SIXTIETH ANNUAL REPORT 2015-2016

FERRO ALLOYS CORPORATION LIMITED CORPORATE INFORMATION

Board of Directors Executives Bankers R. K. Saraf R.D. Agrawal Bank of India Chairman & Managing Director Advisor Central Bank of India State Bank of India Manoj Saraf O.P. Banka Syndicate Bank Managing Director Director(Finance) & CFO State Bank of Bikaner & Jaipur

Vineet Saraf Ashok Agrawal Solicitors Director (Mines) Ashish Saraf Mulla & Mulla and Joint Managing Director P. G. Suresh Kumar Craige Blunt & Caroe Chief Executive Bhaishankar Kanga and Rohit Saraf (Charge Chrome Plant) Girdharilal Joint Managing Director R.K. Singh Auditors A.S. Kapre Sr. General SALVE & Co. Manager (Mines) Umesh Khaitan Chartered Accountants A. K. Pati Pinaki Misra Internal Auditors General Manager (Mines) S. B. Mishra M/s Das & Prasad (Ceased w.e.f.12.08.2016) Chartered Accountants

M. B. Thaker Secretarial Auditors M/s Ashish Saxena & Co. Keshaorao Pardhi Company Secretaries Urmila Gupta Registrars & Share Transfer Agents Ritesh Chaudhry (for both Physical & Electronic) Sr. General Manager (Legal) & Beetal Financial & Computer Services Pvt. Ltd. Company Secretary Beetal House, 3rd Floor, 99, Madangir, Behind LSC, New Delhi – 110 062 Phone No. 91-11-29961281-83 Fax No. 91-11-29961284 E-mail: [email protected] [email protected]

Contents: Corporate Information and Index: Notice to Members ...... 1 Standalone Balance Sheet, Profit & Loss & Notes ...... 48 Director’s Report ...... 6 Consolidated Auditors’ Reoprt to Members ...... 70 Management Discussions and Analysis ...... 29 Consolidated balance Sheet, Statements of Profit & ...... Corporate Governance Report ...... 31 Loss & Notes ...... 74 Auditors’ Report to Members (Standalone) ...... 43 Principal Addresses of the Company ...... 96 SIXTIETH ANNUAL REPORT NOTICE TO MEMBERS 60 2015-16

Notice is hereby given that the SIXTIETH ANNUAL applicable provisions, if any, of the Companies Act, 2013, GENERAL MEETING of the Members of the Company will and Rule 14 and other applicable rules, if any, of The be held at the Registered Office of the Company at D.P. Nagar, Companies (Audit and Auditors) Rules, 2014 (including Randia – 756135, Dist. Bhadrak. Odisha on Wednesday, the any statutory modification(s) or re-enactment thereof 28th day of September, 2016 at 12.00 Noon to transact, with for the time being in force), and subject to the approval or without modification as may be permissible, the following of Central Government as may be required, the business: Company hereby approves and ratifies the remuneration of ` 70,000/- (Rupees Seventy Thousand only) per ORDINARY BUSINESS: annum plus applicable taxes and out of pocket expenses 1. To receive, consider and adopt the Audited Financial payable to M/s Niran & Co., Cost Accountants Statement of the Company for the financial year ended (Registration Number: 000113), appointed as Cost 31st March, 2016, including the report of the Board of Auditors of the Company for the financial year 2016- Directors and Auditors’ Report thereon and the audited 17.” consolidated financial statement of the Company for the Registered Office: By ORDER OF THE BOARD Financial Year ended 31st March, 2016. 2. To appoint a Director in the place of Mr. Ashish Ramkisan D.P. Nagar Saraf (DIN:00004547), who retires from Office by P.O. Randia - 756135 rotation and, being eligible, offers himself for re- Distt. Bhadrak, Odisha Ritesh Chaudhry appointment. Sr. General Manager (Legal) & Company Secretary 3. To consider and, if thought fit, to pass the following Dated : 12th August, 2016 resolution which will be proposed as an Ordinary Place : Noida – 201301, U.P. Resolution: “RESOLVED THAT in accordance with the provisions NOTES: of Section 139, 142 and other applicable provisions, if 1. The Explanatory Statement pursuant to Section 102 of any, of the Companies Act, 2013 read with the the Companies Act, 2013, which sets out details relating Companies (Audit and Auditors) Rules, 2014 (including to Item no.4, being Special Business at the meeting, is any statutory modification(s) or re-enactments therefore annexed hereto. for the time being in force), appointment of M/s Salve & Company, Chartered Accountants, (Regn. No. 2. The Register of Members and the Share Transfer books 109003W), as Statutory Auditors of the Company, which of the Company will remain closed from Saturday, the th th was approved by the shareholders for a period 3 years 24 September, 2016 to Wednesday, the 28 September, from the conclusion of the 58th Annual General Meeting 2016 (both days inclusive) for annual closing. held on 10th September, 2014 be and is hereby ratified 3. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE at this 60th Annual General Meeting of the Company MEETING IS ENTITLED TO APPOINT A PROXY / and they are, therefore, to continue to hold office from PROXIES TO ATTEND AND VOTE INSTEAD OF the conclusion of this Annual General Meeting till the HIMSELF/HERSELF. SUCH A PROXY/ PROXIES NEED conclusion of the 61st Annual General Meeting of the NOT BE A MEMBER OF THE COMPANY. A person can Company at such remuneration plus service tax as act as proxy on behalf of members not exceeding fifty applicable and reimbursement of expenses incurred by (50) and holding in the aggregate not more than ten them incidental to their functions, as shall be fixed by percent of the total share capital of the Company. The the Board of Directors of the Company. instrument of Proxy in order to be effective, should be RESOLVED FURHTER THAT the appointment of the deposited at the Registered Office of the Company, duly Auditors shall be subject to ratification by members in completed and signed, not less than 48 hours before every subsequent Annual General Meeting till the the commencement of the meeting. A Proxy form is sent conclusion of the 61st Annual General Meeting.” herewith. Proxies submitted on behalf of the companies, societies etc., must be supported by an appropriate SPECIAL BUSINESS: resolution/authority, as applicable. 4. To consider, and if thought fit, to pass with or without 4. To prevent fraudulent transactions, members are modification(s), the following resolution as an Ordinary advised to exercise due diligence and notify the resolution: Company of any change in address or demise of any “RESOLVED THAT pursuant to Section 148 and other member as soon as possible. Members are also advised

Ferro Alloys Corporation Limited 1 SIXTIETH ANNUAL REPORT NOTICE TO MEMBERS 60 2015-16

not to leave their demat account(s) dormant for long. documents will also be available at the Company’s Periodic statement of holdings should be obtained from Registered Office in D.P. Nagar, Randia for inspection the concerned Depository Participant and holdings during normal business hours on working days. Even should be verified. after registering for e-communication, members are 5. The Securities and Exchange Board of India (SEBI) has entitled to receive such communication in physical form, mandated the submission of Permanent Account upon making a request for the same, by post free of Number (PAN) by every participant in securities market. cost. For any communication, the shareholders may also Members holding shares in electronic form are, send requests to the Company’s investor email id: therefore, requested to submit the PAN to their [email protected] Depository Participants with whom they are maintaining 10. Voting through electronic means their demat accounts. Members holding shares in In compliance with provisions of Section 108 of the physical form can submit their PAN details to the Companies Act, 2013 and Rule 20 of the Companies Company. (Management and Administration) Rules, 2014 and also 6. Details under sub-clause 3 of Regulation 36 and other 44(1) of the SEBI (Listing Regulations and Disclosure applicable regulations, if any, of the Securities and Requirements) Regulations, 2015, the Company is Exchange Board of India (Listing Obligations And pleased to provide members facility to exercise their right Disclosure Requirements) Regulations, 2015 in respect to vote at the AGM by electronic means and the business of the Directors seeking appointment/re-appointment at may be transacted through e-Voting Services provided the Annual General Meeting, forms integral part Report by Central Depository Services (India) Limited. on Corporate Governance. The Directors have furnished The instructions for e-voting are as under: the requisite declarations for their appointment/re- (i) The voting period begins on 25th September, appointment. 2016 at 9:00 a.m. and ends on 27th September, 7. Electronic copy of the Annual Report for 2015-16 is being 2016 2016 at 5:00 p.m. During this period sent to all the members whose email IDs are registered shareholders’ of the Company, holding shares with the Company/Depository Participants(s) for either in physical form or in dematerialized form, communication purposes unless any member has as on the cut-off date (record date) of 21st requested for a hard copy of the same. For members September, 2016 may cast their vote who have not registered their email address, physical electronically. The e-voting module shall be copies of the Annual Report for 2015-16 is being sent disabled by CDSL for voting thereafter. in the permitted mode. Complete copy of the Annual (ii) Shareholders who have already voted prior to the Report for 2015-16 shall be provided on request to meeting date would not be entitled to vote at the members. meeting venue. 8. In accordance with the Companies Act, 2013 read with (iii) The shareholders should log on to the e-voting the Rules framed there under Electronic copy of the website www.evotingindia.com. Notice of the 60th Annual General Meeting of the Company inter alia indicating the process and manner (iv) Click on Shareholders. of e-voting along with Attendance Slip and Proxy Form (v) Now Enter your User ID is being sent to all the members whose email IDs are a. For CDSL: 16 digits beneficiary ID, registered with the Company/Depository Participants(s) b. For NSDL: 8 Character DP ID followed by 8 for communication purposes unless any member has Digits Client ID, requested for a hard copy of the same. For members c. Members holding shares in Physical Form who have not registered their email address, physical should enter Folio Number registered with the copies of the Notice of the 60th Annual General Meeting Company. of the Company inter alia indicating the process and (vi) Next enter the Image Verification as displayed manner of e-voting along with Attendance Slip and Proxy and Click on Login. Form is being sent in the permitted mode. (vii) If you are holding shares in demat form and had 9. Members may also note that the Notice of the 60th Annual logged on to www.evotingindia.com and voted General Meeting and the Annual Report for 2015-16 on an earlier voting of any company, then your will also be available on the Company’s website existing password is to be used. www.facorgroup.in/investorrelations for their (viii) If you are a first time user follow the steps given download. The physical copies of the aforesaid below:

2 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTICE TO MEMBERS 60 2015-16

For Membrers holding shares in Demat (xii) Click on the EVSN No. 160812019 for Ferro Alloys Form and Physical Form Corporation Limited. PAN Enter your 10 digit alpha-numeric PAN issued (xiii) On the voting page, you will see “RESOLUTION by Income Tax Department (Applicable for DESCRIPTION” and against the same the option both demat shareholders as well as physical “YES/NO” for voting. Select the option YES or shareholders) NO as desired. The option YES implies that you assent to the Resolution and option NO implies • Members who have not updated their PAN that you dissent to the Resolution. with the Company/Depository Participant are requested to use the first two letters (xiv) Click on the “RESOLUTIONS FILE LINK” if you of their name and the 8 digits of the wish to view the entire Resolution details. sequence number in the PAN field. (xv) After selecting the resolution you have decided Sequence no is printed on the address to vote on, click on “SUBMIT”. A confirmation box slips. will be displayed. If you wish to confirm your vote, • In case the sequence number is less than click on “OK”, else to change your vote, click on 8 digits enter the applicable number of 0’s “CANCEL” and accordingly modify your vote. before the number after the first two (xvi) Once you “CONFIRM” your vote on the characters of the name in CAPITAL letters. resolution, you will not be allowed to modify your Eg. If your name is Ramesh Kumar with vote. sequence number 1 then enter (xvii) You can also take a print of the votes cast by RA00000001 in the PAN field. clicking on “Click here to print” option on the Dividend Enter the Dividend Bank Details or Date of Voting page. Bank Birth (in dd/mm/yyyy format) as recorded in (xviii) If a demat account holder has forgotten the login Details or your demat account or in the company password then Enter the User ID and the image Date of records in order to login. verification code and click on Forgot Password & Birth • If both the details are not recorded with enter the details as prompted by the system. (DOB) the depository or company please enter (xix) Shareholders can also cast their vote using the member id / folio number in the CDSL’s mobile app m-Voting available for Dividend Bank details field as mentioned android based mobiles. The m-Voting app can in instruction (v). be downloaded from Google Play Store. Please follow the instructions as prompted by the (ix) After entering these details appropriately, click mobile app while voting on your mobile. on “SUBMIT” tab. (xx) Note for Non – Individual Shareholders and (x) Members holding shares in physical form will then Custodians directly reach the Company selection screen. • Non-Individual shareholders (i.e. other than However, members holding shares in demat form Individuals, HUF, NRI etc.) and Custodian are will now reach ‘Password Creation’ menu wherein required to log on to www.evotingindia.com they are required to mandatorily enter their login and register themselves as Corporates. password in the new password field. Kindly note • A scanned copy of the Registration Form that this password is to be also used by the demat bearing the stamp and sign of the entity holders for voting for resolutions of any other should be emailed to company on which they are eligible to vote, [email protected]. provided that company opts for e-voting through CDSL platform. It is strongly recommended not • After receiving the login details a Compliance to share your password with any other person User should be created using the admin login and take utmost care to keep your password and password. The Compliance User would confidential. be able to link the account(s) for which they wish to vote on. (xi) For Members holding shares in physical form, the details can be used only for e-voting on the • The list of accounts linked in the login should resolutions contained in this Notice. be mailed to [email protected] and on

Ferro Alloys Corporation Limited 3 SIXTIETH ANNUAL REPORT NOTICE TO MEMBERS 60 2015-16

approval of the accounts they would be able (G) The Scrutinizer shall within a period not to cast their vote. exceeding three(3) working days from the • A scanned copy of the Board Resolution and conclusion of the e-voting period unblock the Power of Attorney (POA) which they have votes in the presence of at least 2 (two) witnesses issued in favour of the Custodian, if any, not in the employment of the Company and make should be uploaded in PDF format in the a Scrutinizer’s Report of the votes cast in favour system for the scrutinizer to verify the same. or against, if any, forthwith to the Chairman of the Company. (xxi) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked 8. All documents referred to in the accompanying Notice Questions (“FAQs”) and e-voting manual and the Explanatory Statement shall be open for available at www.evotingindia.com, under help inspection at the Registered Office of the Company on section or write an email to all working days during normal business hours (9.00 [email protected]. am to 5.00 pm) except Saturdays, Sundays and Holidays up to and including the date of the AGM of the Company. In case of members receiving the physical copy: 9. Members are also informed that the complete particulars (A) Please follow all steps from sl. no. (i) to sl. no. of the venue of the Meeting including route map and (xx) above to cast vote. prominent land mark for easy location has been specified (B) In case you have any queries or issues regarding in this notice. Further, the same has been hosted along e-voting, you may refer the Frequently Asked with the Notice on website www.facorgroup.in/ Questions (“FAQs”) and e-voting manual investorrelations/AGMnotice of the company. available at www.evotingindia.co.in under help 11. The investors may contact the Company Secretary for section or write an email to queries, if any. For this purpose, they may either write [email protected], as aforesaid. to him at the Corporate office address at “Facor House (C) The e-voting period commences on 25th A45-A50, Sector-16, Noida, U.P.-201301” or e-mail their September, 2016 (9:00 am) and ends on 27th grievances /queries to the Company Secretary at the September, 2016 (5:00 pm). During this period following e-mail address: [email protected] shareholders of the Company, holding shares 12. Unclaimed/Unpaid dividends for the financial years either in physical form or in dematerialized form, referred herein below are due for transfer to Investor as on the cut-off date (record date) of 21st Education & Protection Fund constituted by the Central September, 2016 may cast their vote Government. Members may claim their unclaimed/ electronically. Once the vote on a resolution is unpaid dividends by approaching the Company’s cast by the shareholder, the shareholder shall Secretarial Department at “Facor House” Ground Floor, not be allowed to change it subsequently. Plot no. A 45-50, Sector 16, Noida – 201301, U.P. for (D) The voting rights of shareholders shall be in payment thereof as the same will be transferred to the proportion to their shares of the paid up equity “Investor Education & Protection Fund” of the Central share capital of the Company as on the cut-off Government, as aforesaid, on the following dates, post date (record date) of 21st September, 2016, as which no claim shall lie against the Company or the referred in preceding clause. Investor Education & Protection fund: • Dividend for the year 2009-10, on or after 17th (E) Mr. Ashish Saxena & Co., Company Secretaries, October, 2017 (Membership No. 6560) has been appointed as th the Scrutinizer to scrutinize the e-voting process • Dividend for the year 2010-11, on or after 12 in a fair and transparent manner. October, 2018 (F) The Results shall be declared on or after the AGM 13. Members are also informed that the complete particulars of the Company. The Results declared alongwith of the venue of the Meeting including route map and the Scrutinizer’s Report shall be placed on the prominent land mark for easy location has been specified Company’s website www.facorgroup.in within 2 in this notice. Further, the same has been hosted along (two) days of passing of the resolutions at the with the Notice on website www.facorgroup.in/ AGM of the Company and communicated to the investorrelations/AGMnotice of the company. BSE Limited.

4 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXCURE TO THE NOTICE 60 2015-16

Registered Office: By ORDER OF THE BOARD In accordance with the provisions of Section 148(3) of the Act read with the Companies (Audit and Auditors) Rules, D.P. Nagar 2014, the remuneration payable to the Cost Auditors has to P.O. Randia - 756135 be ratified by the shareholders of the Company. Accordingly, Distt. Bhadrak, Odisha Ritesh Chaudhry consent of the members is sought for passing an Ordinary Sr. General Manager (Legal) & Resolution as set out at Item No.4of the Notice for ratification Company Secretary of the remuneration payable to the Cost Auditors for the th Dated : 12 August, 2016 financial year ending March 31, 2017. Place : Noida – 201301, U.P. None of the Directors / Key Managerial Personnel of the ANNEXURE TO THE NOTICE Company / their relatives are, in any way, concerned or interested, financially or otherwise, in the resolution set out EXPLANATORY STATEMENT IN RESPECT OF THE at Item No. 4 of the Notice. SPECIAL BUSINESS PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 The Board commends the Ordinary Resolution set out at Item No. 4 of the Notice for approval by the shareholders. Item no.4 Registered Office: By ORDER OF THE BOARD The Board of Directors of the Company, on the recommendation of the Audit Committee, at its meeting held D.P. Nagar on 27th May, 2016, has considered and approved the P.O. Randia - 756135 appointment of M/s Niran & Co., Cost Accountant Distt. Bhadrak, Odisha Ritesh Chaudhry (Registration No. 000113), as Cost Auditor of the Company Sr. General Manager (Legal) & for the financial year 2016-17. Company Secretary Dated : 12th August, 2016 Place : Noida – 201301, U.P.

Ferro Alloys Corporation Limited 5 SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16

DIRECTORS’ REPORT TO THE MEMBERS STATE OF COMPANY’S AFFAIRS Your Directors present the 60th Annual Report of your It needs no reiteration that the fortunes of ferro alloys industry Company and the Audited Financial Statement of the are saddled to that of the steel industry. In the current year, Company for the financial year ended 31st March, 2016, and steel prices have been down by about 33% and consequently the audited consolidated financial statement of the Company the fall in gross margins of steel producers, which has been for the Financial Year ended 31st March, 2016. alarming. In their drive to cut costs in every possible way and survive the depressed market conditions, steelmakers are FINANCIAL RESULTS bargaining hard while buying raw materials or intermediate With adverse business phase during Year under review, the products, including ferroalloys. Company’s performance has been affected significantly which India has a significant profile in mining of chrome and is reflected in the financial results for the year which are, as production of ferrochrome. On the back of depressed market under: (` in lacs) Particulars Consolidated Standalone For the year For the year For the year For the year ended ended ended ended 31st March, 2016 31st March, 2015 31st March, 2016 31st March, 2015 Income from Operations 57368.19 60,310.28 56933.35 60,270.18 Profit before tax & Depreciation/ Amortization (3521.21) (439.76) (322.03) 2951.74 Depreciation/Amortization 2166.41 2178.74 467.66 495.63 Provision for taxation (376.64) 549.50 (376.64) 549.50 Net Profit/(Loss) for the year (5310.98) (3168.00) (413.05) 1906.61 Transfer to General Reserve - 2100.00 - 2100.00 Balance carried to Balance Sheet (12469.98) (7159.00) 3953.94 4366.99 During the year under review, revenue from operations conditions, the production of chrome ore progressively came declined by 5.54% to ` 56,933.35 lacs (previous year down from 3.3 million tonnes (mt) in 2005 to 2.8 mt in 2014 ` 60,270.18 lacs). However, EBIDTA fell by 68.16% to in keeping with the policy to conserve the resource and mining ` 1,466.58 lacs (previous year ` 4,606.55 lacs) and profit disruptions due to court interventions and environment after tax declined by 121.66% to ` (413.05) lacs (previous issues. In any case, India with chrome ore reserve of 70 mt year ` 1,906.61 lacs) on account of difficult market conditions has only one per cent share of global proven deposit. Around and decline in production. 85 per cent of world reserve of this ore is found in South Your Company is engaged mainly in the production of Ferro Africa and Zimbabwe. As a result, India is importing growing Chrome and with a dip in stainless steel production, the quantities of high grade chrome ore for blending with locally Company’s financials have been impacted due to weak mined material. realization. Further, rise in working capital requirement has In the backdrop of the industry’s scenario as above, your kept the profitability and debt-servicing indicators stressed. company’s turnover for the current financial year, 2015-16 Shortall in chrome supply from company’s captive mines due stands at ` 56029.10lacs as against ` 59069.32lacs last year, to there being no mining operations at Company’s Kathpal an decrease of 5.15% over the previous year. Exports during mine, Boula mines compounded the problem of raw material the year were ` 22974.17 lacs. Further, your company has availability. To meet out the requirement of its shortfall of posted a profit/(loss) before tax of ` (789.69) lacs this year Chrome ore, the Company has procured chrome ore from as against ` 2456.11lacs in the previous year, reflecting a Orissa Mining Corporation and other mining companies also, decrease of 132.15%. which increased the cost of production. At the same time, Although the Company’s operations have been closed at sharp decline in sales realization during the year vis a vis Boula mines following the order passed by the Hon’ble relatively lesser reduction in raw material cost have Supreme Court, the company is evaluating legal remedies compounded the problem further which is evident from the to regain and restart the mining operations at the Boula mines. results for the year under review. Further, the Company is in the process of finalizing a long

6 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16 term contract for supply of chrome ore. Although the supply FUTURE STRATEGY AND GROWTH contract is not for a substantial quantity, it should, The Company is also contemplating setting up an additional nevertheless ease some strain on the chrome ore 27MVA furnace at the Company’s Charge Chrome Plant. Your requirements of the Company. company, thus, remains committed to forward integration as PROSPECTS well by way of setting up green field projects, acquisitions, joint ventures etc. High input costs, led by lower availability of ores and reductants, and inadequate power supply are key risks faced Further, the captive power plant set by your company in Facor by the ferro alloys industry. Non-availability of rail wagons for Power Limited, the subsidiary of the Company is supplying procuring raw materials and poor infrastructure facilities at uninterrupted power to the Company and Balasore Alloys ports are other issues that Indian ferro alloy manufacturers Ltd., a Ferro Alloys producer in Orissa on group captive basis have to grapple with. and is also trying to tie up power sale for its balance power generation. However, ferro chrome prices of late, have staged some recovery. Also, Stainless Steel Development Association DIVIDEND announced that Indian stainless steel production will go upto Keeping in view the future requirement of funds in working 5.2 million tons in 2020. This is grossly up by 67.7% from 3.1 capital and other purposes, the Directors do not recommend million tons expected in 2015, and according to the any dividend in the financial year ended 31st March, 2016. anticipation announced, the increasing trend will continue such as 3.6 million tons in 2016, 4.0 million tons in 2017, 4.3 FINANCE million tons in 2018 and 4.7 million tons in 2019. Cash and cash equivalent as at March 31, 2016 was ` 244.72 However, with an annual output of 1 mt, India figures lacs. The Company continues to focus on judicious prominently in the global chrome alloys industry and trade. management of its working capital. Receivables, inventories Our stainless steel production being 3 mt, the domestic and otherworking capital parameters were kept under strict requirement of ferrochrome is about 460,000 tonnes, leaving check through continuous monitoring. us with an exportable surplus of half the alloy production. DEPOSITS Chinese Customs Tariff Commission of the State Council issued 2016 Import and Export Tariffs Schedules, which will The Company has not accepted deposit from the public falling be effective from January 1st 2016. The export tariffs on within the ambit of Section 73 of the Companies Act, 2013 ferroalloys products have been kept the same as that and The Companies (Acceptance of Deposits) Rules, 2014. implemented in 2015. Chinese ferroalloys products have lost CONSOLIDATED FINANCIAL STATEMENTS its price advantage in the international market due to the high export tariff during the past few years, and the export In accordance with the Accounting Standard 21 on volume of Chinese ferroalloys has consequently declined Consolidated Financial Statements read with Accounting sharply. Standard 23 on Accounting for Investments in Associates, the audited consolidated financial statement is provided in Stainless demand in general, however, remains a mixed bag. the Annual Report for the year. Demand is very weak in the oil country, especially with oil prices remaining at only about $40-$45/barrel and not SHARE CAPITAL expected to get above $60/barrel next year. But on the other The paid up Equity Share Capital as on March 31, 2016 was hand, automotive sales – especially sales of pickup trucks 1852.68 lacs. During the year under review, the Company and sport utility vans – are at 15 year highs and shipments has neither issued shares with differential voting rights nor of major home appliances are seeing nearly 10% year on granted stock options nor sweat equity. year increases. The government on August 4, 2016 extended minimum import INDUSTRIAL RELATIONS price on 66 steel products and is also expected to levy an anti- Industrial relations with workers, trade unions, and with local dumping on other products. With this we expect prices in the populace remained amicable and pleasant throughout the domestic market to rise. However, given the demand-supply year. imbalance in the market we expect prices uptick to be marginal. Consequently, operating margins are expected to improve with DIRECTORS higher realisations and lower raw material cost. Mr. Ashishkumar Ramkisan Saraf shall retire by rotation at the ensuing 60th Annual General Meeting and, being eligible, offers himself for re-appointment in accordance with the

Ferro Alloys Corporation Limited 7 SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16 provisions of the Companies Act, 2013 and in terms of the Senior Management give an overview of the operations of the Memorandum and Articles of Association of the Company. Company, to familiarise the new IDs with the Company’s During the year, Mr. Anurag Saraf was appointed as an business operations. The new IDs are given an orientation on Additional Director in the category of Non-Executive Director. the group structure, its operations, subsidiaries, Board However, his resolution for appointment as a Director liable constitution and procedures besides providing them with the to retire by rotation was not approved by the shareholders financials of the Company for at least 3 years and the with requisite majority and as a result, he ceased to be the corporate brochure etc. Also, plant visits are organized for Director of the Company w.e.f 21st September, 2015. Also Mr. each ID for familiarizing with the Company’s operations and S. B. Mishra an Independence Director Ceased to be a Director facilities. consequent upon his death on 12th August, 2016. BOARD EVALUATION Further, all Independent Directors have given declarations that The Board evaluated the effectiveness of its functioning and they meet the criteria of independence as laid down under of individual directors at its meeting held on 12th February, Section 149(6) of the Companies Act, 2013 and Regulation 2016. 25 of the SEBI (Listing Obligations and Disclosure The aspects covered in the evaluation included the Requirements) Regulations, 2015. The Company has contribution to and monitoring of corporate governance formulated a code of conduct for all members of the Board practices, participation in the long-term strategic planning and Senior Management Personnel. All concerned members/ and the fulfilment of Directors’ obligations and fiduciary executives have affirmed compliance with the said code. responsibilities, including but not limited to, active Detail of Remuneration paid to Executive Director During participation at the Board and Committee meetings. the year. The Chairman had meetings with the Independent Directors (` in lacs) and the Chairman of the Nomination and Remuneration S. Name of Director Total Remuneration Committee also had meetings with the Executive and Non- No. Executive Directors. These meetings were intended to obtain Directors’ inputs on effectiveness of Board/Committee 1 Mr. R. K. Saraf 15,16,850.32 processes. 2 Mr. Manoj Saraf 17,99,783.32 Further, the Independent Directors at their meeting, reviewed 3 Mr. Ashish Saraf 17,99,996.32 the performance of Board, Chairman of the Board and of 4 Mr. Rohit Saraf 17,99,997.32 Non- Executive Directors.

