Surat Trade & Merchantile Ltd Directors Report

Dear Shareholders,

Your Directors have pleasure in presenting the 80th Annual Report of Surat Trade and Mercantile Limited (your Company or the Company) along with the Audited Financial Statements for the Financial Year (FY) ended 31st March 2026.

FINANCIAL HIGHLIGHTS

The Audited Financial Statements of your Company as on 31st March 2026, are prepared in accordance with the relevant applicable Indian Accounting Standards ("Ind AS") and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and the provisions of the Companies Act, 2013 ("Act").

Your Companys financial performance for the year ended 31st March 2026 is summarized below:

(Rs. in Lakhs)

Particulars	Year ended 31st March, 2026	Year ended 31st March, 2025
Revenue from Operations	11134.58	6863.70
Other income	1378.56	1482.44
Total Income	12513.14	8346.14
Operating Profit/(Loss) / EBITDA (including other income)	1471.76	996.35
Less: Finance Costs	15.18	16.11
Profit before Depreciation & Amortisation Expenses	1456.58	980.24
Less: Depreciation & Amortisation Expenses	57.23	51.65
Profit before tax	1399.35	928.59

REVIEW OF OPERATIONS AND FINANCIAL PERFORMANCE

During FY25-26, your Company delivered a robust performance. Revenue from operations was Rs. 11134.58 Lakhs compared to Rs. 6863.70 Lakhs in the previous fiscal year.

During FY25-26, Profit before tax rose to Rs. 1399.35 Lakhs from Rs.928.59 Lakhs in the previous year.

Your Company operates primarily in commodity trading and other related activities. During FY25-26, it remained the biggest operational driver of the Company. The Company achieved an income from commodity trading of Rs 10625.33 Lakhs as compared to Rs 6863.70 Lakhs during FY24-25.

Your Company successfully leveraged the ongoing fluctuations and volatility in global commodity markets to maximize profitability with prudent hedging strategies.

During the year under review, the Company actively participated in the trading of metals, in particular gold and silver. Business volume increased substantially as yields improved compared to the previous year. There was significant volatility in commodity prices in the international as well as domestic market through the year, which materially increased during the Iran war at the end of FY26 owing to supply chain disruption, attacks on energy infrastructure in the Middle East etc. This volatility however enabled the Company to improve returns while minimizing risk owing to its strategic hedging practices using derivatives on recognized exchanges.

The Companys profit was also boosted by the sale of artworks in FY25-26.

The Company deploys its surplus liquidity into a curated portfolio of financial instruments to maximize risk- adjusted returns and ensure capital preservation.

For this purpose, the Company maintains a diversified portfolio of investments in equities, debt, including in various mutual funds and AIFs. This, we believe is important in a volatile, uncertain environment.

Total earnings from investment activities, which comprises of dividends and realized/unrealized gains and income from investment in AIF etc., declined at Rs.1378.56 Lakhs during FY25-26 compared to Rs 1482.44 Lakhs in the previous year. This was primarily on account of lower returns in the listed financial markets. Equity and Debt portfolios were influenced by monetary policies, currency movements, U.S. trade policies, fluctuating oil prices due to escalating geopolitical tensions, foreign portfolio outflows, currency concerns, perceived risks to corporate earnings and economic growth etc.

During FY 25-26, the income from AIF investment increased to Rs. 924.40 Lakhs as compared to Rs.805.51 Lakhs in FY24-25. The total asset value under AIFs at the end of FY25-26 also increased to Rs. 9542.07 Lakhs as compared to Rs. 7745.77 Lakhs for FY24-25.

During FY25-26, total income (excluding AIF) from investment activities, including dividends and realized/ unrealized gains etc. declined at Rs.454.16 Lakhs compared to Rs 676.93 Lakhs earned in the previous year.

DIVIDEND

With a view to conserve the resources for future growth, the directors of the Company have decided not to recommend any dividend on equity shares of the Company for the year ended 31st March 2026.

TRANSFER TO RESERVES

Your directors do not propose to transfer any amount of Profits as appearing in the Statement of Profit and Loss of the Company for the year ended 31st March 2026 to the reserves and decided to retain the entire profit for FY26 in the retained earnings.

SHARE CAPITAL

The issued, subscribed and paid-up Equity Share Capital of the Company as on 31st March 2026 stood at Rs. 2220.64 Lakhs consisting of 22, 20, 64,440 equity shares of Rs.1 each fully paid up. Out of the above, the Promoters held 15, 20, 04,917 equity shares comprising 68.45% of the equity share capital of the Company. There was neither any change in the share capital of the Company nor was there any change in the shareholding of the Promoter of the Company during FY 2025-26.

SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

The Company has no subsidiary / joint venture / associates for the financial year ended 31st March 2026. Accordingly, the requirements pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8(5)(iv) of the Companies (Accounts) Rules, 2014 is not applicable.

