Sonal Mercantile Ltd Directors Report

Dear Members,

Your Directors present the Forty Annual Report of your Company together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2025.

1. Background

Your Company is registered with the Reserve Bank of India (RBI) as Non-Systemically Important Non-Deposit taking Non-Banking Financial Companies (NBFC). Further, The Company was identified as NBFC-base Layer under the Scale Based Regulation under Master Direction — Reserve Bank of India (Non-Banking Financial Company — Scale Based Regulation) Directions, 2023.

3. Operating Highlights

During the year under review, revenue from operations of the Company is Rs. 3529.37 Lakhs as compared to Rs. 3931.61 Lakhs in the previous year. The Company earned a profit before tax of Rs. 1040.68 lakhs as compared to Rs. 1170.67 Lakhs in the previous year. Your Directors are putting in their best efforts to improve the performance of the Company.

4. Companys Affairs

Your Company is engaged in the business of providing Secured and Unsecured Loans & Advances and also to make investment in both quoted and unquoted securities. The Company offers specialized solutions for meeting specific liquidity requirements with technical insights into Capital Markets.

5. Dividend

To maintain the liquidity of funds, your Board of Directors does not recommend any dividend for the Financial Year under review.

6. Share Capital

There is no change in the Share Capital of the Company during the Financial Year under review.

7. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review as per the provision of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Your Company being a Non-Deposit Taking NBFC, has not accepted any deposits from the public during the year under review.

8. Listing Agreement

Your Company is listed on BSE Limited and complied with ah the requirements of Listing Agreement. Also, your Company has paid listing fees for the Financial Year 2024-25 to the BSE Limited. The Company is also listed on Delhi Stock Exchange (Currently : Inoperative Stock Exchange).

9. Particulars of Loans, Guarantees or Investments Under Section 186

Your Company being a Non-Banking Financial Company (NBFC), the disclosure regarding particulars of loans made, guarantees given and securities provided in the ordinary course of its business is exempted as per the provisions of Section 186(11) of the Companies Act, 2013. Details of the above made by the Company pursuant to the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to accounts forming part of the audited financial statements for the financial year ended March 31, 2025.

10. Adequacy of Internal Financial Controls

The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use for disposition of its assets. All the transactions are probably authorized, recorded and reported to the Management. The Company is following all applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The Internal Auditor of the company checks and verifies internal control and monitors them in accordance with policy adopted by the Company. The Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of business.

11. Transfer to Reserves

The Company has transferred an amount of Rs. 214.02 Lakhs to the Special Reserve of the RBI Act, 1934 out of current years profits.

12. Directors

Number of Meetings of the Board

During the year, 05 (Five) Board Meetings were convened and held, details of which are provided in the Corporate Governance Report. The intervening gap between the Meetings was in compliance with the Companies Act, 2013.

Policy on Directors Appointment and Remuneration

Declaration by Independent Directors

All Independent Directors have given declarations under section 149(7) of the Companies Act, 2013 that, they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Evaluation of the performance of the Board

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the Annual Performance Evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. The criteria applied in the evaluation process are explained in the Corporate Governance Report.

The Independent Directors in their separate meeting has evaluated performance of Non-Independent Directors, performance of the Board as a whole and also performance of the Chairman of the Company.

Familiarization Programme for Independent Directors

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a Familiarization Programme for its Independent Directors to familiarize them with their roles, rights and responsibilities as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarization Programme are explained in the Corporate Governance Report. The same is also available on the website of the Company at www. sonalmercantile.in.

Appointment of KMP / Directors

No Directors/ KMP has been appointed during the year.

Further, Based on the recommendations of the NRC, Mr. Akash Bhardwaj (DIN: 11268343) was appointed as an Additional (Independent) Director of the Company for a period of five years (5) w.e.f. September 09, 2025 till September 08, 2030 subject to approval of the Members of the Company in the ensuing General Meeting.

Retirement -Re-appointment

In terms of Section 152 of the Companies Act, 2013, Mr. Rajan Goyal (DIN: 02600825) who retires by rotation at the ensuing AGM, being eligible offered himself for reappointment. His Brief Resume is mentioned in the annexure attached to the Notice.