Detail of Remuneration paid to Non-Executive Directors NOMINATION AND REMUNERATION POLICY during the year. The Board has, on the recommendation of the Nomination & (` in lacs) Remuneration Committee framed a Nomination and Remuneration policy for the appointment and remuneration S. Name of Director Sitting Fee of the Directors, Key Managerial Personnel and Senior No. Paid Executives of the Company including criteria for determining 1 Mr. A.S. Kapre 80,000 qualifications, positive attributes, independence of a Director 2 Mr. M.B. Thaker 70,000 and other related matters can be accessed at 3 Mr. Pinaki Misra 20,000 www.facorgroup.in/investorrelations. Further, the Policy was reviewed by the Committee and the Board at their meeting 4 Mr. Keshaorao Pardhi 40,000 held on 27th May, 2016. 5 Mr. Umesh Khaitan 10,000 DISCLOSURE AS PER THE SEXUAL HARASSMENT OF 6 Mrs. Urmila Gupta 40,000 WOMEN AT WORKPLACE (PREVENTION, PROHIBITION 7 Mr. S.B. Mishra 25,000 AND REDRESSAL) ACT, 2013 8 Mr. Vineet Saraf 50,000 Ferro Alloys Corporation Limited, (FACOR), believes in equal 9 Mr. Anurag Saraf 10,000 employment opportunity and remains committed to creating and nurturing a working environment for all employees to FAMILIARISATION PROGRAMME FOR INDEPENDENT enable them work without fear of any prejudice, gender bias DIRECTORS and sexual harassment. The Company does not tolerate All Independent Directors (IDs) inducted into the Board are sexual harassment at the workplace and has adopted a policy given an orientation. Chairman & Managing Director and the on prevention, prohibition and redressal of sexual harassment

8 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16 at workplace in line with the provisions of the Sexual (b) That we have selected such accounting policies and Harassment of Women at Workplace (Prevention, Prohibition applied them consistently and made judgments and and Redressal) Act, 2013 and the Rules thereunder. During estimates that are reasonable and prudent so as to give the Financial Year 2015-16, the Company has not received a true and fair view of the state of affairs of the company any complaint of sexual harassment and the Policy was at the end of the financial year and of the profit and loss reviewed by the Board and Committee at its meeting held on of the company for that period; 27th May, 2016. (c) That proper and sufficient care for the maintenance of MEETINGS adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the During the year Four Board Meetings, Four Audit Committee company and for preventing and detecting fraud and Meetings, One Shareholders’ Grievances Committee, One other irregularities; meeting of Nomination and Remuneration Committee and One meeting of Corporate Social Responsibility Committee (d) That the annual accounts have been prepared on a were convened and held, details whereof are given in the going concern basis; Corporate Governance Report. The intervening gap between (f) That proper internal financial controls were laid down the Meetings was within the period prescribed under the by the company and that such internal financial controls Companies Act, 2013. are adequate and were operating effectively. SUBSIDIARIES (f) That proper systems to ensure compliance with the provisions of all applicable laws were in place and that The Report and Accounts of the Company are prepared in such systems were adequate and operating effectively. consolidated form and contains results of its subsidiaries, Facor Power Limited, Facor Realty and Infrastructure Limited AUDIT COMMITTEE and Facor Energy Limited. The annual accounts of the Audit Committee of the Company comprises of Mr. A.S. Kapre, subsidiaries shall be available on request to the members of Mr. M.B. Thaker, and Mr. S.B. Mishra, all Independent the Company and are available for inspection at the registered Directors. The committee has been constituted in compliance office of the Company. Further, the Consolidated Financial with the provisions of Regulation 18 of the SEBI (Listing Statements presented by the Company include the financial Obligations and Disclosure Requirements) Regulations, 2015 results of the subsidiary companies. [SEBI(LODR) Regulations, 2015] and assumes all Pursuant to Section 129(3) of the Companies Act, 2013 read responsibilities provided therein, discharging their duties with Rule 5 of the Companies (Accounts) Rules, 2014, the diligently with transparency and accountability as their sole statement containing salient features of the financial motivation. statements of the Company’s Subsidiaries’, Associates’ and Joint Ventures (in Form AOC-1) is attached to the financial AUDITORS statements as Annexure-F. M/s Salve & Company, Chartered Accountants hold office upto the conclusion of the 61st Annual General Meeting DIRECTORS’ RESPONSIBILITY STATEMENT subject to their appointment being ratified at every intervening On the basis of framework of internal financial controls Annual General Meeting of the Company till 61st Annual established and maintained by the Company, the work General Meeting of the Company. Based on the performed by the internal, statutory, Cost and Secretarial recommendation of the Audit Committee, the Board of auditors and external agencies, the reviews performed by Directors of the Company have proposed the ratification of Management and the relevant Board Committees, the Board, appointment of M/s Salve & Co., Chartered Accountants, as with the concurrence of the Audit Committee, is of the opinion the Auditors of the Company from the conclusion of the that the Company’s internal financial controls were adequate forthcoming 60th Annual General Meeting till the conclusion and effective as on 31 March, 2016. of the 61st Annual General Meeting. M/s Salve & Co., have Accordingly, pursuant to Section 134(5) of the Companies expressed their willingness to act as Auditors of the Company, Act, 2013 the Board of Directors to the best of their knowledge if appointed, and have further confirmed that the said and ability confirm: appointment would be in conformity with the provisions of Section 141 of the Companies Act, 2013. (a) That in the preparation of the annual accounts, the applicable accounting standards had been followed AUDITOR’S REPORT along with proper explanation relating to material The observations made in the Auditors’ Report are self departures; explanatory and therefore, do not call for any further comments

Ferro Alloys Corporation Limited 9 SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16 u/s 134(3) of the Companies Act, 2013. required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of COST AUDITORS Managerial Personnel) Rules, 2014 are annexed to this report. Pursuant to Section 141 & 148 of the Companies Act, 2013 In terms of the provisions of Section 197(12) of the Companies read with The Companies (Cost Records and Audit) Act, 2013 read with Rules 5(2) and 5(3) of the Companies Amendment Rules, 2014, the cost audit records maintained (Appointment and Remuneration of Managerial Personnel) by the Company in respect of its activity is required to be Rules, 2014, a statement showing the names and other audited. Your Directors have, on the recommendation of the particulars of employees drawing remuneration in excess of Audit Committee, appointed M/s Niran & Co. to audit the cost the limits set out in the said Rules forms part of the Report. accounts of the Company for the financial year 2016-17. As required under the Companies Act, 2013, the remuneration However, having regard to the provisions of the first proviso payable to the cost auditor is required to be placed before to Section 136(1) of the Companies Act, 2013, the Annual the Members in a general meeting for their ratification. Report excluding the aforesaid information is being sent to Accordingly, a Resolution seeking Member’s ratification for the Members of the Company. The said information is the remuneration payable to Messrs Niran & Co., Cost available for inspection at Registered Office of the Company Auditors( Registration No. 000113) is included at Item No. during working hours. Any member interested in obtaining 12 of the Notice convening the Annual General Meeting. M/ such information may write to the Company Secretary, at s Niran& Co., have expressed their willingness to act as the registered office and the same will be furnished on Auditors of the Company, if appointed, and have further request. Further the details are also available on the confirmed that the said appointment would be in conformity Company’s website: www.facorgroup.in with the provisions of Section 141 of the Companies Act, CORPORATE GOVERNANCE 2013. Corporate Governance in your Company is about Further, your Directors had, in accordance with the General Commitment to values, ethical business conduct, nurturing Circular from the Ministry of Corporate Affairs appointed M/ good business ethics and creating value for its stakeholders s Niran & Co., Cost Accountants, as Cost Auditors for in line with the principles of fairness, equity, transparency, st Financial Year ended 31 March, 2016, for which Central accountability and dissemination of information. Your Government approval had been received by the Company. Company’s efforts are driven by the fundamental objectives st The report on Cost audit for Financial Year ended 31 March, of maximizing value by employing resources in opportunities 2016 would be filed with Central Government before 30th that generate consistent returns and position it for sustained September, 2016. growth. SECRETARIAL AUDITOR In terms of Regulation 27 of the SEBI (Listing Obligations Pursuant to the provisions of Section 204 of the Companies and Disclosure Requirements) Regulations, 2015, a separate Act, 2013 and The Companies (Appointment and report on Corporate Governance, Management Discussion Remuneration of Managerial Personnel) Rules, 2014, the and Analysis along with your Company’s Statutory Auditors’ th Company has appointed M/s Ashish Saxena & Company, a Certificate dated 12 August, 2016 confirming the above firm of Company Secretaries in Practice to undertake the compliance is annexed to and forms part of the Directors’ Secretarial Audit of the Company for financial Year 2016-17. Report. The Report of the Secretarial Audit in Form MR-3 is annexed HUMAN RESOURCE DEVELOPMENT to this report, as Annexure-A. Your Company takes great pride in the commitment, CONSERVATION OF ENERGY, TECHNOLOGY competence and vigour shown by its workforce in all realms ABSORPTION, FOREIGN EXCHANGE EARNINGS AND of business. The Company continues to take new initiatives OUTGO to further align its HR policies to meet the growing needs of A statement giving details of conservation of energy, its business. technology absorption, foreign exchange earnings and outgo, EXTRACT OF ANNUAL RETURN in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed The details forming part of the extract of the Annual Return as Annexure ‘B’ which forms part of this Report. in form MGT 9 is annexed herewith as “Annexure D”. SECRETARIAL AUDIT REPORT PARTICULARS OF EMPLOYEES In respect of observation made by the Secretarial Auditor in Disclosures pertaining to remuneration and other details as his report, the management submits that the non-filing of MGT-

10 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16

14 was by oversight. Further, The Company is filing an Rules, 2014, your Company approved a Policy on CSR and application for condonation of delay to complete the filing the Policy was parked on the website of the Company. As requirement. part of CSR initiatives, your Company during the financial year 2015-16 has amongst other activities, undertaken projects in PARTICULAR OF LOAN & INVESTMENT areas of promoting healthcare, empowerment of woman, During the year, the Company has remitted GBP 10,000 (INR ecological balance. These projects are in accordance with 9,64,800) to Facor Energy Limited, Guernsey (FEL, Guernsey). Schedule VII of the Companies Act, 2013. The report on CSR However, allotment of shares to the Company is in process by activities is attached as Annexure - E to this Report FEL, Guernsey. Other than the above, no loans, guarantees given and investments have been made during the year in DISCLOSURE WHERE COMPANY IS REQUIRED TO accordance with section 186 of the Companies Act, 2013 are, CONSTITUTE NOMINATION AND REMUNERATION as under. Accordingly, the information is given below: COMMITTEE: The Company have constitute a Nomination & Remuneration Committee under Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

(` in lacs) Name of the entity Relation Amount Particulars of loans, Purpose for which the loans, guarantees given or guarantees and investments investments made are proposed to be utilized Facor Energy Limited Wholly Owned Subsidiary 9.65 Investment * Business purpose * Shares yet to be allotted by Facor Energy Limited, Guernsey RELATED PARTY TRANSACTION & Company have Nomination & Remuneration Policy for There have been no materially significant related party appointment and remuneration of Directors Under Section 178 transactions between the Company and the Directors, the of the Companies Act, 2013 and Regulation 19 of the SEBI management, the subsidiaries or the relatives except for (Listing Obligations and Disclosure Requirements) those disclosed in the financial statements. Regulations, 2015. All the appointments of Directors are as Accordingly, particulars of contracts or arrangements with per the Nomination & Remuneration Policy of the Company, related parties referred to in Section 188(1) along with the which were also approved by the Committee. justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. DISCLOSURE IF MD/WTD IS RECEIVING REMUNERATION OR COMMISSION FROM SUBSIDIARY COMPANY RISK MANAGEMENT POLICY As per Section 197(14) of the Act, 2013 A MD/WTD of A company is exposed to uncertainties owning to the sector company can receive remuneration or commission from any in which it is operating. The Company is conscious of the holding company or subsidiary company of such company. fact that any risk that could have a material impact on its This should be disclosed by the company in Board’s Report. business should be included in its risk profile. Accordingly, in order to contain / mitigate the risk, the Board of Directors (` in lacs) have approved a Risk management policy which shall be S. Name of Director Total Remuneration reviewed by Board and the management from time to time. No. including Perquisites The Company’s Risk Management framework is designed to & Allowance/Sitting identify, assess and monitor various risks related to key Fee business and strategic objectives and lead to the formulation of a mitigation plan. Major risks in particular are monitored 1 Mr. Ashish Saraf, regularly at Executive meetings and the Board of Directors Joint Managing Director 5,000 of the Company is kept abreast of such issues and the Policy 2 Mr. A.S. Kapre, Independent was reviewed by the Board and Committee at its meeting Director nominated on the held on 27th May, 2016. Board of Facor Power CORPORATE SOCIAL RESPONSIBILITY Limited, subsidiary 40,000 Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy)

Ferro Alloys Corporation Limited 11 SIXTIETH ANNUAL REPORT DIRECTOR REPORT TO THE MEMBERS 60 2015-16

DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR The Company has adopted the Vigil Mechanism Policy for EDUCTION AND PROTECTION FUND the Company in its duly held Board Meeting on 13th February, In terms of Section 125 of the Companies Act, 2013, unclaimed 2015 and the same is available on the website of the or unpaid Dividends detailed, as under, are due for remittance Company. on the dates specified below to the Investor Eduction and Protection Fund established by the Central Government. DETAILS OF DIRECTOR AND KMP • Dividend for the year 2009-10, on or after 17th October, Pursuant to the provisions of section 2014 and other 2017 applicable provisions, if any, of the Companies Act, 2013 and th the rules framed there under, Mr. R.K. Saraf, Chairman & • Dividend for the year 2010-11, on or after 12 October, Managing Director, Mr. O.P. Banka, Director (Finance) & Chief 2018 Finance Officer and Mr. Ritesh Chaudhry, Company Secretary CAUTIONARY STATEMENT have been appointed as the Key Managerial Personnel of the Company. Statements in the Board’s Report and the Management Discussion & Analysis describing the Company’s objectives, Further, details of directors who were appointed and/or who expectations or forecasts may be forward-looking within the have resigned ceased to be Director are, as under: meaning of applicable securities laws and regulations. Actual S. Name of Director Date of Cessation results may differ materially from those expressed in the No. statement. Important factors that could influence the Company’s operations include global and domestic demand 1 Mr. Anurag Saraf,* 21st September, and supply conditions affecting selling prices of finished Non-Executive Director 2015 goods, input availability and prices, changes in government * Represents Promoters regulations, tax laws, economic developments within the country and other factors such as litigation and industrial INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY relations. The Company has an Internal Control System, commensurate with the size, scale and complexity of its ACKNOWLEDGEMENTS operations. To maintain its objectivity and independence, the Directors of the Company wish to thank the Central and State Internal Audit function reports to the Chairman of the Audit Governments for their continued support and co-operation Committee of the Board. extended towards the business as well as the company’s The Internal Audit Department monitors and evaluates the social functions. The Management also thanks the efficacy and adequacy of internal control system in the shareholders, Business Associates, Financial Institutions & Company, its compliance with operating systems, accounting Banks, Customers and Suppliers for the faith reposed in the procedures and policies at all locations of the Company and Company and in them. The Board expresses its sincere its subsidiaries. Based on the report of internal audit function, appreciation to the dedicated and committed team of process owners undertake corrective action in their respective employees and workmen without whom reaching this far and areas and thereby strengthen the controls. Significant audit maintaining the standard and quality of the products for which observations and corrective actions thereon are presented the company is famous, would not have been possible. We to the Audit Committee of the Board. look forward to all of your continued support. Let’s grow and move ahead together. DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE On behalf of Board of Directors, Company has not issued any share under ESOP or Sweat Equity Shares during the year. Place : New Delhi R.K. SARAF th SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE Dated : 12 August, 2016 Chairman & Managing REGULATORS OR COURTS Director There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations. However, members’ attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial statements.

12 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

ANNEXURE ‘A’ TO THE DIRECTORS’ REPORT (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, Form No.MR-3 1992 (‘SEBI Act’):- SECRETARIAL AUDIT REPORT (a) The Securities and Exchange Board of India FORTHE FINANCIAL YEAR ENDED 31ST MARCH, 2016 (Substantial Acquisition of Shares and Takeovers) Pursuant to section 204(1) of the Companies Act, 2013 and Regulations, 2011; rule No.9 of the Companies (Appointment and Remuneration (b) The Securities and Exchange Board of India of Managerial Personnel) Rules, 2014] (Prohibition of Insider Trading) Regulations, 1992; To, (c) The Securities and Exchange Board of India (Issue The Members, of Capital and Disclosure Requirements) Ferro Alloys Corporation Limited Regulations, 2009; D P Nagar Randia, Bhadrak (d) The Securities and Exchange Board of India Orissa- 756135 (Employee Stock Option Scheme and Employee We have conducted the secretarial audit of the compliance Stock Purchase Scheme) Guidelines, 1999; of applicable statutory provisions and the adherence to good (e) The Securities and Exchange Board of India corporate practices by FERRO ALLOYS CORPORATION (Listing Obligation And Disclosure Requirement) LIMITED [CIN - L45201OR1955PLC008400] (hereinafter Regulations, 2015. called the company). Secretarial Audit was conducted in a manner that provided me/us a reasonable basis for evaluating (f) The Securities and Exchange Board of India the corporate conducts/statutory compliances and expressing (Registrars to an Issue and Share Transfer Agents) my opinion thereon. Regulations, 1993 regarding the Companies Act and dealing with client; Based on our verification of the FERRO ALLOYS CORPORATION LIMITED’s books, papers, minute books, (vi) As informed to us the following other Laws are forms and returns filed and other records maintained by the specifically applicable to the Company: company and also the information provided by the Company, a) The Employees’ Provident Funds and its officers, agents and authorized representatives during the Miscellaneous Provisions Act, 1952 conduct of secretarial audit, I/We hereby report that in our b) Employees’ State Insurance Act, 1948 opinion, the company has, during the audit period covering c) The Factories Act,1948 the financial year ended on 31st March, 2016 complied with the statutory provisions listed hereunder and also that the d) Equal Remuneration Act, 1976 Company has proper Board-processes and compliance- e) The Payment of Wages Act, 1936 mechanism in place to the extent, in the manner and subject f) The Minimum Wages Act, 1948, and rules made to the reporting made hereinafter: there under We have examined the books, papers, minute books, forms We have also examined compliance with the applicable and returns filed and other records maintained by FERRO clauses of the following: ALLOYS CORPORATION LIMITED (“the Company”) for the financial year ended on 31st March, 2016 according to the (i) Secretarial Standards issued by The Institute of provisions of: Company Secretaries of India. (i) The Companies Act, 2013 (the Act) and the rules made (ii) The Listing Agreements entered into by the Company there under; with Bombay Stock Exchange. The company is generally regular in giving respective intimations under various (ii) The Securities Contracts (Regulation) Act, 1956 Regulations of the SEBI (Listing Obligations and (‘SCRA’) and the rules made there under; Disclosure Requirements) Regulations, 2015, (iii) The Depositories Act, 1996 and the Regulations and During the period under review the Company has Bye-laws framed there under; complied with the provisions of the Act, Rules, (iv) Foreign Exchange Management Act, 1999 and the rules Regulations, Guidelines, Standards, etc. mentioned and regulations made there under to the extent of above subject to the following observations: Foreign Direct Investment, Overseas Direct Investment a) The Company is yet to file Form MGT-14 in respect and External Commercial Borrowings; of resolutions passed at its Annual General Meeting held on 21/09/2015

Ferro Alloys Corporation Limited 13 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

We further report that: ‘ANNEXURE A’

The Board of Directors of the Company is duly constituted To, with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the FERRO ALLOYS CORPORATION LIMITED composition of the Board of Directors that took place during D P Nagar Randia, Bhadrak the period under review were carried out in compliance with Orissa- 756135 the provisions of the Act. Our report of even date is to be read along with this letter. Adequate notice is given to all directors to schedule the Board 1. Maintenance of secretarial record is the responsibility Meetings, agenda and detailed notes on agenda were sent of the management of the company. Our responsibility at least seven days in advance, and a system exists for is to express an opinion on these secretarial records seeking and obtaining further information and clarifications based on our audit. on the agenda items before the meeting and for meaningful participation at the meeting. 2. We have followed the audit practices and processes as All decisions of the board were unanimous and recorded as were appropriate to obtain reasonable assurance about part of the minutes. the correctness of the contents of the Secretarial records. The verification was done on test basis to We further report that there are systems and processes in ensure that correct facts are reflected in secretarial the company to monitor and ensure compliance with records. We believe that the processes and practices, applicable laws, rules, regulations and guidelines. However, we followed provide a reasonable basis for our opinion. there is scope to improve these control and compliance systems. 3. We have not verified the correctness and appropriateness of financial records and Books of On the basis of information provided, we further report that Accounts of the company. during the audit period there were no instances of: a. Public/Right/Preferential issue of shares / debentures/ 4. Where ever required, we have obtained the Management sweat equity representation about the compliance of laws, rules and regulations and happening of events etc. b. Redemption / buy-back of securities c. Merger / amalgamation / reconstruction, etc. 5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the d. Foreign technical collaborations responsibility of management. Our examination was For Ashish Saxena & Co limited to the verification of procedures on test basis. Company Secretaries 6. The Secretarial Audit report is neither an assurance as Sd/- to the future viability of the company nor of the efficacy Date : 12/08/2016 (Ashish Saxena) or effectiveness with which the management has Place : Ghaziabad Proprietor conducted the affairs of the company. FCS – 6560 For Ashish Saxena & Co CP – 7096 Company Secretaries Note : This report is to be read with our letter of even date Sd/- which is annexed as ‘ANNEXURE A’ and forms an integral Date : 12/08/2016 (Ashish Saxena) part of this report. Place : Ghaziabad Proprietor FCS – 6560 CP – 7096

14 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

ANNEXURE ‘B’ TO THE DIRECTORS’ REPORT Additional information as required under Section 134(3)(m) read with Rule 8(3) of Companies (Accounts) Rules, 2014. A CONSERVATION OF ENERGY: a) Measures Taken Conservation of Energy is an ongoing process b) Additional investment and proposals if any being and is always attached great importance. implemented for reduction of consumption of energy Installation of efficient electric equipments and other measures taken in recent past have brought c) Impact of measures at (a) and (b) above for reduction of down energy consumption. However, it is difficult energy consumption and consequent impact on the cost of to quantify the same and/or assess its impact on } cost of production. production of goods.

d) Total energy consumption and energy consumption per unit Form ‘A’ is not applicable to Ferro Alloys Industry. of production in prescribed form ‘A’. B) TECHNOLOGY ABSORPTION: Research & Development (R&D): R&D in the operation of Ferro Chrome Production a) Specific areas in which R & D carried out by the company and manufacturing of briquettes is a continuous } process. Studies to recover the entrapped metal b) Benefits derived as a result of the above R&D from the discharged slag are in progress.

c) Future Plan of action The Company is analyzing and experimenting different methods of briquetting to cut down cost of production. d) Expenditure on R&D Recurring expenditure on R&D has been shown under respective heads of accounts in Profit & e) Technology absorption, adaptation and innovation: Loss Account. i) Efforts, in brief, made towards technology absorption, Not applicable since no new technology has been adaptation and innovation. adopted ii) Benefits derived as a result of the above efforts, e.g. Not applicable product improvement, cost reduction, product development, import substitution etc. iii) Information regarding technology imported during last No technology has been imported during the last 5 years five years.

C) FOREIGN EXCHANGE EARNINGS AND OUTGO: 1) Activities relating to exports, initiatives taken to increase To explore new avenues of exports and to exports, development of new export markets for products understand latest developments in the and services; and export plans international markets, your directors undertake foreign tours as and when required.

2) Total Foreign Exchange used and earned ` in lacs i) CIF value of imports 575.74 ii) Expenditure in Foreign currency 227.20 iii) Foreign exchange earned on FOB basis 20570.06

On behalf of Board of Directors

Place : New Delhi R.K. SARAF Dated : 12th August, 2016 CHAIRMAN &MANAGING DIRECTOR

Ferro Alloys Corporation Limited 15 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

ANNEXURE ‘C’ TO THE DIRECTORS’ REPORT Annexure 1 – Information 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 (1) Ratio of the remuneration of each Director/KMP to the median remuneration of all the employees of the Company for the financial year:

Median remuneration of all the employees of the Company for the Financial Year 2015-16 ` 3,63,291

The percentage increase in the median remuneration of employees in the Financial Year 1.99%

The number of permanent employees on the rolls of Company as on 31st March, 2015 826

Name of Director Ratio of remuneration to median % increase in remuneration in Remuneration of all employees the Financial Year 2014-15 Non-Executive Directors Mr. Vineet Saraf 0.14 : 1 — Mr. Anurag Saraf 0.03 : 1 — Independent Directors Mr. A.S. Kapre 0.22 : 1 — Mr. Pinaki Misra 0.06 : 1 — Mr. Umesh Khaitan 0.03 : 1 — Mrs. Urmila Gupta 0.11 : 1 — Mr. S.B. Misra 0.07 : 1 — Mr. M.B. Thaker 0.19 : 1 — Mr. Keshaorao Pardhi 0.11 : 1 — Executive Directors Mr. R.K. Saraf 4.68 : 1 — Mr. Manoj Saraf 5.73 : 1 — Mr. Ashish Saraf 5.73 : 1 — Mr. RohitSaraf 5.73 : 1 — Notes: 1) The ratio of remuneration to median remuneration is based on remuneration paid during the period 1st April, 2015 to 31st March, 2016.

(2) Relationship between average increase in remuneration and company performance: a) The average increase in remuneration during Financial Year 2015-16 was 2.69% as compared with previous financial year. Net revenues of the Company during the financial year stood at ` 569.33 crores as against ` 602.70 crores in the previous year. b) The total employee cost for the Financial Year ended 31 March, 2016 was ` 42,24,05,062 against ` 43,40,72,220 for the Financial Year ended 31 March, 2015. The total employee cost as a percentage of net revenues was 7.42% (last year 7.20%).