The policy for determining material subsidiaries formulated by the Board of Directors is disclosed on the website of the Company and can be accessed at https://www.stml.in

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains an adequate system of internal controls aligned with the requirements of Section 134(5) (e) of the Act and commensurate with the size and the nature of its commodity trading business. This ensures that all transactions are authorized, recorded, and reported correctly. The scope includes regular internal audits, strict adherence to exchange margin requirements, and comprehensive tracking of physical-to-derivative position reconciliations.

The Audit Committee, composed of professionally qualified Directors, plays a pivotal role in ensuring the integrity of financial and operational controls. It actively engages with the Statutory Auditors, Internal Auditors and Management to oversee and strengthen the Internal Control environment.

The certification provided in the CEO and CFO certification section of the Annual Report discusses the adequacy of our Internal Control System and procedures.

RESOURCES AND LIQUIDITY

Our principal sources of liquidity are cash and cash equivalents, investments and the cash flow that we generate from our operations. We understand that liquidity in the Balance Sheet has to balance between earning adequate returns and the need to cover financial and business requirements. We continue to be debt-free and maintain adequate liquidity to meet our operational requirements.

There was no outstanding term loan at the beginning or at the end of financial year 2025-26. No fresh Term Loan was availed by the Company during the year. The Company has not availed any working capital facility from Banks during the year.

The Company continues to demonstrate disciplined capital management.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There is no change in the nature of business of the Company during the financial year ended 31st March, 2026.

DIRECTORS AND KEY MANAGERIAL PERSONNEL DIRECTORS

As on 31st March 2026, your Company has 6 (Six) Directors with an optimum combination of Executive and Non- Executive Directors. The Board comprises of 3 (Three) Non-Executive Directors, all 3 are Independent Directors including 1 (One) woman Independent Director.

RE-APPOINTMENT OF DIRECTORS

The Members of the Company at their 79th Annual General Meeting held on 12th September 2025, approved the re- appointment of Shri Suhail P. Shah (DIN: 00719002), who was retiring by rotation at the 79th Annual General Meeting and being eligible had offered himself for re-appointment, as the Director, liable to retire by rotation.

The Members of the Company at the 79th Annual general Meeting held on 12th September 2025, approved the re- appointment of Shri Alok P. Shah (DIN: 00218180) for a period of 5 years from the expiry of his present term of office, i.e., with effect from 1st July, 2025 as Managing Director. His directorship is liable to retire by rotation.

In accordance with the provisions of Section 152 of the Companies Act, 2013 (the Act), Shri Alok P. Shah (DIN: 00218180) will be retiring by rotation at the 80th Annual General Meeting of the Company and being eligible, has offered himself for re-appointment.

The Shareholders of the Company by way of Postal Ballot through Special Resolution approved the appointment of Mr. Suhail P. Shah (DIN: 00719002) as Wholetime Director designated as Executive Director of the Company for a period of 3 years with effect from 1st September 2023. Accordingly, his present term of 3 years ends on 31st August 2026.

Further, based on the recommendation of the Nomination and Remuneration Committee and on the approval of the Board of Directors at their meeting held on 26th May 2026, approval of the shareholders accorded at the Extra- Ordinary General Meeting held on 10th August, 2026, for the re-appointment of Mr. Suhail P. Shah as Wholetime Director designated as Executive Director of the Company for a period of 5(five) years with effect from 1st September 2026.

The first term of appointment of Mr. Deepak N. Shah (DIN: 07356807) as a Non-Executive Independent Director of the Company is due to expire on August 10, 2027. Based on the recommendation of the Nomination and Remuneration Committee and after taking into consideration his performance evaluation, skills, experience, expertise and the declaration of independence submitted by him, the Board of Directors, at its meeting held on August 12, 2026, approved his re- appointment as a Non-Executive Independent Director of the Company for a second consecutive term of five (5) consecutive years commencing from August 11, 2027 and ending on August 10, 2032 (both days inclusive). The requisite Special Resolution seeking approval of the Members for his re-appointment forms part of the Notice convening this Annual General Meeting.

Brief resume, nature of expertise, disclosure of relationship between Directors inter-se, details of directorships and committee membership held in other companies of the Directors proposed to be appointed / re-appointed along with their shareholding in the Company, remuneration, terms and conditions of appointment etc., as stipulated under Secretarial Standard 2 and Regulation 36 of the Listing Regulations, is appended as an Annexure to the Notice convening the 80th Annual General Meeting.

KEY MANAGERIAL PERSONNEL (KMP)

In compliance with Section 203 of the Act read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following persons are the Key Managerial Personnel of your Company:

1. Mr. Alok P. Shah (DIN: 00218180), Managing Director

2. Mr. Paresh V. Chothani (DIN: 00218632), Wholetime Director

3. Mr. Suhail P. Shah, (DIN: 00719002), Wholetime Director

4. Mr. Chandresh S. Punjabi, Chief Financial Officer

5. Ms. Ankita Prasiddha Shroff, Company Secretary

Ms. Mahek Gaurav Jaju resigned from the post of Company Secretary and Compliance Officer with effect from 30th April 2026. Further, pursuant to provisions of Section 203 of the Companies Act 2013 Ms. Ankita Prasiddha Shroff has been appointed as Company Secretary and Compliance Officer with effect from 26th May 2026.

