Sterling Tools Ltd Directors Report

Dear Members,

Your directors are pleased to present the 47^th Annual Report on the business and operations of Sterling Tools Limited (the Company) and Audited Financial Statements (Standalone and Consolidated) for the financial year ended 31^st March 2026.

Financial Summary & Highlights

The Companys financial performance for the year under review along with the previous years figures are given hereunder:

(Amount in H Lacs)

	Standalone		Consolidated
Particulars	2025-26	2024-25	2025-26	2024-25
Revenue from Operations	71,672.27	64,478.34	82,780.78	1,02,629.95
Other Income	915.05	683.14	1,169.73	1,165.40
Total Revenue	72,587.32	65,161.48	83,950.51	1,03,795.35
Total Expenditure	61,491.79	55,683.13	75,164.57	91,673.05
(excluding Depreciation and Finance Cost)
Profit before interest, depreciation, taxes and	11,095.53	9,478.35	8,785.94	12,122.30
exceptional Items
Less: Interest	514.98	585.19	981.71	976.99
Less : Depreciation	3,175.90	3,090.21	3,988.87	3,481.79
Add/(Less): Exceptional items	949.64	-	949.64	-
Profit Before Tax	8,354.29	5,802.95	4,765.00	7,663.52
Less: Current Tax	2,114.35	1,489.07	2,108.10	1,956.29
Deferred Tax	(180.27)	26.91	(275.94)	(122.08)
Profit for the Year	6,420.21	4,286.97	2,932.84	5,829.31
Add/(Less): Other Comprehensive Income	48.16	(951.75)	71.26	(952.73)
Total Comprehensive Income for the Year	6,468.37	3,335.22	3,004.10	4,876.58

Companys performance and outlook

STANDALONE

The standalone performance for FY 2025-26 demonstrates a remarkable and encouraging upward trajectory. Revenue from operations increased to H716.72 crore, while the company achieved an outstanding profit after tax of H64.20 crore. This strong financial outcome highlights the companys resilience, operational efficiency, and sustained growth momentum, reinforcing a solid and stable overall financial position.

CONSOLIDATED

On a consolidated basis, the Company continued to execute its diversification strategy in FY 2025-26 and remains well-positioned for future growth. Revenue from operations for the year stood at H827.81 crore, as compared with H1,026.30 crore in the previous year, while profit before tax and profit after tax were H47.65 crore and H29.33 crore respectively.

The moderation in consolidated revenue and profitability was primarily attributable to a shift in the customer mix of a subsidiary company, following the insourcing of motor control unit production by its largest customer. Your Board is of the view that such variations are temporary in nature within the context of an overall growing market, and the Company remains well-positioned to recover and grow over the medium term.

Management views the future with confidence and anticipates continued improvement in the coming years. The outlook of the

Company, together with that of the automobile industry, is set out in greater detail in the Management Discussion and Analysis Report, which forms an integral part of this Report.

Consolidated Financial Statements

The audited Consolidated Financial Statements in addition to the audited Standalone Financial Statements pursuant to Section 129 of the Companies Act, 2013 (Act) read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) are prepared in accordance with the Indian Accounting Standards prescribed by the Institute of Chartered Accountants of India and the same is enclosed and forms an integral part of this report.

The Consolidated Profit and Loss Account for the period ended 31^st March 2026, includes the Profit and Loss Account for the subsidiaries i.e. Sterling E-Mobility Solutions Limited (formerly known as Sterling Gtake E-Mobility Limited), Sterling Tech-Mobility Limited, Sterling E-Mobility Private Limited, Sterling Advanced Electric Machines Private Limited and Sterling Overseas Pte. Ltd. for the Financial Year ended 31^st March 2026.

In accordance with the third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its Standalone and the Consolidated Financial Statements have been placed on the website of the Company in the Shareholders Meetings section at https://stlfasteners.com/ investors/shareholders-meetings.

Transfer to General Reserve

During the year under review, the Company has not transferred any funds to General Reserves out of the profits available for appropriation.

Dividend

The Company has a strong track record of rewarding its shareholders with substantial dividend payouts. Given the robust operational and financial performance of the Company during the year under review, the Board of Directors are pleased to recommend a final dividend of 137.5% i.e. H 2.75/- (Rupees Two and Seventy-Five Paisa only) per equity share for the FY 2025-26, subject to approval of shareholders in the ensuing Annual General Meeting. This dividend payout will be in accordance with the Companys Dividend Distribution Policy, which is available on the Companys website: https://stlfasteners.com/public/f/pdfs/ Dividend-Distribution-Policy.pdf

In accordance with the prevailing provisions of the Income Tax Act, 2025, the dividend, if declared, will be taxable in the hands of the shareholders at the applicable rates. Consequently, the Company will make the final dividend payment after deducting the tax at source. For detailed information on the procedure for the declaration and payment of the dividend, shareholders are requested to refer to the Notice of the 47^th Annual General Meeting.

