SIXTY FIRST ANNUAL REPORT 2016-2017

FERRO ALLOYS CORPORATION LIMITED CORPORATE INFORMATION

Board of Directors Executives Bankers R. K. Saraf O.P. Banka Bank of India Chairman & Managing Director Director (Finance) Central Bank of India State Bank of India Syndicate Bank Manoj Saraf Yashpal Mehta Managing Director Chief Financial Officer State Bank of Bikaner & Jaipur Solicitors Vineet Saraf P. G. Suresh Kumar Mulla & Mulla and Chief Executive Craige Blunt & Caroe Ashish Saraf (Charge Chrome Plant) Bhaishankar Kanga and Joint Managing Director Girdharilal R.K. Singh Auditors (Existing) Rohit Saraf Sr. General Joint Managing Director Manager (Mines) SALVE & Co. Chartered Accountants Resolution Professional A.S. Kapre Auditors (Proposed) K.G. Somani K.K. Mankeshwan & Co. Umesh Khaitan Chartered Accountants Internal Auditors Pinaki Misra M/s Das & Prasad Chartered Accountants M. B. Thaker Secretarial Auditors Urmila Gupta M/s Ashish Saxena & Co. Company Secretaries

Ritesh Chaudhry Registrars & Share Transfer Agents Sr. General Manager (Legal) & (for both Physical & Electronic) Company Secretary Beetal Financial & Computer Services Pvt. Ltd. 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 ...... 50 Report to the members under Section 134 of the Companies Act, 2013 ...... 7 Consolidated Auditors’ Reoprt to Members ...... 71 Management Discussions and Analysis ...... 31 Consolidated balance Sheet, Statements of Profit & Corporate Governance Report ...... 33 Loss & Notes ...... 74 Auditors’ Report to Members (Standalone) ...... 46 Principal Addresses of the Company ...... 96 SIXTY FIRST ANNUAL REPORT NOTICE TO MEMBERS 61 2016-17

Notice is hereby given that the SIXTY FIRST ANNUAL GENERAL the remuneration of ` 70,000/- (Rupees Seventy Thousand only) MEETING of the Members of the Company will be held at the per annum plus applicable taxes and out of pocket expenses Registered Office of the Company at D.P. Nagar, Randia – 756135, payable to M/s Niran & Co., Cost Accountants (Registration Dist. Bhadrak, Odisha on Thursday, the 28th day of September, 2017 Number: 000113), appointed as Cost Auditors of the Company at 12.00 Noon to transact, with or without modification as may be for the financial year 2016-17.” permissible, the following business: 5. To consider and, if thought fit, to pass with or without ORDINARY BUSINESS: modification(s), the following Resolution as an Ordinary Resolution: 1. To receive, consider and adopt the Audited Financial Statement of the Company for the financial year ended 31st March, 2017, “RESOLVED THAT pursuant to Regulation 31A and other the Report to the members under section 134 of the Companies relevant provisions of the SEBI (Listing Obligations and Act 2013 and Auditors’ Report thereon and the audited Disclosure Requirements) Regulations, 2015 and applicable consolidated financial statement of the Company for the provisions, if any, of the Companies Act, 2013, the approval of Financial Year ended 31st March, 2017. the members of the Company be and is hereby accorded for re-classification of Globalscale Investments Ltd., the Overseas 2. To appoint a Director in the place of Mr. Rohitkumar Corporate entity forming part of the promoters Group of the Narayandasji Saraf (DIN:00003994), who retires from Office Company to Public (Non-Promoter) shareholders subject to by rotation and, being eligible, offers himself for re-appointment. conditions that the promoter seeking re-classification, along 3. To consider and, if thought fit, to pass the following resolution with persons acting in concert with them will not : which will be proposed as an Ordinary Resolution: • Have any special rights through formal or informal “RESOLVED THAT pursuant to provision of section 139 of the agreements; Companies Act 2013 (as amended or re-enacted from time to • Hold more than 10% of the paid-up equity capital of the time) and other applicable provisions, if any, of the Companies Company; Act 2013 read with the Companies (Audit and Auditors) Rules, • Act as a key managerial person for a period of more than 2014 (including any statutory modification(s) or re-enactments three years from the date of Shareholders approval. thereof for the time being in force) M/s K.K. Mankeshwar & Co. RESOLVED FURTHER THAT the Resolution Professional, or Chartered Accountants, be and they are hereby appointed as any one of the following representatives of Resolution the Statutory Auditor of the company, to hold office from the Professional viz. Mr. Vijay Kumar Gupta, Mr. Girish Gupta, acting conclusion of this 61st Annual General Meeting till the conclusion with any of the following officers of the Company viz. Director of the 66th Annual General Meeting subject to the ratification at (Finance), Chief Financial Officer and the Company Secretary each annual general meeting held between the 61st annual of the Company, be and is hereby authorized to take all such general meeting and 66th Annual General Meeting), at a steps as may be necessary, proper and expedient to give effect remuneration plus applicable taxes and reimbursement of to this Resolution. expenses incurred by them incidental to their functions, as may be decided by Resolution Professional and/or the Board of RESOLVED FURTHER THAT the Resolution Professional be Directors, as applicable, in consultation with the said Auditors. and is hereby also authorized to delegate all or any of the powers conferred on it by or under this Resolution to any other officer(s) RESOLVED FURTHER THAT the Company Secretary is hereby or employee(s) of the Company and/or such other persons that directed to file the relevant e-form with the Ministry of Corporate the Resolution Professional may deem expedient or may Affairs and to take all such further actions as may be required consider appropriate in order to give effect to this Resolution in this connection.” including filing of necessary forms / returns with the Ministry of SPECIAL BUSINESS: Corporate Affairs / Stock Exchanges / other authorities concerned.” 4. To consider, and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Registered Office: By Order of Resolution Professional resolution: D.P. Nagar for Ferro Alloys Corporation Limited “RESOLVED THAT pursuant to Section 141, 148 and other P.O. Randia - 756135 applicable provisions, if any, of the Companies Act, 2013, and Distt. Bhadrak, Odisha Ritesh Chaudhry Rule 14 and other applicable rules, if any, of The Companies Sr. General Manager (Legal) & (Audit and Auditors) Rules, 2014 (including any statutory Company Secretary modification(s) or re-enactment thereof for the time being in force), and subject to the approval of Central Government as Resolution Professional st may be required, the Company hereby approves and ratifies Dated : 01 September, 2017 Place : Noida – 201301, U.P. K.G. Somani

Ferro Alloys Corporation Limited 1 SIXTY FIRST ANNUAL REPORT NOTICE TO MEMBERS 61 2016-17

