Dear Members,

Your Directors are pleased to present the 36th Annual Report of your company on the operations and performance along with the Audited Standalone and Consolidated Financial Statements along with Auditor's Report thereon for the financial year ended on 31st March, 2026.

FINANCIAL HIGHLIGHTS

The financial performance of your Company for the financial year ended 31st March, 2026 is summarized below:

(Rs in Crores)

STATE OF COMPANY'S AFFAIRS / PERFORMANCE OVERVIEW

The Company's operating revenue reduced substantially during FY 2025-26 following the closure of the existing Iron and Steel plant. Revenue from operations was Rs37.27 crore as against Rs266.52 crore in the previous year. The Company reported a loss before exceptional items and tax of Rs20.19 crore on a standalone basis.

The reported profit after tax of Rs72.60 crore on a standalone basis was substantially influenced by exceptional items arising from asset disposals, disinvestment and settlement of financial liabilities. Accordingly, the reported profit should be read together with the underlying operating performance.

On a consolidated basis, the Group reported revenue of Rs30.43 crore and net profit of Rs107.73 crore. The consolidated results reflect, inter alia, the discontinuation of the equity method following disinvestment in SAL Steel Limited.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION AND CHANGE IN BUSINESS

There have been material developments subsequent to the close of the financial year and before the date of this Report which are disclosed below.

The Company's Iron and Steel plant at Santej, Gujarat was shut down during August 2025 following the Board's decision dated 21 July 2025, considering technology obsolescence, ageing plant and machinery, higher production costs and continuing losses.

During the year, the Company monetised / disposed of certain plant and machinery and transferred technical know-how and technology as described in the financial results.

Further, at its meeting held on 12 August 2026, the Board approved the proposal to seek Members' approval for strategic alternatives concerning the Steel Plant undertaking and related land, buildings and other immovable assets. The alternatives may include sale, lease, transfer, disposal, development / redevelopment, joint development, strategic partnerships, technology arrangements or other restructuring / commercial arrangements. No specific purchaser or counterparty has been committed as of the date of the disclosure.

The Board also approved the proposal for adoption of a new Memorandum of Association and insertion of additional Main Objects relating broadly to commodity trading and real estate / construction / infrastructure activities, subject to approval of Members and applicable statutory / regulatory approvals.

A registered valuation report dated 30 April 2026, with valuation as at 31 March 2026, placed the Fair Market Value of the Company's plant and machinery at Rs44.195 crore. This is an indicative valuation for assessment and negotiation purposes and is not a final sale consideration or minimum sale price. The valuation does not cover land and buildings

Except for the matters stated above, there have been no other material changes or commitments affecting the financial position of the Company between 31 March 2026 and the date of this Report. Further, except as stated above, there has been no material change in the nature of the business of the Company during the period.

DIVIDEND

In view of the Company's strategic transition, cash requirements and conservation of resources, the Board has not recommended any dividend for the financial year ended 31 March 2026.

TRANSFER TO RESERVES

The Board does not propose to transfer any amount to reserves other than as required to be dealt with in accordance with the applicable accounting framework and statutory requirements.

BUSINESS ACTIVITY

Historically, the Company has been engaged in manufacturing Stainless Steel, Alloy & Special Steel, Carbon / Mild Steel and Armour Steel in flat and long products. During FY 2025–26, the existing Iron and Steel plant operations were shut down. The Company is evaluating strategic alternatives and has proposed expansion of its Main Objects to provide flexibility for future business activities, subject to Member and regulatory approvals.

CHANGES IN AUTHORISED SHARE CAPITAL:

During the financial year 2025-26 there was no change in the Authorised Share Capital of your Company.

CHANGES IN PAID-UP SHARE CAPITAL:

During the financial year 2025-26 there was no change in the Paid-up Share Capital of your Company.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the year, the Company disinvested its interest in SAL Steel Limited under a Share Purchase Agreement dated 04 September 2025. Consequently, SAL Steel Limited was treated as an associate up to 31 December 2025 for consolidated reporting purposes, after which the equity method was discontinued.

The Consolidated Financial Statements of the Company and its Associate, viz., SAL Steel Limited, has been prepared in accordance with the relevant IND AS of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditors and form part of the Annual Report and are reflected in the Consolidated Accounts.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's associate in Form AOC-1 is attached to this report as Annexure - 1.

DEPOSITS

The Company has not accepted/received any deposits during the year under report, falling within the ambit of Section 73 of the Companies Act, 2013 (the act) and the Companies (Acceptance of Deposits) Rules, 2014 and no outstanding against the same was pending at the end of financial year 2025-26.