Deposits

During the year under review, the Company has not accepted any deposits which fall under the purview of Section 73 of the Companies Act, 2013, and as such, no amount of principal or interest was outstanding as on the Balance Sheet date.

i. Number of cases of default in repayment of deposits or payment of interest thereon at the beginning of the year- NIL

ii. Maximum number of cases of default in repayment of deposits or payment of interest thereon during the year- NIL

iii. Number of cases of default in repayment of deposits or payment of interest thereon at the end of the year- NIL

Depository System

As the members are aware, the Companys shares are compulsorily tradeable in electronic form. As on 31^st March 2026, 99.83 % of the Companys total paid-up Capital representing 3,62,80,900 equity shares are in dematerialized form. In view of numerous advantages offered by the Depository System, members holding shares in physical mode are advised to avail the facility of dematerialization from either of the Depositories.

Capital Structure and Listing

As of 31^st March 2026, the Company has an Authorized Share Capital of H11,00,00,000/- and a Paid-Up Share Capital of H7,26,88,852/-, with the Promoters and Promoter Group holding 64.86% of the Companys share capital. The Companys equity shares are listed on the National Stock Exchange of India Limited and BSE Limited, with listing fees paid to both exchanges

Subsidiaries, Joint Ventures, and Associate Companies

As on 31^st March 2026, the Company has five wholly owned subsidiaries. During the year, the Company had the following subsidiary Companies, the status of which is mentioned thereto:

S. No Name of the Entity	Nature of Relationship
1 Sterling E-Mobility Solutions Ltd. (Formerly known as Sterling	Wholly owned Subsidiary
Gtake E-Mobility Ltd.)
2 Sterling Tech-Mobility Ltd.	Wholly owned Subsidiary
3 Sterling E-Mobility Pvt. Ltd.	Wholly owned Subsidiary
4 Sterling Advanced Electric	Wholly owned Subsidiary
Machines Pvt. Ltd.
5 Sterling Overseas Pte Ltd.	Wholly owned Subsidiary

In accordance with Section 129 of the Companies Act, 2013, a statement containing the salient features of financial statements as on 31^st March, 2026 is presented by way of Form AOC-1 as an Annexure -I. Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at https:// stlfasteners.com/investors.

Key business developments during the year under review

During the financial year 2025-26, your Company continued to advance its strategic transformation into a diversified automotive components and technology enterprise, while reinforcing its leadership in its core fastener business. The significant developments during the year are set out below.

A. Strategic Partnerships and Technology Collaborations

In furtherance of its vision to build a comprehensive Electric Vehicle (EV) powertrain and power-electronics platform, your Company, through its subsidiaries, entered into several strategic collaborations during the year:

1. Advanced Electric Machines (AEM), United Kingdom: On 13^th May 2025, the Company, through its subsidiary Sterling E-Mobility Solutions Limited (formerly known as Sterling Gtake E-Mobility Limited), executed a Technology Licensing Agreement with Advanced Electric Machines Limited, UK, to develop, manufacture and market rare-earth magnet-free traction motors for electric vehicles at its Faridabad facility. The arrangement provides the subsidiary an exclusive license for India based on AEMs patented technology, supporting import substitution in line with the Atmanirbhar Bharat and Make in India initiatives.

2. Landworld Technology Co. Ltd., China: On 15^th September 2025, Sterling E-Mobility Solutions

Limited (formerly known as Sterling Gtake E-Mobility Limited), the subsidiary of the Company, signed a Technology License and Supply agreements with Landworld Technology Co. Ltd., China, for the local manufacture of On-Board Chargers, DC/DC Converters and Multi-Function Units at its EV campus in Faridabad.

3. MINIEYE, China: On 19^th January 2026, your Company partnered with MINIEYE, a China-based intelligent-driving and in-cabin solutions provider, for the deployment of Advanced Driver Assistance Systems (ADAS) and Driver Monitoring Systems (DMS) for the Indian market across commercial and passenger vehicle segments, aligned with the mandatory ADAS and DDAWS regulations becoming effective from 1^st January 2027.