NOTES: forms integral part of Report on Corporate Governance. The Director have furnished the requisite declarations for their 1. In terms of the provisions of section 152(6) of the Companies appointment/re-appointment. Act, 2013, Mr. Rohitkumar Narayandasji Saraf retires from office by rotation and being eligible, offers himself for re-appointment 8. Electronic copy of the Annual Report for 2016-17 is being sent as per item no.2 of the agenda. Also, in order to maintain the to all the members whose email IDs are registered with the continuity of the promoter group the resolution for re-appoint of Company/Depository Participants(s) for communication retiring director is being included in the agenda. purposes unless any member has requested for a hard copy of the same. For members who have not registered their email 2. The Explanatory Statement pursuant to Section 102 of the address, physical copies of the Annual Report for 2016-17 is Companies Act, 2013, which sets out details relating to Item being sent in the permitted mode. Complete copy of the Annual no.4 to 5, being Special Business at the meeting, is annexed Report for 2016-17 shall be provided on request to members. hereto. 9. In accordance with the Companies Act, 2013 read with the Rules 3. The Register of Members and the Share Transfer books of the framed there under Electronic copy of the Notice of the 61st rd Company will remain closed from Saturday, the 23 September, Annual General Meeting of the Company inter alia indicating th 2017 to Thursday, the 28 September, 2017 (both days the process and manner of e-voting along with Attendance Slip inclusive) for annual closing. and Proxy Form is being sent to all the members whose email 4. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE IDs are registered with the Company/Depository Participants(s) MEETING IS ENTITLED TO APPOINT A PROXY / PROXIES for communication purposes unless any member has requested TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF. for a hard copy of the same. For members who have not SUCH A PROXY/ PROXIES NEED NOT BE A MEMBER OF registered their email address, physical copies of the Notice of st THE COMPANY. A person can act as proxy on behalf of the 61 Annual General Meeting of the Company inter alia members not exceeding fifty (50) and holding in the aggregate indicating the process and manner of e-voting along with not more than ten percent of the total share capital of the Attendance Slip and Proxy Form is being sent in the permitted Company. The instrument of Proxy in order to be effective, mode. should be deposited at the Registered Office of the Company, 10. Members may also note that the Notice of the 61st Annual duly completed and signed, not less than 48 hours before the General Meeting and the Annual Report for 2016-17 will also commencement of the meeting. A Proxy form is sent herewith. be available on the Company’s website www.facorgroup.in/ Proxies submitted on behalf of the companies, societies etc., investorrelations/AGMNotice2016-17 for their download. The must be supported by an appropriate resolution/authority, as physical copies of the aforesaid documents will also be available applicable. at the Company’s Registered Office in D.P. Nagar, Randia for 5. To prevent fraudulent transactions, members are advised to inspection during normal business hours on working days. Even exercise due diligence and notify the Company of any change after registering for e-communication, members are entitled to in address or demise of any member as soon as possible. receive such communication in physical form, upon making a Members are also advised not to leave their demat account(s) request for the same, by post free of cost. For any dormant for long. Periodic statement of holdings should be communication, the shareholders may also send requests to obtained from the concerpned Depository Participant and the Company’s investor email id: [email protected] holdings should be verified. 11. Voting through electronic means 6. The Securities and Exchange Board of India (SEBI) has In compliance with provisions of Section 108 of the Companies mandated the submission of Permanent Account Number (PAN) Act, 2013 and Rule 20 of the Companies (Management and by every participant in securities market. Members holding Administration) Rules, 2014 and also 44(1) of the SEBI (Listing shares in electronic form are, therefore, requested to submit Regulations and Disclosure Requirements) Regulations, 2015, the PAN to their Depository Paricipants with whom they are the Company is pleased to provide members facility to exercise maintaining their demat accounts. Members holding shares in their right to vote at the AGM by electronic means and the physical form must submit their PAN details to the Company. business may be transacted through e-Voting Services provided by Central Depository Services (India) Limited. 7. Details under sub-clause 3 of Regulation 36 and other applicable The instructions for e-voting are as under: regulations, if any, of the Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) i) The voting period begins on Monday, 25th September, 2017 Regulations, 2015 in respect of the Directors seeking at 9:00 a.m. and ends on Wednesday, 27th September, appointment/re-appointment at the Annual General Meeting, 2017 at 5:00 p.m. During this period shareholders’ of the

2 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTICE TO MEMBERS 61 2016-17

Company, holding shares either in physical form or in ix) After entering these details appropriately, click on dematerialized form, as on the cut-off date (record date) “SUBMIT” tab. st of Thursday, 21 September, 2017 may cast their vote x) Members holding shares in physical form will then directly electronically. The e-voting module shall be disabled by reach the Company selection screen. However, members CDSL for voting thereafter. holding shares in demat form will now reach ‘Password ii) Shareholders who have already voted prior to the meeting Creation’ menu wherein they are required to mandatorily date would not be entitled to vote at the meeting venue. enter their login password in the new password field. Kindly iii) The shareholders should log on to the e-voting website note that this password is to be also used by the demat www.evotingindia.com. holders for voting for resolutions of any other company on which they are eligible to vote, provided that company iv) Click on Shareholders. opts for e-voting through CDSL platform. It is strongly v) Now Enter your User ID recommended not to share your password with any other a. For CDSL: 16 digits beneficiary ID, person and take utmost care to keep your password confidential. b. For NSDL: 8 Character DP ID followed by 8 Digits Client ID, xi) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained c. Members holding shares in Physical Form should in this Notice. enter Folio Number registered with the Company. xii) Click on the EVSN no. 170902030 for Ferro Alloys vi) Next enter the Image Verification as displayed and Click Corporation Limited. on Login. xiii) On the voting page, you will see “RESOLUTION vii) If you are holding shares in demat form and had logged DESCRIPTION” and against the same the option “YES/ on to www.evotingindia.com and voted on an earlier voting NO” for voting. Select the option YES or NO as desired. of any company, then your existing password is to be used. The option YES implies that you assent to the Resolution viii) If you are a first time user follow the steps given below: and option NO implies that you dissent to the Resolution. For Members holding shares in Demat Form xiv) Click on the “RESOLUTIONS FILE LINK” if you wish to and Physical Form view the entire Resolution details. PAN Enter your 10 digit alpha-numeric PAN issued by xv) After selecting the resolution you have decided to vote Income Tax Department (Applicable for both demat on, click on “SUBMIT”. A confirmation box will be shareholders as well as physical shareholders) displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and • Members who have not updated their PAN with accordingly modify your vote. the Company/Depository Participant are requested to use the first two letters of their xvi) Once you “CONFIRM” your vote on the resolution, you name and the 8 digits of the sequence number will not be allowed to modify your vote. in the PAN field. Sequence no is printed on the xvii) You can also take a print of the votes cast by clicking on address slips. “Click here to print” option on the Voting page. • In case the sequence number is less than 8 xviii) If a demat account holder has forgotten the login password digits enter the applicable number of 0’s before then Enter the User ID and the image verification code the number after the first two characters of the and click on Forgot Password & enter the details as name in CAPITAL letters. Eg. If your name is prompted by the system. Ramesh Kumar with sequence number 1 then xix) Shareholders can also cast their vote using CDSL’s enter RA00000001 in the PAN field. mobile app m-Voting available for android based Dividend Enter the Dividend Bank Details or Date of Birth mobiles. The m-Voting app can be downloaded from Bank (in dd/mm/yyyy format) as recorded in your demat Google Play Store. Please follow the instructions as Details OR account or in the company records in order to login. prompted by the mobile app while voting on your Date of • If both the details are not recorded with mobile. Birth (DOB) the depository or company please enter the xx) Note for Non – Individual Shareholders and member id / folio number in the Dividend Bank Custodians details field as mentioned in instruction (v). • Non-Individual shareholders (i.e. other than

Ferro Alloys Corporation Limited 3 SIXTY FIRST ANNUAL REPORT NOTICE TO MEMBERS 61 2016-17