DETAILS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

During the financial year under review, the Company has complied with the applicable provisions of Section 186 of the Companies Act, 2013. Except for investments disclosed in the financial statements, the Company has not granted any loan, provided any guarantee or security, or made any other investment falling within the purview of Section 186 of the Act during the year. The requisite details are disclosed in the Notes forming part of the Financial Statements.

LISTING OF SHARES

The equity shares of the Company are listed on the National Stock Exchange of India Ltd. (NSE) and BSE Limited (BSE). The listing fee for the year 2025-26 has already been paid to the credit of both the Stock Exchanges.

DETAILS OF DIRECTORS OR KMPS APPOINTMENT OR RESIGNATION

The Board of Directors consists of 6 members, of which 3 are Independent Directors including one Women Independent Director as on date of this report.

Directors:

Smt. Nipa Jairaj Shah was appointed as an Additional Independent Director with effect from 14 August 2025, subsequently approved by special resolution passed by the members in their Annual General Meeting held on September 26, 2025.

Shri Rajnikant Amrutlal Vyas was appointed as an Additional Director designated as Whole-Time Director with effect from 04 September 2025, subsequently approved by special resolution passed by the members in their Annual General Meeting held on September 26, 2025.

Shri Prakashkumar Ramanlal Patel ceased to be a Whole-Time Director with effect from 10 September 2025, as reflected in the Company's subsequent corporate disclosures.

Shri Ashok Sharma, Whole-Time Director, retires by rotation at the ensuing AGM and, being eligible, offers himself for re-appointment.

In addition to the matters disclosed elsewhere in this Report, subsequent to the close of the financial year ended 31 March 2026, Shri Ambalal C. Patel, Independent Director of the Company, resigned from the Board with effect from July 13, 2026.The resignation does not have any material financial impact on the Company. The Board has taken note of the resignation and placed on record its appreciation for his contribution and guidance during his tenure.

Key Managerial Person:

There were no changes in with respect to appointment or resignation of key Managerial Persons.

MEETINGS OF THE BOARD AND COMMITTEES

During the financial year ended 31 March 2026, the Board of Directors met at regular intervals to consider and approve, inter alia, the financial results, business operations, statutory compliances, strategic matters, closure and restructuring of the Company's manufacturing operations, asset monetisation, investments and other matters requiring consideration of the Board. The details of meetings of the Board and various Committees of the Board of your Company are given in the Corporate Governance Report annexed herewith as Annexure-6 and forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from each of the Independent Directors that they, respectively, meet the criteria of independence prescribed under Section 149 read with Schedule IV of the Act and rules made thereunder, as well as Regulations 16 and 25(8) of the Listing Regulations. Based on the declarations received, the Board considered the independence of each of the Independent Directors in terms of above provisions and is of the view that they fulfil the criteria of independence and are independent from the management.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied of the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. The Board of Directors of your Company confirms that the Independent Directors have given their confirmation / declaration to your Company, that in terms of Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, they have registered themselves with the Independent Director's database maintained by the Indian Institute of Corporate Affairs and will undergo the online proficiency self-assessment test within the specified timeline, unless exempted under the aforesaid Rules.

BOARD DIVERSITY

A diverse Board enables efficient functioning through differences in perspective and skill, and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender, knowledge and geographical background. The Company follows diverse Board structure.

BOARD EVALUATION

As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the formal annual evaluation was carried out for the Board's own performance, its committee & Individual Directors. The manner and detail in which evaluation was carried out is stated in the Corporate Governance Report which is annexed and forms a part of this report.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has in place adequate internal financial controls with reference to financial statements and such internal financial controls are operating effectively. Your Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.

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

The particulars related to conservation of energy, technology absorption and foreign exchange earnings and outgo as required to be disclosed under Section 134(3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure – 2 to this Report.

RISK MANAGEMENT

The Company has in place a robust risk management framework which identifies and evaluates business risks and opportunities. The Company recognises that the applicable risks need to be managed and mitigated to protect the interest of the shareholders and stakeholders, to achieve business objectives and enable sustainable growth. The Audit committee ensures that the Company is taking appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities. The Committee reviews strategic decisions of the Company and on regular basis, reviews the Company's portfolio of risks and considers it against the Company's Risk Appetite. The Committee also recommends changes to the Risk Management Technique and / or associated frameworks, processes and practices of the Company.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company has implemented a vigil mechanism, where by employees, directors and other stakeholders can report matters such as generic grievances, corruption, misconduct, fraud, misappropriation of assets and non-compliance of code of conduct to the Company. The policy safeguards the whistleblowers to report concerns or grievances and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee.