B. Corporate Restructuring and Re-branding

During the year, the Companys subsidiary, Sterling Gtake E-Mobility Limited, was re-branded as Sterling E-Mobility Solutions Limited with effect from 14^th October 2025, reflecting its evolution into a comprehensive provider of EV powertrain and power-electronics solutions. The Companys exclusive relationship with Jiangsu Gtake Electric Co. Ltd. for the Indian market continues to remain strong and unchanged.

C. Amalgamation

The scheme of amalgamation of Haryana Ispat Private Limited (a wholly owned subsidiary) with the Company, was approved by the Honble National Company Law Tribunal vide order dated 27^th March 2025 (effective from the appointed date of 1^st April 2024), was given effect during the year, with the order filed with the Registrar of Companies on 23^rd April 2025.

Employee stock option Plan

STL-Employee Stock Option Plan-2023 was introduced to offer employees of the Company and its subsidiary companies; an additional incentive tied to productivity and performance. This initiative aims to motivate employees and contribute to the overall corporate growth and profitability of the Company. In accordance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a total of 9,00,605 (Nine Lakh Six Hundred and Five) ESOP options were approved under the ESOP Plan.

During the year under review, the Company has allotted 1,60,108 equity shares to Mr. Jaideep Wadhwa, Non-Executive Non-Independent Director of the Company, pursuant to the exercise of second tranche of ESOPs granted to him in the capacity of Managing Director of Sterling E-Mobility Solutions Limited (formerly known as Sterling Gtake E-Mobility Limited), Wholly owned Subsidiary, in terms of the STL Employee Stock Option Plan, 2023 and vesting schedule thereof. Further, pursuant to the listing application by the Company in respect of the shares allotted to Mr. Jaideep Wadhwa, the said equity shares were listed and admitted to dealings on the National Stock Exchange of India Limited and BSE Limited effective from 12^th March 2026. A certificate from M/s. Dhananjay Shukla & Associates, Secretarial Auditors, regarding this plan and the resolution passed by members will be available for inspection on the Companys website under the "Investors" section on the date of the Annual General Meeting. There is no change in the Plan and the same follows with the applicable regulations. A statement providing complete details as of 31^st March 2026, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, is also available on the Companys website. The web link for this information is https://stlfasteners. com/investors/shareholders-meetings.

Material changes and commitments

No material changes and commitments which could affect the Companys financial position have occurred between the end of the financial year of the Company and the date of this report.

Change in the nature of business, if any.

There was no change in the nature of business of the Company during the FY 2025-26.

Directors and Key Managerial Personnel

The Board of Directors of the Company comprises of Executive and Non-Executive Directors, including Woman Director, possessing rich experience and expertise across diverse fields such as corporate finance, strategic management, accounts, legal, marketing, brand building, social initiatives, general management and strategy. Except for the Independent Directors, all other Directors are liable to retire by rotation in accordance with the provisions of the Companies Act, 2013.

Further, based on the recommendations of the Nomination and Remuneration Committee, the Board of Directors and the Members of the Company subsequently approved the reappointment of Mr. Anil Aggarwal (DIN: 00027214) as Chairman

& Whole-Time Director and Mr. Atul Aggarwal (DIN: 00125825) as Managing Director of the Company, both liable to retire by rotation, for a further term of five (5) consecutive years with effect from April 1, 2026. The Board and Members also approved the re-appointment of Mr. Rakesh Batra (DIN: 06511494) as Independent Director of the Company, not liable to retire by rotation, for a second term of five (5) consecutive years from 10^th November 2025.

In accordance with the provisions of the Companies Act, 2013, Mr. Akhill Aggarwal (DIN:01681666), Executive Director is liable to retire by rotation and being eligible, has offered himself for re-appointment. The details pertaining to Mr. Akhill Aggarwal (DIN:01681666) being recommended for re-appointment are included in the notice of the ensuing Annual General Meeting of the Company.

The Nomination and Remuneration Committee selects the candidates to be appointed as the Director on the basis of the requirement and enhancing the competencies of the Board. The current policy is to have a balance of Executive, Non-Executive and Independent Directors to maintain the independence of the Board and to separate the functions of governance and management. The composition of Board of Directors during the year ended 31^st March, 2026 is in conformity with Regulation 17 of the SEBI Listing Regulations, 2015 read with Section 149 of the Companies Act, 2013.As on 31^st March 2026, there were ten (10) Directors on the Board of the Company, consisting of five (5) Independent Directors, two (2) Non-Executive Directors, one (1) Managing Director and two (2) Whole-Time Directors.

Key Managerial Personnel (KMP) other than directors as mentioned above as of 31^st March 2026 were:

Ms. Pragya Saxena, Company Secretary and Compliance Officer.