16 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

(3) Comparison of the remuneration of the KMP against the performance of the Company: Particulars Crores Aggregate remuneration of KMP in Financial Year 2015-16 0.62 Revenue 569.33 Remuneration of KMPs (as % of revenue) 0.11 Profit before Tax (PBT) (7.90) Remuneration of KMPs (as % of PBT) (7.85)

(4) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer: Sl. No. Description 1 Market Cap variation Mcap at 31 March, 2016( crores) 85.96 Mcap at 31 March, 2015( crores) 74.48 Variation in Mcap in FY 2016 (%) 15.41% 2 Price-to-Earnings Ratio - PE as at 31 March, 2016 (Mkt Price/EPS) (21.09) - PE as at 31 March, 2015 (Mkt Price/EPS) 3.90 Variation in PE in FY 2016 (%) (6.41) 3 % Increase/Decrease from last Public Offer - FPO price per share (January 2011) ( In `)- - Market price as at 31 March, 2016 (in `) 4.64 % decrease from last FPO -

(5) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: a) Average percentage increase in salary of the Company’s employees was 0.52%. The total managerial remuneration for the Financial Year 2015-16 was ` 79.49 lacs as against ` 216.51 lacs during the previous year. b) The percentage decrease in remuneration was, as under: - Mr. R.K. Saraf – Chairman & Managing Director - During the Financial Year 2015-16 was approximately 59.93% as compared to the previous financial year. - Mr. Manoj Saraf – Managing Director - During the Financial Year 2015-16 was approximately 55.52% as compared to the previous financial year.

Ferro Alloys Corporation Limited 17 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

- Mr. Ashish Saraf – Joint Managing Director - During the Financial Year 2015-16 was approximately 56.04% as compared to the previous financial year. - Mr. Rohit Saraf – Joint Managing Director - During the Financial Year 2015-16 was approximately 56.04% as compared to the previous financial year.

(6) Comparison of the each remuneration of the KMP against the performance of the Company:

Sl. No. Particulars of Remuneration Key Managerial Personnel Mr. R.K. Saraf Mr. O.P. Banka Mr. Ritesh Chaudhry 1 Remuneration in FY 16 ( crores) 0.17 0.25 0.20 2 Revenue ( crores) 569.33 569.33 569.33 3 Remuneration as % of Revenue 0.03 0.04 0.04 4 Profit before Tax (PBT) ( crores) (7.90) (7.90) (7.90) 5 Remuneration as % of PBT (2.15) (3.16) (2.53)

(7) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year:

Name of Employees Remuneration Received Ratio (Crores) Mr. P.G. Suresh Kumar 0.25 1.18:1 Mr. O.P. Banka 0.25 1.19:1 Mr. Ashok Agarwal 0.66 3.16:1

(8) Remuneration is as per the remuneration policy of the Company.

On behalf of Board of Directors

R.K. SARAF CHAIRMAN &MANAGING DIRECTOR

18 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

ANNEXURE ‘D’ TO THE DIRECTORS’ REPORT Form No. MGT-9 EXTRACT OF ANNUAL RETURN as on the financial year ended on 2015-16 [Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] I. REGISTRATION AND OTHER DETAILS: i) CIN L45201OR1955PLC008400 ii) Registration Date 27th September, 1955 iii) Name of the Company Ferro Alloys Corporation Limited iv) Category / Sub-Category of the Company Public Company/Limited by Shares v) Address of the Registered office and D P NAGAR, RANDIA, BHADRA ORISSA-756135 contact details Phone No.-+91-6784-240320 Fax No.- +91-6784-240626 E-mail- [email protected], [email protected] vi) Whether listed company Yes vii) Name, Address and Contact details of Beetal Financial & Computer Services Pvt. Ltd., Registrar and Transfer Agent Beetal House, 3rd Floor, 99, Madangir, Behind LSC, New Delhi-110062 Phone No. +91-11-29961281-83 Fax No. +91-11-29961284 E-mail: [email protected] [email protected]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY: All the business activities contributing 10 % or more of the total turnover of the company shall be stated:- S. Name and Description of main NIC Code of the % to total turnover of No. products/services Product/ service the company 1. Ferro Chrome 27110 81.47% 2. Chrome Ore 13202 18.53%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES – S. Name and Address CIN/GLN Holding/ % of Applicable No. of the Company Subsidiary/ shares Section Associate held 1 Facor Power Ltd. U40101DL2005PLC139923 Subsidiary 86.09 2(87) 2 Facor Realty & Infrastructure Ltd. U45208DL2007PLC167732 Subsidiary 100 2(87) 3 Facor Energy Limited,Guernsey NA Subsidiary 100 2(87) 4 Rai Bahadur Shreeram & Co. Pvt. Ltd. U99999MH1953PTC021694 Associate 37.49 2(6) 5 Boula Platinum Mining Pvt. Ltd. U72900DL2008PTC180106 Associate 30 2(6)

Ferro Alloys Corporation Limited 19 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) i) Category-wise Share Holding

Category of No. of shares held at the beginning No. of Shares held at the end % Shareholders of the year 01.04.2015 of the year 31.03.2016 Change Demat Physical Total % of Demat Physical Total % of during Total Total the Share Share A. Promoters (1) Indian a) Individual/ HUF 2,06,6850 0 2,06,6850 0.11 2,06,6850 0 2,06,6850 0.11 0 b) Central Govt. 0 0 0 0 0 0 0 0 0 c) State Govt. 0 0 0 0 0 0 0 0 d) Bodies Corp. 7,27,26,108 0 7,27,26,108 39.25 7,27,26,108 0 7,27,26,108 39.25 0 e) Banks/FI 0 0 0 0 0 0 0 0 0 f) Any Other 6,01,59,840 0 6,01,59,840 32.47 6,01,59,840 0 6,01,59,840 32.47 0 Sub-total (A)(1):- 13,30,92,633 0 13,30,92,633 71.84 13,30,92,633 0 13,30,92,633 71.84 0 (2) Foreign a) NRI’s-Individuals 1,96,188 0 1,96,188 0.11 1,96,188 0 1,96,188 0.11 0 b) Others-Individuals 0 0 0 0 0 0 0 0 0 c) Bodies Corp. 56,39,215 0 56,39,215 3.04 56,39,215 0 56,39,215 3.04 0 d) Banks/FI 0 0 0 0 0 0 0 0 0 e) Any Other 0 0 0 0 0 0 0 0 0 Sub-total (A)(2):- 58,35,403 0 58,35,403 3.15 58,35,403 0 58,35,403 3.15 0 Total Shareholding of 13,89,28,036 0 13,89,28,036 74.99 13,89,28,036 0 13,89,28,036 74.99 0 Promoters (A)=(A)(1)+(A)(2) B. Public Shareholding 1. Institutions a) Mutual Fund 5,739 21,00 78,39 0 1,780 0 1,780 0 0 b) Banks/FI 51,536 3,212 14,748 0 11,536 3,212 14,748 0 0 c) Central Govt. 0 4,046 4,046 0 0 4,046 4,046 0 0 d) State Govt’s 34,020 0 34,020 0.02 34,020 0 34,020 0.02 0 e) Venture Capital Funds 0 0 0 0 0 0 0 0 f) Insurance Companies 1620 6,600 8,220 0 1620 6,600 8,220 1.38 0 g) FIIs 25,51,800 120 25,51,920 1.38 22,89,958 120 22,89,958 0 0 h) Foreign Venture 0 0 0 0 0 0 0 0 0 Capital Funds i) Others (specify) 0 0 0 0 0 0 0 0 0 Sub-total (B)(1):- 26,04,715 16,078 26,20,793 1.41 23,38,914 13,978 23,52,772 1.41 0 2. Non-Institutions a) Bodies Corp. 1,20,40,733 10,550 1,20,51,283 6.45 1,03,98,214 9,896 1,04,08,110 5.62 b) Individuals i) Individual shareholders 2,58,55,349 6,56,310 2,65,11,659 14.31 2,82,50,833 6,50,893 2,89,01,726 15.60 holding nominal share capital upto ` 1 lakh ii) Individual shareholders 42,83,667 0 42,83,667 2.31 18,29,988 0 18,29,988 0.99 holding nominal share capital in excess of ` 1 lakh c) Others (specify) 8,28,843 43,960 8,72,803 0.53 27,84,870 58,619 28,45,389 1.39 Sub-total (B)(2):- 4,30,08,592 7,10,820 4,37,19,412 23.60 4,32,63,905 7,20,062 4,39,83,967 23.60 Total Public Shareholding 4,56,13,307 7,26,898 4,63,40,205 25.01 4,56,16,944 7,19,261 4,63,36,205 25.01 (B)=(B)(1)+(B)(2) C. Shares held by Custodian 0 0 0 0 0 0 0 0 0 for GDRs & ADRs Grand Total (A+B+C) 18,45,34,820 7,33,421 18,52,68,241 100 18,45,44,980 7,19,261 18,52,68,241 100 0

20 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16 ii) Shareholding of Promoters

Shareholder’s Name Shareholding at the beginning of Shareholding the end of the % the year 01.04.2015 year 31.03.2016 change No. of % of total % of Shares No. of % of total % of Shares in share- shares Shares Pledged/ shares Shares Pledged/ holding of the encumbered of the encumbered during Company total shares Company total shares the year 1 Urmiladevi Narayandas Saraf 59,43,503 3.21 0 59,43,503 3.21 0 0 2 Anurag Murlidhar Saraf 48,21,854 2.60 0 48,21,854 2.60 0 0 3 Sushmadevi Vinodkumar Saraf 43,67,086 2.36 0 43,67,086 2.36 0 0 4 Manjudevi Murlidhar Saraf 39,64,131 2.14 0 39,64,131 2.14 0 0 5 Mohinidevi Umashankar Saraf 38,74,617 2.09 0 38,74,617 2.09 0 0 6 Vanitadevi Vineetkumar Saraf 38,40,705 2.07 0 38,40,705 2.07 0 0 7 Promiladevi Ramkisan Saraf 22,10,328 1.19 0 22,10,328 1.19 0 0 8 Ramkisan Durgaprasad Saraf 22,10,327 1.19 0 22,10,327 1.19 0 0 9 Rohitkumar Narayandas Saraf 20,93,366 1.13 0 20,93,366 1.13 0 0 10 Sunandadevi Yogeshkumar Saraf 11,76,976 0.64 0 11,76,976 0.64 0 0 11 Ramadevi Manojkumar Saraf 15,55,581 0.84 0 15,55,581 0.84 0 0 12 Shailajadevi Ashishkumar Saraf 9,34,629 0.50 0 9,34,629 0.50 0 0 13 Ashishkumar Ramkisan Saraf 9,34,629 0.50 0 9,34,629 0.50 0 0 14 Manojkumar Umashankar Saraf 9,40,493 0.51 0 9,40,493 0.51 0 0 15 Sonal Ashimkumar Saraf 8,50,344 0.46 0 8,50,344 0.46 0 16 Ashimkumar Ramkisan Saraf 8,50,344 0.46 0 8,50,344 0.46 0 0 17 Vineetkumar Vithaldas Saraf 5,14,118 0.28 0 5,14,118 0.28 0 0 18 Bimladevi Vithaldas Saraf 3,31,151 0.18 0 3,31,151 0.18 0 0 19 Vinodkumar Saraf 2,03,474 0.11 0 2,03,474 0.11 0 0 20 Murlidhar Durgaprasad Saraf 1,90,120 0.10 0 1,90,120 0.10 0 0 21 Saritadevi Sanjivkumar Saraf 76,758 0.04 0 76,758 0.04 0 0 22 Payal Murlidhar Saraf 31,280 0.02 0 31,280 0.02 0 0 23 Vibhav Vineetkumar Saraf 23,080 0.01 0 23,080 0.01 0 0 24 Preetidevi Rohitkumar Saraf 12,600 0.01 0 12,600 0.01 0 0 25 Yogeshkumar Umashankar Saraf 18,900 0.01 0 18,900 0.01 0 0 25 Aisha Ashishkumar Saraf 11,500 0.01 0 11,500 0.01 0 0 27 Madhuri Manojkumar Saraf 7948 0.00 0 7948 0.00 0 0 28 Sidharth Vineetkumar Saraf 39,731 0.02 0 39,731 0.02 0 0 29 Raghvendra Manojkumar Saraf 4,800 0.00 0 4,800 0.00 0 0 30 Narayandas Durgaprasadji Saraf 3,176 0.00 0 3,176 0.00 0 0 31 Sanjiv Narayandas Saraf 1,96,188 0.11 0 1,96,188 0.11 0 0 32 Madhavhari Yogeshkumar Saraf 89,618 0.05 0 89,618 0.05 0 0 33 Gautam Vinodkumar Saraf 45,898 0.02 0 45,898 0.02 0 0 34 Raghuhari Yogeshkumar Saraf 32,902 0.02 0 32,902 0.02 0 0 35 Gauri Sanjeev Saraf 4800 0.00 0 4800 0.00 0 0 36 Amla Saraf 23,183 0.02 0 23,183 0.02 0 0

Ferro Alloys Corporation Limited 21 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

Shareholder’s Name Shareholding at the beginning of Shareholding the end of the % the year 01.04.2015 year 31.03.2016 change No. of % of total % of Shares No. of % of total % of Shares in share- shares Shares Pledged/ shares Shares Pledged/ holding of the encumbered of the encumbered during Company total shares Company total shares the year 37 Gaurav Vinodkumar Saraf 5,156 0.00 0 5,156 0.00 0 0 38 Sakhi Sanjeevkumar Saraf 5,128 0.00 0 5,128 0.00 0 0 39 R B Shreeram & Co. Pvt. Ltd. 6,94,48,883 37.49 0 6,94,48,883 37.49 0 0 40 Dass Papers Pvt. Ltd. 12,00,000 0.65 0 12,00,000 0.65 0 0 41 Shreeram Durgaprasad Ores Pvt. Ltd. 12,00,000 0.65 0 12,00,000 0.65 0 0 42 Suchitra Investments & Leasing Ltd. 5,67,041 0.30 0 5,67,041 0.30 0 0 43 Saraf Bandhu Pvt. Ltd. 2,35,200 0.13 0 2,35,200 0.13 0 0 44 GDP Infrastructure Pvt. Ltd. 56,840 0.03 0 56,840 0.03 0 0 45 Vidarbha Iron & Steel Co. Ltd 18,144 0.01 0 18,144 0.01 0 0 46 Globalscale Investment Limited 56,39,215 3.04 0 56,39,215 3.04 0 0 47 Manojkumar Saraf & Rohit Saraf, as trustee 0of FACOR Employees Welfare Trust 22,424 0.01 0 22,424 0.01 0 0 48 Ramkishan Durgaprasad Saraf, as Trustee od FAL Employees Welfare Trust 27,576 0.01 0 27,576 0.01 0 0 49 Mohinidevi Umashakar Saraf Jtly with Manjudevi Murlidhar Saraf, on behalf of Premier Commercial Corp. 1,56,72,291 8.46 0 1,56,72,291 8.46 0 0 50 Vanitadevi Vineetkumar Saraf Jtly with Sunandadevi Yogeshkumar Saraf, on behalf of Geedee Sales Services 12,00,000 0.65 0 12,00,000 0.65 0 0 51 Murlidhar Durgaprasad Saraf Jtly with Gaurav Vinod Saraf, on behalf of Deepee Sales Corporation 12,00,000 0.65 0 12,00,000 0.65 0 0 Total 13,89,28,036 74.99 0 13,89,28,036 74.99 0 0 iii) Change in Promoters’ Shareholding (please specify, if there is no change) Shareholding at the Cumulative Shareholding beginning of the year during the year No. of % of total No. of % of total shares shares of shares shares of the company the company At the beginning of the year Data wise Increase/ Decrease in Promoters Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/ sweat equity etc): At the end of the year

22 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16 iv) Shareholding Pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): Shareholding at the Cumulative Shareholding beginning of the year during the year S. Name No. of % of total No. of % of total No. shares shares of shares shares of the company the company 1 Albula Investment Fund Ltd 24,75,290 1.34 22,89,958 1.24 2 Bonanza Portfolio Ltd 19,18,122 1.04 19,07,907 1.03 3 Anil Agarwal 15,39,000 0.83 8,84,000 0.47 4 Queen Consultancy Services Pvt Ltd 14,17,623 0.77 14,17,623 0.77 5 Modex International Securities Ltd 13,12,674 0.76 12,75,150 0.68 6 Modex Investments Pvt Ltd 7,50,000 0.40 9,50,000 0.51 7 Suslil Kumar Jalani 4,20,000 0.23 4,20,000 0.23 8 Pratibhuti Vinihit Limited 8,50,000 0.46 4,69,722 0.25 9 Aqua Financial Consultants Private Limited 5,79,172 0.31 5,79,172 0.31 10 Arjun Kumar Goyal 3,99,496 0.22 3,51,996 0.19 v) Shareholding of Directors and Key managerial Personal: Shareholding at the Cumulative Shareholding beginning of the year during the year S. Name of Director/KMP No. of % of total No. of % of total No. shares shares of shares shares of the company the company 1 Mr. R. K. Saraf 22,10,327 1.19 22,10,327 1.19 2 Mr. Manoj Saraf 9,40,493 0.51 9,40,493 0.51 3 Mr. Ashish Saraf 9,34,629 0.50 9,34,629 0.50 4 Mr. Rohit Saraf 20,93,366 1.13 20,93,366 1.13 5 Mr. A.S. Kapre 25000 0.01 25000 0.01 6 Mr. M.B. Thaker 5,294 0.00 5,294 0.00 7 Mr. Pinaki Misra 0.00 0.00 0.00 0.00 8 Mr. Keshaorao Pardhi 100 0.00 100 0.00 9 Mr. Umesh Khaitan - - - - 10 Mrs. Urmila Gupta - - - - 11 Mr. S.B. Mishra 0.00 0.00 0.00 0.00 12 Mr. Vineet Saraf 5,14,118 0.28 5,14,118 0.28 13 Mr. O.P. Banka 500 - 500 - 14 Mr. Ritesh Chaudhry 0.00 0.00 0.00 0.00

Ferro Alloys Corporation Limited 23 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16 vi) Indebtedness Indebtedness of the company including interest outstanding/accrued but not due for payment (` in Lacs) Secured Unsecured Deposits Total Loans Loans Indebtedness excluding deposits Indebtedness at the beginning of the financial year i) Principal Amount 7,147.00 3,989.97 0 11,136.97 ii) Interest Due but not paid 6.19 24.98 0 31.17 iii) Interest Accrued but not due - 0.12 0 0.12 Total (i+ii+iii) 7,153.19 4,015.07 0 11,168.26 Change in Indebtedness during the financial year i. Addition - 1,130.00 0 1,130.00 ii. Reduction (1708.10) (1,055.85) 0 (2,763.95) Net Change (1708.10) 74.15 0 (1,633.95) Indebtedness at the end of the financial year i) Principal Amount 5,441.33 4,047.27 0 9,488.60 ii) Interest Due but not paid 3.76 25.00 0 28.76 iii) Interest Accrued but not due - 16.95 0 16.95 Total (i+ii+iii) 5,445.09 4089.22 0 9,534.31 vii) Remuneration of Directors and Key Managerial Personnel A. Remuneration to Managing Director, Whole-time Director and/or Manager: (` in Lacs) S. Particulars of Remuneration Name of MD/WTD/Manager Total No. Amount R.K. Saraf Manoj Saraf Ashish Saraf Rohit Saraf 1. Gross Salary (a) Salary as per provisions 14.16 14.16 14.70 14.70 57.72 contained in section 17(1) of Income Tax Act, 1961 (b) Value of perquisites u/s 17(2) 1.01 3.69 3.10 2.50 10.30

Income Tax Act, 1961 (c) Profits in lieu of salary under - - - - - section 17(3) Income Tax Act, 1961 2. Stock Option - - - - - 3. Sweat Equity - - - - - 4. Commission - As % of Profit ------Others, specify 5. Others, please specify - - - - - Total (A) 15.17 17.85 17.80 17.20 68.02 Ceiling as per the Act The remuneration is well with in the limites prescribed under the Companies Act, 2013

24 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

B. Remuneration to other directors (` in Lacs) S. Particulars of Remuneration Name of directors No. Mr. A.S. Mr. Pinaki Mr. Umesh Mrs. Urmila Mr. S.B. Kapre Misra Khaitan Gupta Mishra 1. Independent Directors - Fee for attending Board, ` 80,000 ` 20,000 ` 10,000 ` 40,000 ` 25,000 Committee meetings - Commission ------Others, Please specify - - - - - Total (1) ` 80,000 ` 20,000 ` 10,000 ` 40,000 ` 25,000 2. Other Non-Executive Directors - Fee for attending Board, - - - - - Committee meetings - Commission ------Others, Please specify - - - - - Total (2) - - - - - Total (B)=(1+2) ` 80,000 ` 20,000 ` 10,000 ` 40,000 ` 25,000 Total Managerial Remuneration Overall Ceiling as per the Act The remuneration is well with in the limites prescribed under the Companies Act, 2013

S. Particulars of Remuneration Name of directors No. Mr. M.B. Mr. Keshaorao Mr. Vineet Mr. Anurag Thaker Pardhi Saraf Saraf 1. Independent Directors - Fee for attending Board, ` 70,000 ` 40,000 - - Committee meetings - Commission - - - - - Others, Please specify - - - - Total (1) ` 70,000 ` 40,000 - - 2. Other Non-Executive Directors - Fee for attending Board, - - ` 50,000 ` 10,000 Committee meetings - Commission - - - - - Others, Please specify - - - - Total (2) - - ` 50,000 ` 10,000 Total (B)=(1+2) ` 70,000 ` 40,000 ` 50,000 ` 10,000 Total Managerial Remuneration Overall Ceiling as per the Act

Ferro Alloys Corporation Limited 25 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

C. Remuneration to Key Managerial Personnel Other than MD/WTD/Manager (` in Lacs) S. Particulars of Remuneration Key Managerial Personnel No. CEO Company CFO Total Secretary 1. Gross Salary (a) Salary as per provisions contained in section 17(1) of 15.72 19.00 34.72 Income Tax Act, 1961 (b) Value of perquisites u/s 17(2) Income Tax Act, 1961 0.33 3.68 4.01 (c) Profits in lieu of salary under section 17(3) Income Tax Act, 1961 - - - 2. Stock Option --- 3. Sweat Equity --- 4. Commission - As % of Profit --- - Others, specify --- 5. Others, please specify --- Total (A) 16.05 22.68 38.73 viii. Penalties/Punishment/Compounding of Offences: There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations. However, members’ attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial statements.

ANNEXURE ‘E’ TO THE DIRECTORS’ REPORT ANNUAL REPORT ON CSR ACTIVITIES TO BE INCLUDED IN THE BOARD’S REPORT OF FERRO ALLOYS CORPORATION LIMITED FOR FY 2015-16 Sr. Particulars Remarks No. 1 A brief outline of the Company’s CSR policy, including overview The Company has framed Corporate Social Responsibility of projects or programs proposed to be undertaken and a Policy and is guided by its social responsibility towards the reference to the web-link to the CSR policy and projects or society, in general and environment, in particular and remains Programmes. committed to its further development. The Company promotes projects that are in line with Schedule VII to the Companies Act, 2013 and: • are sustainable and create long term change, • Channelize resources & efforts towards making positive and sustainable contribution in social and economic development; and • Align CSR practices & programs to complement and support the developmental priorities at local, state and national levels. The CSR activities of the Company are focused on the four broad themes with goals to improve overall socio-economic indicators of Company’s area of operation: • Promoting healthcare, sanitation and making safe drinking water available; • Employment enhancement through trailing and vocational skill development; • Promoting education; and • Ensuring sustainable environment The CSR Policy has been uploaded on the Company’s website: www.facorgroup.in

26 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

Sr. Particulars Remarks No. 2 The Composition of the CSR Committee. Mr. M.B. Thaker, Chairman Mr. R.K. Saraf, Member Mr. Manoj Saraf, Member 3 Average net profit of the Company for last three financial years ` 3549.72 lacs

4 Prescribed CSR Expenditure (two per cent of the amount as in ` 70.99 lacs item 3 above)

5 Details of CSR spent during the financial year: a) Total amount to be spent for the financial year; ` 70.99 lacs b) Amount unspent, if any; Not applicable c) Manner in which the amount spent during the financial year is detailed below

(1) (2) (3) (4) (5) (6) (7) (8) Sl.No. CSR project or Sector in which Projects or programs Amount outlay Amount spent on the Cumulative Amount spent: activity Identified the Project is (1) Local area or (budget) project projects or programs expenditure upto Direct or covered other (2) Specify the or programs wise Sub-head: (1) Direct the reporting through State and district (` in lacs) expenditure on period implementing where projects or projects or programs (` in lacs) agency* programs was (2) Overheads: undertaken (` in lacs) a) Sanitation Healthcare Bhadrak 15.00 15.80 15.80 b) Making available Healthcare Bhadrak, Keonjhar, 6.00 6.29 6.29 Direct Safe drinking Dhenkanal and Jajpur water c) Promoting Promoting Bhadrak 12.00 12.19 12.19 Direct Education Education d) Salary of Teachers Empowerment Bhadrak 8.00 8.45 8.45 Direct of Women e) Plantation Ecological Bhadrak, Dhenkanal 29.00 29.13 29.13 Direct expenses balance and Jajpur f) Conservation of Ecological Bhadrak 1.00 1.01 1.01 Direct natural resources balance 71.00 72.87 72.87 *Give details of implementing agency: 6. In case the company has failed to spent the two percent of the average net profit of Not applicable the last three financial years or any part thereof, the reasons for not spending the amount in its Board report. 7. A responsibility statement of the CSR Committee that the implementation and The CSR Committee confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the the monitoring of CSR Policy is in compliance with CSR company. objectives and Policy of the Company.

Managing Director (Chairman CSR Committee) Place : Noida Dated : 27th May, 2016

Ferro Alloys Corporation Limited 27 SIXTIETH ANNUAL REPORT ANNEXURE TO THE DIRECTOR REPORT 60 2015-16

ANNEXURE ‘F’ TO THE DIRECTORS’ REPORT Form AOC-I (Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014) Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures Part “A”: Subsidiaries (Information in respect of each subsidiary to be presented with amounts in ` in Lacs) SI. Name of subsidiary 1 2 3 No. 1 Facor Power Ltd. Facor Energy Ltd. Facor Realty and Infrastructure Ltd. 2 Reporting period for the subsidiary concerned, if - - - different from the holding company’s reporting period 3 Reporting currency and Exchange rate as on - GBP - the last date of the relevant Financial year in the 95.105 case of foreign subsidiaries 4 Share Capital 24,106.00 190.21 10.00 5 Reserves & Surplus (23,516.18) (218.85) - 6 Total Assets 67,410.34 0.08 10.06 7 Total Liabilities 67,410.34 0.08 10.06 8 Investments 0.40 - - 9 Turnover 12,986.17 - - 10 Profit before taxation (5,589.13) (15.21) - 11 Provision for taxation - - - 12 Profit after taxation (5,589.13) (15.21) - 13 Proposed Dividend - - - 14 % of shareholding 86.09% 100.00% 100.00% Following are the names of subsidiaries which are yet to commence operations ; i) Facor Energy Ltd. ii) Facor Realty and Infrastructure Ltd.