INDEPENDENT DIRECTORS

In terms of Section 149 of the Act, Ms. Kruti Kothari, Mr. Deepak N. Shah and Mr. Manish J. Gandhi are the Independent Directors on the Board of your Company.

All the Independent Directors of the Company have submitted their declarations to the Company under Section 149(7) of the Act that they meet the criteria of independence as provided under Schedule IV and Section 149(6) of the Act read with Regulation 16(1)(b) of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

All the Independent Directors have confirmed that their names are registered in the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs (IICA) in terms of Rule 6(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014. They have further confirmed that they have complied with the requirements of Rule 6(2) of the said Rules and have cleared the online proficiency self-assessment test within the prescribed timeline/ is exempt from the requirement to undertake the online proficiency self-assessment test, as applicable.

During the year under review, the Company had no pecuniary relationship or transactions with its Independent Directors, except for sitting fees, reimbursement of meeting related expenses, in accordance with the Act and Listing Regulations.

The Appointment and Tenure of the Independent Directors, including code for Independent Directors, are available on the website of the Company at www.stml.in.

SEPARATE MEETING OF INDEPENDENT DIRECTORS

In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on 24th March 2026.

The Independent Directors at the meeting, inter alia, reviewed the following:

• Performance of Non-Independent Directors and Board as a whole.

• Performance of the Chairman of the Board, taking into account the views of Executive Directors and Non-Executive Directors.

• Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

FAMILIARIZATION / ORIENTATION PROGRAM FOR INDEPENDENT DIRECTORS

In terms of Regulation 25(7) of the Regulations, the Company has adopted a familiarization programme for the Independent Directors to familiarize them with working of the Company, nature of the industry in which the Company operates, business model of the Company, their roles, rights, responsibilities and other relevant details.

These programmes aim to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company.

Pursuant to Regulation 46, the details required are available on the website of your Company at http://www. stml.in/policies.aspx.

NUMBER OF MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD

During FY 2025-26, 5 (five) meetings of the Board of Directors were held. The details of these meetings and Directors attendance are provided in the Corporate Governance Report, which forms part of this Report. As per the requirement of the Act and Listing Regulations, the interval between two meetings of Board of Directors and Audit Committee did not exceed one hundred and twenty days. The composition, terms of reference, and number of meetings of the Board Committees during the year are also detailed in the Corporate Governance Report.

COMMITTEES OF THE BOARD

As required under the Companies Act, 2013 and the SEBI Listing Regulations, your Company has constituted various Statutory Committees. As on 31st March 2026, the Board had four committees: the audit committee, the corporate social responsibility committee, the nomination and remuneration committee and stakeholders relationship committee. During the year, all recommendations made by the committees were approved by the Board. A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report.

AUDIT COMMITTEE

The Audit Committee comprised of three (3) members, and all the members are Independent Directors.

Mr. Deepak N. Shah is the Chairman of the Audit Committee. Ms. Kruti Kothari and Mr. Manish J. Gandhi are members of the Committee. During the year under review, five (5) meetings of the Audit Committee were held.

The Audit Committee acts as a link between the Statutory Auditors, Internal Auditors and the Board of Directors. Its purpose is to assist the Board in fulfilling its responsibilities of monitoring financial reporting process, reviewing the Companys established systems and processes for internal financial controls, governance and reviewing the Companys Statutory and Internal Audit activities. The Committee is governed by a Charter, which is in line with the regulatory requirements mandated by the Act and Listing Regulations.

The details of meetings held during the year and attendance of members of the Audit Committee are provided in the Corporate Governance Report, which forms part of this Report.

There were no instances where the recommendations of the Audit Committee were not accepted by the Board.

BOARD EVALUATION AND CRITERIA FOR EVALUATION

In compliance with the Act and Listing Regulations and based on the Nomination and Remuneration Committees recommendation, the Board adopted a Performance Evaluation Policy outlining criteria for evaluating the performance of the Board, its committee and individual Directors, including Independent Directors. The Board has carried out an annual evaluation of its own performance, its committee and individual Directors, based on the criteria as provided in the Performance Evaluation Policy.

Based on such evaluation, the Board is of the view that all Independent Directors are having thorough knowledge, expertise and experience in their respective areas and possess very good understanding of the Companys business and the general economic environment. They devote quality time and full attention to understand key issues relating to business of the Company and advise on the same which improved governance standards within the Company.