Further,pursuanttotheprovisionsofSection203oftheCompanies Act, 2013 read with the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the below changes occurred in the Key Managerial Personnel of the Company during the financial year under review:

Ms. Komal Malik was appointed as the Company Secretary and Compliance Officer of the Company with effect from August 7, 2025. Subsequently, Mr. Pankaj Gupta stepped down from the position of Chief Financial Officer and resigned from the services of the Company with effect from the close of business hours on December 31, 2025. Thereafter, Ms. Komal Malik resigned from the position of Company Secretary and Compliance Officer with effect from the close of business hours on February 28, 2026.

The Board places on record its sincere appreciation for the valuable contributions made by Mr. Pankaj Gupta and Ms. Komal Malik during their association with the Company and wishes them success in their future endeavors.

Further, the Board appointed Ms. Pragya Saxena as the Company Secretary and Compliance Officer of the Company with effect from March 23, 2026.

The Board extends a warm welcome to Ms. Pragya Saxena and looks forward to her valuable contribution towards the Companys continued growth and governance framework.

Subsequent to the close of the financial year, the Board of Directors, at its meeting held on May 15, 2026, appointed Mr. Anish Agarwal (DIN: 07056465), Director, as the Chief Financial Officer of the Company and designated him as a Key Managerial Personnel pursuant to the provisions of Section 203 of the Companies Act, 2013, with effect from May 15, 2026.

Declaration of Independence by Independent Directors.

During the year under review, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and have complied with the Code of Conduct for Independent Directors prescribed in Schedule IV of the Act and there has been no change in the circumstances which may affect their status as independent director during the year.

In the opinion of the Board of Directors, all the Independent Directors are persons of high repute, integrity and possess the relevant proficiency, expertise and experience in their respective fields.

Number of meetings of the Board and attendance of the Directors

The Board met five (5) times during the FY 2025-26, in respect of which notices were given and the proceedings were properly recorded. The intervening gap between two consecutive meetings was not exceeding the period prescribed under the Companies Act, 2013. For details of the meetings of the Board and attendance of the Directors, please refer Clause 2 of Corporate Governance Report attached to this Annual Report.

Disclosure under Secretarial Standards (SS-1 & SS-2):

The Company has complied with the applicable provisions of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and approved by the Central Government under Section 118 (10) of Companies Act, 2013.

Policy on Directors appointment and remuneration and other details

TheCompanyspolicyonDirectorsappointmentandremuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided in Section 178(3) and Section 134(3) (e) of the Companies Act, 2013 is uploaded on the Website of the Company at https://stlfasteners. com/assets/upload/investors/20240111111425-nomination-and-remuneration-policy-board-795595043113.pdf

Policy on Board Diversity

The Company recognizes and embraces the importance of a diverse Board in its success. The Company believes that a truly diverse Board will leverage differences in thought, perspective, regional and industry experience, cultural and geographical background, age, ethnicity, race, gender, knowledge and skills including expertise in financial, global business, leadership, technology, mergers & acquisitions, Board service, strategy, sales and marketing, Environment, Social and Governance (ESG), risk and cybersecurity and other domains, which will ensure that the Company retains its competitive advantage. The Nomination & Remuneration Policy explains Board Diversity adopted by the Board sets out its approach to diversity.

The Nomination and Remuneration Committee reviews and assesses board composition on behalf of the board and recommends the appointment of new Directors and Senior Management Personnel. The committee also oversees the conduct of the annual review of board effectiveness.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Company has established a formal mechanism for evaluating the performance of the Board of Directors, its committees, individual Directors, Key Managerial Personnel ("KMP") and Senior Management Personnel ("SMP"). The evaluation framework is based on the Guidance Note on Board Evaluation issued by SEBI on January 5, 2017 and is carried out through a structured questionnaire covering various aspects, including the composition and effectiveness of the Board and its Committees, governance practices, strategic oversight, quality of discussions, participation, and discharge of duties and responsibilities.

At a separate meeting of the Independent Directors, the Independent Directors reviewed and evaluated the performance of the Non-Independent Directors, the Board as a whole, and the Chairman of the Company, taking into account the views of the Executive and Non-Executive Directors. The Independent Directors also assessed the quality, quantity and timeliness of the flow of information between the Management and the Board, which is essential for the effective discharge of the Boards responsibilities.

Thereafter,theNominationandRemunerationCommitteeevaluated the performance of the Board, Independent Directors, KMP and SMP based on various parameters, including preparedness for meetings, meaningful and constructive participation in deliberations, achievement of key objectives, leadership qualities, and contribution towards the Companys growth and governance framework. The Board of Directors subsequently reviewed the evaluation carried out by the Nomination and Remuneration Committee and the Independent Directors.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated.

