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Ferro Alloys Corporation Ltd.

BSE: 500141 Sector: Metals & Mining
NSE: FERROALLOY ISIN Code: INE912A01026
BSE 00:00 | 06 Mar Ferro Alloys Corporation Ltd
NSE 05:30 | 01 Jan Ferro Alloys Corporation Ltd
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VOLUME 20210
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OPEN 0.92
CLOSE 0.92
VOLUME 20210
52-Week high 0.92
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 17
Buy Price 0.94
Buy Qty 1500.00
Sell Price 0.92
Sell Qty 113404.00

Ferro Alloys Corporation Ltd. (FERROALLOY) - Director Report

Company director report

We present the 63rd Annual Report of your Company and the Audited Financial Statementof the Company for the financial year ended 31st March 2019 and the audited ConsolidatedFinancial Statements of the Company for the Financial Year ended 31st March 2019.

FINANCIAL RESULTS

Financial snapshot of the company during the year under review is as under:

(Rs.in lacs)

Particulars Standalone Consolidated
For the year ended 31st March 2019 For the year ended 31st March 2018 For the year ended 31st March 2019 For the year ended 31st March 2018
Revenue from operations 57538.21 53908.25 57538.21 53908.25
Other income 457.68 571.10 457.68 571.10
Profit / Loss before Depreciation Finance 5788.86 5561.31 5788.86 5549.92
Costs Exceptional items and Tax Expense
Less: Finance Cost 928.24 986.48 928.24 986.48
Less: Depreciation / Amortisation / Impairment 577.59 575.05 577.59 575.05
Profit / Loss before Finance Costs 4283.03 3999.78 4283.03 3988.39
Exceptional items and Tax Expense
Add/(Less): Exceptional items (15.18) 2487.87 (15.18) 2487.87
Profit / Loss before Tax Expense 4267.85 6487.65 4267.85 6476.26
Share of Profit/(Loss) of Associate - - (0.05) -
Profit / Loss before Tax Expense 4267.85 6487.65 4267.80 6476.26
Less: Tax expense (Current & deferred) 1462.04 939.48 1462.04 939.48
Profit / Loss for the year (1) 2805.81 5548.17 2805.76 5536.78
Total Comprehensive Income / (Loss) (2) (62.47) (55.88) (62.47) (55.88)
Total (1+2) 2743.34 5492.29 2743.29 5480.90
Balance of profit / loss for earlier years (1420.88) (6969.05) (1426.35) (6963.13)
Less: Transfer to Debenture Redemption Not applicable Not applicable Not applicable Not applicable
Reserve
Less: Transfer to Reserves - - - -
Less: Dividend paid on Equity Shares Not applicable Not applicable Not applicable Not applicable
Less: Dividend paid on Preference Shares Not applicable Not applicable Not applicable Not applicable
Less: Dividend Distribution Tax Not applicable Not applicable Not applicable Not applicable
Balance carried forward 1384.93 (1420.88) 1379.41 (1426.35)

STATE OF COMPANY'S AFFAIRS

During the year under review revenue from operations increased by 6.73% toRs.57538.21 lacs (previous year Rs.53908.25lacs). However EBIDTA increased by 4.09% to

Rs.5788.86 lacs (previous year Rs.5561.31 lacs) and profit before exceptional itemsand tax increased by 7.08% to Rs.4283.03 lacs (previous year Rs.3999.78 lacs).

Members may recall that the Company had executed Corporate Guarantee of Rs.517.90crores in tranches to

Rural Electrification Corporation Limited which had sanctioned a Term Loan of Rs.517.90crores to Facor Power Limited the then subsidiary of the Company against the security ofthe assets of FPL the personal guarantee of two of its directors and the CorporateGuarantee of Ferro Alloys Corporation Limited as aforesaid.