During the period under review, the Board of Directors have carried out the evaluation of the performance of Independent Directors and their independence criteria and the Independent Directors in their meeting held on 24th March 2026 have evaluated the performance of the Chairman and Non-Independent Directors and the Board as a whole and also assessed the quality, quantity and timeliness of flow of information between the Board and Company management.

CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2025-26. A declaration to this effect signed by the Managing Director of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

CODE FOR PREVENTION OF INSIDER TRADING

Your Company has adopted a Code of Conduct to regulate, monitor and report trading by designated persons and their immediate relatives as per the requirements under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. This Code of Conduct also includes code for practices and procedures for fair disclosure of unpublished price sensitive information which has been made available on the Companys website at http://www.stml.in/policies.aspx.

PROCEDURE FOR NOMINATION, APPOINTMENT & REMUNERATION OF DIRECTORS

The Nomination and Remuneration Committee (NRC) has been mandated to oversee and develop competency requirements for the Board based on the industry requirements and business strategy of the Company. The NRC reviews and evaluates the profiles of potential candidates for appointment of Directors and meets them prior to making recommendations of their nomination to the Board.

Directors are appointed / re-appointed with the approval of the Members for a term in accordance with the provisions of the law and the Articles of Association. The initial appointment of Managing / Wholetime Director is generally for a period of 3-5 years. All Directors other than Independent Directors are liable to retire by rotation unless otherwise specifically provided under the Articles of Association or under any statute. One-third of the Directors who are liable to retire by rotation, retire at every Annual General Meeting and are eligible for re-appointment.

Disclosures of the ratio of the remuneration of each director to the median employees remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, are provided as “Annexure B".

None of the directors or Managing Director of the Company received any remuneration or commission from Subsidiary Companies of your Company.

The detail of remuneration paid to the Directors including the Managing Director of the Company is provided in Corporate Governance Report.

AUDITORS:

a) STATUTORY AUDITORS:

At the 76th AGM held on 13th September 2022, the Members approved the re-appointment of M/s Sharp and Tannan Associates, Chartered Accountants (ICAI Firm Registration Number 109983W), as the Statutory Auditors of the Company to hold office as the Statutory Auditors for a second term of 5 years commencing from the conclusion of the 76th AGM till the conclusion of the 81st AGM to be held in the FY 2027-28.

As required under the SEBI Listing Regulations, the Statutory Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Further, pursuant to Section 139 of the Companies Act, 2013, the Company has obtained certificate from them to the effect that their continued appointment would be in accordance with the conditions prescribed under the Act and the Rules made thereunder, as may be applicable.

b) SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with rules framed thereunder, and Regulation 24A of the Securities and Exchange Board of India (Listing Regulations and Disclosure Requirements) Regulations, 2015 as amended and based on recommendation of the Board of Directors, the Shareholders of the Company at the 79th Annual General Meeting held on 12th September 2025 approved the appointment of M/s Jigar Vyas & Associates, Practicing Company Secretaries (Firm Registration No. S2015GJ307200) as the Secretarial Auditors of the Company for a term of 5 (five) consecutive years to conduct the Secretarial Audit of five consecutive years from FY 2025-26 to FY 2029-30.

M/s Jigar Vyas & Associates, Practicing Company Secretaries have confirmed that they are not disqualified from being appointed as the Secretarial Auditors of the Company and satisfy the prescribed eligible criteria.

c) INTERNAL AUDITORS

Based on the recommendation of Audit Committee, the Board of Directors, at their meeting held on 26th May 2026, re-appointed M/s K. S. Jagirdar & Co., (ICAI Membership No.036904), Chartered Accountants as Internal Auditors of the Company to conduct the Internal Audit for FY 2026-27. The Internal Auditors present their findings and status updates to the Audit Committee on a quarterly basis.

The audit committee in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

AUDITORS REPORT

a) STATUTORY AUDITORS REPORT

The report of M/s Sharp & Tannan Associates, Chartered Accountants (ICAI Registration No. 109983W), the Statutory Auditors of the Company on the financial statements of the Company for the year ended 31st March 2026 is annexed to the financial statements in terms of the provisions of Section 134(2) of the Companies Act, 2013.

There was no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their Report. For FY 2025-26, the Auditors have not reported any instances of fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(a) of the Act is not applicable. The Statutory Auditors were present in the last AGM.

b) SECRETARIAL AUDITORS REPORT

The Secretarial Audit Report of M/s Jigar Vyas & Associates, Practicing Company Secretaries, for the year ended 31st March 2026 in Form MR-3 is annexed as Annexure - D, which forms part of this Report.

The Company has undertaken an audit for the Financial Year 2025-26 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Jigar Vyas Practicing Company Secretary (ICSI Membership No. FCS 8019) has been submitted to the Stock Exchanges within the stipulated time, in compliance with the provisions of the Regulation 24A of SEBI (LODR) Regulations, 2015.

