Sheela Foam Ltd Directors Report

Dear Members,

The Board of Directors is pleased to present the 54th Annual Report of Sheela Foam Limited ("the Company"), together with the Audited Financial Statements for the financial year ended 31st March, 2026.

FINANCIAL INFORMATION

The Companys financial performance for the year ended 31st March, 2026 is summarised below:

(Rs. in Crores)

Particulars	Consolidated		Standalone
	2025-26	2024-25	2025-26	2024-25
Revenue from operations	3,820.84	3,439.20	2,962.27	2,675.25
Profit before Finance Cost, Depreciation & Tax	447.64	375.90	337.92	306.87
Less: Finance Cost	95.15	120.55	70.98	97.08
Cash Profit	352.49	255.35	266.94	209.79
Less: Depreciation	178.58	182.61	110.20	129.86
Profit before Tax and exceptional items	173.91	72.74	156.74	79.93
Gain on Exceptional Items	7.93	30.59	7.93	30.59
Profit before tax	181.84	103.33	164.67	110.52
Add/(Less): Income Tax	(2.31)	4.57	(9.44)	(0.99)
Add/(Less): Deferred Tax	44.69	9.84	43.54	18.81
Profit after Tax before share of profit/(loss) of joint venture	139.46	88.92	130.57	92.70
Share of profit/(loss) of joint venture	21.39	1.17	-	-
Profit for the year	160.85	90.09	130.57	92.70
Other Comprehensive Income	67.92	7.24	(2.09)	2.95
Total Comprehensive Income for the year	228.77	97.33	128.48	95.65

The Board of Directors of the Company at its meeting held on March 28, 2024, has approved the Scheme of Amalgamation of subsidiary of the Company, i.e., Kurlon Enterprise Limited along with its subsidiaries ("KEL" or "Amalgamating Company") with Sheela Foam Limited ("SFL" or "Amalgamated Company") and their respective Shareholders and Creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 from Appointed date of October 20, 2023. Accordingly, the aforesaid scheme of arrangement has been approved by National Company Law Tribunal, Bench at Mumbai ("NCLT") vide order dated September 17, 2025 and the same has been accounted as required under Appendix C (Business Combinations of Entities under Common Control) of Ind AS 103, the comparative accounting periods presented above have been reinstated by including the accounting effects of the acquisition of the business, as stated above, as if the purchase had occurred from the beginning of the comparative period in the financial statements, i.e. April 01, 2024.

During the current year, Revenue of the Company, on a standalone basis, is H 2,962.27 Crores and Profit for the year is H 130.57 Crores. On a consolidated basis, the overall Revenue increased from H 3439.20 crores to H3820.84 Crores. The consolidated profit for the year increased from H 90.09 Crores to H 160.85 Crores.

MATERIAL CHANGES AND COMMITMENTS:

No material changes or commitments have occurred between the end of the financial year to which the financial statements relate and the date of this Report, affecting the financial position of the Company.

DIVIDEND

The Board of Directors of the Company recommended dividend of H 1 /- per equity share for the year ended 31st March 2026 amounting to H10,92,03,314. In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is available on the Companys website at http://www.sheelafoam.com.

CHANGE IN SHARE CAPITAL

During the year under review, the paid-up equity share capital of the Company increased from H 54,35,29,980, comprising 10,87,05,996 equity shares of H 5 each, to H 54,35,53,890, comprising 10,87,10,778 equity shares of H 5 each, pursuant to the allotment of 4,782 equity shares under the Employee Stock Option Plans (ESOPs) of the Company. Accordingly, the paid-up equity share capital of the Company as at 31 March 2026 stood at H54,35,53,890, comprising 10,87,10,778 equity shares of H 5 each.

Subsequently, the Company allotted 4,88,146 equity shares of H5 each to the shareholders of Kurlon Enterprise Limited in accordance with the Composite Scheme of Arrangement of Kurlon Enterprise Limited and its subsidiaries with and into the Company. Further, the Company allotted 4,390 equity shares under the Employee Stock Option Plans (ESOPs). Consequently, the paid-up equity share capital of the Company increased to H54,60,16,570, comprising 10,92,03,314 equity shares of H 5 each.

During the year under review, the Company did not issue any equity shares with differential voting rights, sweat equity shares, or bonus shares.

SUBSIDIARIES

As on 31st March, 2026 the Company has five wholly owned subsidiaries and four 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), Joyce Foam Pty. Ltd (Joyce Foam) Australia is material non-listed foreign subsidiaries of the Company. 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.

MERGER OF SUBSIDIARIES / STEP-DOWN SUBSIDIARIES

During the year under review, the Composite Scheme of Arrangement for the amalgamation of Belvedore International Limited, Kanvas Concepts Private Limited, Kurlon Retail Limited, Komfort Universe Products and Services Limited, and Starship Value Chain and Manufacturing Private Limited into Kurlon Enterprise Limited, and thereafter the amalgamation of Kurlon Enterprise Limited with Sheela Foam Limited, was approved by the Honble National Company Law Tribunal vide its order dated September 17, 2025.