Members may recall that pursuant to a default in the repayment of the instalments andinterest on the loan as per the repayment schedule and upon an application filed by RECunder section 7 of the Insolvency and Bankruptcy Code 2016 with the National Company LawTribunal Kolkata ("NCLT Kolkata") Corporate Insolvency Resolution Process wasinitiated against the Company w.e.f 6th July 2017 and Mr. K.G. Somani was appointed asResolution Professional.

As reported last year an appeal against the order of Hon'ble NCLT Kolkata was filedbefore the Hon'ble National Company Law Appellate Tribunal New Delhi ("NCLAT NewDelhi") which was dismissed vide order dated 8th January 2019. An appeal was alsofiled against the order of the Hon'ble NCLAT before Hon'ble Supreme Court of India("Supreme Court") which too was dismissed vide order dated 11th February 2019.

Post dismissal of the appeal by NCLAT New Delhi and the Supreme Court the matter wasagain heard by NCLT Kolkata which granted exclusion of time pursuant to which the reviseddate of completion of Corporate Insolvency of the Company was fixed to 19th April 2019.Thereafter upon an application filed by REC Limited for change of Resolution Professionaland for grant of further exclusion of time before National Company Law Tribunal Cuttack("NCLT Cuttack"). Pursuant to order dated 8th July 2019 of NCLT Cuttack Mr.Bhuvan Madan Resolution Professional has replaced Mr. K.G. Somani ResolutionProfessional w.e.f 8th July 2019. Further NCLT Cuttack granted an exclusion of 30 dayswhich was followed by another application seeking further exclusion of time. Vide orderdated 8th August 2019 NCLT Cuttack has granted further exclusion of time of 98 daysfrom 7th August 2019. Accordingly the revised date for completing Corporate InsolvencyResolution Process of the Company is 14th November 2019.

Pursuant to decision of the Committee of Creditors of the Company and the order ofNCLT Cuttack dated 8th August 2019 as aforesaid the resolution professional isinviting prospective resolution applicants to submit resolution plans for the Company.

INDUSTRIAL SCENARIO

Steel is the most versatile material which has made the progress in every aspect onthis earth possible. There are hundreds of varieties of steel because for each applicationit has to be made with specific properties to get the most optimum usage. Though the basicconstituent of steel is iron it is the proportion of other elements in it which giveseach type of steel certain specific properties. These elements are added in liquid ironin the form of Ferro alloys to get the desired composition and properties. Thus Ferroalloys are important additives in the production of steel and Ferro Alloys industry isvitally linked for its growth and development to that of the Steel Industry. India iscurrently the world's 3rd largest producer of crude steel and third largest consumer offinished steel. The steel manufacturing is estimated to contribute to nearly 2% of thenational GDP and employs close to 2.5 million workers. From FY 2013 till FY 2018 thefinished steel production in India has increased by nearly 7% per annum. Production in FY2019 is estimated to be marginally lower than previous year. Meanwhile consumption offinished steel has increased by nearly 3.5% per annum during the time period FY 2013-18.Construction sector is estimated to account for more than 50% of steel consumption inIndia followed by engineering & fabrication automotive packaging & othersectors. Consequently the steel consumption pattern in India has a close correlation withthe construction activity happening in the country. The real estate construction segmenthas benefitted by the strong demand for residential space and commercial offices.

Meanwhile higher Government spending on infrastructure creation and capacity expansionprojects in the industrial sector has benefitted infrastructure and industrialconstruction segments respectively. Consequently the demand for construction materialsfrom steel to cement has witnessed a steady increase.

Further during the quarter ended 30th June 2019 the performance of the Company hasbeen as under:

(Rs.in lacs)

Particulars Quarter ended 30th June 2019 Quarter ended 30th June 2018
1. Revenue from operations 12827.79 15297.17
2. Expenses 12571.14 13617.74
3. EBITDA 704.22 2229.69
4. Tax expense 106.04 684.88
5. Total comprehensive Income 234.50 1125.99

PROSPECTS

India has overtaken Japan to become the world's second largest steel producer soon andaims to achieve 300 million tonnes of annual steel production by 2025-30. Huge scope forgrowth is offered by India's comparatively low per capita steel consumption and theexpected rise in consumption due to increased infrastructure construction and the thrivingautomobile and railways sectors.