The Annual Secretarial Compliance Report for FY

2025-26, does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report in Form MR-3 for the Financial Year ended 31st March, 2026 is attached as Annexure D to this Report. The Secretarial Auditors Report have the following observation:

Auditors Observation

Management Response

Related Party Transactions with Mr. Alok P. Shah(DIN: 00218180), Managing Director of the Company for the financial year 2025-26 has exceeded the prescribed limits under the first proviso to Regulation 23 (1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

During the internal review process conducted in July 2026, the Company identified an inadvertent non-compliance with the first proviso to Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Immediately upon identification of the non-compliance, the Company informed the Secretarial Auditor and initiated corrective measures. Accordingly, the Audit Committee and the Board of Directors, at their respective meetings held on 14 July 2026, approved and ratified the concerned related party transaction(s). Thereafter, the Members of the Company, at the Extra-Ordinary General Meeting held on 10 August 2026 during the financial year 2026-27, also approved and ratified the said transaction(s). Pursuant to the shareholders approval, the Company voluntarily filed a suo motu Settlement Application with the Securities and Exchange Board of India (SEBI) in accordance with the applicable provisions governing settlement proceedings.

COST RECORDS AND COST AUDIT

Consequent to the sale / transfer of assets of Jolwa Manufacturing division in April 2022 and no other manufacturing activity in operation, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company for the FY 2025-26.

SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India. The Directors have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by The Institute of Company Secretaries of India, as amended and such systems were adequate and operating effectively.

DIRECTORS RESPONSIBILITY STATEMENT

The Financial Statements are prepared in accordance with the Indian Accounting Standards (Ind AS) and based on the framework of Internal Financial Controls established and maintained by the Company, work performed by the Internal, Statutory, and Secretarial Auditors and external agencies including audit of Internal Financial Controls over Financial Reporting by the Statutory Auditors and reviews performed by the management and relevant Board Committees, including Audit Committee, the Board is of the opinion that your Companys Internal Financial Controls were adequate and effective during FY 2025-26.

Accordingly, pursuant to Sections 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

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

(b) they 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 and of the profit and loss of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the Annual Accounts for the Financial Year ended 31st March 2026 on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company, and such internal financial controls are adequate and operating effectively; and

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

RE-CLASSIFICATION OF ASSETS

During the year, the Company re-assessed the classification of certain land and buildings previously classified under Property, Plant and Equipment ("PPE").

As the said premises are not being used for operational or any other business purposes of the Company and the land is intended to be held for capital appreciation and strategic monetization, the land has been reclassified as Investment Property in accordance with Ind AS 40 - Investment Property.

Further, based on an Independent external valuation report, the recoverable/residual value of the building was assessed at Rs. 20 lakhs against its carrying amount of Rs. 50.54 lakhs. Accordingly, the Company recognized an impairment loss of Rs. 30.54 lakhs as Other Expenses in the Statement of Profit and Loss, in accordance with "Ind AS 36 - Impairment of Assets."

CORPORATE GOVERNANCE

The Company adheres to the corporate governance requirement set out by Securities and Exchange Board of India and considers the same as its inherent responsibility to disclose timely and accurate information to its stakeholders regarding its operations, performance, leadership and governance of the Company.

A Certificate by the Managing Director and the Chief Financial Officer of the Company in terms of Listing Regulations, inter alia confirming the correctness of the Financial Statements are placed before the Audit Committee and Board of Directors of the Company on quarterly basis.

The Report on Corporate Governance as stipulated under Schedule V of the Regulations is provided in a separate section as Annexure F and forms part of this Report. The required certificate from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated in the Regulation 34 of the Listing Regulations, is annexed to this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Your Company is having duly constituted Corporate Social Responsibility (CSR) Committee comprised of 3 (Three) members out of which, 2 (Two) are Independent Directors. The present members of the CSR Committee comprise of Mr. Deepak N. Shah as the Chairman, Mr. Paresh V. Chothani and Mr. Manish J. Gandhi as Members. The CSR Committee met on 24th March 2026 to review the Corporate Social Responsibility Policy.

The Company works primarily towards supporting projects in the areas of protection of national heritage, restoration of historical sites, and promotion of art and culture; environmental sustainability and ecological balance; promoting education etc.

Your Company has also in place a CSR policy duly approved by the Board of Directors that provides guidelines for conducting its CSR activities and can be accessed at Companys website at http://www.stml.in/ under the link: http://www.stml.in/policies.aspx.

During the Financial Year 2025-26, the Company has contributed for activities undertaken by the Registered agency, Trust etc. in compliance with the provisions of the Companies Act, 2013 for the above objectives inter alia Conservation of natural resources, contribution to R & D, Rural Development, Promoting education and healthcare etc.

During the year under review, your Company spent Rs. 17.50 Lakhs on CSR activities. The average net profit for the past three financial years was Rs 873.45 Lakhs.

The details about CSR Committee, its Terms of Reference, meetings held and attendance of members are provided in the Corporate Governance Report. There have been no instances during the year where recommendations of the CSR Committee were not accepted by the Board.

