2.pdf

20. Corporate Social Responsibility (CSR)

During the year under review, the Company was not required to comply with the provisions of Section 135 of the Companies Act, 2013, since it did not meet the prescribed net profit thresholds. Notwithstanding the same, the Company has voluntarily incurred CSR expenditure of Rs. 4.54 lakhs in alignment with its social commitment.

This Policy is available on the Companys website at https://mercurylabs.com/webfiles/Resource/PDF/Corporate-Social-Responsibility- Policy-2-1.pdf. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report.

21. Policy on prevention, prohibition and Redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.

In compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had constituted an Internal Complaints Committee. The Committee has not received any complaint of sexual harassment during the financial year 2025-26.

1	number of complaints of sexual harassment received in the year;	0
2	number of complaints disposed off during the year	0
3	number of cases pending for more than ninety days	0
4	number of workshops or awareness programme against sexual harassment carried out	2
5	nature of action taken by the employer or District Officer	NIL

The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Company https://mercurylabs.com/webfiles/Resource/PDF/Policy-on-Prevention-of-Sexual-Harassment-at-Work-Place.pdf

22. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Company https://mercurylabs.com/webfiles/Resource/PDF/Whistle_Blower_Policy_MLL.pdf

23. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

During the year, the Company has filed a compounding application before the Honble National Company Law Tribunal for compounding of the alleged offences under Section 134 of the Companies Act, 2013, pertaining to the financial years 2014-2015 and 2015-2016, respectively. The outcome of the same is awaited.

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

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as ‘Annexure-B.

25. Registrar and Share Transfer Agent

MUFG Intime India Private Limited (formerly Link Intime India Private Limited) is the Registrar and Share Transfer Agent of the Company.

26. Particulars of Employees and Remuneration

The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

A. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:

Name of Director & KMP	Designation	Remuneration (? in Lakhs)	Ratio to Median Remuneration	Percentage increase/ decrease in the remuneration
Mr. Rajendra R Shah 1	Managing Director	16.37	6.79	(21.90)
Mr. Dilip R Shah	Non-Executive Director	---	---	---
Mr. Sanjay Patel	Independent Director	---	---	---
Mr. Paresh Mistry 2	Non-Executive Director	16.06	6.62	7.40
Ms. Janki R Shah 2	Non-Executive Director	18.22	7.56	---
Mr. Jayanti Raval	Independent Director	---	---	---
Mr. Ashish Va savada	Chief Financial Officers	17.75	7.37	12.77
Ms. Krishna Shah	Company Secretary	7.45	3.09	12.71

Notes:

1. There was no change in the criteria for payment of remuneration to Managing Director. The variation reflected in column “% Increase/(decrease) in remuneration in FY 2025-26” is due to change in amount of perquisites and other benefits. Basic salary was remaining same.

2. The remuneration of Non-Executive Director and Executive Directors is within the overall limits approved by the shareholders of the Company.

i. The percentage increase in the median remuneration of employees in the financial year:

The percentage increase in the median remuneration of employees in the financial year was 5.70%.

ii. The number of permanent employees on the rolls of the Company: 510

iii. Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average percentile increase made in the salaries of employees other than the managerial personnel in the financial year ending March 31, 2026 was approximately 5.28% and the average increase in the managerial personnel remuneration was 2.65%

iv. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration paid are as per the remuneration policy of the Company.

B. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary, where upon a copy would be sent through email only.

27. Auditors & Their Reports

(1) Statutory Auditors:

M/s. Naresh & Co., Chartered Accountants were appointed as Statutory Auditors of your Company for a period of Five (5) years, commencing from the conclusion of the 41st AGM held in the year 2022, until the conclusion of the 46th AGM to be held in the year 2027.

The Statutory Auditors have confirmed their eligibility and submitted a certificate in affirming that they are not disqualified for holding the office of the Statutory Auditor. The report given by the Statutory Auditor on the financial statements of the Company forms part of the Annual Report. There was no instance of fraud during the year under review, which required the statutory auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act, and the rules made thereunder. No fraud has been reported by the Auditors to the Audit Committee or the Board. The Notes on accounts, referred to in the Auditors Report, are self-explanatory and therefore do not call for any further comments.

(2) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Dholakia & Associates LLP., Practicing Company Secretaries were appointed as Secretarial Auditors of your Company to carry out the Secretarial Audit of the Company for a period of Five (5) years, commencing from financial year 2025-26 upto financial year 2029-30 at 44th Annual General Meeting of the Company held on August 13, 2025.

The Secretarial Auditors have confirmed their eligibility and submitted a certificate in affirming that they are not disqualified for holding the office of the Secretarial Auditor.

The Report on the Secretarial Audit carried out by the Secretarial Auditor i.e. M/s. Dholakia & Associates LLP, Practicing Company Secretaries during the Financial Year 2025-26 is annexed herewith as ‘Annexure-C. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

The Secretarial Auditors have confirmed their eligibility and submitted a certificate in affirming that they are not disqualified for holding the office of the Secretarial Auditor.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2025-26 for all the applicable compliances as per Listing Regulations and Circulars/Guidelines issued by SEBI from time to time. The Annual Secretarial Compliance Report for aforesaid financial year shall be submitted to the stock exchanges within prescribed time limit as per Listing Regulations.