Based on the outcome of the evaluation process, the Board was of the view that the performance of the Board, its Committees, Individual Directors, KMP and SMP was effective and satisfactory.

Particulars of contracts or arrangements with Related Parties

All Related Party Transactions that were entered into during the financial year ended on March 31, 2026 were on an arms length basis and in the ordinary course of business and not material in nature under Section 188(1) of the Act and the Listing Regulations and hence a disclosure in Form AOC-2 in terms of clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 is not required. Details of the transactions with Related Parties are provided in note no. 43 of the accompanying Standalone and Consolidated Financial Statements of the Company in compliance with the provision of Section 134(3)(h) of the Act.

The Company has also adopted the Policy on Related Party Transactions and the same is available on the website of the Company at https://stlfasteners.com/investors/ corporate-policies.

Committees of the Board

The Company has the following Board committees, which have been established as a part of the corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

Audit Committee

Nomination and Remuneration Committee

Stakeholders Relationship Committee

Corporate Social Responsibility Committee

Risk Management Committee

Share Transfer Committee

Management Committee

Investment Committee*

The details with respect to the compositions, powers, roles, terms of reference and number of meetings held during the year of relevant committees are given in detail in the Corporate Governance Report of the Company, which forms part of this Boards Report.

*The Board of Directors, at its meeting held on February 03, 2026, approved the dissolution of the Investment Committee with effect from February 03, 2026.

Auditors

I) Statutory Auditors

As per the provisions of Section 139 (1) of the Companies Act, 2013, the Members of the Company had appointed M/s Walker Chandiok & Co LLP, Chartered Accountants as Statutory Auditors of the Company for a term of 5 (five) consecutive years to conduct the audit from FY 2021-22 to FY 2026- 27. M/s Walker Chandiok & Co LLP have confirmed that they are not disqualified from continuing as Auditors of the Company.

Statutory Auditors Report

There has been no qualification, reservation or adverse remark reported by the Statutory Auditors in its reports on standalone and consolidated financial statements of the Company for the year ended 31^st March, 2026 forming part of this report.

II) Secretarial Auditors

The Shareholders of the Company had appointed M/s Dhanajay Shukla & Associates as the Secretarial Auditors of the Company for a first term of 5 (Five) consecutive years beginning from Financial Year 2025-26.

Secretarial Audit Report

In terms of Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI Listing Regulations, a Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as Annexure- II. During the year under review, the Secretarial Auditor noted the following observation(s):

NSE and BSE imposed a penalty of 25,960/- each inclusive of GST, on the Company for non-compliance with Regulation 13(3) of SEBI (LODR) Regulations, 2015, relating to incorrect filing of the investor grievances statement.

Further, NSE and BSE levied a penalty of 21,240/-each inclusive of GST, for the period from 1^st April, 2025 to 30^th June 2025, and 43,660/- each inclusive of GST, for the period from 1^st July 2025 to 6^th August 2025, for non-compliance with Regulation 6(1) of SEBI (LODR) Regulations, 2015, due to delay in appointment of a qualified Company Secretary as Compliance Officer. The vacancy arose upon resignation of CS Abhishek Chawla on 13^th March 2025 and was filled by appointment of CS Komal Malik with effect from 7^th August 2025.

Moreover, Mr. Pankaj Gupta resigned as Chief Financial Officer of the Company with effect from 31^st December 2025. In terms of Regulation 26A(2) of SEBI (LODR) Regulations, 2015, the vacancy was required to be filled within three months. However, the appointment was completed on 15^th May 2026 with the appointment of Mr. Anish Agarwal as Chief Financial Officer. The delay occurred as the initially selected candidate as recommended by the NRC on 8^th January 2026 was expected to join on 23^rd March 2026 but had declined to join on the stipulated date.

Therefore, the Board had taken note of the aforesaid observations and the Company has taken necessary steps to regularise the compliances and strengthen its compliance monitoring mechanism.

Further as per the requirement of Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Secretarial Audit report of the material subsidiary namely, Sterling E-Mobility Solutions Ltd. (formerly known as Sterling Gtake E-Mobility Limited) is also attached as Annexure III.

Annual Secretarial Compliance Report

Annual Secretarial Compliance Report for the financial year ended 31^st March, 2026 on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder, was obtained from Mr. Santosh Kumar Pradhan, Practicing Company Secretaries and the same was filed with Stock Exchange(s) within the prescribed timeline. The Annual Secretarial Compliance Report is available at https://stlfasteners.com/investors/corporate-governance.