Mrs. Rati Goswami (DIN:08765348) was reappointed as Independent Director of the Company for the second term of five (5) years with effect from June 21, 2025 (date of reappointment) upto June 20, 2030. The same is also available on the website of the Company at www.sonalmercantile.in.

Resignation of KMP / Directors

No Directors has been resigned during the year.

However, Mr. Munish Kumar Garg (DIN : 08866982) shall cease to be an Independent Directors of the Company upon completion of 1 consecutive term of 5 years at the closure of business hours on 08.09.2025.

Disclosure of Relationships Between Directors Inter-Se

Mr. Vikram Goyal and Mr. Rajan Goyal are directly related to each other. As they both are Brothers.

Key Managerial Personnel

The details of Key Managerial Personnel (KMP) of the Company during the year are:

S. No.	Name of Key Managerial Personnel	Designation	Appointment-Cessation
1.	Mr. Vikram Goyal	Whole Time Director	November 23, 2018 (Reappointed w.e.f. November 23, 2023
2.	Mr. Rohit Saraogi	Chief Financial Officer	May 22, 2018
3.	Mr. Akshay Khare	Company Secretary & Compliance Officer	June10, 2022

13. Committees of the Board

Your Company has a duly constituted Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee, Corporate Social Responsibility Committee as per the provisions of Section 177, 178, 135 of the Companies Act, 2013 and provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board of Directors has constituted such committees to enable the Board to deal with specific areas-activities that need a closer review and to have an appropriate structure to assist in the discharge of its responsibilities.

A detailed note on the Board and its committees along with details of the meetings are provided under the Corporate Governance report section in this Annual Report to avoid the repetition.

14. Subsidiary Companies-Associate Companies-Joint Ventures

The Company has One Associate Company i.e. M/s Rudraveerya Developers Limited.

15. Code of Conduct

Your Company has already in place a well framed Code of Conduct for carrying its day to day business operations of the Company. The Code lays down the standard procedure of business conduct which is expected to be followed by the directors and the employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.

All the Board Members and the Senior Management personnel, if any have confirmed compliance with the Code. The detailed Code of Conduct can be referred from the website of the Company i.e. www.sonalmercantile.in.

16. Details of Establishment of Vigil Mechanism- Whistle Blower Policy For Directors And Employees

The Company has already in place a well framed Vigil Mechanism- Whistle Blower Policy for Directors and Employees. The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It protects employees willing to raise a concern about irregularities within the Company. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of employees and the Company. This policy is also placed on the website of the Company. i.e. www.sonalmercantile.in.

17. Business Risk Management Policy

Pursuant to section 134 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company has constituted a Risk Management Committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Annual report. The Company has implemented Risk Management Policy and the Board of Directors has prepared a comprehensive framework of risk management for assessment of risks and to determine the responses to these risks so as to minimize their adverse impact on the organization.

The policy as approved by the Board of Directors is uploaded on Companys website i.e. www.sonalmercantile.in.

18. Prevention of Insider Trading

The Company has already adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and certain designated employees of the Company. All Board Directors and the designated employees/persons have confirmed compliance with the Code. The Code is uploaded on Companys website at i.e. www.sonalmercantile.in.

19. Auditors

Statutory Auditors

M/s. Ajay Rattan & Co. Chartered Accountants (Firm Reg No. 012063N), has appointed as a Statutory Auditors of the Company for a period of 5 (five) years i.e. from the conclusion of 37^th Annual General Meeting till the conclusion of the 42nd Annual General Meeting to be held in the year 2027. The Board has taken note and M/s. Ajay Rattan & Co. Chartered Accountants have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder as Statutory Auditors of the Company as required under Listing Regulations, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Auditors Report

There is no reservation, qualification or adverse remark made by the Statutory Auditors in their Report. Comments/ clarification, if any being read together with notes on the Financial Statements as these are selfexplanatory and do not call for any further comments under Section 134 of the Companies Act, 2013.

Secretarial Auditor

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had reappointed Mr. Nitin Gupta (Practicing Company Secretary) to undertake the Secretarial Audit of the Company for Financial Year 2024-25. There is No qualification, reservation or adverse remark made in his Secretarial Audit Report. The Audit Report is annexed herewith as "Annexure A".