Annual Report on mandatory CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is given in Annexure A forms integral part of this Report.

RELATED PARTY TRANSACTIONS

The Board of Directors has adopted a Policy on Materiality of Related Party Transactions and on Dealing with Related Party Transactions ("RPT Policy"), which lays down the framework for identification, approval, review and reporting of Related Party Transactions, including the threshold limits for determining material modifications thereto. The Policy is intended to ensure that all Related Party Transactions are conducted in accordance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations").

During the year under review, the Board of Directors, at its meeting held on February 14, 2026, reviewed and amended the RPT Policy in line with the requirements of Regulation 23 of the SEBI Listing Regulations. The Policy is available on the Companys website.

During the financial year 2025-26, all Related Party Transactions entered into by the Company with its related parties were in the ordinary course of business and on an arms length basis. Prior approval of the Audit Committee was obtained for all Related Party Transactions, including omnibus approvals for repetitive transactions, in accordance with the applicable provisions of the Companies Act, 2013 and the SEBI Listing Regulations. The Audit Committee also reviewed such transactions on a quarterly basis.

Pursuant to Regulation 23 of the SEBI Listing Regulations, the Company submits the details of Related Party Transactions on a consolidated basis in the prescribed format to the Stock Exchanges on a half-yearly basis.

The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are provided in Annexure E in Form AOC-2, which forms an integral part of this Report.

The disclosures relating to Related Party Transactions, as required under the applicable Indian Accounting Standards, are set out in Note 34 to the Standalone Financial Statements forming part of this Annual Report.

Observation on Related Party Transactions

Auditors Observation

Management Response

Related Party Transactions with Mr. Alok P. Shah(DIN: 00218180), Managing Director of the Company for the financial year 2025-26 has exceeded the prescribed limits under the first proviso to Regulation 23 (1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

During the internal review process conducted in July 2026, the Company identified an inadvertent non-compliance with the first proviso to Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Immediately upon identification of the non-compliance, the Company informed the Secretarial Auditor and initiated corrective measures. Accordingly, the Audit Committee and the Board of Directors, at their respective meetings held on 14 July 2026, approved and ratified the concerned related party transaction(s). Thereafter, the Members of the Company, at the Extra-Ordinary General Meeting held on 10 August 2026 during the financial year 2026- 27, also approved and ratified the said transaction(s). Pursuant to the shareholders approval, the Company voluntarily filed a suo motu Settlement Application with the Securities and Exchange Board of India (SEBI) in accordance with the applicable provisions governing settlement proceedings.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

Internal Financial Control systems of the Company are commensurate with its size and the nature of its operations. The controls are adequate for ensuring the orderly and efficient conduct of the business, including adherence to the Companys policies, the safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and timely preparation of reliable financial information.

Internal audit findings are reviewed, and Significant audit observations and corrective actions are periodically reported to the Audit Committee for review and strategic oversight.

The internal auditors of the Company have in compliance with provisions of Section 177 (4) of the Companies Act, 2013 confirmed to the Audit Committee that the Company has adequate Internal Financial Controls, and the systems of risk management are robust and defensible.

Statutory Auditors of the Company have in their Report dated 26th May 2026 opined that the Company has, in all material respects adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2026.

MATERIAL CHANGES AND COMMITMENTS

Except as disclosed elsewhere in the Annual Report, there have been no material changes and commitments which can affect the financial position of the Company that have occurred between the end of the financial year to which the Financial Statements relate and the date of this Report.

BOARD POLICIES

The details of the policies approved and adopted by the Board as required under the Companies Act, 2013 and Securities and Exchange Board of India (SEBI) regulations are provided in Corporate Governance Report.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

In terms of the provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of the Regulations, Nomination and Remuneration Committee (NRC) has formulated a policy relating to appointment and determination of the remuneration for the Directors, Key Managerial Personnel and Senior Management Personnel which has been adopted by the Board of Directors of the Company. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to the Executive and Non-Executive Directors of the Company.

Your directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, Senior Management Personnel and other employees is as per the Nomination and Remuneration Policy of your Company.

The Nomination and Remuneration Policy include the criteria for determining qualification, positive attributes, independence of Directors and other matters as required under Section 178(3) of the Act and is annexed as Annexure - C. The Nomination and Remuneration Policy is also available on the Companys website on http://www.stml.in/policies.aspx.

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

Your Company has adopted zero tolerance for sexual harassment at the workplace and has a policy as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) for prevention and redressal of complaints of sexual harassment at workplace.

A duly constituted Internal Committee (IC) is also in place to redress complaints on sexual harassment. The IC is empowered to look into all complaints of sexual harassment and facilitate free and fair enquiry process with clear timelines.