(3) Cost Auditors:

Pursuant to the provisions of Section 148 read with Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by the Audit Committee, the Board had appointed M/s. V.M. Patel & Associates, Practicing Cost Accountants, who have given their consent to act as Cost Auditors and laid on the table the consent letter received from them & confirmed that his appointment met the requirements of Section 141 (3)(g) of the Act for the year2026-27 and that they were free from disqualification as specified under section 141 read with Section 148 of the Act.

In terms of Rule 14 of the Companies (Audit and Auditors) Rule, 2014, remuneration payable to the cost auditors is required to be ratified by members. Accordingly, an ordinary resolution will be passed by members at the 45th Annual General Meeting approving the remuneration payable to M/s. V.M. Patel & Associates.

(4) Internal Auditors

The Board of Directors appointed M/s. K R & Associates, Chartered Accountant as Internal Auditors of the Company for financial year 2026-27.

28. Secretarial Standards:

The Company has complied with the all Secretarial Standards issued by the Institute of Company Secretaries of India and adopted under the Act

29. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has accepted deposit from the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of the Act are as under:

Particulars	Amt (Rs. in Lakhs)
Deposit as on 01.04.2025	217.07
Accepted during the year from the Members	76.80
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year;	None
Deposit as on 31.03.2026	293.87

30. Extract of Annual Return

A copy of Annual Return as required in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, has been placed on Companys website at https://mercurylabs.com/mercury-investor-shareholders-information.aspx under the head of Annual Return

31. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of signing the Boards Report.

32. Corporate Governance Report

As stipulated by Regulation 34(3) read with Schedule V(C) of the Listing Regulations, Corporate Governance Report forms part of this Annual Report. Annexed to the said report is the Auditors Certificate as prescribed under Schedule V(E) of the Listing Regulations certifying compliance with conditions of corporate governance. A detailed report on Corporate Governance is annexed as “Annexure-D” to this Report along with the Auditors Certificate on its compliance by the Company.

33. Unclaimed Dividend Amounts and Transfer to IEPF

The Company has transferred dividend amounts which remained unpaid or unclaimed for a period of seven years from the date of their transfer to unpaid dividend account, from time to time, on due dates to the Investor Education and Protection Fund (IEPF) administered by the Central Government.

The Company has uploaded the details of unpaid and unclaimed dividends lying with the Company as on March 31,2026 on the website of the Company.

During the year under review, the Company has transferred 1,600 equity shares of ? 10/- (Rupees Ten only) each of 13 members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to the demat account of IEPF after giving notice to the members and advertisement in newspaper to claim their shares and the Company has credited unclaimed dividend of ? 91,497 to the Investor Education and Protection Fund (IEPF) pursuant to Section 125 (1) of the Act, pertaining to FY 2017-18. Details of shares transferred to IEPF Authority during financial year 2025-26 are also available on the website of the Company https://mercurylabs.com/mercury-investor- shareholders-information.aspx under head of IEPF related information

34. Prohibition of Insider Trading

In compliance with The SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) as amended, the Company has framed a Code of Conduct to regulate, monitor and report trading by all the employees, directors, designated persons and their immediate relatives, connected persons and such employees of the Company who are expected to have access to the UPSI relating to the Company. The Code lays down guidelines, which advises them on procedure to be followed and disclosures to be made, while dealing in the shares of the Company. Company also maintains the structured digital database as mandated in the PIT Regulations.

35. Other Disclosures

i. During the year under review, there was no change in Companys nature of business

ii. The Company has not failed to implement any corporate action during the year under review;

iii. The disclosure pertaining to explanation for any deviation or variation in connection with certain terms of public issue, rights issue, preferential issue, etc. is not applicable to the Company;

iv. The Companys securities were not suspended for trading during the year; and

v. Company does not have any subsidiary, associate or joint venture Companies within the meaning of the Companies Act, 2013.

vi. No credit rating has been obtained by the Company with respect to its securities. Further, the details of the credit rating obtained by the Company with respect to its fixed Deposit have been provided separately in the corporate Governance Report

vii. No application was made nor is any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

viii. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

ix. No settlements have been done with banks or financial institutions.

x. The Company doesnt fulfill the criteria provided under Regulation 34(2)(f) of the SEBI Listing Regulations 2015, therefore Business Responsibility & Sustainability Report is not applicable to the Company

xi. During the year under review, the Company has duly complied with the provisions of the Maternity Benefits Act, 1961 and has provided all statutory benefits to eligible employees as applicable.

xii. All the properties and assets of the Company are adequately insured

36. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

Date: May 29, 2026	On behalf of the Board of Directors,
Place: Vadodara	Mercury Laboratories Limited
	Rajendra R. Shah	Janki R Shah
	Managing Director	Director
	DIN:00257253	DIN:08686344