Rise in infrastructure development and automotive production is driving growth in thesector. Power and cement industries also aiding growth in the metals and mining sector.Demand for iron and steel is set to continue given the strong growth expectations for theresidential and commercial building industry. India holds a fair advantage in cost ofproduction and conversion costs in steel and alumina. It's strategic location enablesconvenient exports to developed as well as the fast developing Asian markets. The Ministryof Steel aims to increase the steel production capacity to 300 million tonnes by 2030-31from 128.28 million tonnes in 2016- 2017 indicating new opportunities in the sector.Government of India's focus on infrastructure and restarting road projects is aiding theboost in demand for steel. Further likely acceleration in rural economy andinfrastructure is expected to lead to growth in demand for steel. The Union CabinetGovernment of India has approved the National Steel Policy (NSP) 2017 which seeks tocreate a globally competitive steel industry in India. NSP 2017 targets 300 million tonnes(MT) steel-making capacity and 160 kgs per capita steel consumption by 2030. Metal ScrapTrade Corporation (MSTC) Limited and the Ministry of Steel have jointly launched ane-platform called ‘MSTC Metal Mandi' under the ‘Digital India' initiative whichwill facilitate sale of finished and semi-finished steel products. The Ministry of Steelis facilitating setting up of an industry driven Steel Research and Technology Mission ofIndia (SRTMI) in association with the public and private sector steel companies tospearhead research and developmental activities in the iron and steel industry at aninitial corpus of Rs 200 crore (US$ 30 million).

India has a significant profile in mining of chrome and production of ferrochrome. Onthe back of depressed market conditions the production of chrome ore progressively camedown in keeping with the policy to conserve the resource and mining disruptions due tocourt interventions and environment issues. In any case India with chrome ore reserve of70 million mt has only one per cent share of global proven deposit. Around 85 per cent ofworld reserve of this ore is found in South Africa and Zimbabwe. As a result India isimporting growing quantities of high grade chrome ore for blending with locally minedmaterial.

FUTURE STRATEGY AND GROWTH

From the fledgling one million tonne capacity status at the time of independence Indiahas now risen to be the 3rd largest crude steel producer in the world and the largestproducer of sponge iron. From a negligible global presence the Indian steel industry isnow globally acknowledged for its product quality. As it traversed its long history sinceindependence the Indian steel industry has responded to the challenges of the highs andlows of business cycles. According to the latest March data from worldsteel India's crudesteel production totalled 105.54 million tonnes in April'18-March'19 up by 2.4 milliontonnes or 2.3% YoY as compared to 103.14 million tonnes in April'17-March'18. Havingovercome the shocks of demonetisation and the Goods & Services Tax (GST)implementation the Indian economy is now expected to achieve faster growth starting inthe second half of 2019 after the election. While the fiscal deficit might weigh on publicinvestment to an extent the wide range of continuing infrastructure projects is likely tosupport growth in steel demand above 7% in both 2019 and 2020.

Steel demand in developing Asia excluding China is expected to grow by 6.5% and 6.4% in2019 and 2020 respectively making it the fastest growing region in the global steelindustry. In the ASEAN region infrastructure development supports demand for steel.Further the steel industry and its associated mining and metallurgy sectors have seen anumber of major investments and developments in the recent past.

DIVIDEND

Keeping in view the future requirement of funds in working capital and other purposesno dividend is recommended for the financial year ended 31st March 2019.

FINANCE

Cash and cash equivalent as at March 31 2019 was Rs.434.17 lacs. The Company continuesto focus on judicious management of its working capital. Receivables inventories andother working capital parameters were kept under strict check through continuousmonitoring.