Further, pursuant to amended Regulation 24A of SEBI Listing Regulations, and subject to your approval being sought as the ensuing AGM Mr. Nitin Gupta, Practicing Company Secretary (Membership No: F12404; C.P. No.: 14087 Peer review certificate no.: 2293/2022) has been appointed as a Secretarial Auditor to undertake the Secretarial Audit of your Company for the first term of five consecutive financial years from FY 2025-26 till FY 2029-30. Mr. Nitin Gupta, Practicing Company Secretary has confirmed that he is not disqualified to be appointed as a Secretarial Auditor and is eligible to hold office as Secretarial Auditor of your Company.

Reporting of frauds by Auditors

There were no frauds reported by Auditors as per Section 134(3) and Section 143 of the Act.

Internal Auditor

The Company has re-appointed Ms. Surbhi Singhal as an Internal Auditor of the Company for the financial year 2024-25.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2024-25 for all applicable compliances as per SEBI Regulations and Circulars/ Guidelines issued thereunder. The Annual Secretarial Compliance Report was submitted to the stock exchanges within 60 days from the end of the financial year and the same is available on the Companys website at www.sonalmercantile.in.

20. Extract of Annual Return

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, a copy of the Annual Return for the Financial Year 2024-25, which will be filed with the Registrar of Companies/MCA, is hosted on the Companys website and can be accessed at www. sonalmercantile.in

21. Corporate Social Responsibility

Pursuant to provision of Section 135 of the Companies Act, 2013, your Company falls within the criteria of CSR applicabilty, therefore, the Company has formed CSR Policy. The CSR Policy & CSR Activity Report_is annexed herewith as "Annexure E".

22. Prudential Norms & Directions of RBI for NBFCs

Your company has complied with all the requirements prescribed by the Reserve Bank of India and has filed the required returns. The Company comply with the Master Direction — Reserve Bank of India (Non-Banking Financial Company — Scale Based Regulation) Directions, 2023 and all the applicable laws, regulations, guidelines, etc. prescribed by RBI from time to time. The Company was identified as NBFC-base Layer under the Scale Based Regulation.

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

i. Conservation of Energy & Technology Absorption: The Company, being a Non-Banking Finance Company (NBFC), does not have any manufacturing activity. The directors, therefore, have nothing to report on ‘Conservation of Energy and Technology Absorption.

Particulars	2024-25 (Rs.)	2023-24 (Rs.)
Foreign Exchange Earnings	0	0
Foreign Exchange outgo	0	0

24. Particulars of Employees

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this report and annexed herewith as "Annexure C".

25. Related Party Transactions

All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from Audit Committee is obtained for the related party transactions which are repetitive in nature. All transactions with related parties entered into during the year under review were at arms length basis and in the ordinary course of business and in accordance with the provisions of the Act and the rules made thereunder, the SEBI Listing Regulations and your Companys Policy on Related Party Transactions.

Pursuant to the provisions of Regulation 23 of the SEBI Listing Regulations, your Company has filed half yearly reports to the stock exchanges, for the related party transactions.

During FY 2024-25, your Company has not entered into any transactions with related parties as per the terms of Section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act, in Form AOC 2, is not applicable. Further, the details of Related Party Transactions covered under Ind AS- 24 are given in the Notes to accounts forming part of the audited financial statements for the financial year ended March 31, 2025 as well as mentioned in the "Annexure D"

The policy on Related Party Transactions is displayed on the website of the Company i.e. www.sonalmercantile.in.

26. Prevention of Sexual Harassment at Workplace

The Company has in place a policy on "Prevention of Sexual Harassment at Workplace" which extends to all employees (permanent, contractual, temporary, trainees). Since the Company has less than ten employees during the year under review, the requirement of constitution of an Internal Complaints Committee ("ICC") under the Act is not applicable. However, the Company is committed to providing a safe and conducive work environment for all its employees. During the financial year 2024-25, no complaint of sexual harassment was received by the Company.

The status of complaints as on March 31, 2025 is as under:

No. of sexual harassment Complaint received during the year	Nil
No. of sexual harassment Complaint disposed of during the year	Nil
No. of cases pending for more than 90 days	Nil

27. Compliance with Maternity Benefit Act, 1961

The provisions of the Maternity Benefit Act, 1961 were not applicable to the Company during the financial year 2024-25.