Individuals, HUF, NRI etc.) and Custodian are their shares of the paid up equity share capital of the required to log on to www.evotingindia.com and Company as on the cut-off date (record date) of Thursday, register themselves as Corporates. 21st September, 2017, as referred in preceding clause. • A scanned copy of the Registration Form bearing (E) M/s. Ashish Saxena & Co., Company Secretaries, the stamp and sign of the entity should be emailed (Membership No. 6560) has been appointed as the to [email protected]. Scrutinizer to scrutinize the e-voting process in a fair and • After receiving the login details a Compliance User transparent manner. should be created using the admin login and (F) The Results shall be declared on or after the AGM of the password. The Compliance User would be able to Company. The Results declared alongwith the Scrutinizer’s link the account(s) for which they wish to vote on. Report shall be placed on the Company’s website • The list of accounts linked in the login should be www.facorgroup.in within 2 (two) days of passing of the mailed to [email protected] and on resolutions at the AGM of the Company and approval of the accounts they would be able to cast communicated to the BSE Limited. their vote. (G) The Scrutinizer shall within a period not exceeding three(3) • A scanned copy of the Board Resolution and Power working days from the conclusion of the e-voting period of Attorney (POA) which they have issued in favour unblock the votes in the presence of at least 2 (two) of the Custodian, if any, should be uploaded in PDF witnesses not in the employment of the Company and format in the system for the scrutinizer to verify the make a Scrutinizer’s Report of the votes cast in favour or same. against, if any, forthwith to the Resolution Professional of the Company. xxi) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) 12. All documents referred to in the accompanying Notice and the and e-voting manual available at www.evotingindia.com, Explanatory Statement shall be open for inspection at the under help section or write an email to Registered Office of the Company on all working days during [email protected]. normal business hours (9.00 am to 5.00 pm) except Saturdays, All grievances connected with the facility for voting by Sundays and Holidays up to and including the date of the AGM electronic means may be addressed to Mr. Rakesh Dalvi, of the Company. Deputy Manager, (CDSL, ) Central Depository Services 13. Members are also informed that the complete particulars of (India) Limited, 16th Floor, Phiroze Jeejeebhoy Towers, the venue of the Meeting including route map and prominent Dalal Street, Fort, Mumbai-400001, or send an email to land mark for easy location has been specified in this notice. [email protected] or call 18002005533. Further, the same has been hosted along with the Notice on In case of members receiving the physical copy: website www.facorgroup.in/investorrelations/AGMNotice2016- 17 of the company. (A) Please follow all steps from sl. no. (i) to sl. no. (xx) above to cast vote. 14. The investors may contact the Company Secretary for queries, (B) In case you have any queries or issues regarding e-voting, if any. For this purpose, they may either write to him at the you may refer the Frequently Asked Questions (“FAQs”) Corporate office address at “Facor House A45-A50, Sector- and e-voting manual available at www.evotingindia.co.in 16, Noida, U.P.-201301” or e-mail their grievances /queries to under help section or write an email to the Company Secretary at the following e-mail address: [email protected], as aforesaid. [email protected] (C) The e-voting period commences on Monday, 25th 15. Unclaimed/Unpaid dividends for the financial years referred September, 2017 (9:00 am) and ends on Wednesday, 27th herein below are due for transfer to Investor Education & September, 2017 (5:00 pm). During this period Protection Fund constituted by the Central Government. shareholders of the Company, holding shares either in Members may claim their unclaimed/unpaid dividends by physical form or in dematerialized form, as on the cut-off approaching the Company’s Secretarial Department at “Facor date (record date) of 21st September, 2017 may cast their House” Ground Floor, Plot no. A 45-50, Sector 16, Noida – vote electronically. Once the vote on a resolution is cast 201301, U.P. for payment thereof as the same will be transferred by the shareholder, the shareholder shall not be allowed to the “Investor Education & Protection Fund” of the Central to change it subsequently. Government, as aforesaid, on the following dates, post which (D) The voting rights of shareholders shall be in proportion to no claim shall lie against the Company or the Investor Education & Protection fund:

4 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTICE TO MEMBERS 61 2016-17

• Dividend for the year 2009-10, on or after 17th October, part of Promoter/Promoter Group has requested to the Company to 2017 reclassify/derecognize it from the category of promoters/promoter • Dividend for the year 2010-11, on or after 12th October, group to public category. 2018 In the light Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, persons who are no 16. Members are again requested to have all their physical longer desirous of being classified as Promoters of the Company, shares in Demat Form at the earliest. Further they also must submit a request to the Company stating the same, which has advised to inform the email addresses and/or change of to be accepted by the Board of Directors and their request will then mailing address to avoid non delivery of notices sent by be acceded subject to the approval of the shareholders of the courier/mail as being undelivered. Company. The acceptance of the Board and the approval of the Registered Office: By Order of Resolution Professional shareholders shall thereafter be sent to the Stock Exchange for their D.P. Nagar for Ferro Alloys Corporation Limited clearance in order to reclassify the shareholding pattern of the th P.O. Randia - 756135 Company. The Board at their meeting on 12 August 2016, deliberated Distt. Bhadrak, Odisha Ritesh Chaudhry on the aforesaid matter and it was therefore noted that these Sr. General Manager (Legal) & shareholders have merely been included in the “promoter Category” Company Secretary because they were related to Mr. Arye Berest, a Director of the Company who passed away on 21st April, 2015. Resolution Professional Therefore, considering the aforementioned grounds, the Board Dated : 01st September, 2017 decided to accept the request of the shareholders in order to Place : Noida – 201301, U.P. K.G. Somani declassify M/s. Globalscale Investments Ltd., his immediate relative and associate companies from the promoter and promoter group. ANNEXURE TO THE NOTICE Further, the said entity/person has informed that its existing EXPLANATORY STATEMENT IN RESPECT OF THE SPECIAL shareholding of 56,39,215 Equity Shares of Re.1/- each in the BUSINESS PURSUANT TO SECTION 102 OF THE COMPANIES company as on date is very less representing a meager percentage ACT, 2013 of 3.04% of the total paid up equity capital of the Company and it does not exercise any control over the company and is also not Item no.4 engaged in the management of the company. It has also informed The Board of Directors of the Company, on the recommendation of that it neither has any representation on the Board of the company the Audit Committee, at its meeting held on 13th May, 2017, has nor has any veto rights/special rights as to voting power or control considered and approved the appointment of M/s Niran & Co., Cost over the company. Accountant (Registration No. 000113), as Cost Auditor of the None of the Directors / Key Managerial Personnel of the Company / Company for the financial year 2017-18. their relatives / Resolution Professional, is, in any way, concerned or In accordance with the provisions of Section 148(3) of the Act read interested, financially or otherwise, in the resolution. with the Companies (Audit and Auditors) Rules, 2014, the The Ordinary Resolution set out at Item No. 5 of the Notice is remuneration payable to the Cost Auditors has to be ratified by the commended for approval by the shareholders. shareholders of the Company. Accordingly, consent of the members is sought for passing an Ordinary Resolution as set out at Item No.4 of the Notice for ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2018. Registered Office: By Order of Resolution Professional None of the Directors / Key Managerial Personnel of the Company / D.P. Nagar for Ferro Alloys Corporation Limited their relatives / Resolution Professional, is, in any way, concerned or P.O. Randia - 756135 interested, financially or otherwise, in the resolution set out at Item Distt. Bhadrak, Odisha Ritesh Chaudhry No. 4 of the Notice. Sr. General Manager (Legal) & The Ordinary Resolution set out at Item No. 4 of the Notice is Company Secretary commended for approval by the shareholders. Resolution Professional ITEM NO.5 Dated : 01st September, 2017 The members may note that Globalscale Investments Ltd., forming Place : Noida – 201301, U.P. K.G. Somani

Ferro Alloys Corporation Limited 5 SIXTY FIRST ANNUAL REPORT NOTICE TO MEMBERS 61 2016-17 BALASORE BHADRAK RLY. STATION RLY. BHUBANESWAR TO BHADRAK -130 Km. TO BHUBANESWAR BONTH CHHAK - 5 Km. TO STATION BHADRAK RLY. - 4 Km. GATE FACOR BONTH CHHAK TO NOTES:- BONTH CHHAK RANDIA BHADRAK MADHAB BUS STAND THEATER

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TO ANANDAPUR NH-6 ROUTE MAP THE TO AGM VENUE FACOR E N S W BHUBANESWAR