DEPOSITS

The Company has not accepted deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits) Rules2014.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard 21 on Consolidated Financial Statements readwith Accounting Standard 23 on Accounting for Investments in Associates the auditedconsolidated financial statement is provided in the Annual Report for the year except thesubsidiary Facor Power Limited whose Management & Control have been taken over byRural Electrification Corporation Limited w.e.f 7th November 2017.

SHARE CAPITAL

The paid up Equity Share Capital as on March 31 2019 was 1852.68 lacs. During the yearunder review the Company has neither issued shares with differential voting rights norgranted stock options nor sweat equity.

INDUSTRIAL RELATIONS

Industrial relations with workers trade unions and with local populace remainedamicable and pleasant throughout the year.

DIRECTORS

Mr. Ashish Ramkisan Saraf shall retire by rotation at the ensuing 63rd Annual GeneralMeeting and being eligible offers himself for re-appointment in accordance with theprovisions of the Companies Act 2013 and in terms of the Memorandum and Articles ofAssociation of the Company.

Further while Mr. A.S. Kapre and Mr. M.B. Thaker are proposed to be re-appointed asIndependent Directors for a second term of 5 (five) consecutive years w.e.f 10thSeptember 2019 subject to ratification and approval by the shareholders at the ensuing63rd AGM of the Company approval of members is also being sought at the said ensuing 63rdAGM for reappointment of Mr. Umesh Kumar Khaitan and Mrs. Urmila Gupta as IndependentDirector for a second consecutive term of 5 (five) years w.e.f 13th February 2020.

Further all Independent Directors have given declarations that they meet the criteriaof independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Company has formulated a code of conduct for all members of the Board and SeniorManagement Personnel. All concerned members/executives have affirmed compliance with thesaid code.

Detail of Remuneration paid to Executive Director during the year.

Name of Director Total Remuneration
1 Mr. R. K. Saraf 10890000
2 Mr. Manoj Saraf 6334989
3 Mr. Ashish Saraf -
4 Mr. Rohit Saraf 6344988

Detail of Remuneration paid to Non-Executive Directors during the year.

Name of Director Sitting Fee Paid
1 Mr. A.S. Kapre -
2 Mr. M.B. Thaker -
3 Mr. Pinaki Misra -
4 Mr. Umesh Khaitan -
5 Mrs. Urmila Gupta -
6 Mr. Vineet Saraf -

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

All Independent Directors (IDs) inducted into the Board are given an orientation.Chairman & Managing Director and the Senior Management give an overview of theoperations of the Company to familiarise the new IDs with the Company's businessoperations. The new IDs are given an orientation on the group structure its operationssubsidiaries Board constitution and procedures besides providing them with the financialsof the Company for at least 3 years and the corporate brochure etc. Also plant visits areorganized for each ID for familiarizing with the Company's operations and facilities.

BOARD EVALUATION

In view of the initiation of the Corporate Insolvency Resolution Process against theCompany w.e.f 6th July 2017 the powers of the Board of Directors of the Company standsuspended in terms of the provisions of section 17 of the Insolvency and Bankruptcy Code2016 and the same stood vested in the Resolution Professional. Accordingly the exerciseof evaluation of the Board could not be taken up during the year under review.

NOMINATION AND REMUNERATION POLICY

The Board on the recommendation of the Nomination &

Remuneration Committee has framed a Nomination and Remuneration policy for theappointment and remuneration of the Directors Key Managerial Personnel and SeniorExecutives of the Company including criteria for determining qualifications positiveattributes independence of a Director and other related matters which can be accessed atwww. facor roup.in/investorrelations. In view of the initiation of the CorporateInsolvency Resolution Process against the Company w.e.f 6th July 2017 the powers of theBoard of Directors of the Company stand suspended in terms of the provisions of section 17of the Insolvency and Bankruptcy Code 2016 and the same stood vested in the ResolutionProfessional. Accordingly the exercise of evaluation of the Board could not be taken upduring the year under review.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