DIRECTORS' RESPONSIBILITY STATEMENT

In Compliance with Section 134 (3) (c) and Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and hereby confirm the following:

a) in the preparation of the annual accounts for the financial year ended 31st March 2026, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure;

b) the Directors had 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 profit and loss account of the Company for that period;

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

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The policy of the Company on Director's appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under sub-section (3) of Section 178 of the Companies Act, 2013 is available on the Company's website at www.shahalloys.com.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE {DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN ATWORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013}

In accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, a committee has been established at the offices for this purpose. There were no complaints pending for the redressal at the beginning of the year and no complaints received during the financial year.

PARTICULARS OF THE EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure-3

Further, particulars of employees remuneration, as required under section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not applicable since there was no employee of the Company including Executive Directors who was in receipt of remuneration in excess of the limits set out in the said rules.

RELATED PARTY TRANSACTIONS

All contracts/ arrangements/ transactions entered by your Company during the financial year under review with related parties were in the ordinary course of business and on an arm's length basis and is in compliance with the applicable provisions of the Act and the Listing Regulations.

All related party transactions are placed before the Audit Committee and before the Board for their approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and to the Board of Directors at their Board Meetings for their approval on a quarterly basis.

There are no material related party transactions which are not in ordinary course of business or which are not on arm's length basis and hence there is no information to be provided as required under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014. The details of transactions with related parties as required are provided in Form AOC-2 annexed as Annexure - 4. The policy on Materiality on Related Party Transactions and manner of dealing with Related Party Transactions as approved by the Board is uploaded on your Company's website www.shahalloys.com.

None of the Independent Directors has any pecuniary relationships or transactions vis-a-vis your Company.

A statement of related party transactions pursuant to Indian Accounting Standard (Ind AS) - 24 forms a part of notes to accounts

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements have been prepared in accordance with Indian Accounting Standards (IND AS). The Company has prepared these financial statements to comply in all material respects with the IND AS, notified under section 133 of the Companies Act, 2013 ("the Act") read together with paragraph 7 of the Companies (Accounts) Rules 2014.

CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of Section 135 of the Companies Act, 2013 and Rules made thereunder, the amount required to be spent on CSR activities during the year under review, is Rs NIL/-.Hence, the Company has not spent any amount during the Financial Year ended 31st March, 2026. The requisite details of CSR activities carried by the Company pursuant to Section 135 of the Companies Act, 2013 is not applicable. The composition and other details of the CSR Committee is included in the Corporate Governance Report which form part of the Board's Report. The Board in its meeting held on 30th May, 2026, review/revised the existing CSR Policy of the company to harmonise with the amended carried out by the Ministry of Corporate Affairs in the Companies (CSR Policy Rules), 2014.

AUDITORS AND AUDIT REPORTS

a) Statutory Auditors

Members at its 32nd Annual General Meeting held on September 23, 2022 approved the re-appointment of M/s. Parikh & Majmudar, Chartered Accountants, as statutory auditors for a terms of five years as per provisions of the Companies Act, 2013.

Statutory Auditors' Report

The observations of Statutory Auditor in its reports on standalone and consolidated financials are self-explanatory and therefore do not call for any further comments.

Details in respect of frauds reported by auditors

There were no instances of fraud reported by the auditors.

b) Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Company had appointed M/s. Ashish Bhavsar & Associates, Cost Accountants, as the Cost Auditors of the Company for conducting the audit of the cost records for the financial year 2025–26.

The Cost Audit Report for the financial year ended 31 March 2026 has been duly received by the Company from the Cost Auditors. The Company shall file the same with the Central Government within the prescribed period, as applicable.

The Cost Auditors have confirmed their eligibility and compliance with the applicable provisions of the Companies Act, 2013 and the rules made thereunder.

Further, based on the present level of operations and turnover of the Company, the Company does not fall within the prescribed threshold limits requiring maintenance of cost records and appointment of a Cost Auditor under Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as applicable for the financial year 2026–27. Accordingly, the Company is not required to appoint a Cost Auditor for the financial year 2026–27

The Company shall continue to monitor the applicability of the provisions relating to maintenance of cost records and cost audit and shall comply with the applicable requirements if the provisions become applicable in any subsequent financial year.

Disclosure on maintenance of Cost Records.