6 Ferro Alloys Corporation Limited REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

REPORT TO THE MEMBERS UNDER SECTION 134 OF THE COMPANIES ACT, 2013 We present the 61st Annual Report of your Company and the Audited Financial Statement of the Company for the financial year ended 31st March, 2017, and the audited consolidated financial statement of the Company for the Financial Year ended 31st March, 2017. FINANCIAL RESULTS Despite sluggish business conditions during the first half of the year, the Company performed reasonably well on standalone basis to post reasonable profits for the year. The results are as under: (` in lacs) Particulars Standalone Consolidated For the year For the year For the year For the year ended ended ended ended 31st March, 2017 31st March, 2016 31st March, 2017 31st March, 2016 Income from Operations 61,144.23 56,933.35 61,670.60 57,368.19 Profit/(Loss) before tax & Depreciation/ 4,054.32 (322.03) (2,821.58) (4,227.62) Amortization Depreciation/Amortization 543.26 467.66 2,264.20 2,166.41 Provision for taxation 1,494.24 (376.64) 14,94.24 (376.64) Net Profit/(Loss) for the year 2,016.82 (413.05) (5,386.03) (5,240.02) Balance carried to Balance Sheet 5,970.76 3,953.94 (19,050.09) (12,469.98) Note: To be read in conjuction with accounting disclosures by Resolution Professional. During the year under review, revenue from operations and to other captive consumers of power. Although FPL, in increased by 7.4% to ` 61,144.23 lacs (previous year addition to selling approx. 35 MW of power to the Company’s ` 56,933.35 lacs). However, EBIDTA increased by 280.10% manufacturing facility in Odisha, had also tied up for sale of to ` 5,574.44 lacs (previous year ` 1,466.58 lacs) and profit power to Balasore Alloys Limited (BAL), another captive after tax increased by 588.28% to ` 2016.82 lacs (previous consumer, and had entered into definitive agreements with year ` (413.05 lacs) on account of improved market conditions the said BAL, power off-take to the extent envisaged under during the second half of the year. the terms of the agreement. However the agreement did not The Company has three subsidiaries viz. Facor Power materialize resulting in shortfall of revenue at FPL. Limited, Facor Realty And Infrastructure Limited and Facor Members are further informed that the Company had, Energy Limited. While Facor Power Limited has reported a pursuant to approvals received from the shareholders of the Turnover of ` 12,258.59 lacs, it has posted net loss of Company from time to time, provided a Corporate Guarantee ` 8,584.66 lacs for the year ended 31st March, 2017, Facor of an amount of ` 517.90 crores, in tranches, to Rural Energy Limited (FEL) has posted net loss of ` 12.18 lacs for Electrification Corporation Limited (REC) which had FY 2016-17 and Facor Realty and Infrastructure Limited sanctioned a Term Loan of ` 517.90 crores to Facor Power (FRIL) has pre-operative expenses of ` 0.14 lacs for FY 2016- Limited, the subsidiary of the Company against the security 17. Accordingly, during the year under review, after offsetting of the assets of FPL, the personal guarantee of two of its the minority interest of ` 1,194.08 lacs, the consolidated net directors and the Corporate Guarantee of your Company, as loss of the Company stood at ` 5,386.03 lacs as against aforesaid. ` 5,240.02 lacs in 2015-16. To summarize, the financial results Pursuant to a default in the repayment of the loan as per the of the subsidiaries have impacted the consolidated financial repayment schedule and upon an application filed by REC position of the Company. under section 7 of the Insolvency and Bankruptcy Code, 2016 STATE OF COMPANY’S AFFAIRS with the National Company Law Tribunal, Kolkata against your Members may recall that Facor Power Limited (FPL), the Company, the Company has been admitted for subsidiary of the Company had set up a 100 MW captive commencement of Corporate Insolvency Resolution Process th generation thermal power plant adjacent to the Company’s w.e.f 6 July, 2017. Mr. K.G. Somani, FCA has been appointed manufacturing facility in Randia, Odisha. The said power plant as Interim Resolution Professional for the Company pursuant project, when conceived was to supply electricity to the to the cited order of the NCLT, Kolkata. At the first meeting of Company Committee of Creditors of the company held on August 4,

Ferro Alloys Corporation Limited 7 REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

2017 his appointment was confirmed as a Resolution type of steel certain specific properties. These elements are Professional. added in liquid iron in the form of Ferro alloys to get the Further, a Deed of Guarantee jointly with M/s Facor Alloys desired composition and properties. Thus, Ferro alloys are Limited and M/s Vidarbha Iron and Steel Corporation Limited important additives in the production of steel and Ferro Alloys had been issued by the Company for an amount not industry is vitally linked for its growth and development to exceeding ` 142.40 crores in favour of Consortium of Bankers that of the Steel Industry. of Facor Steels Limited. Bank of India has lodged the claim India’s steel sector posted a robust 11% growth in production of ` 33.82 crores However the Company is contesting the in 2016-17 at 101.2 MT even as domestic consumption said claim. remained anaemic mainly due to poor offtake from the endure Members may note further that in terms of the provisions of segments like construction, automobiles and white goods Section 17 of the Insolvency and Bankruptcy Code, 2016 sectors. SAIL, RINL, Tata Steel, Essar, JSWL & JSPL together from the date of appointment of the Interim Resolution produced 57.5 Million Tons during April to March 2016-17, Professional, the management of the affairs of the Corporate which was a growth of 18.5% compared to same period last Debtor i.e. the Company vest in the IRP and the powers of year while production for other producers was down by 1.2%, the Board of Directors of the Company stand suspended and according to Joint Plant Committee (JPC), a unit under the are to be exercised by the IRP. steel ministry. In terms of the provisions of the cited code, as above, the Rating agency ICRA recently said that even as India’s steel powers of the Board of Directors of the Company stand consumption growth remained weak in the current fiscal due suspended and the operations of the Company are now to continued weakness in the key end user industries, “2017- managed by Mr. K.G. Somani, the Resolution Professional. 18 points to a favourable demand outlook for the steel sector in the medium term,” ICRA said. Industry is hopeful that the An appeal against the order of the National Company Law government’s proposed 3.96 lakh crore investments, Tribunal, Kolkata has, however, been filed with the National budgeted for the current fiscal, in the infrastructure sector Company Law Appellate Tribunal, New Delhi, the outcome would result in substantial increase in steel consumption. of which is awaited. With 80% of global chrome ore reserves, South Africa (SA) Company Operations after Appointment of Resolution is the largest supplier of chrome ore. China, with its rising Professional share of global stainless steel output, has now overtaken At the Direction of the NCLT and appellant authority the South Africa as world’s leading Ferro Chrome producer, with company is run as a going concern. You will be happy to 35% of global output. However, with negligible chrome ore know the performance of the company at Mines and CCP, resources of its own, China’s Ferro Chrome production relies factory is satisfactory. All efforts are being made to come out heavily on chrome ore imports, mainly from South Africa. with a resolution plan acceptable to all concerned. The global Stainless Steel output of 44 mnt drives a Ferro Chrome market of 11 Million Tons that requires 32 Million Particular July 2017 July 2016 Tons of chrome ore. 1 Ferro Chrome In the backdrop of the industry’s scenario as above, your Production in MT 5852 5578 company’s turnover (excluding export incentives) for the Sales in MT 7913.620 5111.305 current financial year, 2016-17 stands at ` 60537.38 lacs as against ` 56029.10 lacs last year, an increase of 8.05% over 2. Chrome Ore the previous year. Exports during the year were ` 30666.75 Production in MT 13886 24* lacs. Further, your company has posted a profit/(loss) before Sales in MT 6952.44 3401.78 tax of ` 3511.06 lacs this year as against ` (789.69 lacs) in the previous year, reflecting an increase of 544.61%. * Minimal production due to heavy rain. PROSPECTS INDUSTRIAL SCENARIO The World Steel Association (world steel) released its Short Steel is the most versatile material, which has made the Range Outlook (SRO) for 2017 and 2018. World steel progress in every aspect on this earth possible. There are forecasts that global steel demand will increase by 1.3% to hundreds of varieties of steel because for each application it 1,535.2 Mt in 2017, following growth of 1.0% in 2016. In 2018, has to be made with specific properties to get the most it is forecast that global steel demand will grow by 0.9% and optimum usage. Though the basic constituent of steel is iron, will reach 1,548.5 Million Tons. it is the proportion of other elements in it, which gives each

