Southern Latex Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

In 2025, the global economy grew at an estimated rate of 3.4%. Even as the world was coping with tariff uncertainties and ongoing geopolitical issues, the conflict in the Middle East has come as the latest in a series of shocks, severely testing the resilience of the global economy. Economies around the world are faced with higher commodity costs, supply chain disruptions, rising inflation and financial market disruptions.

The uncertainty around United States (US) tariffs continues with the recent US Supreme Court ruling invalidating the higher tariffs levied. Shifting of global trade patterns were visible as countries negotiated tariff headwinds. Trade uncertainties drove many countries to move towards finalising trade agreements. However, geo economic fragmentation and geo political risks are increasingly becoming a reality, which the world economy needs to navigate.

On the downside, price increase due to geopolitical tensions, raise interest rate expectations and reduce asset prices. Another medium-term risk is ocean freight delays. These has led to shortages in essential inputs for rubber production, such as natural and synthetic rubber, resulting in higher operational costs for manufacturers. Economic sanctions and trade restrictions have further complicated the export and import of rubber products. Hence, manufacturers are also increasingly seeking alternative sources.

Trends such as global warming, green energy, sustainability and digital adoption will continue to affect countries and industries. Some will be positively impacted by these changes while others will find it challenging.

Overall, the international business is expected to demonstrate resilience and gradual improvement during the FY 2026-27.

INDIAN ECONOMIC OVERVIEW

India remained one of the fastest-growing major economies, with a growth rate of 7.5% in FY 2025-26. Indias economy delivered an outstanding performance in FY 2025- 26, reaffirming its position as the fastest- growing major economy in the world for the fifth consecutive fiscal year. Even as the external environment posed difficulties domestically, the economy was at optimum, with high demand, low inflation and declining interest rates. Robust domestic drivers helped overcome global challenges, including the impact of high US tariffs.

The Rupee depreciated in 2025-26 due to adverse capital flows arising from uncertainties around trade and tariffs. The conflict in West Asia added to the depreciation. Rupee depreciated 10% over the last year and 4% since the conflict began, which will likely contribute to inflation in the economy. Union Budget for financial year 2026 focuses on promoting manufacturing and investment through measures like electronic components manufacturing scheme, support for capital goods manufacturing and tax breaks on building data centres, while maintaining the infrastructure push.

Our overall outlook for the Indian economy remains positive. India is the fastest growing large economy. This impressive performance can be attributed to factors like growing domestic demand, the governments focus on increased capital expenditure, strong manufacturing growth, moderate inflation, a stable interest rate regime and healthy foreign exchange reserves.

In the current scenario of increasing commodity prices, inflation and supply chain disruptions could have a negative impact on the Industry. In addition, we must acknowledge that the aforementioned factors are not the only potential disruptors. Several other developments could create a more challenging business environment like the geopolitical tensions and the war which could also have unforeseen economic consequences. Against this backdrop, the Company is closely monitoring the progress of the war for determining appropriate strategies to be adopted to probable oppurtunities for the business.

THREATS, RISKS & CONCERNS

In the current scenario of increasing commodity prices, inflation and supply chain disruptions could have a negative impact on the Industry. In addition, we must acknowledge that the aforementioned factors are not the only potential disruptors. Several other developments could create a more challenging business environment like geopolitical tensions which could also have unforeseen economic consequences.

OPERATIONS OVERVIEW:

During the year under review, your Company had earned Rs.55.25 lakh and resulting net profit of Rs.23.50 lakh as compared with the previous year as Rs.53.90 lakh and Rs.23.51 lakh respectively.

The Company is exploring possible ways to revive the business through Strategic partnerships, collaborations and product developments. But the Company is still experiencing sluggishness in the investment and hence the Company is facing difficulties to diversify its operations. But the Company is looking for a strong future ahead and targeting the growth in the coming years.

INTERNAL CONTROL SYSTEMS:

The Company has adequate internal control systems and procedures designed to effectively control the operations.

The internal control systems are designed to ensure that the financial and other records are reliable for the preparation of financial statements and for maintaining assets. Audit Committee periodically reviews the functioning of the entire system was satisfied with the adequacy and effectiveness of the Internal Controls and Systems followed by the company.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Company makes efforts to ensure that employees are provided with a congenial work atmosphere. Facilities are equipped with state-of-the-art machineries, automation software and communication equipment apart from periodic recreational facilities to motivate the team. Continuously improving the quality of people through training in skill development as well as personality development. Management places great emphasis on continuously improving the work environment and ambience to nurture innovation and creativity.

On behalf of the Board of Directors
Sd/-	Sd/-
N.Neelakanda Pillai	MuraliKrishnan
Managing Director	Director
DIN-00084550	DIN- 05312102
PLACE: CHENNAI
DATE: 21.05.2026