Further, the Scheme of Merger of Staqo World Private Limited, a wholly owned subsidiary of the Company, with Staqo Software Private Limited, another wholly owned subsidiary of the Company, was also approved by the Honble NCLT, New Delhi Bench, vide its order dated November 21, 2025.

Consequent to the above Schemes becoming effective, the aforesaid entities ceased to be subsidiaries / step-down subsidiaries of the Company.

INVESTMENT MADE BY THE COMPANY IN SHARE CAPITAL

The Company has acquired 17.70% equity stake w.e.f. August 29, 2023 in ‘House of Kieraya Limited (Furlenco) which has been increased to 43.89% during the year ended March 31, 2025. Subsequently, during the year ended March 31, 2026, the companys equity stake got reduced to 34.53% on issuance of fresh issue of 83,72,392 equity shares by House of Kieraya Limited out of which the company subscribed 20,09,377 equity shares.

The company has invested amounting H 8,23,19,445 in the Equity shares of wholly owned subsidiary Sheela Foam Trading LLC in Dubai, United Arab of Emirates.

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 Companys 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 K A & Associates LLP (Formerly known as M S K A & 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)

Appointment of directors on the Board of the Company, is based on the recommendations of the Nomination & Remuneration Committee (‘NRC). NRC identifies and recommends to the Board, persons for appointment on the Board, after considering the necessary and desirable competencies.

The NRC considers positive attributes like integrity, maturity, judgement, leadership position, time and willingness, financial acumen, management experience and knowledge in one or more fields of technology, law, management, sales, marketing, administration, research, etc.

Independent Directors should fulfill the obligations of independence as per the Act and Regulation 25 of the SEBI (LODR) Regulations, 2015 in addition to the general criteria stated above. All the Independent Directors of the Company are enrolled in the Databank of IDs maintained by Indian Institute of Corporate Affairs, an entity under the Ministry of Corporate Affairs. Their registrations are renewed when due. It is ensured that a person to be appointed as a director has not suffered any disqualification under the Act or any other law to hold such an office.

The Board of Directors, based on the recommendation of the Nomination and Remuneration Committee (NRC), has adopted a Remuneration Policy in accordance with the provisions of Section 178 of the Companies Act, 2013 and the rules made thereunder. The Remuneration Policy is available on the Companys website at www. sheelafoam.com.

CHANGES IN DIRECTORS OR KMPS

Retire by Rotation:

In accordance with the provisions of the Companies Act, 2013, Namita Gautam (DIN 00190463) is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and, being eligible, has offered herself for re-appointment. The Board of Directors has recommended her re-appointment.

Change in designation:

The Board of Directors of the Company, at its meeting held on November 4, 2025, after considering the recommendations of the Nomination & Remuneration Committee, approved the change in designation of Rahul Gautam from Executive Chairman to Chairman and Managing Director of the Company, and the change in designation of Tushaar Gautam from Managing Director to Vice Chairman and Joint Managing Director.

Further, based on the recommendations of the Nomination

& Remuneration Committee, the Board approved the change in designation of Rakesh Chahar from Whole-time Director to

Deputy Managing Director (Whole Time Director) with effect from August 5, 2025.

Cessation:

Nilesh Sevabrata Mazumdar has been relieved from the post of Chief Executive Officer of the Company with effect from July 01, 2025.

Lt. Gen. (Dr.) Vijay Kumar Ahluwalia, Independent Director of the Company, retired from the Board upon completion of his second term as an Independent Director, with effect from the close of business hours on March 04, 2026.

Som Mittal, Ravindra Dhariwal and Anil Tandon Independent Directors of the Company, will retire from the Board upon completion of their second term as Independent Directors, with effect from the close of business hours on June 6, 2026.

Appointment/ Re-appointment

The present term of Rahul Gautam, Chairman and Managing Director, Namita Gautam, Whole-time Director, Tushaar Gautam, Vice Chairman and Joint Managing Director, and Rakesh Chahar, Deputy Managing Director (Whole-time Director) will be completed on March 31, 2027.

Based on their performance and pursuant to the recommendation of the Nomination and Remuneration Committee, the Board has approved their re-appointment for a further term of five years with effect from April 1, 2027, subject to the approval of the shareholders at the ensuing AGM. Necessary resolutions in this regard have been included in the Notice convening the AGM.

The Nomination and Remuneration Committee has recommended the appointment of Neeraj Jain, Hiroo Mirchandani, Rajiv Shrivastava, and Sudhir Ganpathy Shenoy as Independent Directors on the Board of the Company.

The aforesaid appointments will be placed for approval of the shareholders at the ensuing Annual General Meeting.

DECLARATION U/S 149(6) OF THE ACT

All the Independent Directors (IDs) have given declarations u/s 149(6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirming that they meet the criteria of independence as laid down under the said Section/ Regulation. The Directors of the Company have also confirmed that they were not disqualified to be appointed as directors as per Section 164(2) of the Companies Act, 2013 and that they have not been debarred by SEBI or any other statutory authority to hold an office of director in a company.