28. Business Responsibility Report

Business Responsibility Report as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to the Company.

29. Corporate Governance

The Company is committed to maintain the steady standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. A Report on Corporate Governance regarding compliance with the conditions of Corporate Governance as stipulated in Regulations 17 to 27, clauses (b) to (i) of subregulation (2) of Regulation 46 and paragraphs C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual Report and also a Certificate from the Practicing Company Secretary of the Company regarding compliance with the conditions of Corporate Governance forms a part of this Report.

30. Managements Discussion and Analysis Report

Managements Discussion and Analysis Report (MDAR) for the year under review, as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

31. Disclosures under the Act

Significant and Material Orders

No significant and material order was passed against the Company by any regulator or court or tribunal impacting going concern status and companys operations in future.

There was no application filed/proceedings done/pending related to the Insolvency and Bankruptcy Code, 2016.

Material changes and commitments affecting the financial position of the Company after the close of financial year

There are No material changes and commitments affecting the financial position of the Company, which has occurred between the end of the financial year of the Company i.e. March 31, 2025 and the date of the Boards Report.

Change in the Nature of Business

There is no change in the nature of the Business of the Company during the Financial Year.

32. Directors Responsibility Statement

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

i. In the preparation of the annual accounts for the year ended March 31, 2025, the applicable accounting standards have been followed along with proper explanation relating to material departure.

ii. The 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 the end of the financial year 31.03.2025 and of the profit or loss of the Company for the year under review.

iii. 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.

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

v. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

33. Compliance with the provisions of Secretarial Standard-1 and Secretarial Standard-2

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and that such systems are adequate and operating effectively.

34. Dematerialisation of Shares:

The ISIN No. INE321M01017 has been allotted for the Company. Therefore, the matter and/or investors may keep their shareholding in the electronic mode with their Depository Participates. 99.38% of the Company were held in dematerialized form and 0.62% of the issued share capital as on March 31, 2025.

35. Health, Safety And Environment Protection:

The Company has complied with all the applicable environmental law and labour laws. The Company has been complying with the relevant laws and has been taking all necessary measures to protect the environment and maximize worker protection and safety.

36. Human Resources

People remain the most valuable asset of your Company. Your Company follows a policy of building strong teams of talented professionals. Your Company continues to build on its capabilities in getting the right talent to support different products and geographies and is taking effective steps to retain the talent. It has built an open, transparent and meritocratic culture to nurture this asset. The Company recognizes people as its most valuable asset and The Company has kept a sharp focus on Employee Engagement. The Companys Human Resources is commensurate with the size, nature and operations of the Company.

37. Cost Records and Cost Audit

Maintenance of Cost Records and requirement of cost audit as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 are not applicable to the Company and accordingly such accounts and records are not required to be made and maintained.

38. RBI Guidelines

The Company continues to fulfill all the norms and standards laid down by the Reserve Bank of India for the Non-Banking Financial Company.

39. NBFC Registration

The company has registered with Reserve Bank of India as Non-Banking Finance Company vide: B-14.02393 Dated 19/07/2002.

40. Credit Rating

The Directors of the Company are pleased to report that the Company is registered with ah four RBI Authorized CICs Companies i.e. TransUnion CIBIL Limited (Formerly: Credit Information Bureau (India) Limited). Credit Information Bureau (India) Limited (CIBIL), Equifax Credit Information Services Private Limited (ECIS), Experian Credit Information Company of India Pvt. Ltd, CRIF High Mark Credit Information Services Pvt. Ltd.

41. Investor Education and Protection Fund

During the year under review, the Company was not required to transfer any amount to the Investor Education and Protection Fund ("IEPF") in terms of Section 125 of the Companies Act, 2013.

42. Acknowledgments and Appreciation

The Directors take this opportunity to thank the Companys customers, shareholders, investors, suppliers, bankers, financial institutions and Central & State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment.

	Vikram Goyal	Rajan Goyal
Date: September 02nd, 2025	Whole Time Director	Director
Place: New Delhi	DIN: 00381115	DIN: 02600825