Part “B”: Associates and Joint Ventures Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures Sr. No. Name of Associates Boula Platinum Mining Pvt. Ltd. 1. Latest audited Balance Sheet Date 31.03.2016 2. Shares of Associateheld by the company on the year end No. 466,164 Amount of Investment in Associates (` in Lacs) 4.66 Extend of Holding % 30% 3. Description of how there is significant influence There is significance influence due to holding of more than 20% Equity Share Capital. 4. Reason why the associate is not consolidated - 5. Networth attributable to Shareholding as per latest audited Balance Sheet (` in Lacs) 52.07 6. Profit / Loss for the year (` in Lacs) i. Considered in Consolidation (0.05) ii. Not Considered in Consolidation -

28 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT MANAGEMENT DISCUSSIONS AND ANALYSIS 60 2015-16

MANAGEMENT DISCUSSIONS AND ANALYSIS RISKS AND CONCERNS / OPPORTUNITIES AND THREATS / OUTLOOK INDUSTRY STRUCTURE, DEVELOPMENT AND OTHER RELATED MATTERS Owing to the cyclical nature of Ferro Alloys industry, to boost production, government needs to provide incentives/reliefs Ferro Chrome, as an alloy of chrome and iron with different as steady growth and potential in business and development grades, is primarily consumed by steel industry as it provides is possible only upon governments’ resolve to remove non-corrosive quality to steel. The year 2015-16 has been a bottlenecks which the industry is experiencing. While some year of dismal performance by ferro alloys industry which is of them relate to the larger macroeconomic framework, some primarily driven by the growth and progress of steel industry. of them are intrinsic to the industry itself; major ones are as With downward swing in steel prices, ferro alloys industry follows: has got a beating. Margins have dipped consequently resulting in negative growth in financials of the industry during • High cost of grid power has been impacting the industry’s FY 2015-16. Power cost, which forms a major part of the competitiveness vis a vis industries in other jurisdictions. cost of production has been seeing a rise particularly in recent • High cost of coal and failure of CIL to allocate required years has been a bane for the industry thus limiting the coal to captive power unit capacity utilization of ferro alloys industry. • Inadequate indigenous supply of good quality and high

Although, the chrome ore available in India has higher Cr2O3 grade coke and higher Cr/Fe ratio, making indian ores more amenable • Depleting Chrome ore supply on domestic level. With to beneficiation and upgradation, the upside of quality is OMC being the only major producer of chrome ore in diluted due to poor availability of good quality raw material, the country, there are availability issues. high power tariff and uncertain policy framework which renders the quality factor uncompetitive in the international • Price volitality coupled with Lower ferro chrome prices market. and consequently lowering/erosion of profit margins Ferro chrome production has been witnessing consistent dip • Inadequate infrastructure, over burdened roadways, since 2005 and stood at 2.8 mt in 2014. Further, due to issues railways and ports plaguing the industry and having faced turbulent times in the Fortunes of the ferro chrome industry can improve if the recent years, ferro chrome plants are operating at levels well following issues are addressed: below their capacity. Fully integrated producers have a better • Uniform power tariff need to be made available at chance to fare internationally comparable tariff. Markets in different jurisdictions were also affected • Increase in customs duty to 7.5% from existing 5%. significantly. Globally also, ferro chrome production has dipped albeit marginally. However, production of ferro chrome • Reduction of Customs duty on import of raw material in South Africa seems to be picking up pegging it to regaining • Cheaper credit availability for facilitating setting up its lost position as a leader in ferro chrome market. At the captive power plants same time, China, which, till recent times had been driving • Higher rate of depreciation be allowed for its captive the international prices of ferro chrome, lost its price power plant. advantage in international market on account of rise in export tariff. Consequently, the Chinese export of ferro chrome • Industry be allowed duty-free imports of used power dipped. plant equipments and machineries for setting up captive power plants to contain cost of set up. Although the outlook ahead does not seem great ahead given the Dollar rupee parity, at the same time, with ferro chrome • Allocating coal linkage as well as coal mines to power prices having seen an upswing in the recent past, industry plants of ferro alloy industry should get some breather given the rally of price increase • For anthracite coal customs duty be brought down to continues with other constituent costs remaining arrested. Nil from current 5%. With FACOR, which has been in the business for nearly 60 With Company contemplating putting up of additional 27 MVA years and has shown ability to brace turbulent times, it will furnace, the benefit shall come through after sometime as be able to face the difficult times due to having captive chrome the industry witnesses growth spurt. Further, FACOR is ore mines and power generation plant, which not many keeping track of legislations and aligning its business risk industry players have. mitigation strategy accordingly.

Ferro Alloys Corporation Limited 29 SIXTIETH ANNUAL REPORT MANAGEMENT DISCUSSIONS AND ANALYSIS 60 2015-16

The prospects for the ferro alloy industry are not that dismal and the nature of its business for optimum utilization of considering the fact that the global steel demand is pegged available precious resources. An independent firm of to grow at a decent rate of 2.9%. Also, with growth in Chartered Accountants is the Internal Auditor and reports to infrastructure involving extensive usage of steel, growth for Audit Committee of the Board on audit done during each industry is sure to come through. Further, as per vision 2020, quarter based on the annual audit plan as approved by the Indian steel industry has a plan to almost double the 120 Committee. The mechanism of internal control and checks million tons capacities projected in 2012 to 200 million tones are reviewed by the management, internal and statutory in 2020. Further, the prices of ferro chrome which seem to auditors from time to time and suitable changes/ modifications have reached the lower end of the bell curve have started are implemented so as to ensure that an effective scheme of showing signs of recovery and the price rally should continue checks and balances exists at all times. The management is for some time. Also, the Government’s “Make in India’ focus reasonably satisfied with the existing internal control systems. should bring good times for ferro chrome business as well. The Audit Committee of Board of Directors also reviews these matters from time to time in their meetings. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE MATERIAL DEVELOPMENT IN HUMAN RESOURCES / During the year under review, revenue from operations INDUSTRIAL RELATIONS FRONT INCLUDING PEOPLE declined by 5.54% to ` 56,933.35 lacs (previous year EMPLOYED ` 60,270.18 lacs). However, EBIDTA fell by 68.16% to The overall industrial relations in the Company were cordial. ` 1,466.58 lacs (previous year ` 4,606.55 lacs) and profit Employees are considered the most valuable asset and form after tax declined by 121.66% to ` (413.05) lacs (previous the FACOR family and FACOR values association which is year ` 1,906.61 lacs) on account of difficult market conditions best demonstrated in long service period of employees in and decline in production. FACOR family. Lower sales realization compounded by decline in production CAUTIONARY STATEMENT on account of shortfall in chrome ore production which was on account of there being no operations in Boula mines Statements in this Management Discussion and Analysis pursuant to Supreme Court decision going against the Report are based upon data available with the Company and Company and and Kathpal mines where the operations had on certain assumptions having regard to the economic been closed temporarily due to pending clearances from conditions, government policies, political developments, concerned authorities. However, notwithstanding the within and outside the country. The management is not in a cancellation of mining lease, the Company is evaluating legal position to guarantee the accuracy of the assumptions and remedies to regain and restart the mining operations at the the projected performance of the Company in future in view Boula mines. of external factors viz, government policies and legislations which impact the Company’s business. It is, therefore, INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY cautioned that the actual results may differ from those The Company has placed systems and procedures of internal expressed or implied herein. The Company does not control and checks in operation commensurate with the size undertake to update these statements.

30 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

1. COMPANY’S PHILOSOPHY Corporate Governance at FACOR is based on the principles of fairness, equity, transparency, accountability and dissemination of information. Corporate Governance has been integral to FACOR’s business operations and is an ongoing journey. The Company believes that an organization’s culture and policies form the basis of good Corporate Governance practices. FACOR recognizes its social responsibility towards the shareholders and the society and embraces its Corporate Social Responsibility with a view to improving the lives of the local populace in and around its operating perimeter, in particular. Further, employees are considered the most valuable asset and form the FACOR family. Together we resolve to move forward for a better future. 2. BOARD OF DIRECTORS FACOR’s is aware of the requirement of Board diversity. This is best substantiated in the well balanced and Independent structure of the Company’s Board of Directors which has a fair representation of Executive, Non-Executive and Independent Directors for enhancement of organizational capabilities. None of the Directors on the Board of the Company is a member of more than 10 Committees of a Chairman of more than 5 Committees across all Companies in which they are Directors. The Independent Directors have desired and relevant experience and add immense value to Board deliberations for taking from decisions.. The changes in the composition of the Board during the year and its composition as on 31st March, 2016 was as follows:- Name of Director Category No of Whether No. of Outside Board last Outside Committee Meetings AGM Directorship Position Held attended Attended held Public Member Chairman Mr R.K. Saraf, Executive* 4 Yes 2 3 - Chairman & Managing Director Mr. Manoj Saraf, Executive* 4 Yes 1 - - Managing Director Mr.Vineet Saraf, Director Non-Executive* 5 Yes 3 - - Mr. A.S. Kapre Non-Executive 5 Yes 4 1 3 Independent Mr. Pinaki Misra Non-Executive 2 No 1 - - Independent Mr. Rohit Saraf, Executive* 3 No 2 - - Jt. Managing Director Mr. Ashish Saraf, Executive* 3 Yes 4 - - Jt. Managing Director Mr. Arye Berest Non-Executive - NA - - - [Ceased w.e.f.21.04.2015] Non-Independent Mr. S.B. Mishra * Non-Executive 2 Yes 1 - 1 Independent Mr. M.B. Thaker Non-Executive 4 Yes 1 3 - Independent Mr. Keshaorao Pardhi Non-Executive 4 No 3 - - Independent

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Name of Director Category No of Whether No. of Outside Board last Outside Committee Meetings AGM Directorship Position Held attended Attended held Public Member Chairman Mr. Anurag Saraf Non-Executive* 1 NA 6 - 2 [Ceased w.e.f. 21.09.2015] Mr. Umesh Kumar Khaitan Non-Executive 1 No 9 3 - Independent Mrs. Urmila Gupta Non-Executive 4 Yes 3 5 1 Independent Woman Director * Represents Promoters. * No Director is related to each other except Mr. R.K. Saraf and Mr. Ashish Saraf, who is father of Mr. Ashish Saraf. * Ceased to be a Director w.e.f. 12th August, 2016 Consequent upon his demise. BOARD MEETINGS AND PROCEDURES: The Board of FACOR is its apex decision making body for overall control and governance of the company. In line with the provisions of the Companies Act, 2013, the provisions of erstwhile Listing Agreement which was later replaced by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI(LODR) Regulations, 2015], and also with a view to ensuring better governance and effective discharge of its duties and in compliance with statutory requirement, the Board has constituted various Committees, namely the Audit Committee, the Nomination & Remuneration Committee, the Stakeholders Relationship & Transfer Committee and the Corporate Social Responsibility Committee. Although the Board holds atleast one meeting in each quarter, wherever necessitated, additional Board Meetings are also convened in the interest of business of the Company. The agenda is finalized by the Chairman of the Board and the Company Secretary after consultation with the other concerned team members of the senior management and is drawn up covering all material information and circulated well in advance of the Board meeting date to to facilitate a focused discussion on the topic. The matters to be deliberated upon are generally restricted to those covered in the Agenda except for pressing exceptional circumstances which are deemed sensitive and/or were not apprehended to be so at the time of finalization. The Board is apprised of the details concerning the agenda items by way of, notes, covering areas such as Finance, Operational functions, progress reports of the Company and its subsidiaries, their operations, status on deployment of funds in subsidiaries etc, business strategies before taking on record the quarterly financial results of the Company. During 2015-2016 the Board met 5 times on 30th May, 2015, 8th August, 2015, 21st September, 2015, 7th November, 2015 and 12th February, 2016 to deliberate on various matters. Independent Directors Meeting The Independent Directors of the Company met on 12th February, 2016 without the presence of Non-Independent Directors and members of the Management. At this meeting, the IDs inter alia evaluated the performance of the Non- Independent Directors and the Board of Directors, as a whole, evaluated the performance of the Chairman of the Board taking into account the views of Executive and Non-Executive Directors and also evaluated the aspects relating to the quality, content and timeliness of the flow of information between the Company, the Management and the Board. Code of Conduct: The Company has adopted the Code of Conduct for Directors, Senior Management Personnel and other Executives of the Company. The Company has received confirmations from the Directors as well as Senior Management Personnel regarding compliance of the Code during the year under review. The Company has received confirmations from the Directors regarding compliance of the Code for the year under review. Further, the Code is posted on the website of the Company www.facorgroup.in

32 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

3. COMMITTEES OF THE BOARD A. Audit Committee: Composition, Meetings and Attendance: The Company has an Audit Committee comprising of three Independent Directors. The Committee is headed by Mr. A. S. Kapre. The Company Secretary acts as the Secretary of the Committee. The role of the Audit Committee and the information to be reviewed by the Audit Committee is as specified in Part C of Schedule II to SEBI (LODR) Regulations, 2015 with the Stock Exchanges read with Section 177 of the Companies Act, 2013 and the rules made there under. The composition of the Committee as on 31st March, 2016 and the attendance of the members at the meetings held are as follows:- Name of the Director Category No. of meetings held Whether during the tenure attended last AGM Held Attended Mr. A.S. Kapre, Chairman Independent 4 4 Yes Mr. S.B. Mishra, Member Independent 4 1 Yes Mr. M.B. Thaker, Member Independent 4 3 Yes Four meetings of the Committee were held during the year ended 31 March, 2016 on 30th May, 2015, 8th August, 2015, 7th November, 2015 and 12th February, 2016. With a view to protecting and safeguarding the Shareholders’ interest the Committee comprises solely of Independent Directors, the financial results of the Company are minutely scrutinized by the Committee and discussed at length before being recommended to the Board for its adoption. Internal Audit Report of the Company is also placed before the Committee for its perusal. The committee closely analyses the internal control mechanism and wherever necessary directs for suitable changes. Similarly, other matters required to be placed in conformity the provisions of Regulation 18(3) of SEBI (LODR) Regulations, 2015, the Companies Act, 2013 and the rules framed thereunder are placed at regular intervals to ensure that transparency in the conduct of business is maintained. B. Nomination & Remuneration Committee: In terms of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI(LODR) Regulations, 2015, the Board has a “Nomination and Remuneration Committee”. The composition of the Committee and the attendance details of the members are given below: Name of Directors Category No. of No. of Meetings Whether last Meetings held attended AGM attended Mr. A. S. Kapre, Chairman Independent 1 1 Yes Mr. S. B. Mishra , Member Independent 1 0 Yes Mr. M.B. Thaker, Member Independent 1 1 Yes Comprising of all the Independent Directors, the Committee oversees the Company’s nomination process for the Directors, Senior management and specifically to identify, screen and review individuals qualified to serve as Directors and at Senior Management consistent with criteria approved as the Nomination & Remuneration Policy approved by the Board and to recommend, for approval by the Board, nominees for election at the AGM of the shareholders. The Committee also reviews the compensation of the Company’s Wholetime Directors and senior management. The Committee further coordinates and oversees the annual self-evaluation of the performance of the Board, Committees, and of Independent Directors. One meetings of the Committee were held during the year on 30th May, 2015.

Ferro Alloys Corporation Limited 33 SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

Details of remuneration paid to Executive Directors for the year 2015-16 are as under: Name of Director Total Remuneration including Period of Agreement perquisites and allowances (in `) Mr. R.K. Saraf, CMD 15,16,850.32 5 years w.e.f 29th June 2015 Mr. Manoj Saraf, MD 17,99,783.32 5 years w.e.f 1stJanuary, 2016 Mr. Ashish Saraf, JMD 17,99,996.32 5 years w.e.f 1st August, 2014 Mr. Rohit Saraf, JMD 17,99,997.32 5 years w.ef 1st August, 2014 Total: 69,16,627.28 - Further, other than the payment of remuneration as per the terms of their respective engagements, which have been approved by the members of the Company from time to time, no material transactions have been made to the Non- Executive Directors vis-à-vis your Company. During the year 2015-16, they were paid sitting fee/remuneration as under: Name of Director Sitting Fee Paid No. of Equity Shares (In `) of ` 1/- each held Mr. A.S. Kapre 80,000/-* 25,000 Mr. M.B. Thaker 70,000/-* 5,294 Mr. S.B. Mishra 25,000/-* - Mr. Pinaki Misra 20,000/- - Mr. Keshaorao Pardhi 40,000/- 100 Mr. Vineet Saraf 50,000/- 5,14,118 Mr. Anurag Saraf 10,000/- 48,21,854 Mrs.Urmila Gupta 40,000/- - Mr. Umesh Khaitan 10,000/- - Total 3,45,000/- * Includes sitting fee paid for attending Committee Meetings. Note : (i) There are no stock options and severance fees. (ii) No Notice Period is specified for Director’s Resignation / Termination. C. STAKEHOLDERS RELATIONSHIP & SHARE TRANSFER COMMITTEE: In terms of Section 178 of the Companies Act, 2013 and Regulation 20 of the SEBI(LODR) Regulations, 2015, the Board has in place a “Stakeholders’ Relationship Committee”. The composition of the Committee is as under:- Name of Director Position No. of Meetings held No. of meetings attended Mr. A.S. Kapre, Chairman 1 1 Mr. R.K. Saraf Member 1 Mr. M.B. Thaker Member 1 Mr. Rohit Saraf Member 1 Mr. Manoj Saraf Member 1 The Stakeholders Relationship & Share Transfer Committee is headed by Mr. A. S. Kapre, an Independent Director. The Committee endeavors and ensures that the complaints received are settled within a reasonable time period to the satisfaction of the aggrieved investor/ shareholder.

34 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

The Committee reviews and resolves the grievances of the security holders of the Company, including complaints relating to transfer and transmission of securities, non-receipt of dividends, and such other grievances as may be raised by the security holders from time to time. One meeting of the Committee was held during the year on 12th February, 2016. Further, the Status of Investors’ complaints received and resolved during the year 2015-16 is as under:- Investors complaints Resolved Not solved to the No. of pending received satisfaction of Shareholders complaints 01 01 Nil Nil D. CONSTITUTION OF CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR) In terms of Section 135 of the Companies Act, 2013, the Board has constituted a Corporate Social Responsibility (CSR) Committee to monitor the Corporate Social Responsibility Policy of the Company and the activities included in the policy. The CSR policy of the Company can be accessed at www.facorgroup.in/Investorrelations The composition of the Committee is as under:- Name of Director Position No. of Meetings held No. of meetings attended Mr. M. B. Thaker Chairman 1 1 Mr. R.K. Saraf Member 1 Mr. Manoj Saraf Member 0 Policy for Determining Material Subsidiaries In terms of SEBI (LODR) Regulations, 2015 the Company has formulated a Policy for Determining Material Subsidiaries and the same is available on the Company’s website. The Policy can be accessed at: http://www.facorgroup.in/ Investorrelations. Vigil Mechanism The Board has formulated a Vigil Mechanism system that provides a formal mechanism for all Directors, employees and vendors of the Company to approach the Chairman of the Audit Committee of the Company and make protective disclosures about the unethical behaviour, actual or suspected fraud or violation, if any, of the Company’s Code of Conduct. Under the Policy, every Director, employee or vendor of the Company has an assured access to the Chairman of the Audit Committee. Details of the Vigil Mechanism are given in the Directors’ Report. Further, the details of vigil mechanism can be accessed at www.facorgroup.in/Investorrelations. 4. GENERAL BODY MEETINGS The Annual General Meeting of the Company in the last three years has been held as under:- AGM Held Venue Day, date & time Whether Resolution passed in the last AGM Special Through Postal Resolution Ballot 57th AGM D.P. Nagar, Monday, 12th September, 2013 Yes No RANDIA – 756135, Dist. Bhadrak (Odissa) 58th AGM -DO- Wednesday,10th September, 2014 Yes No 59th AGM -DO- Monday, 21st September, 2015 Yes No Resolutions passed through postal ballot: During the year no postal ballot process was undertaken by the Company. However, the procedure for postal ballot required to be conducted, if any, would be in accordance with the Act and the rules framed in this regard.

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5. DISCLOSURES a) Related Party Transaction: During FY 2015-16, the company entered into transactions with related parties after complying with the relevant provisions of the Companies Act, 2013, the rules framed thereunder and the provisions of erstwhile Listing Agreement and the SEBI (LODR) Regulations, 2015. Transactions entered into with related parties were in line with the Board’s policy on transactions with related parties. Further, the Company’s policy on Related Party Transactions can be viewed on the website of the Company at www.facorgroup.in/Investorrelations. Further, during the Financial Year 2015-16, the Company did not have any material pecuniary relationship or transactions with Non-executive Directors. Also, in the preparation of financial statements, the Company has followed the Accounting Standards. The significant accounting policies which are applied have been set out in the Notes to Financial Statements. The Board has received disclosures from Key Managerial Personnel relating to material, financial and commercial transactions where they and/ or their relatives have personal interest. There are no materially significant related party transactions which have potential conflict with the interest of the Company at large. b) Compliance by the Company Other than the delay in filing Shareholding pattern for the quarter ended 31st March, 2016 under regulation 31 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations, 2015), the Company has complied with the requirement of the Stock Exchange, SEBI and other statutory authorities on all matters in the last three years. Further, other than the penalty of ` 9160/- levied on the company due to delay of 8 days in filing of the shareholding pattern for the q.e 31st March, 2016, as aforesaid, there were no instances of non-compliance and no penalties or strictures have been imposed on the Company by the Stock Exchange or SEBI or by any statutory authorities on any matter related to capital markets or related thereto during the last three years. Further, the Company has complied with the mandatory requirements under the erstwhile Listing Agreement, SEBI LODR Regulations, 2015 and/ or under the Companies Act, 2013 and the rules framed thereunder. c) Reconciliation of Share Capital Audit In terms of Regulation 40 (9) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, certificates, on half-yearly basis, have been issued with respect to due compliance of share transfer formalities by the Company. Further, Reconciliation of Share Capital Audit was done from time to time to inter alia reconcile the total admitted capital with National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Limited (“CDSL”) (collectively “Depositories”) with the total issued and listed capital. The Audit confirms that the total paid-up capital is in agreement with the aggregate of the total number of shares in physical form and in dematerialised form (held with Depositories), respectively d) Report on Corporate Governance Your Company has complied with Corporate Governance Requirements specified under Regulations 17 to 27 and clause (b) to (i) of sub regulation (2) of Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 e) Disclosure of Accounting Treatment Your Company has followed all relevant Accounting Standards while preparing the Financial Statements. f) CEO/CFO Cretificate The CEO/CFO Cretificate in terms Regulation 17 (8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been placed before the Board. g) Code of Conduct: In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended (the Regulations), the Board of Directors of the Company adopted the revised Facor Code of Conduct for Prevention of Insider Trading and the Code of Conduct (the Code) to be followed by Directors, Officers and other Employees. The Code is based on the principle that Directors, Officers and Employees of a Facor owe a fiduciary duty to, among others, the shareholders of the Company to place the interest of the shareholders above their own and conduct their personal securities transactions in a manner that does not create any conflict of interest. The Code also seeks to ensure timely and adequate disclosure of Price Sensitive Information to the investor community by the Company to

36 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

enable them to take informed investment decisions with regard to the Company’s securities. The code is applicable to all Directors and such designated employees who are expected to have access to unpublished price sensitive information relating to the Company as defined in the Code. Compliance required under the Code in respect to various intimations and disclosures to be made both, internally and with stipulated authorities are strictly adhered to at all times. Mr. Ritesh Chaudhry, Company Secretary, has been appointed as the Compliance Officer for monitoring adherence to the Regulations. h) Whistle Blower Policy: The Company has adopted the Whistle Blower Policy. However, no instances of fraud or other irregularities were observed during the year 2015-16 which needed to be reported to the Board/Audit Committee. i) The Company has complied with all the mandatory recommendation under Clause 49 of the erstwhile Listing Agreement as also the provisions of SEBI (LODR) Regulations, 2015. The Company has not adopted the non-mandatory provisions of the said clause. j) Disclosure of information as per SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 2011: List of persons, who constitute the Group as defined under MRTP Act, 1969 is as under: I Promoters: 1. Mrs. Mohinidevi Saraf 2. Mrs. Bimladevi Saraf 3. Mr. Narayandas Saraf 4. Mr. R.K. Saraf 5. Mr. Murlidhar Saraf II Relatives of above Five Promoters as defined under Companies Act, 2013 III Group/Associate Entities: 1 Facor Alloys Limited 21 Facor Energy Limited,Guernsey 2 Facor Steels Limited 22 Facor Minerals (Netherlands) B.V 3 Rai Bahadur Shreeram & Co. Pvt. Ltd. 23 Facor Turkkrom Mining Netherlands B.V. 4 Shreeram Durgaprasad Ores Pvt. Ltd. 24 Tusta Trading Company Inc. 5 Saraf Bandhu Pvt. Ltd. 25 UMT International Ltd. 6 Facor Power Ltd. 26 Facor Employees Welfare Trust 7 Facor Realty & Infrastructure Ltd. 27 FAL Employees Welfare Trust 8 GDP Infrastructure Pvt. Ltd. 28 Best Minerals Ltd. 9 Vidharba Iron & Steel Corpn. Ltd. 29 YMR Enterprise Pvt. Ltd. 10 Shreeram Shipping Services Pvt. Ltd. 30 V & G Commercial Pvt. Ltd. 11 Suchitra Investment & Leasing Ltd. 31 ARK Mercantile Pvt. Ltd. 12 Dass Paper Private Ltd. 32 Vanita Enterprises Pvt Ltd. 13 Geedee Sales Services 33 NDS Minerals Pvt Ltd. 14 Godavaridevi Saraf & Sons 34 Raghavendra Sarkar Ventures Pvt. Ltd. 15 Facor Energy India Ltd. 35 Mezeron Enterprises Pvt. Ltd. 16 Facor Electric Limited 36 Vakrangee Press Limited 17 Facor Solar Limited 37 Facor Minerals Pte Limited 18 FAL Power Ventures Pvt. Ltd. 38 Pioneer Facor IT Infradevelopers Pvt. Limited. 19 Facor Minerals Pte Ltd. 39 Cati Madencilik Ithalat Ve Ihracat Anonim Sirketi. 20 Deepee Sales Corporation 40 Asim Minerals Pvt. Ltd. 6. MEANS OF COMMUNICATIONS • The financial results, important announcements, declarations are communicated to each Shareholders by means of advertisements in Financial Express and Samaj. The Company also posts the vital information such as financial results, shareholding pattern, important information, declarations etc. on its website at www.facorgroup.in which are updated at regular intervals. • The official news releases, as and when required, are being released to the Stock Exchange. Further, the same are posted at the website of the Company from time to time.