III) Cost Auditors

As per Section 148 of the Companies Act, 2013 the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice.

Pursuant to the provisions of Section 148 of the Companies Act, 2013, and Rules made thereunder, M/s Jitender Navneet & Co., Cost Accountants were appointed as the Cost Auditor of the Company to audit the Cost Accounts of the Company for the year ending 31^st March, 2026.

Disclosure on maintenance of Cost Records

The Company has maintained the cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, as required by the Company and such accounts and records are made and maintained as per rule 8(5) (ix) of the Companies Accounts Rules, 2014.

Details in respect of Fraud, if any, Reported by the Auditors

During the year under review, the Statutory Auditors, Secretarial Auditor and Cost Auditors of your Company have not reported any instances of fraud committed in the Company by its Officers or Employees to the Audit Committee, as required under Section 143(12) of the Act.

Internal Financial Control Systems and their adequacy

The Company has established adequate Internal Financial Controls over Financial Reporting (IFCoFR) commensurate with the size, scale, and complexity of its operations. These controls are designed to ensure the orderly and efficient conduct of business, adherence to established policies and procedures, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

The Internal Audit function periodically assesses the adequacy and effectiveness of the Companys internal control framework and compliance with applicable policies and procedures. The findings of internal audit, along with the status of corrective actions, are regularly reviewed by the Audit Committee to ensure the continued effectiveness of internal controls.

As of March 31, 2026, the Management evaluated the effectiveness of the Companys internal financial controls over financial reporting, in accordance with the requirements of the Companies Act, 2013 and Regulation 17(8) read with Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Based on this assessment, Management concluded that the controls were operating effectively and that no material weaknesses or significant deficiencies existed as of that date. Recognizing the inherent limitations of any internal control system, the Company continues to undertake periodic reviews and audits to strengthen and enhance its control environment. M/s Walker Chandiok & Co. LLP, Statutory Auditors of the Company, have audited the financial statements and issued their report on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting, as required under Section 143(3)(i) of the Companies Act, 2013. The Company also maintains a well-established Internal Audit function that conducts risk-based audits across key business processes and operational areas. During the year, the internal audit activities were carried out by M/s Profaids Consulting. The Audit Committee reviews and approves the annual Internal Audit Plan and scope of work and receives quarterly updates on audit observations, recommendations, and management actions. Significant findings and corrective measures are periodically presented to the Audit Committee to facilitate continuous improvement and regulatory compliance.

Based on its review of the internal audit reports, management responses, and the overall internal control framework, the Audit Committee concluded that the Companys internal financial controls were adequate and operating effectively as of March 31, 2026. The Board of Directors reviewed the recommendations of the Audit Committee and accepted the same wherever applicable during the year.

Risk Management System

The Company has constituted a Risk Management Committee and adopted a comprehensive Risk Management Policy to identify, assess, monitor, and mitigate risks that may impact its business objectives. The Companys risk management framework and key risk factors are discussed in detail in the Management Discussion and Analysis Report.

The Risk Management Committee is responsible for identifying and evaluating significant risks, developing and overseeing the implementation of mitigation strategies, and periodically reviewing the effectiveness of such measures. The Committee regularly monitors identified risks and their corresponding mitigation plans and, where necessary, reprioritizes risks based on their potential impact on the Companys operations, financial performance, and reputation.

The Company has established a structured process for managing, monitoring, and reporting principal risks and uncertainties that could affect the achievement of its strategic objectives. Key risks identified across business functions are continuously assessed and addressed through appropriate control measures and mitigation actions.

Based on the assessment carried out during the year, the Board is of the opinion that there are no risks that may threaten the existence or continuity of the Companys business.

Vigil Mechanism/Whistle Blower Policy

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Company has adopted a policy on Vigil Mechanism for directors and employees to report their genuine concerns or grievance to the Vigilance Officer. The policy is available on the Company website https://stlfasteners.com/ investors/corporate-policies.

Human Resources Management

Employees are the Companys most valuable asset and key to its long-term success. The Company is committed to attracting, developing, and retaining talented individuals by fostering a collaborative, transparent, and inclusive work culture that recognizes merit and rewards sustained high performance. The Companys human resource practices focus on enhancing employee capabilities, supporting career growth, and preparing future leaders.

The Company is dedicated to maintaining a safe, respectful, and inclusive workplace where all employees feel valued and empowered to contribute to their fullest potential, irrespective of gender, sexual orientation, or other personal characteristics.

Industrial relations remained harmonious and cordial throughout the year under review. As of 31^st March 2026, the Company had a total of 656 permanent employees, comprising 642 Males and 14 Females.