8 Ferro Alloys Corporation Limited REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

Commenting on the outlook, Mr T.V. Narendran, Chairman spending, the United States is expected to continue to lead of the worldsteel Economics Committee said, In 2016, steel growth in the developed world in 2017-18. However, despite demand recovery was stronger than expected with the upside a recovery in oil prices, a rebound of investments in the oil mostly coming from China. We believe in 2017 and 2018 we and gas sector may be limited given the increased efficiency will see a cyclical upturn in steel demand with a continuing of shale producers. The EU recovery is solidifying with many recovery in the developed economies and an accelerating positive developments. Eurozone monetary policy is expected growth momentum in the emerging and developing to remain on its current path, at least in 2017, while fiscal economies. We expect that Russia and Brazil will finally move tightening is not expected to strengthen further and risk of out of their recessions. However, China, which accounts for disinflation has significantly receded. If political stability can 45% of global steel demand, is expected to return to a more be maintained, investment is expected to pick up to provide subdued growth rate after its recent short uplift. For this a further boost to the recovery. Benefiting from the improving reason, overall growth momentum will remain modest. global economy and weak yen, Japan’s steel demand is With the risk of global recession receding and economic expected to show a stable recovery. Steel demand in the performance improving across most regions, a number of developed economies will increase by 0.7 % in 2017 and 1.2 geopolitical changes still create some concern. US policy % in 2018. uncertainties, Brexit, the rising populist wave in current Having dealt with the structural problems and fall in European elections and the potential retreat from commodity prices, the Russian and Brazilian economies are globalisation and free trade under the pressure of rising stabilising and expected to show modest growth in 2017. nationalism adds a new dimension of uncertainty in Russian growth will continue to pick up in 2018 as structural investment environments. To balance this, risks from ongoing reforms take more effect. After the demonetisation shock, conflict in the Middle East and in Eastern Ukraine appear to the Indian economy is expected to resume growth, although be reducing. In the capital markets, the probable US FED on a slightly weakened basis. The ASEAN countries are interest rate increase and any appreciation of the US dollar expected to demonstrate solid growth in 2017-18. However, is likely to have global impact. In particular, it may provoke the region remains vulnerable to currency volatilities capital outflows from the emerging economies and place a associated with US interest rate hikes and dollar appreciation. risk on corporate debt in the developing countries, which has climbed significantly over the last few years. FUTURE STRATEGY AND GROWTH The automotive sector has been the top performer among The Board of Directors of the Company in a meeting held on th key steel using sectors. Thanks to the consumption driven 13 May, 2017 have approved setting up an additional 27MVA recovery in the developed economies, low oil prices and the furnace at the Company’s Charge Chrome Plant. However, government stimuli programmes supporting automobile in view of the initiation of Corporate Insolvency Resolution purchases in several countries. However, this may now be Process, the said project has been put on hold. The Company approaching a peak. The construction, building and is in active dialogue with the Committee of Creditors formed infrastructure sector, which accounts for 50% of global steel under the provision of the Insolvency And Bankruptcy Code, use, has been showing a divided picture between the 2016 for seeking their approval for allowing the Company to developing and developed economies. This sector has been incur capital expenditure towards the said 27MVA furnace, a major driver for steel demand in the developing countries as the said furnace, besides improving the turnover of the driven by urbanisation, but activity in the developed Company, would also take additional power from Facor Power economies since the 2008 financial crisis has been more Limited, the subsidiary of the Company, thereby improving subdued. This appears to be about to change with a recovery its bottom line as well. Your company remains committed to in construction activities apparent in the EU through the forward integration as well by way of setting up green field improving economic conditions and the potential renewal projects, acquisitions, joint ventures etc.. initiatives for infrastructure in the US. The machinery sector DIVIDEND could also benefit from rising investment activities if the Keeping in view the future requirement of funds in working uncertainties surrounding the global economy can be capital and other purposes, no dividend is recommended for contained. On the other hand, depression in shipbuilding the financial year ended 31st March, 2017. activities is expected to continue for some time given the global glut in shipping capacity. FINANCE Developed world Cash and cash equivalent as at March 31, 2017 was ` 333.55 lacs. The Company continues to focus on judicious Benefiting from strong fundamentals, newly announced management of its working capital. Receivables, inventories measures related to fiscal stimuli and rising infrastructure

Ferro Alloys Corporation Limited 9 REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17 and other working capital parameters were kept under strict Detail of Remuneration paid to Non-Executive Directors check through continuous monitoring. during the year. (Amount in `) DEPOSITS S. Name of Director Sitting Fee The Company has not accepted deposit from the public falling No. Paid within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. 1 Mr. A.S. Kapre 70,000 2 Mr. M.B. Thaker 75,000 CONSOLIDATED FINANCIAL STATEMENTS 3 Mr. Pinaki Misra 10,000 In accordance with the Accounting Standard 21 on 4 Mr. Umesh Khaitan 20,000 Consolidated Financial Statements read with Accounting Standard 23 on Accounting for Investments in Associates, 5 Mrs. Urmila Gupta 30,000 the audited consolidated financial statement is provided in 6 Mr. Vineet Saraf 40,000 the Annual Report for the year. FAMILIARISATION PROGRAMME FOR INDEPENDENT SHARE CAPITAL DIRECTORS The paid up Equity Share Capital as on March 31, 2017 was All Independent Directors (IDs) inducted into the Board are 1852.68 lacs. During the year under review, the Company given an orientation. Chairman & Managing Director and the has neither issued shares with differential voting rights nor Senior Management give an overview of the operations of granted stock options nor sweat equity. the Company, to familiarise the new IDs with the Company’s business operations. The new IDs are given an orientation INDUSTRIAL RELATIONS on the group structure, its operations, subsidiaries, Board Industrial relations with workers, trade unions, and with local constitution and procedures besides providing them with the populace remained amicable and pleasant throughout the financials of the Company for at least 3 years and the year. corporate brochure etc. Also, plant visits are organized for each ID for familiarizing with the Company’s operations and DIRECTORS facilities. Mr. Rohitkumar Narayandasji Saraf shall retire by rotation at the ensuing 61st Annual General Meeting and, being eligible, BOARD EVALUATION offers himself for re-appointment in accordance with the The Board evaluated the effectiveness of its functioning and provisions of the Companies Act, 2013. of individual directors at its meeting held on 9th February, 2017. During the year, Mr. S. B. Mishra ceased to as director due to his demise on 12th August, 2016 and Mr. Keshaorao Pardhi The aspects covered in the evaluation included the resigned as Director of the company due to his health on contribution to and monitoring of corporate governance 12th November, 2016. practices, participation in the long-term strategic planning and the fulfilment of Directors’ obligations and fiduciary Further, all Independent Directors have given declarations responsibilities, including but not limited to, active that they meet the criteria of independence as laid down under participation at the Board and Committee meetings. Section 149(6) of the Companies Act, 2013 and Regulation The Chairman had meetings with the Independent Directors 25 of the SEBI (Listing Obligations and Disclosure and the Chairman of the Nomination and Remuneration Requirements) Regulations, 2015. The Company has Committee also had meetings with the Executive and Non- formulated a code of conduct for all members of the Board Executive Directors. These meetings were intended to obtain and Senior Management Personnel. Directors’ inputs on effectiveness of Board/Committee Detail of Remuneration paid to Executive Director During processes. the year. Further, the Independent Directors at their meeting, reviewed (Amount in `) the performance of Board, Chairman of the Board and of S. Name of Director Total Remuneration Non- Executive Directors. No. NOMINATION AND REMUNERATION POLICY 1 Mr. R. K. Saraf 92,47,471 The Board has, on the recommendation of the Nomination & 2 Mr. Manoj Saraf 54,91,106 Remuneration Committee framed a Nomination and 3 Mr. Rohit Saraf 55,23,712 Remuneration policy for the appointment and remuneration