The details of complaints relating to sexual harassment at workplace during the year ended 31st March 2026 are provided as under:

a) Number of complaints of sexual harassment received during the year: Nil

b) Number of complaints disposed - off during the year: Nil

c) Number of cases pending for more than ninety days: Nil

The Policy of the "Prevention of Sexual Harassment of Women at Workplace" of the Company is available on the website of the Company at http://www.stml.in/ policies.aspx.

DISCLOSURE UNDER MATERNITY BENEFITS ACT, 1961

The Company complies with the provisions of the Maternity Benefits Act, 1961, ensuring that eligible women employees receive their statutory entitlements. These benefits reflect your Companys commitment in creating a compliant, inclusive and supportive workplace that prioritizes the health and well-being of expecting and new mothers.

INDIAN ACCOUNTING STANDARDS (Ind AS)/ FINANCIAL STATEMENTS

Your Company follows Indian Accounting Standards (Ind AS) issued by the Ministry of Corporate Affairs in the preparation of its financial statements. Your Company has consistently applied applicable accounting policies during the year under review. Management evaluates all recently issued or revised accounting standards on an ongoing basis. The Company discloses its financial results on a quarterly basis which are subjected to limited review and publishes audited financial results on an annual basis.

The financial statements for the year ended 31st March 2026 have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as required under the provisions of Section 133 of the Companies Act, 2013 read with rules made there under, as amended.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Information regarding employees in accordance with the provisions of Rule 5(2) and Rule 5(3) of the companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure- B to this Report.

WHISTLE BLOWER POLICY AND VIGIL MECHANISM

Pursuant to provisions of Section 177(9) of the Act, read with Regulation 22(1) of the Listing Regulations, your Company has adopted a Whistle Blower Policy (Policy), to provide a formal vigil mechanism to the Directors and employees to report their concerns about unethical behaviour, including actual or suspected leak of unpublished price sensitive information, actual or suspected fraud or violation of the Companys Code of Conduct.

The Policy provides for adequate safeguards against victimization of employees and also provides direct access to the Chairman of the Audit Committee in certain cases. It is affirmed that no personnel of the Company was denied access to the Audit Committee.

The functioning of the Whistle Blower Mechanism/ Vigil Mechanism existing in the Company is reviewed by the Audit Committee on Annual basis. During the year under review, no compliant has been received and no employee was denied access to the Audit Committee.

The Whistle Blower Policy is available on the Companys website at http://www.stml.in.

REPORTING OF FRAUD

During the year under review, the Statutory Auditor, Internal Auditors and Secretarial Auditors have not reported any instance of fraud committed in the Company by its officers or employees to the Audit Committee under Section 143(12) of the Act, details of which need to be mentioned in this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The primary business activities of the Company comprise of Trading in Commodities and other Commodity related business. Accordingly, there are no reportable details relating to conservation of energy or technology absorption. There were no foreign exchange earnings or outgo during the year under review.

CEO AND CFO CERTIFICATION

Pursuant to Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Managing Director and CFO Certification forms part of the Annual Report. Managing Director and CFO also provide quarterly certification on financial results, while placing the financial results before the Board in terms of the Listing Regulations.

HEALTH, SAFETY AND ENVIRONMENT

Your Company believe that organisations sustainability is directly proportional to the safety, health and environment management. We endeavour to demonstrate environmental and social responsibility at every step.

We are devoted to benefit communities - workforce, public and environment. Our safety, health and environment objectives include complying with all applicable laws relevant to the industry. The Management believes in sharing responsibility throughout the hierarchy in conforming to the existing laws.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

During the year under review, the Company continued to have cordial and peaceful relations with the manpower employed. The focus remains on continuous skill upgradation to navigate complex commodity and financial markets. There were total 25 employees (including Managing Director/Wholetime Directors) which comprises of 3 female and 22 male employees as at 31st March 2026.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance reflects the strength of our dual-model operations. Revenue from commodity trading is supported by the other income and appreciation generated from our financial investments. A detailed discussion on the financial statements is forming part of the Directors Report.

GREEN INITIATIVES

In commitment to keep in line with the Green Initiatives and going beyond it, the Notice of 80th Annual General Meeting of the Company including the Annual Report for FY 2025-26 are being sent to all Members whose e-mail addresses are registered with the Company / Depository Participant(s).

CODE ON SOCIAL SECURITY

The Government of India on 21st November 2025 notified the four Labour Codes consolidating 29 existing labour laws. The Ministry of Labour & Employment has also issued draft Central Rules and FAQs to help assess the financial impact of these changes. The Company shall comply with the applicable provisions of the Labour Codes.

RISK MANAGEMENT

Your Company uphold a balanced risk appetite, enabling it to pursue growth while maintaining strong risk controls.

The Company periodically assesses the risks in the internal and external environment along with treating the risks and incorporates risk management plans in its strategy, business and operational plans. Your Company recognizes that the risk is an integral part of business and is committed to managing the risks in proactive and efficient manner.