The Company made and maintained the Cost Records under Section 148 of the Companies Act, 2013 (18 of 2013) for the Financial Year 2025-26.

c) Internal Auditor

The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the Audit Committee in order to strengthen the internal control system for the Company.

d) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder, the Board of Directors has appointed M/s Kamlesh Shah & Co., Practicing Company Secretaries, as Secretarial Auditor to conduct Secretarial Audit of the Company for the term of Five Financial year commencing from FY 2025-26 till FY 2029-30 subject to approval of members at the 35th Annual General Meeting of the company.

Secretarial Audit Report

In terms of Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as Annexure - 5. There are no qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report.

Annual Secretarial Compliance Report

A Secretarial Compliance Report for the financial year ended 31st March, 2026 on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder, was obtained from M/s Kamlesh Shah & Co., Practicing Company Secretaries, Secretarial Auditor.

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

A certificate of Non-Disqualification of Directors for the Financial Year 2025-26, pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) issued by Practicing Company Secretary is annexed to this report as Annexure - 8.

CORPORATE GOVERNANCE REPORT

The Company is committed to observe good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2026, as per regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report as Annexure - 6.

BOARD'S RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS

The Directors submit their explanations to various observations made by the Auditors in their report for the year 2025-26. Para nos. of Auditors' Report and reply are us under:

Para 1 of Standalone and Consolidated Independent Auditor's Report

On account of non-payment of principle and interest to the Banks, debts were declared NPA by the Banks. Since Company has entered into onetime settlement with banks and financial institutions (FI) and negotiated, settled and paid the dues amicably with the remaining Banks and FI, hence it did not provide for interest.

Para 2 of Standalone and Consolidated Independent Auditor's Report

It is expected that the impact of "Effective Interest Method" to the Finance Cost as per the Requirements of IND AS 109 on the financial Results will not be material enough and hence, the Management has not given effect of the same in the consolidated financial results.

Annexure A to Standalone Independent Auditors' Report - Para viii

As per the scheme sanctioned by CDR (EG), consortium bankers were required to give working capital for the optimal utilization of production capacity. However, in the absence of non-availability of funds from the lenders, the accruals were not in line with the sanctioned scheme and hence Company could not utilize optimally its production capacity. In view of this, company was not able to make payments to banks/institutions and debenture holders as per the sanctioned scheme. However, before due date of repayment, Company had approached Hon'ble BIFR for declaring it as a Sick company under Section 3(1)(0) of the SICA and was declared so before the due date, i.e., September 2011. On account of sick status of the company, payments will be made as per the scheme as may be approved by the Hon'ble BIFR.

Almost all of the banks have assigned the debts to various Asset Reconstruction Companies (ARCs). Company has entered into Settlement Agreements with ARCs. Company has made settlement proposal with other banks, financial institution and ARCs. Company has negotiated and settled and paid all the outstanding with lenders and ARCs' for settlement of debts and expecting a settlement soon with the remaining banks & FIs.

Para 3 of Consolidated Independent Auditor's Report

It is expected that the loss of allowance if any as per Expected credit loss Method on the financial assets will not be material enough and hence, the Management has not given effect of the same in the consolidated financial results.

Clarification on Outstanding shown in the Audited Financial Statement if any

Any outstanding shown in the Audited Financial statement/audit report is not the confirmation of debt.

DISCLOSURE UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

There was no application admitted under Insolvency and Bankruptcy Code, 2016 (31 of 2016) by or against the Company during the year under review.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

No significant material order(s) were passed by the regulators/ courts which would impact the going concern status of the Company and its future operations during the year under review.

ANNUAL RETURN

In accordance with the provisions of Sections 92 and 134(3)(a) of the Act read with the Companies (Management and Administration) Rules, 2014, the Annual Return in e-form MGT-7 for the financial year ended 31st March, 2026 has been uploaded on the website of the Company at www.shahalloys.com.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the year under review:

- Details relating to deposits covered under Chapter V of the Act.

- Issue of equity shares with differential rights as to dividend, voting or otherwise.

- Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees' Stock Options Schemes referred to in this Report.

- Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

- No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

- No fraud has been reported by the Auditors to the Audit Committee or the Board.

- There has been no change in the nature of business of the Company.

- There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the Financial Year 2025-26.

APPRECIATION

Your Directors place on record its appreciation for the support and co-operation your Company has been receiving from its investors, customers, vendors, bankers, financial institutions, business associates, Central & State Government authorities, Regulatory authorities and Stock Exchanges. Your Board looks forward for the long-term future with confidence, optimism and full of opportunities.

CAUTIONARY STATEMENT

Statement in the Board's Report and the Management Discussion and Analysis describing your Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence your Company's operations include global and domestic demand and supply conditions affecting selling price of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.