10 Ferro Alloys Corporation Limited REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17 of the Directors, Key Managerial Personnel and Senior STATEMENT UNDER SECTION 134(5) OF THE COMPANIES Executives of the Company including criteria for determining ACT, 2013. qualifications, positive attributes, independence of a Director On the basis of framework of internal financial controls and other related matters can be accessed at established and maintained by the Company, the work www.facorgroup.in/investorrelations. Further, the Policy was performed by the internal, statutory, Cost and Secretarial reviewed by the Committee and the Board at their meeting auditors and external agencies, the reviews performed by th held on 13 May, 2017. Management and the relevant Board Committees, Mr. R.K. DISCLOSURE AS PER THE SEXUAL HARASSMENT OF Saraf, Chairman & Managing Director of the Board of WOMEN AT WORKPLACE (PREVENTION, PROHIBITION Directors of the Company has confirmed that the Company’s AND REDRESSAL) ACT, 2013 internal financial controls were adequate and effective as on 31 March, 2017 and that as required under Section 134(5) Ferro Alloys Corporation Limited, (FACOR), believes in equal of the Companies Act, 2013 it is confirmed: employment opportunity and remains committed to creating (a) That in the preparation of the annual accounts, the and nurturing a working environment for all employees to applicable accounting standards had been followed enable them work without fear of any prejudice, gender bias along with proper explanation relating to material and sexual harassment. The Company does not tolerate departures; sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment (b) That we have selected such accounting policies and at workplace in line with the provisions of the Sexual applied them consistently and made judgments and Harassment of Women at Workplace (Prevention, Prohibition estimates that are reasonable and prudent so as to give and Redressal) Act, 2013 and the Rules thereunder. During a true and fair view of the state of affairs of the company the Financial Year 2016-17, the Company has not received at the end of the financial year and of the profit and loss any complaint of sexual harassment and the Policy was of the company for that period; reviewed by the Board and Committee at its meeting held on (c) That proper and sufficient care for the maintenance of 13th May, 2017. adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the MEETINGS company and for preventing and detecting fraud and During the year Four Board Meetings, Four Audit Committee other irregularities; Meetings, One Shareholders’ Grievances Committee, One (d) That the annual accounts have been prepared on a meeting of Nomination and Remuneration Committee and going concern basis; One meeting of Corporate Social Responsibility Committee (e) That proper internal financial controls were laid down were convened and held, details whereof are given in the by the company and that such internal financial controls Corporate Governance Report. The intervening gap between are adequate and were operating effectively. the Meetings was within the period prescribed under the (f) That proper systems to ensure compliance with the Companies Act, 2013. provisions of all applicable laws were in place and that SUBSIDIARIES such systems were adequate and operating effectively. The Report and Accounts of the Company are prepared in AUDIT COMMITTEE consolidated form and contains results of its subsidiaries, Audit Committee of the Company comprises of Mr. A.S. Kapre, Facor Power Limited, Facor Realty and Infrastructure Limited Mr. M.B. Thaker, and Mr. Umesh Khaitan, all Independent and Facor Energy Limited. The annual accounts of the Directors. The committee has been constituted in compliance subsidiaries shall be available on request to the members of with the provisions of Regulation 18 of the SEBI (Listing the Company and are available for inspection at the registered Obligations and Disclosure Requirements) Regulations, 2015 office of the Company. Further, the Consolidated Financial [SEBI(LODR) Regulations, 2015] and assumes all Statements presented by the Company include the financial responsibilities provided therein, discharging their duties results of the subsidiary companies. diligently with transparency and accountability as their sole Pursuant to Section 129(3) of the Companies Act, 2013 read motivation. with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial AUDITORS statements of the Company’s Subsidiaries’, Associates’ and M/s Salve & Company, Chartered Accountants hold office Joint Ventures (in Form AOC-1) is attached to the financial upto the conclusion of the 61st Annual General Meeting of statements as annexure A. the Company. Based on the recommendation of the Audit

Ferro Alloys Corporation Limited 11 REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

Committee, the Board of Directors of the Company have, in Act, 2013 and The Companies (Appointment and their meeting held on 13th May, 2017 have proposed the Remuneration of Managerial Personnel) Rules, 2014, the appointment of M/s K.K. Mankeshwar & Co. Chartered Company has appointed M/s Ashish Saxena & Company, a Accountants, as the Statutory Auditor of the company for the firm of Company Secretaries in Practice to undertake the financial year ended 31st March, 2018 to 31st March, 2022 Secretarial Audit of the Company for financial Year 2017-18. from the conclusion of 61st Annual General Meeting till the The Report of the Secretarial Audit in Form MR-3 is annexed conclusion of 66th Annual General Meeting (subject to the to this report as annexure ‘B’. ratification at each annual general meeting held after 61st annual general meeting), at a remuneration as may be CONSERVATION OF ENERGY, TECHNOLOGY decided by Resolution Professional/Board of Directors in ABSORPTION, FOREIGN EXCHANGE EARNINGS AND consultation with the said Auditors. M/s K.K. Mankeshwar & OUTGO Co., have expressed their willingness to act as Auditors of A statement giving details of conservation of energy, the Company, if appointed, and have further confirmed that technology absorption, foreign exchange earnings and outgo, the said appointment would be in conformity with the in accordance with the Companies Act, 2013 Section provisions of Section 141 of the Companies Act, 2013. 134(3)(m) read with Rule 8(3) of Companies (Accounts) Rules, 2014, is annexed as Annexure ‘C’ which forms part of AUDITOR’S REPORT this Report. The observations made in the Auditors’ Report are self explanatory and therefore, do not call for any further PARTICULARS OF EMPLOYEES comments u/s 134(3) of the Companies Act, 2013. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule COST AUDITORS 5(1) of the Companies (Appointment and Remuneration of Pursuant to Section 141 & 148 of the Companies Act, 2013 Managerial Personnel) Rules, 2014 are annexed to this report read with The Companies (Cost Records and Audit) as annexure ‘D’. Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its activity is required to be In terms of the provisions of Section 197(12) of the audited. The Board of Directors in their meeting held on 13th Companies Act, 2013 read with Rules 5(2) and 5(3) of the May, 2017, on the recommendation of the Audit Committee, Companies (Appointment and Remuneration of Managerial appointed M/s Niran & Co. to audit the cost accounts of the Personnel) Rules, 2014, a statement showing the names and Company for the financial year 2017-18. As required under other particulars of employees drawing remuneration in the Companies Act, 2013, the remuneration payable to the excess of the limits set out in the said Rules forms part of cost auditor is required to be placed before the Members in the Report. a general meeting for their ratification. Accordingly, a However, having regard to the provisions of the first proviso Resolution seeking Member’s ratification for the remuneration to Section 136(1) of the Companies Act, 2013, the Annual payable to Messrs Niran & Co., Cost Auditors( Registration Report excluding the aforesaid information is being sent to No. 000113) is included at Item No. 4 of the Notice convening the Members of the Company. The said information is the Annual General Meeting. M/s Niran& Co., have expressed available for inspection at Registered Office of the Company their willingness to act as Auditors of the Company, if during working hours. Any member interested in obtaining appointed, and have further confirmed that the said such information may write to the Company Secretary, at appointment would be in conformity with the provisions of the registered office and the same will be furnished on Section 141 of the Companies Act, 2013. request. Further the details are also available on the Further, in accordance with the General Circular from the Company’s website: www.facorgroup.in Ministry of Corporate Affairs M/s Niran & Co., Cost CORPORATE GOVERNANCE Accountants, had been appointed as Cost Auditors for Financial Year ended 31st March, 2016, for which Central Corporate Governance in your Company is about Government approval had been received by the Company. Commitment to values, ethical business conduct, nurturing The report on Cost audit for Financial Year ended 31st March, good business ethics and creating value for its stakeholders 2017 would be filed with Central Government in accordance in line with the principles of fairness, equity, transparency, with the provisions of the Companies Act, 2013 and the rules accountability and dissemination of information. The framed thereunder. Company’s efforts are driven by the fundamental objectives of maximizing value by employing resources in opportunities SECRETARIAL AUDITOR that generate consistent returns and position it for sustained Pursuant to the provisions of Section 204 of the Companies growth.

12 Ferro Alloys Corporation Limited REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

In terms of Regulation 27 of the SEBI (Listing Obligations in form MGT 9 is annexed herewith as Annexure ‘E’. and Disclosure Requirements) Regulations, 2015, a separate report on Corporate Governance, Management Discussion SECRETARIAL AUDIT REPORT and Analysis along with your Company’s Statutory Auditors’ In respect of observation made by Secretarial Auditor in his Certificate dated 1st September, 2017 confirming the above report, the management submits that the non-filing of MGT- compliance is annexed to and forms part of the Directors’ 7 was by oversight. Further, the Company is taking action to Report. complete the filing requirement. HUMAN RESOURCE DEVELOPMENT PARTICULAR OF LOAN & INVESTMENT The Company takes great pride in the commitment, During the year, the Company has remitted GBP 17,000 (INR competence and vigour shown by its workforce in all realms 16,56,140) to Facor Energy Limited, Guernsey (FEL, of business. The Company continues to take new initiatives Guernsey). However, allotment of shares to the Company is to further align its HR policies to meet the growing needs of in process by FEL, Guernsey. Other than the above, no loans, its business. guarantees given and investments have been made during the year in accordance with section 186 of the Companies EXTRACT OF ANNUAL RETURN Act, 2013 are, as under. Accordingly, the information is given The details forming part of the extract of the Annual Return below:

Name of the entity Relation Amount Particulars of loans, Purpose for which the loans, ` in lacs guarantees given or guarantees and investments investments made are proposed to be utilized Facor Energy Limited Wholly Owned Subsidiary 16.56 Investment * Business purpose * Shares yet to be allotted by Facor Energy Limited, Guernsey RELATED PARTY TRANSACTION CORPORATE SOCIAL RESPONSIBILITY There have been no materially significant related party Pursuant to Section 135 of the Companies Act, 2013 read transactions between the Company and the Directors, the with the Companies (Corporate Social Responsibility Policy) management, the subsidiaries or the relatives except for Rules, 2014, your Company approved a Policy on CSR and those disclosed in the financial statements and the Report the Policy was parked on the website of the Company. As to the members under section 134 of the Companies Act part of CSR initiatives, your Company during the financial 2013. year 2016-17 has amongst other activities, undertaken Accordingly, particulars of contracts or arrangements with projects in areas of promoting healthcare, empowerment of related parties referred to in Section 188(1) along with the woman, ecological balance. These projects are in accordance justification for entering into such contract or arrangement in with Schedule VII of the Companies Act, 2013. The report on Form AOC-2 does not form part of the report. CSR activities is attached as Annexure ‘F’ to this Report. RISK MANAGEMENT POLICY DISCLOSURE WHERE COMPANY IS REQUIRED TO CONSTITUTE NOMINATION AND REMUNERATION A company is exposed to uncertainties owning to the sector COMMITTEE: in which it is operating. The Company is conscious of the fact that any risk that could have a material impact on its The Company have constituted a Nomination & business should be included in its risk profile. Accordingly, in Remuneration Committee under Regulation 19 of the SEBI order to contain / mitigate the risk, the Board of Directors (Listing Obligations and Disclosure Requirements) have approved a Risk management policy which shall be Regulations, 2015 & Company have Nomination & reviewed by Board and the management from time to time. Remuneration Policy for appointment and remuneration of The Company’s Risk Management framework is designed to Directors Under Section 178 of the Companies Act, 2013 identify, assess and monitor various risks related to key and Regulation 19 of the SEBI (Listing Obligations and business and strategic objectives and lead to the formulation Disclosure Requirements) Regulations, 2015. All the of a mitigation plan. Major risks in particular are monitored appointments of Directors are as per the Nomination & regularly at Executive meetings and the Board of Directors Remuneration Policy of the Company, which were also of the Company is kept abreast of such issues and the Policy approved by the Committee. was reviewed by the Board and Committee at its meeting held on 13th May, 2017.

Ferro Alloys Corporation Limited 13 REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

DISCLOSURE IF MD/WTD IS RECEIVING REMUNERATION The Internal Audit Department monitors and evaluates the OR COMMISSION FROM SUBSIDIARY COMPANY efficacy and adequacy of internal control system in the As per Section 197(14) of the Act, 2013 A MD/WTD of Company, its compliance with operating systems, accounting company can receive remuneration or commission from any procedures and policies at all locations of the Company and holding company or subsidiary company of such company. its subsidiaries. Based on the report of internal audit function, This should be disclosed by the company in Board’s Report. process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit S. Name of Director Total Remuneration observations and corrective actions thereon are presented No. including Perquisites to the Audit Committee of the Board. & Allowance/Sitting Fee DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE 1 Mr. Ashish Saraf, 5,000 Company has not issued any share under ESOP or Sweat Joint Managing Director Equity Shares during the year. 2 Mr. A.S. Kapre, Independent 35,000 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE Director nominated on the REGULATORS OR COURTS Board of Facor Power As stated hereinbefore, the Hon’ble National Company Law Limited, subsidiary Tribunal, Kolkata (NCLT, Kolkata) vide order dated 6th July, DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT 2017 approved initiation of Corporate Insolvency Resolution Process of the Company pursuant to an application under The Company has adopted the Vigil Mechanism Policy for section 7 of the Insolvency and Bankruptcy Code, 2016 filed the Company in its duly held Board Meeting and the same is by Rural Electrification Corporation Limited. available on the website of the Company. Pursuant to the initiation of the above proceedings, the DETAILS OF DIRECTOR AND KMP powers of the Board have been suspended in terms of section Pursuant to the provisions of section 203 and other applicable 17 of the said Code and the same now vest with Mr. K.G. provisions, if any, of the Companies Act, 2013 and the rules Somani, the Resolution Professional. framed there under, Mr. R.K. Saraf, Chairman & Managing However, an appeal has been filed against the order of the Director, Mr. Yashpal Mehta, Chief Finance Officer and Mr. said NCLT, Kolkata, before the Company Law Appellate Ritesh Chaudhry, Company Secretary have been appointed Tribunal, New Delhi, the outcome of which is awaited. as the Key Managerial Personnel of the Company. Accounting Disclosures by Resolution Professional Further, details of directors who were appointed and/or who have resigned are, as under: Prima facie review of the audited accounts as at 31.03.2017 would need certain additional disclosures for the Standalone S. Name of Director Date of Appointment/ accounts of the Company. After discussion with the Auditors No. Resignation/Death and their comments the accounts should be read with the 1 Mr. S. B. Mishra, Upto 12th August, 2016 following disclosures: Independent Director* Note No. 38 th 2 Mr. Keshaorao Pardhi, Upto 12 November, (a) The Corporate Guarantee given jointly by Ferro Alloys Independent Director 2016 Corporation Ltd. in respect of Facor Steels Ltd. for * Ceased to be director due to consequent upon his demise. ` 142.40 crores has not been quantified in the accounts. Further, with the appointment of resolution professional, The claim under the Guarantee has been invoked to powers of the Board of Directors stand suspended. the extent of ` 33.82 crores. However the company is contesting its liability. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY (b) The Corporate Guarantee given by Ferro Alloys The Company has an Internal Control System, Corporation Limited in respect of REC has been invoked commensurate with the size, scale and complexity of its amounting to ` 510.98 crores and interest thereon which operations. To maintain its objectivity and independence, the has not been disclosed, as its liability. However, the Internal Audit function reports to the Chairman of the Audit Company is contesting its liability. Committee of the Board. In view of observation on accounting Profit & Loss A/c. disclosure efforts are being made by the company to improve internal financial reporting in this regard. (a) The impairment loss in respect of investment in Facor

14 Ferro Alloys Corporation Limited REPORT TO THE MEMBERS UNDER SECTION 134 SIXTY FIRST ANNUAL REPORT OF THE COMPANIES ACT, 2013 61 2016-17

Power Ltd. a Subsidiary Company and/or loss amounting goods, input availability and prices, changes in government to ` 321.01 crores not been considered . regulations, tax laws, economic developments within the (b) Inter Unit Transfers (net of Excise Duty) of ` 10498.20 country and other factors such as litigation and industrial L.Y. ` 10550.65 lacs have not been excluded from the relations. Turnover disclosed, resulting in sales as well as raw ACKNOWLEDGEMENTS material consumed figures being overstated. The Company thanks the Central and State Governments Others for their continued support and co-operation extended (a) During the year, a sum of ` 23,19,918 has been paid towards the business as well as the company’s social (L.Y. Rs. NIL) to M/s. Khaitan and Khaitan, Advocates, functions. The Management also thanks the shareholders, wherein Mr. Umesh Khaitan is a Partner. This also should Business Associates, Financial Institutions & Banks, be read with the other Related Party Transaction. Customers and Suppliers for the faith reposed in the Company and in them and expresses its sincere appreciation TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR to the dedicated and committed team of employees and EDUCATION AND PROTECTION FUND workmen without whom reaching this far and maintaining the In terms of Section 125 of the Companies Act, 2013, standard and quality of the products for which the company unclaimed or unpaid Dividends detailed, as under, are due is famous, would not have been possible. The Resolution for remittance on the dates specified below to the Investor Professional has sought full cooperation and support from Education and Protection Fund established by the Central all the Officers, Employees and Bankers of the company and Government. assured them that the operations of the company will continue • Dividend for the year 2009-10, on or after 17th October, as a going concern basis without any hindrances. We look 2017 forward to everyone’s continued support. Let’s grow and move ahead together. • Dividend for the year 2010-11, on or after 12th October, 2018 By Order of Resolution Professional CAUTIONARY STATEMENT For Ferro Alloys Corporation Limited Statements in the Members Report and the Management Discussion & Analysis describing the Company’s objectives, Resolution Professional expectations or forecasts may be forward-looking within the Ritesh Chaudhry meaning of applicable securities laws and regulations. Actual Sr. General Manager (Legal) & results may differ materially from those expressed in the Company Secretary K.G. Somani statement. Important factors that could influence the Company’s operations include global and domestic demand Place : Noida and supply conditions affecting selling prices of finished Dated : 1st September, 2017