DIVERSITY OF THE BOARD

The Company believes that diversity is important to the work culture at any organisation. In particular, a diverse Board, among others, will enhance the quality of decisions by utilizing different skills, qualifications and professional experience for achieving sustainable and balanced development.

STATUTORY AUDITORS

M S K A & Associates LLP (Formerly known as M S K A & Associates), Chartered Accountants (Firm Registration No. 105047W/W101187), 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 54th Annual General Meeting of the Company to be held in the year 2026.

As per Section 139 of the Act, a firm of auditors can be appointed as Statutory Auditors for two terms of five years each. Accordingly, a proposal for reappointment of M S K A & Associates LLP (Formerly known as M S K A & Associates), Chartered Accountants is being placed before the shareholders for their reappointment for another term of five years from the conclusion of the ensuing AGM till the conclusion of the AGM in the year 2031.

Details of material Subsidiary including the date and place of incorporation and the name and date of appointment of the statutory auditor:

Sl. No.	Name and Place of Material Subsidiaries	Date of Incorporation	Name of Statutory Auditors	Appointment Date
1	Joyce Foam Pty Ltd (Australia)	03.10.2005	NEC Accountants Pty Ltd	30.09.2016

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 are as below: -

Particulars	Year ended 31 March, 2026	Year ended 31 March,2025
Audit Fees	81	79
Certification Work	02	03
Reimbursement of expenses	07	05
Total	90	87

COST AUDITOR

As per section 148 read with Companies (Audit and Auditors) Rule, 2014 M/s Mahesh Singh & Co, Cost Accountants (Firm Registration No.: 000150) was appointed, to conduct the cost records of the Company for the Financial Year 2025-26, by the Board of Directors. Cost Auditor will provide its report to the Board of Directors. They have been reappointed as Cost Auditors for the year 2026-27. A resolution for ratification of their remuneration for the year 2026-27, as required under the Companies Act, 2013, forms part of the Notice convening the ensuing AGM.

INTERNAL AUDITOR

M/s PKF Sridhar Santhanam LLP, Chartered Accountants appointed as the Internal Auditor of the company and they will report to Board of Directors or the respective committee. The internal audit will help company to review the operational efficiency and assessing the internal controls. It also reviews the safeguarding of assets of the Company.

SECRETARIAL AUDITOR

M/s AVA Associates, Company Secretaries, New Delhi (P2007DE001600) appointed as Secretarial Auditor of the Company for the five consecutive financial years from 2025-26 to 2029-30. The report on secretarial audit is annexed as Annexure-D to the Directors Report. The report does not contain any qualification, reservation or adverse remark.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of Companies Act, 2013, your company has to undertake Corporate Social Responsibility programme. The disclosure as per 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 Directors Report. There was no instance of the Board not accepting the recommendation of the Audit Committee.

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 the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An appropriate internal mechanism has been established to receive, address, and redress complaints relating to sexual harassment at the workplace.

During the financial year 2025–26, one complaint was received under the said Act. Accordingly, the details are as follows:

a. Number of complaints pending at the beginning of the financial year : NIL

b. Number of complaints filed during the financial year: 01

c. Number of complaints disposed of during the financial year: 01

d. Number of complaints pending as at the end of the financial year: Nil

DISCLOSURE UNDER MATERNITY BENEFIT ACT, 1961

The Company is in compliance of the provision of Maternity Benefit Act, 1961 to the extent applicable.

MEETINGS OF THE BOARD

During the year, 5 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 25-26:

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 19.73 Crore (Previous Year H 12.45 crores) and payments in foreign exchange were H 304.58

Crore (Previous Year H 156.83 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 Boards Report.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of provisions of Regulation 34 of the Listing Regulations, the Managements 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 Companys operations in future.

APPLICABILITY OF IBC CODE

Neither any application was made, nor any proceedings were pending under the IBC Code during the year.

ONE TIME SETTLEMENTS

The Company has not entered into any one-time settlement of debt during the year under review.

DISCLOSURE UNDER SECRETARIAL STANDARDS

Applicable Secretarial Standards i.e. SS-1 and SS-2 relating to ‘Meeting of the Board of Directors and ‘General Meetings, respectively, have been duly followed by the Company.

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 did not issue any bonus shares during the year.

EMPLOYEE STOCK OPTION SCHEME

The Companys Employee Stock Option Schemes are in line with Companys 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. 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 Companys website at http://www.sheelafoam.com

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT(BRSR)

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

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.

India Ratings and Research a credit rating agency has given rating to the Company, Bank Loan Facilities and debenture of the Company on September 09, 2025, further CRISIL has given rating to Bank Loan Facilities of the Company on April 24, 2026 same are available on http://www.sheelafoam.com.

ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2024-25 is uploaded on the website of the Company and the same is available on http://www.sheelafoam.com

ACKNOWLEDGEMENT

Your Directors wish to express and place on record their thanks to the Companys Distributors, Dealers and Business Associates for their excellent effort and the customers for their continued patronage of the Companys 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 Companys 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.

	By Order and on behalf of the
	Board of Sheela Foam Limited
	(Rahul Gautam)
Place: Noida	Chairman & Managing Director
Date: May 14, 2026	DIN: 00192999