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7. GENERAL SHAREHOLDERS INFORMATION AGM, Date, Time & Venue 28th September-, 2016 at 12 noon -at D.P. Nagar, Randia – 756135, Bhadrak (Odisha) Particulars of Directors proposed to be appointed / re-appointed in the forthcoming Annual General Meeting: Name of Date of Date of Experience in Qualifications List of Other Public Chairman / Member of the No. of Director Birth Appointment specific Limited Companies committee of Board of shares functional in which other Public Limited held areas Directorship held Companies on which he as on 31-3-2015 was a Director as on 31-3-2015 Mr. Ashish 13.02.1966 01.08.2004 Specialisation B.E. and also 1. Facor Power Ltd. Nil 934629 Saraf in Industrial & Graduate from 2. Facor Energy Production Harvard India Ltd. Engineering Business 3. Facor Realty And School in Infrastructure Ltd. Owner 4. Vankrangee President Press Ltd Management Program (OPM)

Financial Year ending 31st March, 2016 Date of Book Closure 24th September, 2016 to 28th September, 2016 (Both days inclusive) Dividend Payment Date Not applicable CIN NO. L45201OR1955PLC008400 Listing Details: Name of Stock Exchange Stock Code ISIN No. Bombay Stock Exchange Limited 500141 INE912A01026 Market Price Data: Month Bombay Stock Exchange BSE Sensex (`) High Low High Low April, 2015 6.86 4.08 29094.61 26897.54 May, 2015 6.11 4.41 28071.16 26423.99 June, 2015 5.65 4.32 27968.75 26307.07 July, 2015 6.35 4.80 28578.33 27416.39 August, 2015 7.70 4.67 28417.59 25298.42 September, 2015 5.70 4.40 26471.82 24833.54 October, 2015 6.25 4.60 27618.14 26168.71 November, 2015 5.58 4.19 26824.30 25457.42 December, 2015 7.20 4.45 26256.42 24867.73 January, 2016 8.30 5.15 26197.27 23839.76 February, 2016 6.45 3.90 25002.32 22494.61 March, 2016 5.27 4.06 25327.45 23133.18

38 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

Registrar & Transfer Agents (RTA) : Beetal Financial & Computer Services (P) Ltd.Beetal House, 3rd Floor,99, Madangir, Behind LSC,NEW DELHI – 110 062 Share Transfer System : Transfer of shares in physical form are normally processed within a period of 10 days from the date of lodgment with the approval of the Share Transfer Committee of the Board of Directors subject to the documents being valid and complete in all respects. Distribution of Shareholding as on 31st March: No. of equity 2015 – 2016 2014 – 2015 shares held No. of No. of % of issued No. of No. of % of issued shareholders shares held equity share shareholders shares held equity share capital capital Up to 500 44505 13794047 7.45 39028 3620887 1.95 501 to 1000 524 3970957 2.14 3075 2741899 1.48 1001 to 2000 261 3813942 2.06 1560 2566458 1.39 2001 to 3000 97 2478341 1.34 644 1689400 0.91 3001 to 4000 43 1538764 0.83 302 1125317 0.61 14001 to 5000 40 1849178 1.00 416 2010688 1.09 5001 to 100000 46 3283524 1.77 480 3626058 1.96 100001 to above 73 154539488 83.41 543 167887534 90.61 Total 45589 185268241 100.00 46048 185268241 100.00 Dematerialization of shares and liquidity as on 31st March: No. of equity 2015 – 2016 2014 – 2015 shares held No. of No. of No. of No. of shareholders shares held shareholders shares held Physical Mode 21300 720062 Physical 21461 726898 Physical Mode Mode Electronic Mode 24289 184548179 Electronic 24587 184541343 Electronic Mode Mode Total: 45589 185268241 Total: 46048 185268241 Total: Shareholding pattern as on 31stMarch: Category 2015– 2016 2014– 2015 No. of Percentage of No. of Percentage of shares held Shares held shares held Shares held Promoters, their relatives, associates 138928036 74.99 138928036 74.99 etc. and persons acting in concert. Financial Institutions/Banks 14748 0.01 14748 0.01 State Government Company/ State Financial Corporation 38066 0.02 38066 0.02 Mutual Funds/ UTI 3880 0.00 7839 0.00 Insurance Companies 8220 0.00 8220 0.00 Bodies Corporate 10416681 5.62 11951620 6.45 Others 35858610 19.36 34319712 18.53 Total: 185268241 100.00 185268241 100.00

Ferro Alloys Corporation Limited 39 SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

Plant Locations: Mining Complex Charge Chrome Plant LaxmiBhawan D.P. Nagar Kuans, Bhadrak – 756 100 P.O. – Randia – 756 135 Dist. Bhadrak (Odisha) Dist. Bhadrak (Odisha) Tel.No. : +91-6784-250311/250598/251312 Tel.No. : +91-6784-240320 Fax No.: +91-6784-251782 Fax.No.: +91-6784-240626 E-mail : [email protected] E-mail:[email protected]; [email protected]

Address for Correspondence: For matters relating to Company’s Shares For other matters Beetal Financial & Computer Services (P) Ltd. Corporate Office: Beetal House, 3rd Floor, Ferro Alloys Corporation Ltd. 99, Madangir, LSC, FACOR HOUSE, Plot No. A-45 to A-50 New Delhi – 110 062 Ground Floor, Sector 16, NOIDA – 201 301 Tel No.: +91-11-29961281-33 Tel.No. : +91-120- 4171000 Fax No.:+91-11-29961284 Fax No.: +91-120-4256700 E-mail : [email protected] E-mail : [email protected]

Registered Office: D.P. Nagar, Randia – 756 135 Dist. Bhadrak (Odisha) Tel.No.: +91-6784-240320 / 272 Fax.No.: +91-6784-240626 E-mail: [email protected]; [email protected]

Useful Information for Shareholders a) Unclaimed shares: Pursuant to a Scheme of Arrangement Ferro Alloys Corporation Ltd. (FACOR) was trifurcated into three separate companies viz., Ferro Alloys Corporation Ltd. (FACOR), Facor Alloys Ltd. (FAL) & Facor Steels Ltd. (FSL), in 2004. As part of the said Scheme of Arrangement, new equity shares of Re.1/- each fully paid up of all the above referred three companies in lieu of the old shares of ` 10/- each of FACOR were issued and mailed to the shareholders of the Company at their then registered addresses under cover of Registered Letter dated 31st August, 2004. Certain covers containing the share certificates have returned as undelivered to the company due to change in the postal address of the shareholders. Further, it is also observed that subsequent communications from the Company to such shareholders such as Annual Report, Postal Ballot, Dividend Warrants etc. have also returned as undelivered. Reference of the shareholders is invited to Regulation 39 (4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which provides that company shall transfer all these unclaimed shares into one Folio in the name of “Unclaimed Suspense Account” and these shares can be dematerialized and kept with one of the Depository Participants and all corporate benefits in terms of securities accruing on such shares viz. Bonus shares, Split etc. shall also be credited to such Unclaimed Suspense Account. The Company, therefore, requests the shareholders holding shares in physical form to take stock of their shareholding in the Company and in case not in possession of share certificates of the aforesaid companies, may, quoting reference of their folio no., current postal address (with pin code) and e-mail address, if any, please write to the Registrar & Share Transfer Agent of the Company at the address mentioned hereinabove for receiving custody of share certificates. In the above connection, the Company had already reminded shareholders of the Company of the above in the previous year’s Annual Report and once again by way of a second reminder requests shareholders to review the above intimation and take necessary action in the matter as advised failing which the Company shall, in compliance the provisions referred above, take necessary action at its end in due course.

40 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

b) Registration of Email Addresses: The Company supports the ‘Green Initiative in Corporate Governance’ of the Ministry of Corporate Affairs, and sends Notices / documents including Annual Report comprising Balance Sheet, Profit & Loss Account, Directors Report, Auditors Report etc. in electronic mode (hereinafter ‘documents’), provided the Company has email addresses of its members for sending these documents through email by giving an advance opportunity to every shareholder to register their email address and changes therein from time to time with the Company. In furtherance of the green initiative, Members are requested to register/ update their email addresses to: a) The Registrars and Share Transfer Agents, M/s. Beetal Financial & Computer Services (P) Ltd., New Delhi- 110 062 in respect of shares in physical &form; and b) Their Depository Participants in respect of shares in electronic form so that upon registration of the email address, the Company could send notices and other documents, in electronic form, to such shareholders.

DECLARATION As provided in clause D to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchange, it is hereby declared that all the Board Members and Senior Management personnel of the Company have affirmed the Compliance with the Code of Conduct for the year ended 31st March, 2016.

Place : Noida R.K. Saraf Date : 12th August, 2016 Chairman & Managing Director

Ferro Alloys Corporation Limited 41 SIXTIETH ANNUAL REPORT CORPORATE GOVERNANCE REPORT 60 2015-16

AUDITORS’ CERTIFICATE To the Members of Ferro Alloys Corporation Limited We have examined the compliance of conditions of Corporate Governane by Ferro Alloys Corporation Limited, for the year ended 31st March, 2016 as stipulated in Clause 49 of the Listing Agreement (Listing Agreement) of the Company with the Stock Exchange for the period 1st April, 2015 to 30th November, 2015 and as per the relevant provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) as referred to in Regulations 15(2) of the Listing Regulations for the period 1st December, 2015 to 31st March, 2016. The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedure and implementation there of adopted by the Company for ensuring compliance with the conditions of the Corporate Governance as stipulated in Listing Agreement/Listing Regulations, as applicable. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement / Listing Regulations, as applicable. We further state that such compliance is neither as assurance as to the further viability of the Company nor the efficiency or effectiveness with which the Managment has conducted the affairs of the Company For Salve & Co. Chartered Accountants, (Firm’s Regn. No. 109003W)

K. P. Sahasrabudhe Place :Noida, UP Partner Date :12th August, 2016 Membership No.7021

42 Ferro Alloys Corporation Limited SIXTIETH 60 ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT 2015-16

TO THE MEMBERS OF FERRO ALLOYS CORPORATION LIMITED Report on the Standalone Financial Statements We have audited the accompanying standalone financial statements of Ferro Alloys Corporation Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2016 the Statement of Profit and Loss,the Cash Flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design,implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these standalone financial statements based on our audit.We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10)of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016 and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of Section 143 (11) of the Act, we give in the Annexure ’A’, a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable. 2. As required by Section 143 (3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

Ferro Alloys Corporation Limited 43 SIXTIETH ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT 60 2015-16

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. (e) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act. (f) With reference to the adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such control, refer our separate report in Annexure- ‘B’. (g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us. i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements; ii. the Company did not have any long-term contracts including the derivative contracts for which there were any material foreseeable losses; iii. there was no amount required to be transferred to the Investor Education and Protection Fund by the Company.

For SALVE & Co. Chartered Accountants (Firm’s Registration No.109003W)

C.A. K.P. SAHASRABUDHE Place: Noida, UP Partner Date : 27th May, 2016 (Membership No.007021)

44 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 60 2015-16

ANNEXURE- “A” TO THE INDEPENDENT AUDITORS’ REPORT The Annexure referred to in our report to the members of Ferro Alloys Corporation Limited (‘the Company’), on the Standalone Financial Statements for the year ended 31st March, 2016. We report that: i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b) All the fixed assets have been physically verified by the Management at reasonable intervals and no material discrepancies were noticed on such verification. c) The title deeds of immovable properties are held in the name of the Company. ii) Physical verification of inventory has been conducted at reasonable intervals by the Management. No material discrepancies were noticed on physical verification. iii) The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013. iv) In our opinion and according to information and explanations given to us, the Company has not given any loan, made any investment, given any guarantee, or provided any security covered under section 185 and 186 of the Act during the year. v) The Company has not accepted any deposits from the public. vi) The Central Government has specified maintenance of cost records under sub-section 1 of Section 148 of the Act and are of the opinion that prima facie such accounts and records have been made and maintained. vii) (a) According to the information and explanations given to us, the Company is regular in depositing undisputed statutory dues including provident fund,employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues with the appropriate authorities. (b) According to the information and explanations given to us, the following dues of Sales tax, entry tax, duty of customs and duty of excise have not been deposited by the Company on account of disputes:-

Nature of dues ` /Lacs FORUM WHERE THE DISPUTE IS PENDING PERIOD CUSTOMS DUTY 10.16 Dy. Commissioner of Customs, Paradip 1990-91 & 2000-01 1.13 Customs Excise & Service Tax Appellate Tribunal, Kolkata 1999-2000 & 2000-01 137.84 Asst. Commissioner Central Excise, Customs & Service Tax, Balasore. 1981-82, 1982-83, 1985-86, 1988-89, 1989-90, 1990-91, 1996-97, 1997-98, 1999-2000, 2000-01, 2001-02 81.94 Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar 1997-98 to 2001-02 64.96 Commissioner of Customs (Appeals), Kolkata 1983-84 61.18 Hon’ble High Court, Odisha 1995-96 & 1997-98 8.15 Jt. Secretary (Review) MOF, GOI, CBEC, Delhi 1994-95 EXCISE DUTY 2.20 Asst. Commissioner Central Excise, Customs & Service Tax, Balasore 1981 22.88 Central Excise and Service Tax Appellate Tribunal, 2001-02 & 2002-03 West Zone Bench, Mumbai 1190.47 Customs Excise & Service Tax Appellate Tribunal, Kolkata 2007-08 & 2008-09 83.58 Commissioner (Appeal) Central Excise Customs & Service Tax, Bhubaneswar 2005-06, 2007-08, 2008-09 & 2009-10 46.02 Addl. Commsr., Central Excise Customs & Service Tax, Bhubaneswar-II 2011-12, 2012-13 & 2013-14 2540.60 Commissioner Central Excise Customs & Service Tax, Bhubaneswar-II 2009-10, 2010-11, 2011-12 & 2012-13 SALES TAX 25.08 Additional Commissioner Sales Tax, Cuttack 1980-81, 1981-82, 2005-06 & 2006-07 10.69 Sales Tax Tribunal, Cuttack 2000-01 & 2003-04 9.49 Addl. Commissioner of Sales Tax, Cuttack 2005-06, 2006-07, 2007-08 832.78 Commissioner of Sales Tax, Central Zone, Cuttack 2007-08 527.75 Joint Commissioner Commercial Taxes, Balasore 1999-2000, 2005-06, 2006-07, 2007-08 79.87 Joint Commissioner Commercial Taxes, Bhubaneswar 2012-13 & 2013-14 ENTRY TAX 231.83 Additional Commissioner of Sales Tax, Central Zone, Cuttack 2007-08 viii) The Company has not defaulted in repayment of loan or borrowing to financial institutions, banks, government or dues to debenture holders. ix) The Company has not raised money by way of initial public offer or further public offer (including debt instrument) or term loan during the year.

Ferro Alloys Corporation Limited 45 SIXTIETH ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 60 2015-16 x) Based upon the audit procedure performed and information and explanations given by the management, we report that no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year. xi) The Company has paid or provided managerial remuneration in accordance with the requisite approvals mandated by the provision of section 197 read with Schedule V to the Act. xii) To the best of our knowledge and according to the information and explanations given to us, the Company is not a Nidhi Company. xiii) To the best of our knowledge and according to the information and explanations given to us, the transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable, and the details of such transactions have been disclosed in the financial statements, as required by the applicable accounting standards. xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. xv) To the best of our knowledge and according to the information and explanations given to us, the Company has not entered into non-cash transaction with directors or persons connected with them. xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. For SALVE & Co. Chartered Accountants (Firm’s Registration No.109003W) C.A. K.P. SAHASRABUDHE Place: Noida, UP Partner Date : 27th May, 2016 (Membership No.007021)

ANNEXURE ‘B’TO THE INDEPENDENT AUDITORS’ REPORT Report on the Internal Financial controls under clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 We have audited the internal financial controls over financial reporting of Ferro Alloys CorporationLimited (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. Management’s Responsibility for Internal Financial Controls The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. Auditors’ Responsibility Our responsibility is to express an opinion on the Company‘s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143 (10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls,both applicable to an audit of Internal Financial Controls and, both issued by ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

46 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 60 2015-16

Meaning of Internal Financial Controls over Financial Reporting A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For SALVE & Co. Chartered Accountants (Firm’s Registration No.109003W)

C.A. K.P. SAHASRABUDHE Place: Noida, UP Partner Date : 27th May, 2016 (Membership No.007021)

Ferro Alloys Corporation Limited 47 SIXTIETH ANNUAL REPORT BALANCE SHEET AS AT 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) Particulars Note As at As at Nos. 31st March, 2016 31st March, 2015 ------EQUITY AND LIABILITIES Shareholders’ Funds Share Capital ...... 2 1,852.68 1,852.68 Reserves and Surplus ...... 3 23,593.18 24,006.23 ------25,445.86 25,858.91 Non-Current Liabilities Long-Term Borrowings ...... 4 3,024.95 3,194.89 Deferred Tax Liabilities (Net) ...... 14 - 216.36 Other Long-Term Liabilities ...... 5 218.65 218.65 Long-Term Provisions ...... 6 1,439.58 1,544.46 ------4,683.18 5,174.36 Current Liabilities Short-Term Borrowings ...... 7 4,776.25 4,929.81 Trade Payables a) Outstanding dues of micro and small enterprises 8 4.24 18.64 b) Outstanding dues of creditors other than micro and small enterprises ...... 8 7,311.80 5,179.41 Other Current Liabilities ...... 9 4,205.61 6,460.36 Short-Term Provisions ...... 10 156.59 531.67 ------16,454.49 17,119.89 ------TOTAL 46,583.53 48,153.16 ======ASSETS Non-Current Assets Fixed Assets Tangible Assets ...... 11 9,824.18 8,716.31 Capital Work-in-Progress ...... 11 965.99 1,480.43 ------10,790.17 10,196.74 Non-Current Investments ...... 12 21,918.21 21,920.52 Long-Term Loans and Advances ...... 13 1,184.45 1,185.01 Deferred Tax Assets (Net) ...... 14 160.63 ------34,053.46 33,302.27 Current Assets Inventories ...... 15 6,888.41 8,677.00 Trade Receivables ...... 16 1,452.64 1,535.51 Cash and Bank Balances ...... 17 295.12 193.06 Short-Term Loans and Advances ...... 18 3,831.35 4,359.78 Other Current Assets ...... 19 62.55 85.54 ------12,530.07 14,850.89 ------TOTAL 46,583.53 48,153.16 ======Significant Accounting Policies 1 Notes on Financial Statements 2 to 42 As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994) Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

48 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) Particulars Note Year Ended Year Ended Nos. 31st March, 2016 31st March, 2015 ------INCOME Revenue from Operations ...... 20 56,933.35 60,270.18 Other Income ...... 21 567.89 346.33 ------Total Revenue 57,501.24 60,616.51 EXPENSES : Cost of Materials Consumed ...... 22 22,944.48 23,602.06 Changes in Inventories of Finished Goods and Stock-in-Process ...... 23 2,716.67 (1,240.03) Employee Benefits Expense ...... 24 4,224.05 4,340.71 Finance Costs ...... 25 1,788.61 1,654.81 Depreciation and Amortisation Expense ...... 26 467.66 495.63 Other Expenses ...... 27 26,149.46 29,307.22 ------Total Expenses 58,290.93 58,160.40 ------Profit/(Loss) Before Tax ...... (789.69) 2,456.11 Tax Expenses Current Tax ...... - 580.84 Tax for Earlier Years ...... 0.35 (101.93) Deferred tax ...... (376.99) 70.59 ------(376.64) 549.50 ------Profit/(Loss) for the year (413.05) 1,906.61 ------Earning per equity share of face value of ` 1/- each Basic and Diluted (in `) ...... 28 (0.22) 1.03 Significant Accounting Policies ...... 1 Notes on Financial Statements ...... 2 to 42 As per our report of even date attached, For and on behalf of the Board,

For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570)

C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994)

Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

Ferro Alloys Corporation Limited 49 SIXTIETH ANNUAL REPORT CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) 2015-16 2014-15 ------(A) CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before tax ...... (789.69) 2,456.11 Adjustment for: Depreciation ...... 524.96 552.41 Exchange difference on translation (Net) ...... 1.05 4.58 Interest and Dividend Income ...... (78.57) (138.06) Finance Costs ...... 1,788.61 1,654.81 Profit/Loss on Sale of Fixed Assets (Net) ...... 1.60 (12.04) ------2,237.65 2,061.70 ------Operating Profit before Working Capital Changes ...... 1,447.96 4,517.81 Adjustment for: Trade and Other Receivables ...... 537.92 3,746.69 Inventories ...... 1,788.59 (574.00) Trade Payables ...... (266.47) (560.13) Others ...... 8.69 (39.92) ------2,068.73 2,572.64 ------Cash Generated from Operations ...... 3,516.69 7,090.45 Direct Taxes Paid/Adjusted ...... (301.08) (93.56) ------(301.08) (93.56) ------Net Cash Flow from Operating Activities ...... 3,215.61 6,996.89 (B) CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets ...... (1,125.95) (1,037.14) Sale of Fixed Assets ...... 5.96 22.67 Purchase of Investments ...... 0.01 (3,191.92) Sale of Investments ...... 2.31 5.00 Interest and Dividend Income ...... 104.83 168.98 ------Net Cash Flow (used in) /from Investing Activities (1,012.84) (4,032.41) (C) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Long and Short Term Borrowings ...... (321.09) (1,216.59) Finance Costs Paid ...... (1,761.47) (1,687.32) Dividend/Corporate Tax on Dividend Paid ...... (9.46) (4.44) ------Net Cash Flow (used in)/from Financing Activities (2,092.02) (2,908.35) ------Net Increase/(Decrese) in Cash and Cash Equivalents 110.75 56.13 ------Opening Balance of Cash and Cash Equivalents 133.97 77.84 Closing Balance of Cash and Cash Equivalents 244.72 133.97 ------Net Increase/(Decrease) in Cash and Cash Equivalents 110.75 56.13 ======As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994) Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

50 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICIES (a) Corporate Information Ferro Alloys Corporation Limited (FACOR) was incorporated in 1955. The Company is listed at Bombay Stock Exchange. It is one of the India’s largest producers and exporters of Ferro Alloys, an essential ingredient for manufacture of Steel and Stainless Steel. FACOR is also engaged in Chrome Ore exploration, mining and beneficiation in the state of Odisha. Chrome Ore is one of the main raw material for producing Charge Chrome / High Carbon Ferro Chrome. Facor is having about 86% stake in Facor Power Ltd. which is engaged in the generation of power. (b) Basis of Preparation of Financial Statements These accounts have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013, as adopted consistently by the Company. (c) Use of Estimates The preparation of financial statements is in conformity with the generally accepted accounting principles, which requires estimates and assumptions to be made that affect the reportable amount of assets and liabilities on the date of financial statements and the reportable amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known/materialized. (d) Fixed Assets : All fixed assets are valued at cost net of recoverable taxes less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets. (e) Intangible asset : Intangible asset acquired seperately are measured at cost less amortisation and impairment losses, if any. Intangible assets are amortised on a straight line basis over the estimated useful life. (f) Depreciation : The charge in respect of depreciation on tangible assets aquired prior to 01.04.2014 is provided on different fixed assets on the basis of ‘straight line method’ and ‘written down value method’ over the useful lives of assets after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life as evaluated by external valuers and further reviewed by the technical Management based on historical experience.Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013. However, the useful life of the assets aquired on or after 1st April, 2014, is in accordance with the useful lives as prescribed for those assets in Part C of Schedule II of the Companies Act, 2013. (g) Foreign Exchange Transactions : (i) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction. (ii) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at contract rates, where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets. (iii) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Statement of Profit and Loss. (h) Investments : Current Investments are carried at lower of cost and quoted/fair value. Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature. (i) Current Assets : Finished Goods and Stock-in-Process are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost. All other items of current assets are stated after provisions for any diminution in value. (j) Revenue Recognition : Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.Sales comprise sale of goods and services, conversion charges, Inter-unit transfers and exports.Sales are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are inclusive of excise duty but net of trade discounts and VAT. However, excise duty relating to sales is reduced from gross turnover for disclosing net turnover.Export benefits are recognised as per schemes specified in Foreign Trade Policy, as amended from time to time on accrual basis. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognised when the right to receive is established.

Ferro Alloys Corporation Limited 51 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (k) Employee Benefits : (a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. (b) Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss. (l) Borrowing Costs : Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset.All other borrowing costs are expensed in the period they occur. (m) Provision for Current and deferred Tax : Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from “timing differences “ between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future. (n) Contingent liabilities : Contingent Liabilities are not recognised but are disclosed in the notes.

2. SHARE CAPITAL (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------Authorised Share Capital: 220,000,000 (Previous Year - 220,000,000) Equity Shares of ` 1/- each ..... 2200.00 2200.00 800,000 (Previous Year - 800,000) 0.01% Redeemable Preference Shares of ` 100/- each ...... 800.00 800.00 ------TOTAL 3000.00 3000.00 ------Issued, Subscribed and Paid up: 185,268,241 (Previous Year - 185,268,241) Equity Shares of ` 1/- each fully paid up ...... 1852.68 1852.68 ------TOTAL 1852.68 1852.68 ------2.1 The details of Shareholders holding more than 5% shares : Name of the Shareholder As at 31st March, 2016 As at 31st March, 2015 No. of Shares % held No. of Shares % held Rai Bahadur Shreeram and Company Private Limited ...... 69,448,883 37.49% 69,448,883 37.49% Premier Commercial Corporation ...... 15,672,291 8.46% 15,672,291 8.46%

2.2 The reconciliation of number of shares outstanding at the beginning and at the end of the reporting period: Particulars As at 31st March, 2016 As at 31st March, 2015 No. of Shares No. of Shares Shares outstanding at the beginning of the year ...... 185,268,241 185,268,241 Shares issued during the year ...... - - Shares bought back during the year ...... - - Shares outstanding at the end of the year ...... 185,268,241 185,268,241

2.3 Terms/rights attached to Equity Shares: The Company has only one class of Equity Shares having a par value of ` 1/- per share. The Equity Shares have equal rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act, 2013 52 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------3. RESERVES AND SURPLUS Capital Reserve Balance as at the beginning and end of the year ...... 439.24 439.24 General Reserve: Balance as per last Balance Sheet ...... 19,200.00 17,100.00 Add : Transferred from Statement of Profit and Loss ...... - 2,100.00 ------19,200.00 19,200.00 Statement of Profit and Loss Balance as at the beginning of the year ...... 4,366.99 4,560.38 Add: Profit/(Loss) for the year ...... (413.05) 1,906.61 ------3,953.94 6,466.99 Less : Appropriations Transferred to General Reserve ...... - 2,100.00 ------3,953.94 4,366.99 ------TOTAL 23,593.18 24,006.23 ------

4. LONG-TERM BORROWINGS Secured From Banks: Rupee Term Loan Account(Refer Note 4.1) . 82.24 265.61 Unsecured From related parties (Refer Note 4.2) ...... 1,582.71 1,594.71 Others ...... } 1,360.00 1,330.00 ------2,942.71 2,924.71 Deferred payment liabilities ...... - 4.57 ------2,942.71 2,929.28 ------TOTAL 3,024.95 3,194.89 ------4.1 - Secured by hypothecation of Metal Recovery Plant and second pari-passu charge on other fixed assets of the company and guarateed by two directors. - Terms of repayment : Payable in equal quarterly instalments. 4.2 Terms of repayment : Payable after 31st March, 2017

5. OTHER LONG-TERM LIABILITIES ...... 218.65 218.65 ------TOTAL 218.65 218.65 ------

Ferro Alloys Corporation Limited 53 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------6. LONG-TERM PROVISIONS Provision for Employee Benefits: P.L. Encashment (Unfunded) ...... 272.23 294.10 Others ...... 1,167.35 1,250.36 ------TOTAL 1,439.58 1,544.46 ------

7. SHORT-TERM BORROWINGS From Banks : (Secured) Cash Credit / Packing Credit Accounts (Refer Note 7.1) ...... 4,200.12 4,100.80 Bills Discounted ...... } 576.13 829.01 ------TOTAL 4,776.25 4,929.81 ------7.1 Secured by hypothecation of stocks of raw-materials, finished products, book debts, and other receivables and by way of second charge on fixed assets of the Company by deposit of title deeds in respect of immovable properties and guaranteed by two Directors.

8. TRADE PAYABLES Trade Payables a) Outstanding dues of micro and small enterprises ...... 4.24 18.64 b) Outstanding dues of creditors other than micro and small enterprises ...... 7,311.80 5,179.41 ------TOTAL 7,316.04 5,198.05 ------

9. OTHER CURRENT LIABILITIES Current maturities of long-term debts - Rupee Term Loan from Banks ...... 582.84 1,951.58 Interest accrued but not due on borrowings ...... 16.95 0.12 Interest accrued and due on borrowings ...... 28.76 31.17 Unpaid dividends ...... 4.42 13.88 Other Payables* ...... 3,572.64 4,463.61 ------TOTAL 4,205.61 6,460.36 ------* Includes statutory dues, security deposits and advance from customers.