Ferro Alloys Corporation Limited (FACOR) believes in equal employment opportunity andremains committed to creating and nurturing a working environment for all employees toenable them work without fear of any prejudice gender bias and sexual harassment. TheCompany does not tolerate sexual harassment at the workplace and has adopted a policy onprevention prohibition and redressal of sexual harassment at workplace in line with theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules thereunder which can be viewed atwww.facorgroup.in/investorrelations. During the Financial Year 2018-19 the policy was notreviewed in view of the ongoing Corporate insolvency Resolution Process and the powers ofthe Board and its Committees remaining suspended w.e.f 6th July 2017. However it isconfirmed that during FY

2018-19 the Company has not received any complaint of sexual harassment.

MEETINGS

During the year under review no meetings of the Board and/ or its Committees wereconvened and held as all the powers of the board and/or its committees are beingexercised by the Resolution Professional in view of the ongoing Corporate InsolvencyResolution Process and the powers of the Board and its committees remaining suspendedw.e.f 6th July 2017 in terms of section 17 of the Insolvency and Bankruptcy Code 2016.

SUBSIDIARIES

The Report and Accounts of the Company are prepared in consolidated form and containsresults of its subsidiary Facor Realty and Infrastructure Limited. The annual accounts ofthe subsidiary shall be available on request to the members of the Company and areavailable for inspection at the registered office of the Company. Further theConsolidated Financial Statements presented by the Company include the financial resultsof the subsidiary company. The Consolidated Financial Statements have been preparedwithout the consolidation of Facor Power Limited (Subsidiary of the Company) as RuralElectrification Corporation Limited (REC) has taken over the management and control ofFacor Power Limited by issuing a letter dated 7th November 2017 under section 13(4)(b) ofSARFAESI Act 2002.

Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 the statement containing salient features of the financialstatements of the Company's Subsidiaries' Associates' and Joint Ventures (in Form AOC-1)is attached to the financial statements.

STATEMENT UNDER SECTION 134(5) OF THE COMPANIES ACT 2013

On the basis of framework of internal financial controls established and maintained bythe Company the work performed by the internal statutory Cost and Secretarial auditorsand external agencies the reviews performed by Management Mr. R.K. Saraf Chairman &Managing Director of the Company has confirmed that the Company's internal financialcontrols were adequate and effective as on 31 March 2019 and that as required undersection 134(5) of the Companies Act 2013 it is confirmed:

(a) That in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(b) That we have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year and of theprofit and loss of the company for that period;

(c) That proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the companyand for preventing and detecting fraud and other irregularities;

(d) That the annual accounts have been prepared on a going concern basis;

(f) That proper internal financial controls were laid down by the company and that suchinternal financial controls are adequate and were operating effectively.

(f) That proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.

AUDIT COMMITTEE

Audit Committee of the Company comprises of Mr. A.S. Kapre Mr. M.B. Thaker and Mr.Umesh Khaitan all Independent Directors. The committee has been constituted in compliancewith the provisions of Regulation 18 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 [SEBI(LODR) Regulations 2015] and assumes allresponsibilities provided therein discharging their duties diligently with transparencyand accountability as their sole motivation. However during the year under review nomeeting of the Audit Committee was held as Corporate Insolvency Resolution Process wasinitiated against the Company w.e.f 6th July 2017 and as a result the powers of theBoard and its committees stood suspended and vested in the Resolution Professionalthereafter.

AUDITORS

The Company's Statutory Auditors K.K. Mankeshwar & Co Chartered Accountantshaving Registration no. 106009W allotted by the Institute of Chartered Accountants ofIndia (ICAI) were appointed as Statutory Auditors of the Company for a period of 5 (five)consecutive years at the 61st Annual General Meeting (AGM) of the Members of the Companyheld on Thursday 28th September 2017. Their appointment was subject to ratification bythe Members of the Company at every subsequent AGM held after the 61st AGM held on 28thSeptember 2017 as aforesaid.