Particulars of Employees

The details regarding the ratio of the remuneration of each director to the median employees remuneration and other details except the statement showing the names of the top ten employees in terms of remuneration drawn, as per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided as Annexure IV.

However, in terms of proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the statement showing the names of the top ten employees in terms of remuneration drawn is being sent to the members of the Company. The said information is available for inspection on all working days, during business hours, at the Registered Office of the Company. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

Details of CSR policy and initiatives undertaken by the company on CSR activities during the year

The composition of the Corporate Social Responsibility Committee has been disclosed in the Corporate Governance Report, attached to this report. The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-V of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time. The policy on CSR is available on the website of the Company, https:// stlfasteners.com/investors/corporate-policies. Further the implementation and monitoring of CSR Policy is in compliance with the provisions of the Companies Act, 2013.

Sexual Harassment

The Company has adopted a Policy on Prevention of Sexual Harassment (POSH) in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. In compliance with Section 4 of the Act and the rules framed thereunder, the Company has constituted an Internal Complaints Committee (ICC) to address and redress complaints relating to sexual harassment at the workplace.

The status of the complaints, during the year under review is as below:

Number of sexual harassment complaints received during the year - Nil

Number of complaints disposed of during the year- Nil

Number of cases pending for more than 90 days- Nil

Disclosure under the Maternity Benefit Act, 1961

The Directors hereby confirm that the Company is in full compliance with the provisions of the Maternity Benefit Act, 1961 and affirm that :

(a) the Company provides maternity leave in accordance with the requirements of the Act;

(b) all necessary facilities and entitlements mandated by the law are extended to women employees;

(c) no discriminatory practices are adopted against women employees on account of maternity or childbirth.

Particulars of Loans, Guarantees or Investments under section 186

Particulars of loans, guarantees given and investments made during the year, as required under section 186 of the Companies Act, 2013 and schedule V of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulations, 2015, are provided in the Notes to the financial statements.

Credit Rating

During the year, ICRA Limited, reaffirmed the Companys long-term rating at [ICRA] AA- (Stable) and revised the outlook to Stable from Positive, while reaffirming the short-term rating at [ICRA] A1+. The rating continues to reflect the Companys established market position as the second-largest automotive fasteners manufacturer in India and its healthy credit profile, supported by steady accruals from the fasteners business.

Capital Expenditure

As on 31^st March 2026, the Gross Fixed Assets including intangible assets stood at H55,970.58 Lacs and Net Fixed Assets stood at H 24,453.47 Lacs. Additions during the year amounted to H1,722.59 Lacs.

Cash Flow Analysis

In compliance with the provisions of Regulation 34 of the Listing Regulations, 2015, the Cash Flow Statement for the year ended 31^st March 2026 forms an integral part of this Annual Report.

Transfer of amounts to Investor Education and Protection Fund (IEPF )

Pursuant to the provisions of Section 125 of the Companies Act, 2013, relevant amounts along with the shares, which remained unpaid or unclaimed for a period more than seven years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund.

During FY 2025-26, the Company transferred:-

Particulars	Details
1. Amount of unclaimed/ unpaid dividend	H1.93 Lacs
2. Underlying shares transferred to IEPF	5,940 Shares

Pursuant to the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer & Refund) Rules, 2016, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company on the Ministry of Corporate Affairs website and the shareholders may refer to the Notice of

AGM regarding details of amounts and the corresponding shares proposed to be transferred to IEPF during the coming year.

Name of Nodal Officer: Ms. Pragya Saxena, Company Secretary and Compliance Officer. Details of Nodal Officer are mentioned on the website of the Company at https://stlfasteners.com/ investors/investor-contact

Corporate Governance and Management Discussion & Analysis Report

The Company is committed to maintain good corporate governance standards by applying the best management practices, compliance with the law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for the sustainable development of all stakeholders.

Parameters of statutory compliances evidencing the standards expected from a listed entity have been duly observed and a Report on Corporate Governance as well as the Certificate from Company Secretary in Practice confirming compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") forms part of the Annual Report. A separate section on corporate governance practices followed by the Company, together with a certificate from a Practising Company Secretary confirming its compliance, forms a part of this Annual Report, as per SEBI Regulations. Further, as per Regulation 34 read with Schedule V of the Listing Regulations, a Management Discussion and Analysis Report is annexed to this report.

