Sarla Performance Fibers Limited has announced its audited financial results for the financial year ended March 31, 2026, following a board meeting held on April 22, 2026. The company has made several key announcements regarding dividend recommendations, upcoming AGM arrangements, and auditor appointments.

Financial Results and Audit Qualifications

The board approved the audited financial results for both standalone and consolidated statements for the quarter and year ended March 31, 2026. However, the statutory auditors C N K & Associates LLP issued qualified audit opinions on both sets of financial statements.

The qualification relates to the sale of 11 Non-Cumulative Redeemable Preference Shares held in wholly owned subsidiary Sarla Flex Inc. (United States of America) for USD 1,21,000. This transaction resulted in significant losses:

The company has applied to regulators for necessary approvals regarding the sale, write-off of investment, and credit of sale proceeds, which remain pending as of the report date.

Dividend Recommendation and AGM Details

The board has recommended a final dividend of ₹2 per equity share of ₹1 each for the financial year ended March 31, 2026, subject to shareholder approval at the forthcoming Annual General Meeting. Notably, the promoters and promoter group have expressed their intention to waive their rights to receive the dividend.

The company has appointed MUFG Intime India Private Limited as the e-voting platform provider and CS Vyoma Desai as the scrutinizer for the voting process.

Auditor Appointments and Corporate Governance

The board approved several key appointments for the financial year 2026-27:

Internal Auditor Re-appointment:

• Ms. Pooja Dharewa (Membership No. 135998) of KD Practice Consulting Private Limited has been re-appointed as Internal Auditor
• The appointment is in accordance with Section 138 of the Companies Act, 2013

Cost Auditor Re-appointment:

• M/s. Kasina & Associates (Firm Registration Number: 104088) has been re-appointed as Cost Auditor
• Annual remuneration of Rs. 95,000 is subject to shareholder ratification under Section 148 of the Companies Act, 2013

Regulatory Compliance and Publication

In compliance with Regulation 47 of the SEBI Listing Regulations, the company published newspaper advertisements for its audited financial results on April 24, 2026. The advertisements were published in Gujarat Guardian (with Gujarati translation) and Financial Express (in English – all edition).

Book Closure and Record Dates

The company has announced specific dates for various corporate actions:

Deferred Buyback Proposal

The board deliberated on a proposal for buyback of equity shares but decided to defer the matter for further evaluation. The proposal will be reconsidered at the upcoming board meeting scheduled for May 11, 2026.

Trading Window and Compliance

In accordance with the company's insider trading prevention code, the trading window for dealing in company securities will remain closed until further communication. The company will publish extracts of audited financial results in newspapers as prescribed under Regulation 47 of the Listing Regulations.

The comprehensive financial results, along with auditor reports and impact statements for audit qualifications, are available on the company's website at www.sarlafibers.com .

Sarla Performance Fibers Limited has divested its investment in its wholly owned subsidiary, Sarlaflex Inc., recognizing a loss of ₹7,713.26 lakhs in its books of accounts. The subsidiary was incorporated in the United States of America with the objective of expanding the company's global manufacturing footprint. SPFL had invested approximately ₹100 crore through a combination of equity and loans, which were subsequently converted into preference shares.

The subsidiary suspended its manufacturing operations in December 2017 due to unforeseen business and market circumstances. As at March 31, 2026, Sarlaflex Inc. had a negative net worth. In view of the prolonged underperformance and erosion of net worth, the management decided to divest its investment in the preference shares.

Financial and Strategic Impact

The recognized loss is largely a non-cash accounting adjustment, except for ₹111.59 lakhs received towards sale consideration. Accordingly, the transaction does not impact the company's operational liquidity or current cash flows. The key financial implications of the divestment include:

By eliminating non-productive capital from the balance sheet, the company expects a direct improvement in its Return on Capital Employed (ROCE). The transaction strengthens the balance sheet by removing legacy assets that were not generating returns. The management stated that addressing this legacy investment creates a leaner and more agile balance sheet, enabling redeployment of capital and management focus towards core and high-growth business segments.

Future Outlook

The management remains optimistic about revenue growth, particularly driven by increasing exports to global markets, with expectations of improved margins in the current year. During the year, the company has commenced supplies to new customers, where significant potential is envisaged for revenue expansion and long-term business growth. The strategic exit from Sarlaflex Inc. aligns with the company's focus on optimizing its capital structure and concentrating resources on profitable operations.