10. SHORT-TERM PROVISIONS Provision for Employee Benefits: P.L. Encashment (Unfunded) ...... 139.92 149.93 For Taxation ...... 16.67 381.74 ------TOTAL 156.59 531.67 ------

54 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS 11. FIXED ASSETS (` in lacs) Particulars GROSS BLOCK AT COST DEPRECIATION NET BLOCK As at Additions/ Deductions/ As at Upto For the Deductions/ Upto As at As at 1.04.2015 Adjustments Adjustments 31.03.2016 1.04.2015 Year Adjustments 31.03.2016 31.03.2016 31.03.2015 (I) Tangible Assets Land Leased 17.39 - - 17.39 - - - - 17.39 17.39 Land Freehold 2,548.91 - - 2,548.91 - - - - 2,548.91 2,548.91 Buildings 4,229.65 237.20 - 4,466.85 1,852.98 116.33 - 1,969.31 2,497.54 2,376.67 Roads and Drains 493.72 - - 493.72 207.96 29.24 - 237.20 256.52 285.76 Railway Sidings 86.58 - - 86.58 82.25 - - 82.25 4.33 4.33 Plant and Machineries 9,258.00 1,355.92 1.85 10,612.07 6,440.40 261.87 1.81 6,700.46 3,911.61 2,817.60 Office and Other Equipments 682.25 40.12 1.85 720.52 414.30 42.09 1.20 455.19 265.33 267.95 Furniture and Fixtures 287.06 7.15 0.21 294.00 167.97 15.10 0.20 182.87 111.13 119.09 Vehicles 951.29 - 29.79 921.50 672.68 60.33 22.93 710.08 211.42 278.61 18,554.85 1,640.39 33.70 20,161.54 9,838.54 524.96 26.14 10,337.36 9,824.18 Previous Year 18,027.34 579.75 52.24 18,554.85 9,343.39 536.76 41.61 9,838.54 8,716.31 (II) Intangible Assets Goodwill 5,344.39 - - 5,344.39 5,344.39 - - 5,344.39 - Previous Year 5,344.39 - - 5,344.39 5,328.74 15.65 - 5,344.39 - Capital Work-in-Progress 965.99 1,480.43 Total: 10,790.17 10,196.74

(` in lacs) As at As at 31st March, 2016 31st March, 2015 ------12. NON-CURRENT INVESTMENTS Trade Investments : (At Cost) In Equity Shares of Subsidiary Companies - Unquoted, fully paid up 198,059,930 (Previous Year - 19,80,60,000) Facor Power Limited of ` 10/- each ... 20,614.20 20,614.21 100,000 (Previous Year - 100,000) Facor Realty & Infrastructure Ltd...... 10.00 10.00 of ` 10/- each 200,001 (Previous Year 2,00,001) Facor Energy Ltd. of GBP 1 each ...... 182.05 182.05 ------20,806.25 20,806.26 In 15% Cumulative Redeemable Preference Shares of Subsidiary Company - Unquoted, fully paid up 1,100,000 (Previous Year : 1,100,000) Facor Power Ltd. of ` 100/- each ...... 1,100.00 1,100.00 In Equity Shares of Associate Company- Unquoted, fully paid up 466,164 (Previous Year - 466,164) Boula Platinum Mining Pvt. Ltd...... 4.66 4.66 In Equity Shares of Other Companies- Quoted, fully paid up 500,000 (Previous Year - 500,000) Facor Alloys Limited of ` 1/- each ...... 5.00 5.00 In Government Securities : Unquoted 5 Years National Savings Certificates ...... 0.20 0.20 6 Years National Savings Certificates ...... 2.05 4.35 7 Years National Savings Certificates ...... 0.05 0.05 ------Deposited with Government/Semi Government Authorities ...... 2.30 4.60 as Security Deposit. ------TOTAL 21,918.21 21,920.52 ------Aggregate cost of Quoted Investments ...... 5.00 5.00 Market Value of Quoted Investments ...... 4.00 4.40 Aggregate amount of Unquoted Investments ...... 21,913.21 21,915.52

Ferro Alloys Corporation Limited 55 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------13. LONG-TERM LOANS AND ADVANCES (Unsecured and Considered Good) Capital Advance ...... 321.30 323.35 Security Deposits ...... 863.15 861.66 ------TOTAL 1,184.45 1,185.01 ------

14. DEFERRED TAX ASSETS/ (LIABILITIES) (NET) Deferred Tax Liabilities: Difference between Book and Income Tax depreciation ...... 760.28 518.62 Deferred Tax Assets: Disallowance u/s 43B of the Income Tax Act, 1961 to be allowed on payment basis ...... 265.32 302.26 Unabsorbed Depreciation and Unabsorbed Business Loss ...... 655.59 ------920.91 302.26 ------Net Deferred Tax Assets /(Liabilities) 160.63 (216.36) ------

15. INVENTORIES (As per Inventory taken, valued and as certified by the Management) (At cost unless otherwise stated) Raw Materials (includes in transit ` 9.39 lacs, Previous Year ` 32.20 lacs) ...... 3,237.88 2,396.83 Stock-in-Process (At Cost or Net realisable value whichever is lower) ...... 139.58 219.28 Finished Goods (At Cost or Net realisable value whichever is lower) ...... 3,026.12 5,663.09 Stores and Spare Parts(includes in transit ` Nil, Previous Year ` 22.31 lacs) .. 441.04 358.76 Loose Tools ...... 43.79 39.04 ------TOTAL 6,888.41 8,677.00 ------

16. TRADE RECEIVABLES (Unsecured and Considered Good) Over six months ...... 50.14 42.43 Others ...... 1,402.50 1,493.08 ------TOTAL 1,452.64 1,535.51 ------

56 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------17. CASH AND BANK BALANCES CASH AND CASH EQUIVALENTS Cash in hand ...... 19.25 14.89 Cheques in hand ...... 0.20 - With Scheduled Banks: In Current Accounts ...... 225.27 119.08 In Current Accounts- For Unpaid Dividend ...... 4.42 14.28 ------229.69 133.36 ------249.14 148.25 OTHER BANK BALANCES In Fixed Deposits Accounts : With original maturity of more than three months but less than twelve months (Refer Note No.17.1 below) ...... 6.75 10.00 With original maturity of more than twelve months (Refer Note No.17.2 below) ...... 39.23 34.81 ------TOTAL 295.12 193.06 ------17.1 As Margin Money Deposit with Banks ` 6.75 lacs (Previous Year ` Nil) 17.2 Fixed Deposit Receipts pledged with Government Authorities and with Banks ` 39.23 lacs (Previous Year ` 34.81lacs)

18. SHORT- TERM LOANS AND ADVANCES (Unsecured and Considered Good) Loans and Advances to Related Parties ...... 40.14 43.99 Others ...... 3,791.21 4,315.79 ------TOTAL 3,831.35 4,359.78 ------

19. OTHER CURRENT ASSETS Interest accrued on Deposits ...... 60.62 83.61 Claims Recoverable ...... 1.93 1.93 ------TOTAL 62.55 85.54 ------

Ferro Alloys Corporation Limited 57 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------20. REVENUE FROM OPERATIONS Sale of products, less returns ...... 59,426.01 62,934.90 Less: Excise Duty ...... 3,396.91 3,865.58 ------56,029.10 59,069.32 Add: Export Incentives ...... 904.25 1,200.86 ------TOTAL 56,933.35 60,270.18 ------Gross Sales ------20.1 PARTICULARS OF SALE OF PRODUCTS Ferro Alloys ...... 48,237.11 50,743.35 Chrome Ore ...... 11,133.64 12,165.28 Off Grade / By-products ...... 55.26 26.27 ------TOTAL 59,426.01 62,934.90 ------21. OTHER INCOME Interest Income: Interest on Deposits ...... 9.47 11.88 Other Interest ...... 70.50 126.18 Miscellaneous receipts ...... 89.90 21.74 Profit /( Loss) on Fixed Assets Sold/Discarded (Net) ...... (1.60) 12.04 Profit /( Loss) on sale of Investments ...... - (2.45) Foreign Exchange Gain ...... 159.64 164.72 Liabilities/Provisions no longer required written back (Net)...... 239.98 12.22 ------TOTAL 567.89 346.33 ------22. COST OF MATERIALS CONSUMED Opening stock of Materials ...... 2,396.83 3,022.38 Add: Purchases (Refer Note 31) ...... 23,785.53 22,976.51 ------26,182.36 25,998.89 Less: Closing stock of Materials ...... 3,237.88 2,396.83 ------Cost of Materials Consumed 22,944.48 23,602.06 ------22.1 PARTICULARS OF MATERIALS CONSUMED Chrome Ore/Concentrate/Others ...... 16,101.35 15,956.09 Coke and Coal ...... 6,140.16 7,044.02 Quartz ...... 72.83 70.70 Carbon paste/Electrode paste ...... 541.72 477.98 Miscellaneous ...... 88.42 53.27 ------TOTAL 22,944.48 23,602.06 ------

58 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------23. CHANGES IN INVENTORIES OF FINISHED GOODS AND STOCK-IN PROCESS Closing stock: Finished Goods ...... 3,026.12 5,663.09 Stock-in-Process ...... 139.58 219.28 ------3,165.70 5,882.37 Opening stock: Finished Goods ...... 5,663.09 4,463.76 Stock-in-Process ...... 219.28 178.58 ------5,882.37 4,642.34 ------Decrease/(Increase) in Inventories 2,716.67 (1,240.03) ------

(` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------24. EMPLOYEE BENEFITS EXPENSE Salaries, Wages and Bonus ...... 3,198.03 3,217.65 Contribution to Provident and Other Funds ...... 402.76 416.24 Welfare Expenses ...... 554.26 499.76 Directors’ Remuneration ...... 69.00 207.06 ------TOTAL 4,224.05 4,340.71 ------

25. FINANCE COSTS Interest: On Fixed Loan ...... 207.85 438.68 On Others ...... 1,578.53 1,211.12 ------1,786.38 1,649.80 Other Borrowing Costs ...... 2.23 5.01 ------TOTAL 1,788.61 1,654.81 ------

26. DEPRECIATION AND AMORTISATION EXPENSE Depreciation...... 467.66 479.98 Amortisation ...... - 15.65 ------TOTAL 467.66 495.63 ------Depreciation is excluding ` 57.30 lacs (Previous Year ` 56.78 lacs) considered under cost of material consumed (Refer Note 30)

Ferro Alloys Corporation Limited 59 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------27. OTHER EXPENSES Power and Fuel ...... 14,005.86 13,735.61 Mining, Handling and other Production Expenses ...... 3,915.62 5,441.35 Freight, Shipment and Sales Expenses ...... 1,913.35 2,490.93 Royalty ...... 2,570.18 2,401.68 Stores and Spares ...... 176.13 216.34 Works Expenses ...... 1,696.93 1,491.63 Transport Expenses ...... 56.88 162.57 Repairs and Maintenance to Plant and Machinery ...... 870.72 1,668.81 Repairs and Maintenance to Buildings ...... 397.92 1,086.07 Insurance ...... 25.78 29.46 Rent ...... 196.40 183.50 Rates and Taxes ...... 72.54 82.57 Commission and Brokerage on Sales ...... 188.70 231.15 Donations ...... - 17.40 Payments to Auditors ...... 10.59 9.20 Directors’ Sitting Fees ...... 3.46 4.26 Miscellaneous Expenses ...... 48.40 54.69 ------TOTAL 26,149.46 29,307.22 ------

27.1 PAYMENTS TO AUDITORS (A) Statutory Auditor Audit Fees ...... 4.75 4.75 Tax Audit Fees ...... 0.15 0.15 Certification and Consultation Fees ...... 0.18 0.34 Reimbursement of Expenses ...... 3.05 1.20 ------Sub-Total (A) 8.13 6.44 ------(B) Cost Auditor Audit Fees ...... 0.70 0.70 Management Services ...... 0.60 0.60 Certification and Consultation Fees ...... 0.24 0.44 Reimbursement of Expenses ...... 0.92 1.02 ------Sub-Total (B) 2.46 2.76 ------TOTAL (A + B) 10.59 9.20 ------

28. EARNING PER SHARE (BASIC AND DILUTED) (i) Net Profit after Tax ...... (413.05) 1,906.61 (ii) Weighted average number of equity shares (Nos. in lacs) ...... 1,852.68 1,852.68 (iii) Earning per Share: ( ` per share) ...... (0.22) 1.03

60 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS 29. Disclosure pursuant to Accounting Standard - 15 ( Revised) “Employee Benefits” : Defined Contribution Plan : Amount of ` 282.82 (Previous Year ` 282.81) is recognised as expense and included in “Employee Benefits Expenses” in Note 24 of the Statement of Profit and Loss. Defined Benefit Plan : The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with SBI Life Insurance in form of qualifying insurance policy. The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of privilege leave for encashment. This is an unfunded plan. The following tables summaries the components of net expense recongnised in the Statement of Profit and Loss and Balance Sheet for the respective plans.

(a) Reconciliation of Opening and Closing balances of the present value of the Defined Benefit Obligation : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Present value of Defined Benefit Obligation 1,843.94 444.03 1,598.31 434.04 at the beginning of the year Interest Cost 147.52 35.52 127.86 34.72 Current Service Cost 80.37 36.49 79.32 57.64 Acturial Losses/(Gains) 54.41 35.55 204.63 22.29 Benefits Paid (237.19) (139.44) (166.18) (104.66) Present value of Defined Benefit Obligation 1,889.05 412.15 1,843.94 444.03 at the close of the year

(b) Changes in the Fair Value of Plan Assets and reconciliation thereof : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Fair Value of Plan Assets at the beginning 1,754.64 - 1,380.61 - of the year Add : Expected Return on Plan Assets 140.37 - 110.44 - Add/(Less) : Actuarial Gains/(Losses) 19.26 - 186.85 - Add : Contributions 239.82 - 242.92 - Less : Benefits Paid (237.19) - (166.18) - Fair Value of Plan Assets at the close of the year 1,916.90 - 1,754.64 -

Ferro Alloys Corporation Limited 61 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (c) Amount recognised in the Balance Sheet including a reconciliation of the present value of the defined obligation in (a) and the fair value of the plan assets in (b) to assets and liabilities recognised in the Balance Sheet : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Present Value of Defined Benefit Obligation 1,889.05 412.15 1,843.94 444.03 Less : Fair Value of Plan Assets 1,916.90 - 1,754.64 - Present Value of unfunded obligation (27.85) 412.15 89.30 444.03

(d) Amount recognised in the Statement of Profit and Loss are as follows (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Current Service Cost 80.37 36.49 79.32 57.64 Interest Cost 147.52 35.52 127.86 34.72 Expected return on Plan Asset (140.37) - (110.44) - Net acturial loss/(gain) 35.15 35.55 17.78 22.29 Net periodic cost 122.67 107.56 114.52 114.65

(e) Actuarial Assumptions as at the Balance Sheet date : Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Mortality table LIC a LIC a LIC a LIC a (1994-96) (1994-96) (1994-96) (1994-96) Discount Rate 8% 8% 8% 8% Salary Escalation Rate 5% 5% 5% 5%

(f) Movement in net liability recognised in Balance sheet : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Opening net liabilty 89.30 444.03 217.70 434.04 Expenses as above 122.67 107.56 114.52 114.65 Contributions Paid (239.82) (139.44) (242.92) (104.66) Closing net liabilty (27.85) 412.15 89.30 444.03

62 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (g) Other Disclosures : (` in lacs) Particulars 2015-16 2014-15 2013-14 2012-13 Gratuity PL Gratuity PL Gratuity PL Gratuity PL Encashment Encashment Encashment Encashment Defined Benefit Obligation 1,889.05 412.15 1,843.94 444.03 1,598.31 434.04 1,395.13 385.92 Plan Assets 1,916.90 - 1,754.64 - 1,380.61 - 1,155.12 - Surplus/(Deficit) 27.85 (412.15) (89.30) (444.03) (217.70) (434.04) (240.01) (385.92)

30. Raw Material Purchases include following being processing expenses: (` in lacs) 2015-16 2014-15 Power and Fuel ...... 58.50 80.34 Salaries and other benefits to employees ...... 101.68 116.17 Operating and other expenses ...... 446.34 714.39 Depreciation...... 57.30 56.78 ------663.82 967.68 ------2015-16 2014-15 ` in lacs Percentage ` in lacs Percentage ------31. (a) 1. Value of Consumption of imported Raw Materials ...... 681.60 2.97 1,328.02 5.63 2. Value of Consumption of indigenous Raw Materials ...... 22,262.88 97.03 22,274.04 94.37 ------22,944.48 100.00 23,602.06 100.00 ======(b) 1. Value of Consumption of imported Components and Spare Parts: ...... 150.76 8.54 188.23 7.54 2. Value of Consumption of indigenous Components and Spare Parts: ...... 1,615.00 91.46 2,306.80 92.46 ------1,765.76 100.00 2,495.03 100.00 ======32. C.I.F. Value of Imports : (` in lacs) 2015-16 2014-15 (a) Raw Materials ...... 438.43 408.96 (b) Components, Stores and Spare Parts ...... 137.31 108.01 ------575.74 516.97 ------33. Expenditure in Foreign Currency : (i) Commission on Sales ...... 189.68 260.99 (ii) Legal & Professional Charges ...... - 9.42 (iii) Travelling Expenses ...... 16.86 10.83 (iv) Subscription ...... 9.36 9.39 (v) Miscellaneous ...... 11.30 9.73 ------227.20 300.36 ------34. Earnings in Foreign Exchange on account of Export of Goods on F.O.B. basis ...... 20,570.06 19,473.25

Ferro Alloys Corporation Limited 63 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS 35. Corporate Scocial Responsibility Expenditure during the year amounts to ` 72.87 Lacs (Previous Year ` 53.13 Lacs) which has been debited under different heads of accounts in the Statement of Profit and Loss. 36. The information related to Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the company. 37. Contingent Liabilities and Commitments (I) Contingent Liabilities : (a) Claims against the Company not acknowledged as debts, since disputed ` 6,681.08 lacs (Previous Year ` 6,027.52 lacs). Amounts paid under protest ` 328.63 lacs (Previous Year ` 379.61 lacs) have been debited to Advance Account. (b) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable. (II) Capital and other Commitments : (a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts ` 415.97 Lacs (Previous Year ` 599.91 lacs). 38. a) The Company has given corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of Term Loan of ` 51,790 Lacs (Previous Year ` 51,790 Lacs) to Facor Power Ltd. (FPL). The Company has also pledged 19,80,59,930 shares (Previous Year 19,80,59,930 shares) with REC out of 19,80,59,930 shares (Previous Year 19,80,60,000 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project. b) The Company has given corporate guarantee to Central Bank of India of ` 3,000 Lacs (Previous Year ` 4,200 Lacs) for providing Working Capital Facilities to FPL. 39. Details on Segment Reporting : (` in lacs) DESCRIPTION FERRO ALLOYS CHROME ORE CONSOLIDATED TOTAL 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 1) REVENUE External Sales 45,478.45 47,560.16 - - 45,478.45 47,560.16 Inter Segment Sales - - 10,550.65 11,509.16 10,550.65 11,509.16 Total Revenue 45,478.45 47,560.16 10,550.65 11,509.16 56,029.10 59,069.32 2) RESULT Segment Result before Interest & Tax 1,828.41 3,958.02 (829.49) 152.90 998.92 4,110.92 Unallocated Expenses - - Finance Costs (1,513.60) (1,268.84) (275.01) (385.97) (1,788.61) (1,654.81) Tax Expense - - - - 376.64 (549.50) Profit / (Loss) from ordinary activities - - - - (413.05) 1,906.61 Extraordinary Loss ------NET PROFIT / (LOSS) - - - - (413.05) 1,906.61 3) OTHER INFORMATION Segment Assets 9,583.61 8,770.84 14,921.07 17,461.80 24,504.68 26,232.64 Unallocated Corporate Assets - - - - 22,078.85 21,920.52 Total Assets - - - - 46,583.53 48,153.16 Segment Liabilities 11,992.02 10,176.23 3,683.23 4,359.04 15,675.25 14,535.27 Unallocated Corporate Liabilities - - - - 21.09 611.98 Total Liabilities - - - - 15,696.34 15,147.25 Capital Expenditure 657.63 173.37 468.32 863.77 1,125.95 1,037.14 Depreciation / Amortisation 286.60 292.12 238.36 260.29 524.96 552.41 Non Cash expenditure other than Depreciation / Amortisation 1.37 1.97 0.15 0.17 1.52 2.14

64 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS 40. Related Party Disclosure:- I List of related parties:- A Name and nature of relationship with the related party where control exists: Facor Power Limited - Subsidiary Company. Facor Realty and Infrastructure Limited - Subsidiary Company. Facor Energy Limited - Subsidiary Company. B Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year : 1 Boula Platinum Mining Pvt. Ltd. - Associate 2 Facor Alloys Limited 3 Facor Steels Limited 4 Rai Bahadur Shreeram and Company Pvt. Ltd. 5 Shri Durgaprasad Saraf Charitable Trust 6 Shreeram Shipping Services Pvt. Ltd. 7 Shreeram Durgaprasad Ores Pvt. Ltd. 8 Saraf Enterprises (Pvt.) Ltd. 9 Saraf Bandhu Pvt. Ltd. 10 GDP Infrastructure Private Limited C Key Management Personnel : i) R.K. Saraf Chairman & Managing Director ii) Manoj Saraf Managing Director iii) Ashish Saraf Joint Managing Director iv) Rohit Saraf Joint Managing Director D Relatives of a Key Management Personnel : i) Mrs. Priti Rohit Saraf II Transactions with Related Parties during the year ended 31-03-2016 in the ordinary course of business.

(` in lacs) Particulars With Subsidiary With Enterprise With Key Companies where Significant Management influence exists Personnel & Relatives 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 i) Purchase of Goods 13,177.89 12,532.04 - - ii) Rent paid 82.10 71.66 23.18 23.50 iii) Interest paid 151.13 105.22 iv) Electricity Charges Paid 8.82 9.19 v) Maintenance Charges Paid 6.12 6.82 vi) Sale of Investment - 2.55 vii) Short Term Loans & Advances given (3.85) (77.69) (2.84) 4.00 viii) Clearing & forwarding and other service charges 11.57 7.91 ix) Long Term Borrowings (12.00) 825.00 x) Other Current Liabilities (640.87) (1,378.36) xi) Key Management Personnel and their Relative’s Remuneration 79.49 216.51 xii) Investments - 3,488.42 - (5.00) xiii) Balances outstanding at the year end a) Short Term Loans & Advances 20.45 24.31 19.68 25.07 b) Trade Payable 1,329.95 337.14 c) Long Term Borrowings 1,582.72 1,594.72 d) Other Long Term Borrowings 218.65 218.65 e) Other Current Liabilities 11.50 652.36 f) Key Management Personnel and their Relative’s Remuneration 364.09 362.31

Ferro Alloys Corporation Limited 65 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS III Disclosure in respect of Related Party Transactions during the year: (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. 1 PURCHASE OF GOODS Facor Power Limited Subsidiary 13,177.89 12,532.04 Total 13,177.89 12,532.04

2 RENT PAID Facor Alloys Limited Others 57.75 50.40 GDP Infrastructure Private Limited Others 3.00 - Saraf Enterprises (Pvt.) Ltd. Others 18.83 18.74 Saraf Bandhu Private Limited Others 1.80 1.80 Shri Durgaprasad Saraf Charitable Trust Others 0.72 0.72 Sub-Total 82.10 71.66 Mrs. Priti Rohit Saraf Relative of Key 23.18 23.50 Management Personnel Total 105.28 95.16

3 INTEREST PAID Shreeram Durgaprasad Ores Pvt. Ltd. Others 29.56 30.24 Rai Bahadur Shreeram and Company Pvt. Ltd. Others 121.57 74.98 Total 151.13 105.22

4 ELECTRICITY CHARGES PAID Facor Alloys Limited Others 8.82 9.19 Total 8.82 9.19

5 MAINTENANCE CHARGES PAID Facor Alloys Limited Others 6.12 6.82 Total 6.12 6.82

6 SALE OF INVESTMENT Rai Bahadur Shreeram and Company Private Limited Others - 2.55 Total - 2.55

7 SHORT TERM LOANS & ADVANCES GIVEN Facor Power Limited Subsidiary (13.50) 0.69 Facor Realty and Infrastructure Limited Subsidiary - (2.78) Facor Energy Limited Subsidiary 9.65 (75.60) Sub-Total (3.85) (77.69) Facor Steels Limited Others - 4.00 Boula Platinum Mining Pvt. Ltd. Associate (2.84) - Sub-Total (2.84) 4.00 Total (6.69) (73.69)

66 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. 8 CLEARING & FORWARDING AND OTHER SERVICE CHARGES Shreeram Shipping Services Pvt. Ltd. Others 11.57 7.91 Total 11.57 7.91

9 LONG TERM BORROWINGS (Inter Corporate Deposit) Shreeram Durgaprasad Ores Pvt. Ltd. Others - (15.00) Rai Bahadur Shreeram and Company Private Limited Others (12.00) 840.00 Total (12.00) 825.00

10 OTHER CURRENT LIABLITIES Facor Alloys Limited Others (640.74) (1,386.38) Shreeram Durgaprasad Ores Pvt. Ltd. Others (0.01) (0.12) Rai Bahadur Shreeram and Company Private Limited Others (0.12) 8.14 Total (640.87) (1,378.36)

11 KEY MANAGEMENT PERSONNEL AND THEIR RELATIVES’ REMUNERATION Shri R. K. Saraf Key Management 17.00 15.87 Personnel Shri Manoj Saraf Key Management 20.83 20.27 Personnel Shri Ashish Saraf Key Management 20.83 20.84 Personnel Shri Rohit Saraf Key Management 20.83 20.85 Personnel Shri Vinod Saraf Key Management - 5.93 Personnel Commission Directors - 132.75 79.49 216.51

12 INVESTMENTS Facor Power Limited Subsidiary - 3,396.00 Facor Energy Limited Subsidiary - 92.42 Sub-Total - 3,488.42 Facor Steels Limited Others - (5.00) Total - 3,483.42

Ferro Alloys Corporation Limited 67 SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. 13 BALANCES OUTSTANDING AT THE YEAR END (A) Short Term Loans & Advances Facor Power Limited Subsidiary - 13.50 Facor Energy Limited Subsidiary 20.45 10.81 Sub-Total 20.45 24.31 Facor Steels Limited Others 19.68 19.68 Boula Platinum Mining Pvt. Ltd. Associate - 2.84 Rai Bahadur Shreeram and Company Private Limited Others - 2.55 Sub-Total 19.68 25.07 Total 40.13 49.38

(B) Trade Payables Facor Power Limited Subsidiary 1,329.95 337.14 1,329.95 337.14

(C) Long Term Borrowings Rai Bahadur Shreeram and Company Private Limited Others 1,287.72 1,299.72 Shreeram Durgaprasad Ores Pvt. Ltd. Others 295.00 295.00 Total 1,582.72 1,594.72

(D) Other Long Term Borrowings Boula Platinum Mining Pvt. Ltd. Associate 218.65 218.65 Total 218.65 218.65

(E) Other Current Liabilities Facor Alloys Limited Others - 640.74 Rai Bahadur Shreeram and Company Private Limited Others 9.25 9.36 Shreeram Durgaprasad Ores Pvt. Ltd. Others 2.25 2.26 11.50 652.36

(F) Key Management Personnel and their Relatives’ Remuneration Shri R. K. Saraf Key Management 0.22 - Personnel Shri Manoj Saraf Key Management 0.56 - Personnel Directors Commission Payable Key Management 363.31 362.31 Personnel Total 364.09 362.31

68 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016 60 2015-16

STANDALONE ACCOUNTS 41. Details of Loans given, Investments made and Guarantee given covered U/s 186(4) of the Companies Act, 2013 Loans given, Investments made and Guarantees given by the Company in respect of loans are given under the respective heads.