Pursuant to the amendments made to Section 139 of the Companies Act 2013 by theCompanies (Amendment) Act 2017 effective from 7th May 2018 the requirement of seekingratification of the Members for the appointment of Statutory Auditors has been withdrawnfrom the Statute.

In view of the above ratification of the Members for continuance of their appointmentat this AGM is not being sought. The Statutory Auditors have given a confirmation to theeffect that they are eligible to continue with their appointment and that they have notbeen disqualified in any manner from continuing as Statutory Auditors of the Company. Theremuneration plus applicable taxes and reimbursement of expenses incurred by themincidental to their functions shall be determined the Resolution Professional and/or theBoard of Directors as applicable in consultation with the said Auditors.

AUDITOR'S REPORT

The observations made in the Auditors' Report are self-explanatory and therefore donot call for any further comments u/s 134(3) of the Companies Act 2013.

COST AUDITORS

Pursuant to Section 141 & 148 of the Companies Act 2013 read with The Companies(Cost Records and Audit) Amendment Rules 2014 the cost audit records maintained by theCompany in respect of its activity is required to be audited. The Resolution Professionalhas considered and decided the appointment of M/s Niran & Co. Cost Accountant(Registration No. 000113) as Cost Auditor of the Company for the financial year 2019-20on a remuneration of Rs.70000/- (Rupees Seventy Thousand only) per annum plus applicabletaxes and out of pocket expenses and applicable taxes.

In accordance with the provisions of Section 148(3) of the Act read with the Companies(Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditors has to beratified by the shareholders of the Company. It is therefore necessary for the members topass an Ordinary Resolution under section 148 and other applicable provisions if any ofthe Companies Act 2013 as set out at Item no.4 of the Notice of the 63rd AGM of theCompany.

None of the Directors / Key Managerial Personnel of the Company / their relatives /Resolution Professional is in any way concerned or interested financially orotherwise in the resolution set out at Item No. 4 of the Notice.

Further the report on Cost audit for Financial Year ended 31st March 2019 would befiled with Central Government in accordance with the timelines specified under theCompanies Act 2013.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s RAA & Associates LLP a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company for financial Year 2019-20. The Report ofthe Secretarial Audit for FY 2018-19 in Form MR-3 is annexed to this report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

A statement giving details of conservation of energy technology absorption foreignexchange earnings and outgo in accordance with the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules 1988 is annexed as Annexure ‘A' whichforms part of this Report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this report. In terms of the provisionsof Section 197(12) of the Companies Act 2013 read with Rules 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementshowing the names and other particulars of employees drawing remuneration in excess of thelimits set out in the said Rules forms part of the Report.

However having regard to the provisions of the first proviso to Section 136(1) of theCompanies Act 2013 the Annual Report excluding the aforesaid information is being sentto the Members of the Company. The said information is available for inspection atRegistered Office of the Company during working hours. Any member interested in obtainingsuch information may write to the Company Secretary at the registered office and the samewill be furnished on request. Further the details are also available on the Company'swebsite: www.facorgroup. in

CORPORATE GOVERNANCE

Corporate Governance in your Company is about Commitment to values ethical businessconduct nurturing good business ethics and creating value for its stakeholders in linewith the principles of fairness equity transparency accountability and dissemination ofinformation. Your Company's efforts are driven by the fundamental objectives of maximizingvalue by employing resources in opportunities that generate consistent returns andposition it for sustained growth.

In terms of Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a separate report on Corporate Governance Management Discussion andAnalysis along with your Company's Statutory Auditors' Certificate 31st August 2019confirming the above compliance is annexed to and forms part of the Directors' Report.