All major financial commitments are subject to scrutiny by the Board and investments are permitted only on being satisfied about its returns or utility to the Company. There are no risks which in the opinion of the Board threaten the existence of the Company.

INSURANCE

All the insurable interests of your Company including inventories, buildings, and other assets etc. are adequately insured against risk of fire and other risks.

DEPOSITS FROM PUBLIC

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of FY26 or the previous financial year. Your Company did not accept any deposit during the year under review.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

During the period under review, the Company has not made any loan, guarantee or investment in terms of the provisions of Section 186 of the Companies Act, 2013.

ANNUAL RETURN

Pursuant to Sections 92(3) and 134(3)(a) of the Act, read with Rule 12 of Companies (Management and Administration) Rules, 2014, the Annual Return in Form MGT - 7 for the Financial Year ended 31st March 2026, is available on the Companys website at http://stml.in/ AnnualReturn.aspx

The Annual Return shall be filed with the Ministry of Corporate Affairs, within the prescribed timelines.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of the operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis Report, which forms part of this Report attached as Annexure G.

STATE OF COMPANYS AFFAIRS

The state of your Companys affairs is given under the heading Review of Operations and various other headings in this Report which forms part of the Annual Report.

AGREEMENT(S) BINDING THE COMPANY

As required under Regulation 30A of Listing Regulations, the Company has to report that it has not been informed by any shareholders, promoters, promoter group entities, related parties, directors, KMPs or employees of the Company, who are purported to be parties to any agreements specified in Clause 5A of Paragraph A of Part A of Schedule III of the SEBI Listing Regulations, of having entered into any agreement or have signed any agreement to enter into such agreement to which the Company is not a party as at the end of the financial year.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to your Company for the financial year ended 31st March 2026.

REASERCH AND DEVELOPMENT

During the period under review, Company has not invested or has undertaken any research and development activities.

TRANSFER OF AMOUNTS TO INVESTOR EDUCTION AND PROTECTION FUND ACCOUNT

The Company has not declared any dividend during the last seven years. Accordingly, there were no amounts required to be transferred to the Investor Education and Protection Fund (IEPF) during the financial year under review.

LISTING WITH STOCK EXCHANGES

The Equity Shares of the Company are listed on BSE Limited. The Company confirms that it has paid the prescribed Annual Listing Fee to BSE Limited up to March 31, 2026, within the prescribed timelines.

INSOLVENCY AND BANKRUPTCY CODE, 2026

During the financial year, neither any application nor any proceedings is initiated against the Company under the Insolvency and Bankruptcy Code, 2016.

SETTLEMENT WITH BANKS OR FINANCIAL INSTITUTIONS

During the financial year, no settlements were made by the Company with any of the Banks or Financial Institutions.

DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE-TIME SETTLEMENT AND THE VALUATION DONE WHILE AVAILING LOANS FROM BANKS OR FINANCIAL INSTITUTIONS, ALONG WITH THE REASONS THEREFOR

During the financial year 2025-26, no insolvency proceedings were initiated against the Company. Accordingly, there were no instances of one-time settlement with any bank or financial institution, and hence this disclosure is not applicable.

DETAILS OF PENALTIES, PUNISHMENT OR COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE DIRECTORS REPORT

There were no penalties, punishments or commitments affecting the financial position of the Company between the end of the financial year and the date of this Directors Report.

GENERAL DISCLOSURES

The Board of Directors state that during the year ended 31st March 2026:

1. Your Company did not issue any equity shares with differential rights as to dividend, voting or otherwise.

2. Your Company did not issue shares (Including sweat equity shares) to employees of your Company under any scheme.

3. No significant or material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and your Companys operation in future.

4. There were no revisions made in the financial statements and Directors Report of your Company.

CAUTIONARY STATEMENT

Certain statements made in the Directors Report describing the Companys objectives, projections, outlook, expectations, estimates and others may constitute forward looking statements within the applicable securities laws and regulations.

Actual results may differ from such expectations, whether expressed or implied. Several factors could make significant difference to the Companys Operations. These include global economic conditions, domestic commodity regulations, raw material price volatility, government regulations and taxation and other external factors etc. over which the Company may not have any direct / indirect control.

ACKNOWLEDGEMENT

Your directors place on records their appreciation of the valuable co-operation extended to the Company by its Bankers and various authorities of the State and Central Government State & Central Government agencies.

Your directors also acknowledge with gratitude the support of customers, agents, suppliers, shareholders and all other stakeholders for their continued faith and support during these challenging times.

Your Board also take this opportunity to place on record its appreciation of the contribution made by the employees of the Company at all levels and last but not least, of the continued confidence reposed by you in the Management.

By order of the Board
For and on behalf of Surat Trade and Mercantile
	Limited
Alok P. Shah	Paresh V. Chothani
DIN:00218180	DIN:00218632
Managing Director	Whole-Time Director
Place: Surat
Date: 12th August, 2026