42. Previous Year’s figures have been re-grouped wherever necessary.

As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994)

Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

Ferro Alloys Corporation Limited 69 SIXTIETH 60 ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT 2015-16

TO THE MEMBERS OF FERRO ALLOYSCORPORATION LIMITED Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Ferro Alloys Corporation Limited (hereinafter referred to as “the Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) and its associate, comprising of the Consolidated Balance Sheet as at 31st March, 2016, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”). Management’s Responsibility for the Consolidated Financial Statements The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as”the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group including its associate in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group and of its associate are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) ofthe Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its associate as at 31st March, 2016, and their consolidated loss and their consolidated cash flows for the year ended on that date. Other Matters a) We did not audit the financial statements of two subsidiaries whose financial statements reflect total assets of ` 67,420.40 Lacs as at 31st March, 2016, total revenues of ` 12,986.17 Lacs and net cash flows amounting to ` 3.78 Lacs for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of net loss of ` 0.05 Lacs for the year ended 31st March, 2016, as considered in the consolidated financial statements, in respect of one associate, whose financial statements have not been audited by us. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and associate, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and associate, is based solely on the reports of the other auditors.

70 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 60 2015-16 b) We did not audit the financial statements of a subsidiary company, whose financial statements reflect total assets of ` 0.08 Lacs as at 31st March, 2016, total revenues of ` nil and net cash flows amounting to `(-)1.85 Lacs for the year ended on that date, as considered in the Consolidated Financial Statements. These financial statements are unaudited and have been furnished to us by the Management and our opinion on these Consolidated Financial Statements, in as far as it relates to the amounts and disclosures included in respect of this subsidiary, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act in so far as it relates to the aforesaid subsidiary, is based solely on such unaudited financial statements. Our opinionon the consolidated financial statements, and our reporton Other Legal and Regulatory Requirements below, is not modified in respect of the above matterswith respect to our reliance on the work done and the reports of the other auditors and the financial statements certified by the Management. Report on Other Legal and Regulatory Requirements 1. As required by Section143(3) of the Act, we report, to the extent applicable, that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements. (b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors. (c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements. (d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. (e) On the basis of the written representations received from the directors of the Holding Company as on 31st March, 2016 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies and associate company incorporated in India, none of the directors of the Group companies and its associate company incorporated in India is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act. (f) With respect to the adequacy of the internal financial controls over financial reporting of the Group and the operating effectiveness of such controls, refer to our report in “Annexure A”; and (g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule11 the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. the consolidated financial statements disclose the impact of pending litigations on its financial position of the Group and its associate in its financial statements; ii. the Group and its associate did not have any long-term contracts including the derivative contracts for which there were any material foreseeable losses; iii. there has been no delay in transferring amounts, required to be transferred, to the investor education and protection fund by the Groupand its associate incorporated in India during the year ended 31st March, 2016. For SALVE & Co. Chartered Accountants (Firm’s Registration No.109003W) C.A. K.P. SAHASRABUDHE Place: Noida, UP Partner Date : 27th May, 2016 (Membership No.007021)

Ferro Alloys Corporation Limited 71 SIXTIETH ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 60 2015-16

ANNEXURE ‘A’ TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE CONSOLIDATED FINANCIAL STATEMENT OF FERRO ALLOYS CORPORATION LIMITED Report on the Internal Financial controls under clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act). We have audited the internal financial controls over financial reporting of Ferro Alloys Corporation Limited (“the holding Company”) and its subsidiary companies and its associate company which are companies incorporated in India, for the year ended 31st March, 2016 in conjunction with our audit of the Consolidated Financial Statements of the Company.

Management’s Responsibility for Internal Financial Controls The respective Board of Directors of the Holding Company, its subsidiary companies and associate company, which are incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility Our responsibility is to express an opinion on the Company‘s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143 (10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the

72 Ferro Alloys Corporation Limited SIXTIETH ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 60 2015-16 internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion In our opinion, the Holding Company, its subsidiaries and associate company, which are incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India as it appears from our examination of the books and records of the Holding Company and the reports of the other auditors in respect of entities audited by them and representation received from management for entities unaudited.

For SALVE & Co. Chartered Accountants (Firm’s Registration No.109003W)

C.A. K.P. SAHASRABUDHE Place: Noida, UP Partner Date : 27th May, 2016 (Membership No.007021)

Ferro Alloys Corporation Limited 73 SIXTIETH ANNUAL REPORT CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) Particulars Note As at As at Nos. 31st March, 2016 31st March, 2015 ------EQUITY AND LIABILITIES Shareholders’ Funds Share Capital ...... 2 1,852.68 1,852.68 Reserves and Surplus ...... 3 7,160.60 12,471.17 ------9,013.28 14,323.85 Minority Interest ...... - 706.45 Non-Current Liabilities Long-Term Borrowings ...... 4 47,157.69 51,160.35 Deferred Tax Liabilities (Net) ...... - 216.36 Other Long-Term Liabilities ...... 5 218.65 665.44 Long-Term Provisions ...... 6 1,488.33 1,591.84 ------48,864.67 53,633.99 Current Liabilities Short-Term Borrowings ...... 7 6,807.73 7,047.07 Trade Payables a) Outstanding dues of micro and small enterprises 8 4.24 18.64 b) Outstanding dues of creditors other than micro and small enterprises ...... 8 6,594.41 6,195.56 Other Current Liabilities ...... 9 24,204.19 14,976.65 Short-Term Provisions ...... 10 158.53 536.18 ------37,769.10 28,774.10 ------TOTAL 95,647.05 97,438.39 ======ASSETS Non-Current Assets Fixed Assets Tangible Assets ...... 11 63,402.19 63,636.66 Intangible Assets ...... 11 5,162.73 5,162.73 Capital Work-in-Progress ...... 11 10,863.88 10,193.88 ------79,428.80 78,993.27 Non-Current Investments ...... 12 9.80 12.15 Long-Term Loans and Advances ...... 13 1,378.80 1,428.65 Other Non- Current Assets ...... 14 150.31 149.80 Deferred Tax Assets (Net) ...... 160.63 ------81,128.34 80,583.87 Current Assets Inventories ...... 15 7,820.57 10,272.19 Trade Receivables ...... 16 1,602.28 1,536.16 Cash and Bank Balances ...... 17 497.77 409.64 Short-Term Loans and Advances ...... 18 4,482.73 4,498.72 Other Current Assets ...... 19 115.36 137.81 ------14,518.71 16,854.52 ------TOTAL 95,647.05 97,438.39 ======Significant Accounting Policies 1 Notes on Financial Statements 2 to 35 As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994) Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

74 Ferro Alloys Corporation Limited SIXTIETH CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) Particulars Note Year Ended Year Ended Nos. 31st March, 2016 31st March, 2015 ------INCOME Revenue from Operations ...... 20 57,368.19 60,310.28 Other Income ...... 21 604.80 385.68 ------Total Revenue 57,972.99 60,695.96 EXPENSES : Cost of Materials Consumed ...... 22 30,581.42 31,353.46 Changes in Inventories of Finished Goods and Stock-in-Process ...... 23 2,716.67 (1,240.03) Employee Benefits Expense ...... 24 4,742.44 4,892.45 Finance Costs ...... 25 9,033.99 8,145.45 Depreciation and Amortisation Expense ...... 26 2,166.41 2,178.74 Other Expenses ...... 27 15,126.09 18,800.14 ------Total Expenses 64,367.02 64,130.21 ------Profit/(Loss) Before Tax ...... (6,394.03) (3,434.25) Tax Expenses Current Tax ...... - 580.84 Tax for Earlier Years ...... 0.35 (101.93) Deferred Tax ...... (376.99) 70.59 ------(376.64) 549.50 ------Profit/(Loss) after Tax but before share of Profit / Loss from (6,017.39) (3,983.75) Associate & Minority Interest Share of Profit / (Loss) from Associate After Tax ...... (0.05) (1.21) Minority Interest ...... (706.46) (816.96) ------Profit/(Loss) for the year ...... (5,310.98) (3,168.00) ------Earning per equity share of face value of ` 1/- each Basic and Diluted ( in ` ) ...... 28 (2.87) (1.71) Significant Accounting Policies ...... 1 Notes on Financial Statements ...... 2 to 35 As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994) Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

Ferro Alloys Corporation Limited 75 SIXTIETH CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) 2015-16 2014-15 ------(A) CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before tax ...... (6,394.03) (3,434.25) Add : Income from associate after Tax ...... (0.05) (1.21) Adjustment for: Depreciation ...... 2,223.71 2,235.52 Exchange difference on translation (Net) ...... 1.05 4.58 Interest and Dividend Income ...... (107.41) (152.69) Finance Costs ...... 9,033.99 8,145.45 Sale of project scrap ...... (8.55) (24.81) Profit/Loss on Sale of Fixed Assets (Net) ...... 0.84 (11.96) ------11,143.63 10,196.09 ------Operating Profit before Working Capital Changes ...... 4,749.55 6,760.63 Adjustment for: Trade and Other Receivables ...... (70.94) 3,836.21 Inventories ...... 2,451.62 (740.46) Trade Payables ...... 9,054.38 (2,887.93) Others ...... 24.55 (18.41) ------11,459.61 189.41 ------Cash Generated from Operations ...... 16,209.16 6,950.04 Direct Taxes Paid/Adjusted ...... (301.08) (93.56) ------(301.08) (93.56) ------Net Cash Flow from Operating Activities ...... 15,908.08 6,856.48 (B) CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets and Capital work in progress ...... (2,669.42) (3,082.07) Addition to Intangibles ...... - (1,466.10) Sale of Fixed Assets ...... 9.34 25.40 Sale of Investments ...... 2.35 2.71 Interest and Dividend Income ...... 129.86 190.82 ------Net Cash Flow used in Investing Activities ...... (2,527.87) (4,329.24) (C) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Long and Short Term Borrowings ...... (4,242.00) 3,875.83 Other Non- Current Assets ...... (0.51) (3.09) Finance Costs Paid ...... (9,033.99) (8,145.45) Miscellaneous Expenditure/Income ...... 8.55 24.81 ------Cash Flow used in Financing Activities ...... (13,267.95) (4,247.90) Adjustment to networth on consolidation i) Foreign Currency Translation Reserve ...... 0.41 0.05 ii) Adjustment to minority interest ...... 0.01 300.00 iii) Adjustment on account of consolidation ...... - 0.42 1,466.10 1,766.15 ------Net Cash Flow (used in) /from Financing Activities ...... (13,267.53) (2,481.75) Net Increase/(Decrease) in Cash and Cash Equivalents ...... 112.68 45.49 ------Opening Balance of Cash and Cash Equivalents ...... 165.51 120.02 Closing Balance of Cash and Cash Equivalents ...... 278.19 165.51 ------Net Increase/(Decrease) in Cash and Cash Equivalents ...... 112.68 45.49 ======As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994) Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016

76 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS 1. Significant Accounting Policies (A) Basis of Preparation of Consolidated Financial Statements These Consolidated Financial Statements have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013, as adopted consistently by the Company. (B) Principles of Consolidation a) The Consolidated Financial Statements present the consolidated Accounts of Ferro Alloys Corporation Limited and its following subsidiaries and associate companies in terms of Accounting Standard 21 & Accounting Standard 23 notified pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended). Subsidiary Companies Sl. Name of the Subsidiary Proportion of Country of No. ownership & Voting Power Incorporation 1. Facor Realty and Infrastructure Ltd. (FRIL) 100.00% India 2. Facor Power Limited (FPL) 86.09% India 3. Facor Energy Limited (FEL) 100.00% Guernsey

Associate Company Sl. Name of the Associate Proportion of Country of No. ownership & Voting Power Incorporation 1. Boula Platinum Mining Private Limited 30.00% India FPL is engaged in generation and supply of Power and is setting up a 100 MW (2*5OMW) Thermal Power Plant at Bhadrak, Odisha. It has commenced commercial production from 1st October, 2011 from 1st Turbine of 50 MW and 1st Boiler. The second phase of the Project (2nd Turbine of 50 MW and 2nd Boiler) has been commissioned and synchronized on 11th March, 2014. FRIL and FEL have not yet commenced business. b) The financial statements of the Company and its subsidiaries have been consolidated on a line-by-line basis adding together the book value of like items of assets, liabilities, income and expenses, after eliminating intra-group balances, intra group transactions and any unrealized profits. c) The consolidated financial statements have been prepared using accounting policies for like transactions and are presented, to the extent possible, in the same manner as the company’s separate financial statements. d) The financial statements of FEL have been prepared in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP). This subsidiary is not significant as compared to the Company’s consolidated operations and hence, the impact thereof, if any, on account of any difference to the Indian Generally Accepted Accounting Principles (IGAAP) is not material. e) In translating the financial statements of the non-integral foreign subsidiary for incorporation in the consolidated financial statements, the assets and liabilities, both monetary and non-monetary are translated at the closing rate; income and expenses items are translated at average exchange rate; and all resulting exchange differences are accumulated in foreign currency translation reserve. f) The difference between the cost of investment in the subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognized in financial statements as Goodwill or Capital Reserve as the case may be. g) Minority Interest’s share of net profit of consolidated subsidiaries for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholders of the Company. h) Minority interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated balance sheet separate from liabilities and the equity of the Company’s shareholders. i) The losses applicable to the minority in excess of the minority interest in the equity of the subsidiary and further losses applicable to the minority are adjusted against the majority interest. If the subsidiary subsequently report profit, all such profits are allocated to the majority interest until the minority’s share of losses previously absorbed by the majority has been recovered. j) Investments in Associate Company has been accounted under the equity method as per (AS 23) – “Accounting for Investments in Associates in Consolidated Financial Statements”.

Ferro Alloys Corporation Limited 77 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS k) The difference between the cost of investments in the associates and the share of net assets at the time of acquisition of shares in the associates is identified in the financial statements as Goodwill or Capital Reserve as the case may be. (C) Investments other than in subsidiaries have been accounted as per Accounting Standard (AS) 13 on “Accounting for Investments”. (D) Other Significant Accounting Policies; These are set out under the head “Significant Accounting Policies” of the company & the subsidiaries. Differences in accounting policies followed by the other entities have been reviewed and no adjustments have been made, since the impact of these differences is not significant. (E) Notes to these consolidated financial statements are intended to serve as a means of informative disclosure and a guide to better understanding. Recognising this purpose, the Company has disclosed only such notes from the individual financial statements, which fairly present the needed disclosure. (F) Consolidated Deferred taxes are same as deferred tax of standalone Ferro Alloys Corporation Limited.

(` in lacs) As at As at 31st March, 2016 31st March, 2015 ------2. SHARE CAPITAL Authorised Share Capital: 220,000,000 (Previous Year - 220,000,000) Equity Shares of ` 1/- each ..... 2,200.00 2,200.00 800,000 (Previous Year - 800,000) 0.01% Redeemable Preference Shares of ` 100/- each ...... 800.00 800.00 ------TOTAL 3,000.00 3,000.00 ------Issued, Subscribed and Paid up: 185,268,241 (Previous Year - 185,268,241) Equity Shares of ` 1/- each fully paid up ...... 1,852.68 1,852.68 ------TOTAL 1,852.68 1,852.68 ------2.1 The details of Shareholders holding more than 5% shares : Name of the Shareholder As at 31st March, 2016 As at 31st March, 2015 No. of Shares % held No. of Shares % held Rai Bahadur Shreeram and Company Private Limited ...... 69,448,883 37.49% 69,448,883 37.49% Premier Commercial Corporation ...... 15,672,291 8.46% 15,672,291 8.46%

2.2 The reconciliation of number of shares outstanding at the beginning and at the end of the reporting period: Particulars As at 31st March, 2016 As at 31st March, 2015 No. of Shares No. of Shares Shares outstanding at the beginning of the year ...... 185,268,241 185,268,241 Shares issued during the year ...... - - Shares bought back during the year ...... - - Shares outstanding at the end of the year ...... 185,268,241 185,268,241

2.3 Terms/rights attached to Equity Shares: The Company has only one class of Equity Shares having a par value of ` 1/- per share. The Equity Shares have equal rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act, 2013.

78 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------3. RESERVES AND SURPLUS Capital Reserve: Balance as at the beginning and end of the year ...... 439.24 439.24 Foreign Currency Translation Reserve: Balance as at the beginning of the year ...... (9.07) (9.12) Add: Movement during the year ...... 0.41 0.05 ------Balance as at the end of the year (8.66) (9.07) General Reserve: Balance as at the beginning of the year ...... 19,200.00 17,100.00 Add : Transferred from Statement of Profit & Loss ...... - 2,100.00 ------Balance as at the end of the year 19,200.00 19,200.00 Statement of Profit and Loss Balance as at the beginning of the year ...... (7,159.00) (3,341.94) Add: Profit/(Loss) for the year ...... (5,310.98) (3,168.00) Less: Depreciation adjustment from Opening Retained Earnings...... - 4.53 Transferred to Goodwill on Consolidation ...... - 1,466.10 Change in Minority Interest ...... - 10.63 Appropriations: Transferred to General Reserve ...... - 2,100.00 ------3,581.26 (5,310.98) (3,817.06) ------Balance as at the end of the year ...... (12,469.98) (7,159.00) ------TOTAL 7,160.60 12,471.17 ------

4. LONG-TERM BORROWINGS Secured From Banks & Financial Institution : Rupee Term Loan Account - From Banks (Refer Note 4.1) ...... 82.24 265.61 - From Banks (Refer Note 4.2) ...... 4.97 - - From Rural Electrification Corporation Limited (Refer Note 4.3 (a) and (b)) ...... 44,127.77 47,965.46 ------44,214.98 48,231.07 Unsecured From related parties (Refer Note 4.4) ...... 1,582.71 1,594.71 Others ...... 1,360.00 1,330.00 ------2,942.71 2,924.71 Deferred payment liabilities ...... - 4.57 ------2,942.71 2,929.28 ------TOTAL 47,157.69 51,160.35 ------

Ferro Alloys Corporation Limited 79 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS 4.1 - Secured by hypothecation of Metal Recovery Plant and second pari-passu charge on other fixed assets of the company and guarateed by two directors. - Terms of repayment : Payable in equal quarterly instalments 4.2 - Vehicle loan is secured against hypothecation of sepecified vehicles. Terms of repayment : Payable in equal monthly instalments. 4.3 (a) Loan of ` 4,44,127.77 lacs (Previous Year ` 47,965.46 lacs) from Rural Electrification Corporation Limited (REC) is secured by first charge on all present & future immoveable properties, movable fixed assets including lease hold land, project assets, book debts, commission receivables, intangibles, goodwill, uncalled capital, Turst & Retention Account. It is further secured by first charge on all insurance contracts / insurance proceeds including the insurance contracts related to the project within a period of six months from the date of initial disbursement and contractors guarantee, performance bond & letter of credit. Pledge of 91.30% (previous year 91.30%) fully paid up share capital of the project as collateral security and and personal guarantee of two Promoter Directors. (b) Term loan from REC is re-payable in 44 equal quarterly instalment. Instalment due on 31st December 2015 and 31st March 2016 have not been paid. Total amount due as on 31st March 2016 is ` 2,322.61 lacs (Previous Year ` Nil). Interest of ` 9,402.39 lacs due on term loan is outstanding for the period September 30, 2014 to March 30, 2016 (Previous Year ` 2,476.96 lacs for the period September 30, 2014 to March 30, 2015), due to this the account has been declared as non performing assets (NPA). 4.4 Terms of repayment : Payable after 31st March, 2016 (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------5. OTHER LONG-TERM LIABILITIES...... 218.65 665.44 ------TOTAL 218.65 665.44 ------6. LONG-TERM PROVISIONS Provision for Employee Benefits: P.L.Encashment (Unfunded) ...... 292.73 316.51 Gratuity ...... 28.25 24.97 Others ...... 1,167.35 1,250.36 ------TOTAL 1,488.33 1,591.84 ------7. SHORT-TERM BORROWINGS From Banks : (Secured) Cash Credit / Packing Credit Accounts (Refer Note 7.1 & 7.2) ...... 5,731.60 5,618.06 Bills Discounted ...... } 576.13 829.01 ------6,307.73 6,447.07 Unsecured : From Related Parties ...... 500.00 500.00 Others ...... - 100.00 ------TOTAL 6,807.73 7,047.07 ------7.1 Cash Credit facility of ` 1,531.48 lacs (Previous Year ` 1,517.26 lacs) from Central Bank of India is secured against the pari- passu first charge on all the assets, present & future and personal Guarantee of two Promoter Directors.This Cash Credit facility is payable on demand. 7.2 Balance Cash Credit / Packing Credit / Bills Discounted facility of ` 4,776.25 lacs (Previous Year ` 4,929.81 lacs) is secured by hypothecation of stocks of raw-materials, finished products, book debts, and other receivables and by way of second charge on fixed assets of the Company by deposit of title deeds in respect of immovable properties and guaranteed by two Directors. This is payable on demand.

80 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------8. TRADE PAYABLES Trade Payables a) Outstanding dues of micro and small enterprises ...... 4.24 18.64 b) Outstanding dues of creditors other than micro and small enterprises ...... 6,594.41 6,195.56 ------TOTAL 6,598.65 6,214.20 ------9. OTHER CURRENT LIABILITIES Current maturities of long-term debts - Rupee Term Loan from Banks & Financial Institution (Secured) ...... 5,229.98 4,235.65 Deferred payment liabilities ...... - 10.69 Interest accrued but not due on borrowings ...... 24.64 87.41 Interest accrued and due on borrowings ...... 9,431.15 2,508.13 Unpaid dividends ...... 4.42 13.88 Other payables * ...... 9,514.00 8,120.89 ------TOTAL 24,204.19 14,976.65 ------* Includes statutory dues, security deposits and advance from customers. 10. SHORT-TERM PROVISIONS Provision for Employee Benefits: P.L.Encashment (Unfunded) ...... 141.08 152.26 Gratuity ...... 0.78 2.18 For Taxation ...... 16.67 381.74 ------TOTAL 158.53 536.18 ------11. FIXED ASSETS (` in lacs) Particulars GROSS BLOCK AT COST DEPRECIATION NET BLOCK As at Additions/ Deductions/ As at Upto For the Deductions/ Upto As at As at 1.04.2015 Adjustments Adjustments 31.03.2016 1.04.2015 Year Adjustments 31.03.2016 31.03.2016 31.03.2015 (I) Tangible Assets: Land Leased 135.55 - - 135.55 3.95 1.13 - 5.08 130.47 131.60 Land Freehold 3,141.43 76.42 - 3,217.85 - - - - 3,217.85 3,141.43 Buildings 13,122.80 243.12 - 13,365.92 2,737.96 396.93 - 3,134.89 10,231.03 10,384.84 Roads and Drains 1,110.98 4.23 - 1,115.21 267.03 89.42 - 356.45 758.76 843.95 Railways Sidings 2,777.79 - - 2,777.79 293.74 184.74 - 478.48 2,299.31 2,484.05 Plant and Machinery 57,155.96 1,598.47 1.85 58,752.58 11,289.11 1,407.71 1.81 12,695.01 46,057.57 45,866.85 Office and Other Equipments 731.73 47.97 2.57 777.13 444.91 48.81 1.89 491.83 285.30 286.82 Furniture and Fixtures 324.76 15.92 0.21 340.47 185.00 18.59 0.20 203.39 137.08 139.76 Vehicles 1,074.20 13.29 44.13 1,043.36 716.84 76.38 34.68 758.54 284.82 357.36 79,575.20 1,999.42 48.76 81,525.86 15,938.54 2,223.71 38.58 18,123.67 63,402.19 63,636.66 Previous Year 78,720.32 910.32 55.44 79,575.20 13,756.14 2,219.87 37.47 15,938.54 63,636.66 (II) Intangible Assets: Goodwill 10,507.12 - - 10,507.12 5,344.39 - - 5,344.39 5,162.73 5,162.73 Previous Year 9,041.02 1,466.10 - 10,507.12 5,328.74 15.65 - 5,344.39 5,162.73 Capital Work-in-Progress: 10,863.88 10,193.88 Total 79,428.80 78,993.27

Ferro Alloys Corporation Limited 81 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------12. NON-CURRENT INVESTMENTS Trade Investments : (At Cost) In Equity Shares of Other Companies - Quoted, fully paid up 500,000 (Previous Year - 500,000) Facor Alloys Limited ...... 5.00 5.00 of ` 1 each In Equity Shares of Associate Company - Unquoted, fully paid up 466,164 (Previous Year - 466,164) Boula Platinum Mining ...... 4.66 4.66 Pvt. Ltd. of ` 1 each (Refer Note 12.2) Add: Share of Profit / (Loss) net ...... (2.56) (2.51) ------2.10 2.15 In Government Securities : Unquoted 5 Years National Savings Certificates ...... 0.20 0.20 6 Years National Savings Certificates ...... 2.45 4.75 7 Years National Savings Certificates ...... 0.05 2.70 0.05 ------TOTAL 9.80 12.15 ------12.1 Aggregate cost of Quoted Investments ...... 5.00 5.00 Market Value of Quoted Investments ...... 4.00 4.40 Aggregate amount of Unquoted Investments ...... 4.80 7.15 12.2 Goodwill arising at acquisition is limited to acquisition value of ` 4.66 Lacs

13. LONG-TERM LOANS AND ADVANCES (Unsecured and Considered Good) Capital Advance ...... 333.49 383.39 Security Deposits ...... 1,044.69 1,042.01 Prepaid Expenses ...... 0.62 3.25 ------TOTAL 1,378.80 1,428.65 ------

14. OTHER NON-CURRENT ASSETS Unamortised Expenses ...... 150.31 149.80 ------TOTAL 150.31 149.80 ------

15. INVENTORIES (As per Inventory taken, valued and as certified by the Management) (At cost unless otherwise stated) Raw Materials (includes in transit ` 108.87 lacs, Previous Year ` 611.50 lacs) .... 4,056.55 3,939.21 Stock-in-Process (At Cost or Net realisable value whichever is lower) ...... 139.58 219.28 Finished Goods (At Cost or Net realisable value whichever is lower) ...... 3,026.12 5,663.09 Stores and Spare Parts (includes in transit ` Nil, Previous Year ` 22.31 lacs) ..... 554.53 411.57 Loose Tools ...... 43.79 39.04 ------TOTAL 7,820.57 10,272.19 ------

82 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2016 31st March, 2015 ------16. TRADE RECEIVABLES (Unsecured and Considered Good) Over six months ...... 50.14 42.43 Others ...... 1,552.14 1,493.73 ------TOTAL 1,602.28 1,536.16 ------