HUMAN RESOURCE DEVELOPMENT

The Company takes great pride in the commitment competence and vigour shown by itsworkforce in all realms of business and its commitment in the trying times in particular.The Company continues to take new initiatives to further align its HR policies to meet thegrowing needs of its business.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure D".

SECRETARIAL AUDIT REPORT

Report of Secretarial Auditor in Form MR-3 for FY 2018-19 forms part of the Reportunder section 134 of the Companies Act 2013.

RELATED PARTY TRANSACTION

There have been no materially significant related party transactions between theCompany and the Directors the management the subsidiaries or the relatives except forthose disclosed in the financial statements.

Accordingly particulars of contracts or arrangements with related parties referred toin Section 188(1) along with the justification for entering into such contract orarrangement in

Form AOC-2 does not form part of the report.

PARTICULAR OF LOAN & INVESTMENT

There have been no transactions by the Company and the Directors the management thesubsidiaries or the Resolution Professional except for those disclosed in the financialstatements.

RISK MANAGEMENT POLICY

A company is exposed to uncertainties owning to the sector in which it is operating.The Company is conscious of the fact that any risk that could have a material impact onits business should be included in its risk profile. Accordingly in order to contain /mitigate the risk the Company has a Risk management policy approved by the Board. TheCompany's Risk Management framework is designed to identify assess and monitor variousrisks related to key business and strategic objectives and lead to the formulation of amitigation plan. Major risks in particular are monitored regularly at Executive meetingsand the Board of Directors of the Company is kept abreast of such issues and the Policy.However the review of the policy could not be taken up during the year under review bythe Board in view of the ongoing Corporate Insolvency Resolution Process and the powers ofthe Board remaining suspended in terms of the provisions of section 17 of the Insolvencyand Bankruptcy Code 2016.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 your Company approved a Policy on CSR and thePolicy was parked on the website of the Company. As part of CSR initiatives your Companyduring the financial year 2018-19 has amongst other activities undertaken projects inareas of promoting healthcare empowerment of woman ecological balance. These projectsare in accordance with Schedule VII of the Companies Act 2013. The report on CSRactivities is attached as Annexure to this Report.

DISCLOSURE WHERE COMPANY IS REQUIRED TO CONSTITUTE NOMINATION AND REMUNERATIONCOMMITTEE:

The Company has constituted a Nomination & Remuneration Committee under Regulation19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Further the Company has a Nomination & Remuneration Policy for appointment andremuneration of Directors under Section 178 of the Companies Act 2013 and Regulation 19of the SEBI (Listing Obligations and Disclosure Requirements)

Regulations 2015. While terms of reference of the Committee include appointments ofDirectors as per the Nomination & Remuneration Policy of the Company no new Directorwas appointed on the Board of Company during the year under review. Further no meetingsof the aforesaid committee has been held during the year under review in view of theongoing Corporate Insolvency Resolution Process and the powers of the Board remainingsuspended in terms of the provisions of section 17 of the Insolvency and Bankruptcy Code2016.

DISCLOSURE IF MD/WTD IS RECEIVING REMUNERATION OR COMMISSION FROM SUBSIDIARY COMPANY

As per Section 197(14) of the Act 2013 A MD/WTD of company can receive remuneration orcommission from any holding company or subsidiary company of such company and the sameshould be disclosed by the company in Board's Report. Accordingly it is informed asunder:

Name of Director Total Remuneration including Perquisites & Allowance / Sitting Fee
1. Mr. R.K. Saraf Chairman & Managing Director -
2. Mr. Manoj Saraf Managing Director -
3. Mr. Ashish Saraf Joint Managing Director -
4. Mr. Rohit Saraf Joint Managing Director -

DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT

The Company has adopted the Vigil Mechanism Policy for the Company and the same isavailable on the website of the Company www.facorgroup.in/investorrelations.