Annual Return

As provided under section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the Annual Return in the prescribed form MGT-7 as on 31^st March, 2026 is available on the Companys website at https://stlfasteners.com/assets/upload/ investors/20260811154049-ac5096015-358588078947.pdf

Business Responsibility and Sustainability Report (BRSR)

The Company takes pride in presenting its third BRSR for the FY 2025-26. This report adheres to the format outlined in the amendment to Regulation 34(2)(f) of the SEBI Listing Regulations as specified in Gazette Notification No. SEBI/LAD- NRO/GN/2021/22 dated May 05, 2021 and is included within the Annual Report. Aligned with the nine principles of the National Guidelines on Responsible Business Conduct issued by the Ministry of Corporate Affairs, Government of India, the BRSR for the FY 2025-26 has been developed and forms part of this report. The Company has further enhanced its reporting framework and internal control mechanisms to ensure the consistent, accurate, and reliable collection of data required for Business Responsibility and Sustainability Reporting (BRSR) disclosures.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information pursuant to the provisions of Section 134(3) (m) of The Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption & foreign exchange earnings and outgo is given by way of Annexure-VIto this Report.

Safety, Health and Environment (SHE) Measures

Environmental protection remains a key priority for the Company. The Company ensures strict compliance with applicable environmental laws and regulations while undertaking additional measures, wherever necessary, to prevent pollution and promote recycling, as well as to minimize waste, discharges, and emissions. It is also committed to the responsible and efficient use of natural resources across all operations and aims to progressively reduce its carbon footprint in the coming years.

Quality Management System

STL has implemented robust Quality, Environment management, Data Security and Health & Safety management system at its manufacturing facilities. The facilities are certified by:

Key certifications
IATF 16949 : 2016	Quality Management System
ISO 45001: 2018	Health & Safety Management System
ISO 14001: 2015	Environment Management System
ISO 9001:2015	Quality Management System
ISO 17025	Chemical Testing, Mechanical Testing and
	Instrument Calibration
ISO 27001:2022	Information Security Management
	Systems (ISMS)

Proceedings pending, if any, under the Insolvency and Bankruptcy code, 2016

The Company has neither filed an application during the year under review nor are any proceedings pending under the Insolvency and Bankruptcy Code, 2016 as on 31^st March, 2026.

Significant and Material Orders passed by the Regulators or Courts

During the year, pursuant to the order dated 02^nd July 2025 passed by The Land Acquisition Collector/DRO, the Company received compensation of 949.64 Lacs (included interest of

H 622.45 lacs) from DMRC towards acquisition of land. The order had a significant positive impact on the financial position of the Company.

Insurance

The Company has taken appropriate insurance for all assets against foreseeable perils.

Weblink to Important documents/information

The Company has hosted certain policies/documents/ information including inter alia Policy for determining Policy on Related Party Transactions, Familiarisation programmes for Independent Directors etc. as per the requirement of law or otherwise on following the link: https://stlfasteners. com/investors/.

OTHER DISCLOSURES

During the financial year under review:-a. The Company has not issued any equity shares with differential rights as to dividend, voting, or otherwise. b. Except as disclosed in this report and the financials of the Company, there was no issue of shares (including sweat equity shares) to employees of the Company under any other scheme. The equity shares so issued ranked pari-passu with the existing fully paid-up equity shares in all respects as to dividend, etc. c. The Company does not have any scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees. d. Neither the Managing Director nor the Whole-Time Directors of the Company receive any remuneration or commission from any of its subsidiaries. e. There was no instance of one-time settlement with any Bank or Financial Institution. f. The Company does not have any shares in an unclaimed suspense demat account.

Directors Responsibility Statement

Pursuant to the requirement under section 134(3) (c) of the Companies Act, 2013 with respect to the Directors Responsibility Statement, it is hereby confirmed that: (i) in the preparation of the accounts for the financial year ended 31^st March 2026, the applicable accounting standards have been followed and there are no material departures. (ii) the Directors have selected accounting policies in consultation with Statutory Auditors and applied them consistently and made judgements 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 and of the profit of the Company for the financial year under review.

(iii) the directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013. The directors have confirmed that there are adequate control & systems for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the Directors have prepared the accounts for the financial year ended 31^st March 2026 on a going concern basis. (v) 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.

(vi) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Acknowledgements

The Directors express deep gratitude to our customers for their sustained support and feedback, which have helped the company meet evolving needs and diversify its product portfolio for sustainable business growth. We thank our dedicated employees for their commitment to our growth and success. We also appreciate our supply chain partners, whose partnership has been key to our industry leadership.

Our sincere thanks goes to the regulatory authorities, bankers, financial institutions, rating agencies, stock exchanges, depositories, auditors, legal advisors, consultants, Technology partners and other stakeholders. Your commitment to good governance, transparency, ethics, and accountability has been crucial to our success.