17. CASH AND BANK BALANCES CASH AND CASH EQUIVALENTS Cash in hand ...... 23.00 15.60 Cheques in Hand ...... 0.20 - With Scheduled Banks: In Current Accounts ...... 254.99 149.91 In Current Accounts- For Unpaid Dividend ...... 4.42 14.28 OTHER BANK BALANCES In Fixed Deposit Accounts : Bank Deposits (held as margin money/ security deposits) ...... 168.78 184.64 Bank Deposits (With original maturity of more than three months but less than twelve months) ...... 6.75 10.00 Bank Deposits ( held as a margin money/ security deposits and having original maturity more than 12 months) ...... 39.63 35.21 ------TOTAL 497.77 409.64 ------17.1 Bank deposits of ` 54.06 lacs (Previous Year ` 54.06 lacs) have been deposited with Executive Engineer, Salandi Canal Division, Bhadrak as advance water charges to be adjusted against water charges payable in case of default. 17.2 Bank deposits of ` 114.72 lacs (Previous Year ` 130.58 lacs) represent margin money for Bank Guarantees and Letter of Credits issued by Bank. 17.3 As Margin Money Deposit with Banks ` 6.75 lacs (Previous Year ` Nil) 17.4 Fixed Deposit Receipts pledged with Government Authorities and with Banks ` 39.63 lacs (Previous Year ` 35.21 lacs)

18. SHORT- TERM LOANS AND ADVANCES (Unsecured and Considered Good) Loans and Advances to Related Parties ...... 19.69 19.68 Others ...... 4,463.04 4,479.04 ------TOTAL 4,482.73 4,498.72 ------

19. OTHER CURRENT ASSETS Interest accrued on Deposits ...... 76.88 99.33 Claims Recoverable ...... 1.93 1.93 Unamortised Expenses ...... 36.55 36.55 ------TOTAL 115.36 137.81 ------

Ferro Alloys Corporation Limited 83 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------20. REVENUE FROM OPERATIONS Sale of products, less returns ...... 59,860.85 62,975.00 Less: Excise Duty ...... 3,396.91 3,865.58 ------56,463.94 59,109.42 Add: Export Incentives ...... 904.25 1,200.86 ------TOTAL 57,368.19 60,310.28 ------

Gross Sales ------20.1 PARTICULARS OF SALE OF PRODUCTS Ferro Alloys ...... 48,237.11 50,743.35 Chrome Ore ...... 11,133.64 12,165.28 Power ...... 434.84 40.10 Off Grade / By-products ...... 55.26 26.27 ------TOTAL 59,860.85 62,975.00 ------

21. OTHER INCOME Interest Income: Interest on Deposits ...... 36.91 26.51 Other Interest ...... 70.50 126.18 Miscellaneous receipts ...... 90.06 21.73 Profit /( Loss) on Fixed Assets Sold/Discarded (Net) ...... (0.84) 11.96 Profit /( Loss) on sale of Investments ...... - (2.45) Foreign Exchange Gain ...... 159.64 164.72 Liabilities/Provisions no longer required written back (Net)...... 239.98 12.22 Sale of project scrap ...... 8.55 24.81 ------TOTAL 604.80 385.68 ------

22. COST OF MATERIALS CONSUMED Opening stock of Materials ...... 3,925.52 4,372.67 Add: Purchases ...... 30,706.61 30,906.31 ------34,632.13 35,278.98 Less: Closing stock of Materials ...... 4,050.71 3,925.52 ------Cost of Materials Consumed 30,581.42 31,353.46 ------

84 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------23. CHANGES IN INVENTORIES OF FINISHED GOODS AND STOCK-IN PROCESS Closing stock: Finished Goods ...... 3,026.12 5,663.09 Stock-in-Process ...... 139.58 219.28 ------3,165.70 5,882.37 Opening stock: Finished Goods ...... 5,663.09 4,463.76 Stock-in-Process ...... 219.28 178.58 ------5,882.37 4,642.34 ------Decrease/(Increase) in Inventories 2,716.67 (1,240.03) ------

(` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------24. EMPLOYEE BENEFITS EXPENSE Salaries, Wages and Bonus ...... 3,648.90 3,701.24 Contribution to Provident and Other Funds ...... 424.15 440.81 Welfare Expenses ...... 561.87 504.82 Directors’ Remuneration ...... 107.52 245.58 ------TOTAL 4,742.44 4,892.45 ------

25. FINANCE COSTS Interest: On Fixed Loan ...... 7,440.16 6,919.84 On Others ...... 1,578.53 1,211.12 ------9,018.69 8,130.96 Other Borrowing Costs ...... 15.30 14.49 ------TOTAL 9,033.99 8,145.45 ------

26. DEPRECIATION AND AMORTISATION EXPENSE Depreciation...... 2,166.41 2,163.09 Amortisation ...... - 15.65 ------TOTAL 2,166.41 2,178.74 ------

Ferro Alloys Corporation Limited 85 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2016 31st March, 2015 ------27. OTHER EXPENSES Power and Fuel ...... 1,454.53 1,694.06 Mining, Handling and other Production Expenses ...... 3,915.62 5,441.35 Freight, Shipment and Sales Expenses ...... 1,913.35 2,490.93 Royalty ...... 2,570.18 2,401.68 Stores and Spares ...... 302.94 387.29 Works Expenses ...... 2,726.06 2,436.00 Transport Expenses ...... 56.88 162.57 Repairs and Maintenance to Plant and Machinery ...... 922.64 1,738.36 Repairs and Maintenance to Buildings ...... 427.21 1,147.97 Insurance ...... 50.58 68.16 Rent ...... 215.53 202.38 Rates and Taxes ...... 101.73 103.73 Commission and Brokerage on Sales ...... 188.70 231.15 Donations ...... - 17.40 Payments to Auditors ...... 20.19 18.77 Directors’ Sitting Fees ...... 3.46 4.26 Miscellaneous Expenses ...... 256.49 254.08 ------TOTAL 15,126.09 18,800.14 ------

28. EARNING PER SHARE BASIC AND DILUTED (i) Net Profit after Tax ...... (5,310.98) (3,168.00) (ii) Weighted average number of equity shares (Nos. in lacs) ...... 1,852.68 1,852.68 (iii) Earning per Share: ( ` per share) ...... (2.87) (1.71)

29. Disclosure pursuant to Accounting Standard - 15 ( Revised) “Employee Benefits” : i. Defined Contribution Plan Amount of ` 317.08 lacs (Previous Year ` 314.04 lacs) has been recognised as expense / preoperative expenses in the consolidated statement of Profit and Loss / CWIP during the year. ii. Defined Benefit Plan The following tables sets forth the status of the Gratuity, PL Encashment of the Group and the amounts recognised in the Consolidated Balance Sheet and Consolidated Statement of Profit & Loss:

86 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (a) Reconciliation of Opening and Closing balances of the present value of the Defined Benefit Obligation : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Present value of Defined Benefit Obligation 1,871.09 468.77 1,616.28 449.40 at the beginning of the year Interest Cost 149.69 37.50 129.25 35.91 Current Service Cost 86.51 41.59 85.53 63.50 Actuarial Losses/(Gains) 53.30 37.74 207.36 26.01 Benefits Paid (242.52) (151.79) (167.33) (106.05) Present value of Defined Benefit Obligation 1,918.07 433.81 1,871.09 468.77 at the close of the year

(b) Changes in the Fair Value of Plan Assets (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Fair Value of Plan Assets at the beginning 1,754.64 - 1,380.61 - of the year Add : Expected Return on Plan Assets 140.37 - 110.44 - Add/(Less) : Actuarial Gains/(Losses) 19.26 - 186.85 - Add : Contributions 239.82 - 242.92 - Less : Benefits Paid (237.19) - (166.18) - Fair Value of Plan Assets at the close of the year 1,916.90 - 1,754.64 -

(c) Amount recognised in the Consolidated Balance Sheet including a reconciliation of the present value of the defined obligation in (a) and the fair value of the plan assets in (b) to assets and liabilities recognised in the Consolidated Balance Sheet : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Present Value of Defined Benefit Obligation 1,918.07 433.81 1,871.09 468.77 Less : Fair Value of Plan Assets 1,916.90 - 1,754.64 - Present Value of unfunded obligation 1.17 433.81 116.45 468.77

Ferro Alloys Corporation Limited 87 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (d) Amount recognised in the Consolidated CWIP/ Consolidated Statement of Profit and Loss: (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Current Service Cost 86.51 41.59 85.53 63.50 Interest Cost 149.69 37.50 129.25 35.91 Expected return on Plan Asset (140.37) - (110.44) - Net actuarial loss/(gain) 34.04 37.74 20.51 26.01 Net periodic cost 129.87 116.83 124.85 125.42

(e) Actuarial Assumptions as at the Consolidated Balance Sheet date : Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Mortality table LIC a LIC a LIC a LIC a (1994-96) (1994-96) (1994-96) (1994-96) Discount Rate 7.74% - 8% 7.74% - 8% 7.75% - 8% 7.75% - 8% Salary Escalation Rate 5% 5% 5% 5%

(f) Movement in net liability recognised in Consolidated Balance sheet : (` in lacs) Particulars 2015-16 2014-15 Gratuity PL Gratuity PL Encashment Encashment Opening net liability 116.45 468.77 235.67 449.40 Expenses as above 129.87 116.83 124.85 125.42 Contributions Paid (245.15) (151.79) (244.07) (106.05) Closing net liability 1.17 433.81 116.45 468.77

30. Contingent Liabilities and Commitments (I) Contingent Liabilities : (a) Claims against the Company not acknowledged as debts, since disputed ` 6,681.08 lacs (Previous Year ` 6,054.31 lacs). Amounts already paid under protest ` 328.63 lacs (Previous Year ` 379.61 lacs) have been debited to Advance Account. (b) Counter guarantees in favour of Consortium Banks in respect of their outstanding with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable. (c) Bank Guarantees outstanding at the year end ` 569.15 lacs (Previous Year ` 528.19 lacs). (II) Capital and other Commitments: (a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts ` 680.99 lacs (Previous Year ` 986.56 lacs).

88 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS 31. Details on Segment Reporting : (` in lacs) DESCRIPTION FERRO ALLOYS CHROME ORE POWER OTHERS CONSOLIDATED TOTAL 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 1) REVENUE External Sales 45,478.45 47,560.16 - - 434.84 40.10 - - 45,913.29 47,600.26 Inter Segment Sales - - 10,550.65 11,509.16 12,551.33 12,041.55 - - 23,101.98 23,550.71 Total Revenue 45,478.45 47,560.16 10,550.65 11,509.16 12,986.17 12,081.65 - - 69,015.27 71,150.97 2) RESULT Segment Result before Interest & Tax 1,828.41 3,958.02 (829.49) 152.90 1,656.25 617.21 (15.21) (16.93) 2,639.96 4,711.20 Unallocated Expenses Finance Costs (1,513.60) (1,268.84) (275.01) (385.97) (7,245.38) (6,490.64) - - (9,033.99) (8,145.45) Tax Expense ------376.64 (549.50) Profit / (Loss) from ------(6,017.39) (3,983.75) ordinary activities Extraordinary Loss ------NET PROFIT / (LOSS) ------(6,017.39) (3,983.75) 3) OTHER INFORMATION Segment Assets 9,583.61 8,770.84 14,921.07 17,461.80 67,409.94 66,623.45 10.14 15.84 91,924.76 92,871.93 Unallocated Corporate Assets ------22,079.25 21,920.92 Total Assets ------114,004.01 114,792.85 Segment Liabilities 11,992.02 10,176.23 3,683.23 4,359.04 16,509.16 8,678.11 28.78 19.45 32,213.19 23,232.83 Unallocated Corporate ------21.09 611.98 Liabilities Total Liabilities ------32,234.28 23,844.81 Capital Expenditure 657.63 173.37 468.32 863.77 1,543.47 2,044.93 - - 2,669.42 3,082.07 Depreciation / Amortisation 286.60 292.12 238.36 260.29 1,698.75 1,683.11 - - 2,223.71 2,235.52 Non Cash expenditure other than Depreciation/Amortisation 1.37 1.97 0.15 0.17 - - - - 1.52 2.14 32. Related Party Disclosure:- I List of related parties:- A Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year : 1 Boula Platinum Mining Pvt. Ltd. - Associate 2 Facor Alloys Limited 3 Facor Steels Limited 4 Rai Bahadur Shreeram and Company Private Ltd. 5 Shri Durgaprasad Saraf Charitable Trust 6 Shreeram Shipping Services Pvt. Ltd. 7 Shreeram Durgaprasad Ores Pvt. Ltd. 8 Saraf Enterprises (Pvt.) Ltd. 9 Saraf Bandhu Pvt. Ltd. 10 GDP Infrastrucure Private Limited B Key Management Personnel : i) R.K. Saraf Chairman & Managing Director ii) Manoj Saraf Managing Director iii) Rohit Saraf Joint Managing Director iv) Ashish Saraf Joint Managing Director v) Vineet Saraf Executive Director vi) Yogesh Saraf Executive Director C Relative of a Key Management Personnel : i) Mrs. Priti Rohit Saraf ii) Mrs. Sunanda Devi Saraf

Ferro Alloys Corporation Limited 89 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS II Transactions with Related Parties during the period ended 31-03-2016 in the ordinary course of business. (` in lacs) Particulars With Enterprise With Key Management where significant Personnel & Relatives influence exists 2015-16 2014-15 2015-16 2014-15 i) Rent paid/(received) 101.23 90.54 35.18 41.50 ii) Interest paid 213.76 167.72 - - iii) Electricity Charges Paid 8.82 9.19 - - iv) Maintenance Charges Paid 6.12 6.82 v) Sale of Investment - 2.55 vi) Short term Loan & Advances given (2.84) 4.00 - - vii) Clearing & forwarding and other service charges 11.57 7.91 - - viii) Long Term Borrowings (12.00) 825.00 - - ix) Other Current Liabilities (640.87) (1,378.36) - - x) Key Management Personnel and their Relative’s Remuneration - - 118.01 255.03 xi) Investments - (5.00) - - xii) Reimbursement of expenses 5.26 5.57 - - xiii) Personal Guarantee - - (2,400.00) 10,172.00 xiv) Balances outstanding at the year end a) Short Term Loan & Advances 21.89 27.28 - - b) Other Long-Term Liabilities 218.65 218.65 - - c) Long Term Borrowings 1,582.72 1,594.72 - - d) Short Term Borrowings 500.00 556.25 - - e) Other Current Liabilities 16.82 653.13 - - f) Key Management Personnel and their Relative’s Remuneration - - 364.09 362.31 g) Personal Guarantee - - 109,580.00 111,980.00

III Disclosure in respect of Related Party Transactions during the year: (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. 1 RENT PAID Facor Alloys Limited Others 76.88 69.28 GDP Infrastructure Private Limited Others 3.00 - Saraf Enterprises (Pvt.) Ltd. Others 18.83 18.74 Saraf Bandhu Private Limited Others 1.80 1.80 Shri Durgaprasad Saraf Charitable Trust Others 0.72 0.72 Sub-Total 101.23 90.54 Mrs. Priti Rohit Saraf Relative of Key 23.18 23.50 Management Personnel Mrs. Sunanda Devi Saraf Relative of Key 12.00 18.00 Management Personnel Sub-Total 35.18 41.50 Total 136.41 132.04

90 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. 2 INTEREST PAID Shreeram Durgaprasad Ores Pvt. Ltd. Others 29.56 30.24 Rai Bahadur Shreeram and Company Others 121.57 74.98 Private Limited Facor Alloys Limited Others 62.63 62.50 Total 213.76 167.72

3 ELECTRICITY CHARGES PAID Facor Alloys Limited Others 8.82 9.19 Total 8.82 9.19

4 MAINTENANCE CHARGES PAID Facor Alloys Limited Others 6.12 6.82 Total 6.12 6.82

5 SALE OF INVESTMENT Rai Bahadur Shreeram and Company Others - 2.55 Private Limited Total - 2.55

6 SHORT TERM LOANS & ADVANCES GIVEN Facor Steels Limited Others - 4.00 Boula Platinum Mining Pvt. Ltd. Associate (2.84) - Total (2.84) 4.00

7 CLEARING & FORWARDING AND OTHER SERVICE CHARGES Shreeram Shipping Services Pvt. Ltd. Others 11.57 7.91 Total 11.57 7.91

8 LONG TERM BORROWINGS (Inter Corporate Deposit) Shreeram Durgaprasad Ores Pvt. Ltd. Others - (15.00) Rai Bahadur Shreeram and Company Others (12.00) 840.00 Private Limited Total (12.00) 825.00

9 OTHER CURRENT LIABLITIES Facor Alloys Limited Others (640.74) (1,386.38) Shreeram Durgaprasad Ores Pvt. Ltd. Others (0.01) (0.12) Rai Bahadur Shreeram and Company Others (0.12) 8.14 Private Limited Total (640.87) (1,378.36)

Ferro Alloys Corporation Limited 91 SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. 10 KEY MANAGEMENT PERSONNEL AND THEIR RELATIVES’ REMUNERATION Shri R. K. Saraf Key Management 17.00 15.87 Personnel Shri Manoj Saraf Key Management 20.83 20.27 Personnel Shri Ashish Saraf Key Management 20.83 20.84 Personnel Shri Rohit Saraf Key Management 20.83 20.85 Personnel Shri Vinod Saraf Key Management - 5.93 Personnel Commission Directors - 132.75 Shri Vineet Saraf Key Management 19.26 19.26 Personnel Shri Yogesh Saraf Key Management 19.26 19.26 Personnel 118.01 255.03

11 INVESTMENTS Facor Steels Limited Total Others - (5.00)

12 REIMBURSEMENT OF EXPENSES Facor Alloys Limited Others 5.26 5.57 Total 5.26 5.57

13 PERSONAL GUARANTEE Shri. Vineet Saraf Key Management (1,200.00) 5,086.00 Personnel Shri. Anurag Saraf Key Management (1,200.00) 5,086.00 Personnel Total (2,400.00) 10,172.00

14 BALANCES OUTSTANDING AT THE YEAR END (A) Short Term Loans & Advances Facor Steels Limited Others 19.68 19.68 Boula Platinum Mining Pvt. Ltd. Associate 2.21 5.05 Rai Bahadur Shreeram and Company Private Limited Others - 2.55 Total 21.89 27.28

92 Ferro Alloys Corporation Limited SIXTIETH NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2016 60 2015-16

CONSOLIDATED ACCOUNTS (` in lacs) S. Particulars Relationship 2015-16 2014-15 No. (B) Other Long Term Borrowings Boula Platinum Mining Pvt. Ltd. Associate 218.65 218.65 Total 218.65 218.65

(C) Long Term Borrowings Rai Bahadur Shreeram and Company Private Limited Others 1,287.72 1,299.72 Shreeram Durgaprasad Ores Pvt. Ltd. Others 295.00 295.00 Total 1,582.72 1,594.72

(D) Short Term Borrowings Ferro Alloys Limited Others 500.00 556.25 Total 500.00 556.25

(E) Other Current Liabilities Facor Alloys Limited Others 5.32 641.51 Rai Bahadur Shreeram and Company Private Limited Others 9.25 9.36 Shreeram Durgaprasad Ores Pvt. Ltd. Others 2.25 2.26 16.82 653.13

(F) Key Management Personnel and their Relatives’ Remuneration Shri R. K. Saraf Key Management 0.22 - Personnel Shri Manoj Saraf Key Management 0.56 - Personnel Directors Commission Payable Key Management 363.31 362.31 Personnel Total 364.09 362.31

(G) Personel Guarantee Shri Vineet Saraf Key Management 54,790.00 55,990.00 Personnel Shri Anurag Saraf Key Management 54,790.00 55,990.00 Personnel Total 109,580.00 111,980.00

Ferro Alloys Corporation Limited 93 NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016

33. Additional information, as required under schedule III to the Companies Act, 2013, of enterprises consolidated as Subsidiary / Associate. S. Name of the Enterprise Net Assets, i.e., total assets Share in profit No. minus total liabilities or loss As % of Amount As % of Amount consolidated (` in lacs) consolidated (` in lacs) net assets profit or loss 1 234 5 Parent Ferro Alloys Corporation Limited 1487.34 25,445.86 6.86 (413.05) Subsidiaries Indian 1 Facor Power Limited (1,374.55) (23,516.18) 92.88 (5,589.13) 2 Facor Realty and Infrastrucure Limited - - - - Foreign 1 Facor Energy Limited (12.79) (218.85) 0.25 (15.21) Minority Interest in all Subisidiaries, - - 11.74 (706.46) Associates (Investment as per equity method) Indian 1 Boula Platinum Mining Pvt. Limited 0.12 2.10 0.00 (0.05) 34. FORM AOC - 1 [Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014] Statement containing salient features of the financial statement of subsidiaries/ associate company Part “A”: Subsidiaries (` in lacs) 1 SI. No. 12 3 2 Name of subsidiary Facor Power Facor Energy Facor Realty and Ltd. Ltd.# Infrastructure Ltd. 3 Reporting period for the subsidiary concerned, if different - - - from the holding company’s reporting period 4 Reporting currency and Exchange rate as on the last date of - GBP 95.105 - the relevant Financial year in the case of foreign subsidiaries 5 Share Capital 24,106.00 190.21 10.00 6 Reserves & Surplus (23,516.18) (218.85) - 7 Total Assets 67,410.34 0.08 10.06 8 Total Liabilites 67,410.34 0.08 10.06 9 Investments 0.40 - - 10 Turnover 12,986.17 - - 11 Profit before taxation (5,589.13) (15.21) - 12 Provision for taxation - - - 13 Profit after taxation (5,589.13) (15.21) - 14 Proposed Dividend - - - 15 % of shareholding 86.09% 100.00% 100.00% # Financial information is based on Unaudited Results. Notes: Following are the names of subsidiaries which are yet to commence operations ; (i) Facor Energy Ltd. (ii) Facor Realty and Infrastructure Ltd. NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016

CONSOLIDATED ACCOUNTS Part “B”: Associates Statement pursuant to Section 129(3) of the Companies Act, 2013 related to Associate Company Name of Associates Boula Platinum Mining Pvt. Ltd. 1. Latest audited Balance Sheet Date 31.03.2016 2. Shares of Associates held by the company on the year end No. 466,164 Amount of Investment in Associates (` in lacs) 4.66 Extend of Holding % 30% 3. Description of how there is significant influence There is significance influence due to holding of more than 20% Equity Share Capital. 4. Reason why the associate is not considered - 5. Net worth attributable to Shareholding as per latest 52.07 audited Balance Sheet (` in lacs) 6. Profit/(Loss) for the year (` in lacs) (i) Considered in Consolidation (0.05) (ii) Not Considered in Consolidation -

35. Previous Year’s figures have been re-grouped wherever necessary.

As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA MANOJ SARAF Chartered Accountants Director (Finance) Managing Director (Regn.No.109003W) & CFO (DIN 00234570) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY ROHIT SARAF Partner Sr. General Manager (Legal) & Joint Managing Director Membership No. 007021 Company Secretary (DIN 00003994)

Noida, UP : 27th May, 2016 Noida, UP : 27th May, 2016 SIXTIETH ANNUAL REPORT OUR PRINCIPAL ADDRESSES 60 2015-16

Registered Office and Works Regional Offices: Other Offices: D. P. Nagar Mumbai: Visakhapatnam: P.O. : Randia - 756 135 A/101, Gokul Arcade, “Manganese House” Dist : Bhadrak [Odisha] C.T.S. No. 173-A, Swami Nityanand Harbour Approach Road Phone : Bhadrak 91-6784-240320 Marg, Vile Parle (East), Visakhapatnam - 530 001 (A.P.) E-Mail : [email protected]; Mumbai - 400 057 Phone : 91-891-2569011/2569013 [email protected] Phone : 91-22-26823931 2568003 Fax : 91-6784-240626 Fax : 91-22-26823934 E-Mail : [email protected] E-Mail : [email protected] [email protected] Mr. Anil Banka Fax : 91-891-2564077 Manager (Accounts) Mr. Naresh Kumar Dy. General Manager [Finance] Kolkata Head Office th Tumsar Everest House,11 Floor, Nagpur: 46-C, Block ‘F’, Shreeram Bhawan Shreeram Bhawan Jawaharlal Nehru Road Tumsar- 441 912 Ramdaspeth Kolkata - 700 071 Nagpur - 440 010 Dist : Bhandara (Maharashtra) Phone : 91-33-40103400 Phone : 91-7183-232251, 232233 Phone : 91-712-2436920-23 E-Mail : [email protected] Fax : 91-712-2432295 & 233090 Fax : 91-33-40103434 E-Mail : [email protected] Shri H.S. Shah Fax : 91-7183-232271 Mr. Pratap Lodge Dy. General Manager General Manager [East Zone]

Mining Complex Bhadrak Chennai: Bhubaneswar: Laxmi Bhawan, Kuans, 37F, Whites Road, IInd Floor GD-2/10, Chandrasekharpur Bhadrak - 756 100 Royapettah Bhubaneswar-751 023 [Odisha] Dist : Bhadrak [Odisha] Chennai - 600 014 Phone : 91-674-2302881 / 882 Phone : 91-6784-250311/250598 Phone : 91-44-28411092-6 E-Mail : [email protected] E-Mail : [email protected]; E-Mail : [email protected] Fax : 91-674-2302612 [email protected] Fax : 91-44-28411097 Fax : 91-6784-251782 Shri M.V. Rao Mr. R.G. Chari Resident Manager General Manager [South Zone] Corporate Office Noida Facor House, A-45-50, Ground Floor, Sector 16, Noida - 201 301 Dist. Gautam Budh Nagar, U.P. Phone : 91-120-4171000 Fax : 91-120-4256700 E-mail : [email protected]

Mr. Ishwar Das Manager (Administration)

96 Ferro Alloys Corporation Limited FERRO ALLOYS CORPORATION LIMITED CIN: L45201OR1955PLC008400 Registered Office & Works: D.P. Nagar, Randia-756135. Dist. Bhadrak, Odisha, India • T + 91-6784-240 230 • F +91-6784-240 626 • E.: [email protected] Website: www.facorgroup.in

Sixtieth Annual General Meeting on 28th September, 2016 FORM NO. MGT-11 PROXY FORM (Pursuant to section 105 (6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014) CIN: L45201OR1955PLC008400 Registered Office & Works: D P Nagar, Randia, Bhadrak, Odisha - 756135 India Name of the Company Ferro Alloys Corporation Limited

Name of the member(s) Registered Address E-mail Id Folio No./DP ID-Client ID No.

I/ We, being the member(s) of the above named Company, holding...... shares, hereby appoint:

(1) Name: ...... Address: ......

E-mail Id : ...... Signature:...... or failing him;

(2) Name: ...... Address: ......

E-mail Id : ...... Signature:...... or failing him;

(3) Name: ...... Address: ......

E-mail Id : ...... Signature:...... or failing him; as my/ our Proxy to attend and vote (on a poll) for me/ us and on my/ our behalf at the Sixtieth Annual General Meeting of the Company, to be held on Monday, the 28st September, 2016 at 12.00 Noon at D.P. Nagar, Randia – 756135, Dist. Bhadrak. Odisha- 756135 and at any adjournment thereof in respect of the following resolutions:

Resolution No. Resolutions Ordinary Business 1. Adoption of Audited Financial Statements, Directors’ and Auditors’ Report for the year ended 31st March, 2016 and the audited consolidated financial statement of the Company for the Financial Year ended 31st March, 2016. 2. Re-appointment of Mr. Ashish Ramkishan Saraf, as Non-Executive Director, who retires by rotation. 3. Ratification of Auditors’ appointment made at 60th AGM of the Company and fixing their remuneration. Special Business 4. Ratification of Cost Auditors’ remuneration.

Signed this day of...... 2016 Affix Signature of Shareholder(s) : ...... Revenue Stamp Signature of Proxy holder(s) : ......

Note : This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting. THROUGH COURIER

If undelivered please return to : FERRO ALLOYS CORPORATION LIMITED Facor House, Ground Floor, A45-A-50, Sector-16 Noida-2301 301, U.P. www.artdesignprint.in : 9899578245 : www.artdesignprint.in