DETAILS OF DIRECTOR AND KMP

Pursuant to the provisions of section 203 and other applicable provisions if any ofthe Companies Act 2013 and the rules framed there under Mr. R.K. Saraf Chairman &Managing Director Mr. Yashpal Mehta Chief Finance Officer and Mr. Ritesh ChaudhryCompany Secretary are Key Managerial Personnel of the Company.

Further during the year under review Mr. Pinaki Misra an Independent director on theBoard of the Company has resigned from the Board of the Company on 22nd September 2018.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company and its subsidiaries. Based on thereport of internal auditor process owners undertake corrective action in their respectiveareas and thereby strengthen the controls. Significant audit observations and correctiveactions thereon are presented to the Audit Committee of the Board. However during theyear under review the Internal audit reports were reviewed by the Resolution Professionalin view of the suspension of the powers of the Board and its Committees pursuant to theprovisions of section 17 of the Insolvency and Bankruptcy Code 2016.

DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE

Company has not issued any share under ESOP or Sweat Equity Shares during the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

As reported last year an appeal against the order of Hon'ble

NCLT Kolkata was filed before the Hon'ble National Company Law Appellate Tribunal NewDelhi ("NCLAT New Delhi") which was dismissed vide order dated 8th January2019. An appeal was also filed against the order of the Hon'ble NCLAT before Hon'bleSupreme Court of India ("Supreme Court") which too was dismissed vide orderdated 11th February 2019.

Post dismissal of the appeal by NCLAT New Delhi and the Supreme Court the matter wasagain heard by NCLT Kolkata which granted exclusion of time pursuant to which the reviseddate of completion of Corporate Insolvency of the Company was fixed to 19th April 2019.Thereafter upon an application filed by REC Limited for change of Resolution Professionaland for grant of further exclusion of time before National Company Law Tribunal Cuttack("NCLT Cuttack"). Pursuant to order dated 8th July 2019 of NCLT Cuttack Mr.Bhuvan Madan Resolution Professional has replaced Mr. K.G. Somani ResolutionProfessional w.e.f 8th July 2019. Further NCLT Cuttack granted an exclusion of 30 dayswhich was followed by another application seeking further exclusion of time. Vide orderdated 8th August 2019 NCLT Cuttack has granted further exclusion of time of 98 daysfrom 7th August 2019. Accordingly the revised date for completing Corporate InsolvencyResolution Process of the Company is 14th November 2019.

Pursuant to decision of the Committee of Creditors of the Company and the order ofNCLT Cuttack dated 8th August 2019 as aforesaid the resolution professional isinviting prospective resolution applicants to submit resolution plans for the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year to which the financialstatements related and the date of the report.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act 2013 unclaimed or unpaid Dividends havebeen transferred to the Investor Education and Protection Fund established by the CentralGovernment.

CAUTIONARY STATEMENT

Statements in the Board's Report and the Management

Discussion & Analysis describing the Company's objectives expectations orforecasts may be forward-looking within the meaning of applicable securities laws andregulations.

Actual results may differ materially from those expressed in the Statement. Importantfactors that could influence the Company's operations include global and domestic demandand supply conditions affecting selling prices of finished goods input availability andprices changes in government regulations tax laws economic developments within thecountry and other factors such as litigation and industrial relations.

ACKNOWLEDGEMENTS

The Company thanks the Central and State Governments for their continued support andco-operation extended towards the business as well as the company's social functions. TheManagement also thanks the shareholders Business Associates Financial Institutions &Banks Customers and Suppliers for the faith reposed in the Company and in them andexpresses its sincere appreciation to the dedicated and committed team of employees andworkmen without whom reaching this far and maintaining the standard and quality of theproducts for which the company is famous would not have been possible. The managementalso thanks the Resolution

Professional and its team for the efforts put in sustaining the operations of theCompany during the year without any hindrance.

By order of Resolution Professional

for Ferro Alloys Corporation Limited

(Ram Kisan Saraf)

Chairman & Managing Director

Place : Noida

Dated : 31st August 2019

.