Ferro Alloys Corporation Limited 15 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

ANNEXURE ‘A’ 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. 1 2 3 2 Name of subsidiary Facor Power Ltd. Facor Energy Ltd. # Facor Realty and 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 - GBP 81.1475 - the last date of the relevant Financial year in the case of foreign subsidiaries 5 Share Capital 24,106.00 162.30 10.00 6 Reserves & Surplus (32,100.84) (197.99) - 7 Total Assets 67,099.06 0.37 10.13 8 Total Liabilites 67,099.06 0.37 10.13 9 Investments 0.40 - - 10 Turnover 12,236.49 - - 11 Profit before taxation (8,584.66) (12.18) - 12 Provision for taxation - - - 13 Profit after taxation (8,584.66) (12.18) - 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. 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 31.03.2017 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 51.98 audited Balance Sheet (` in lacs) 6. Profit/(Loss) for the year (` in lacs) (i) Considered in Consolidation (0.09) (ii) Not Considered in Consolidation -

16 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

ANNEXURE ‘B’ 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 FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2017 (Substantial Acquisition of Shares and Takeovers) Pursuant to section 204(1) of the Companies Act, 2013 Regulations, 2011; and rule No.9 of the Companies (Appointment and (b) The Securities and Exchange Board of India Remuneration 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 Orissa- 756135 (d) The Securities and Exchange Board of India (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 corporate practices by FERRO ALLOYS CORPORATION (e) The Securities and Exchange Board of India LIMITED [CIN - L45201OR1955PLC008400] (hereinafter (Listing Obligation And Disclosure Requirement) called the company). Secretarial Audit was conducted in a Regulations, 2015. 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 Based on our verification of the FERRO ALLOYS and dealing with client; 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, its officers, agents and authorized representatives during the a) The Employees’ Provident Funds and conduct of secretarial audit, I/We hereby report that in our Miscellaneous Provisions Act, 1952 opinion, the company has, during the audit period covering b) Employees’ State Insurance Act, 1948 the financial year ended on 31st March, 2017 complied with c) The Factories Act,1948 the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance- d) Equal Remuneration Act, 1976 mechanism in place to the extent, in the manner and subject e) The Payment of Wages Act, 1936 to the reporting made hereinafter: f) The Minimum Wages Act, 1948, and rules made We have examined the books, papers, minute books, forms there under and returns filed and other records maintained by FERRO We have also examined compliance with the applicable ALLOYS CORPORATION LIMITED (“the Company”) for the clauses of the following: financial year ended on 31st March, 2017 according to the provisions of: (i) Secretarial Standards issued by The Institute of Company Secretaries of India. (i) The Companies Act, 2013 (the Act) and the rules made there under; (ii) The Listing Agreements entered into by the Company with Bombay Stock Exchange. The (ii) The Securities Contracts (Regulation) Act, 1956 company is generally regular in giving respective (‘SCRA’) and the rules made there under; intimations under various Regulations of the SEBI (iii) The Depositories Act, 1996 and the Regulations and (Listing Obligations and Disclosure Requirements) Bye-laws framed there under; Regulations, 2015, (iv) Foreign Exchange Management Act, 1999 and the rules During the period under review the Company has and regulations made there under to the extent of complied with the provisions of the Act, Rules, Foreign Direct Investment, Overseas Direct Investment Regulations, Guidelines, Standards, etc. mentioned and External Commercial Borrowings; above subject to the following observations: a) The Company is yet to file Form MGT-7 for the (v) The following Regulations and Guidelines prescribed financial year ended 31.03.2016

Ferro Alloys Corporation Limited 17 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

We further report that: c. Merger / amalgamation / reconstruction, etc. The company has given the corporate guarantee in d. Foreign technical collaborations respect of banking facilities obtained by M/s Facor Power For Ashish Saxena & Co Limited, the subsidiary of the Company (hereinafter Company Secretaries mentioned as borrower), from Rural Electrification Corporation Limited (REC). However, in view of the Sd/- default in the repayment of the loan and interest amount Date : 01/09/2017 (Ashish Saxena) to Rural Electrification Corporation Limited consequent Place : Ghaziabad Proprietor upon invocation of Corporate Guarantee given by the FCS – 6560 Company for the loan given to Facor Power Limited, the CP – 7096 subsidiary of the Company, as aforesaid, and upon an Note: This report is to be read with our letter of even date application filed against the Company by REC under which is annexed as ‘ANNEXURE A’ and forms an integral section 7 of the Insolvency and Bankruptcy Code, 2016 part of this report. with the National Company Law Tribunal, /Kolkata, the Company has been admitted for commencement of ‘ANNEXURE A’ Corporate Insolvency Resolution Process w.e.f 6th July, To, 2017. Accordingly, Mr. K.G. Somani, who had initially FERRO ALLOYS CORPORATION LIMITED been appointed as Interim Resolution Professional for D P Nagar Randia, Bhadrak the Company pursuant to the cited order now stands Orissa- 756135 appointed as the Resolution Professional. Our report of even date is to be read along with this letter. Accordingly, in terms of the provisions of Section 17 of 1. Maintenance of secretarial record is the responsibility the Insolvency and Bankruptcy Code, 2016 from the date of the management of the company. Our responsibility of appointment of the Interim Resolution Professional, is to express an opinion on these secretarial records the management of the affairs of the Corporate Debtor based on our audit. i.e. the Company vest in the IRP and the powers of the 2. We have followed the audit practices and processes as Board of Directors of the Company stand suspended were appropriate to obtain reasonable assurance about and are to be exercised by the IRP/RP. the correctness of the contents of the Secretarial The Board of Directors of the Company is duly records. The verification was done on test basis to constituted with proper balance of Executive Directors, ensure that correct facts are reflected in secretarial Non-Executive Directors and Independent Directors. The records. We believe that the processes and practices, changes in the composition of the Board of Directors we followed provide a reasonable basis for our opinion. that took place during the period under review were 3. We have not verified the correctness and carried out in compliance with the provisions of the Act. appropriateness of financial records and Books of Accounts of the company. Adequate notice is given to all directors to schedule the 4. Where ever required, we have obtained the Management Board Meetings, agenda and detailed notes on agenda representation about the compliance of laws, rules and were sent at least seven days in advance, and a system regulations and happening of events etc. exists for seeking and obtaining further information and 5. The compliance of the provisions of Corporate and other clarifications on the agenda items before the meeting applicable laws, rules, regulations, standards is the and for meaningful participation at the meeting. responsibility of management. Our examination was All decisions of the board were unanimous and recorded limited to the verification of procedures on test basis. as part of the minutes. 6. The Secretarial Audit report is neither an assurance as We further report that there are systems and processes to the future viability of the company nor of the efficacy in the company to monitor and ensure compliance with or effectiveness with which the management has applicable laws, rules, regulations and guidelines. conducted the affairs of the company. However, there is scope to improve these control and For Ashish Saxena & Co compliance systems. Company Secretaries On the basis of information provided, we further report Sd/- that during the audit period there were no instances of: Date : 01/09/2017 (Ashish Saxena) a. Public/Right/Preferential issue of shares / Place : Ghaziabad Proprietor debentures/ sweat equity FCS – 6560 b. Redemption / buy-back of securities CP – 7096

18 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

ANNEXURE ‘C’ 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 and is b) Additional investment and proposals if any being implemented for always attached great importance. Installation of efficient reduction of consumption of energy electric equipments and other measures taken in recent c) Impact of measures at (a) and (b) above for reduction of energy past have brought down energy consumption. However, consumption and consequent impact on the cost of production of it is difficult to quantify the same and/or assess its impact goods. }on cost of production. d) Total energy consumption and energy consumption per unit of Form ‘A’ is not applicable to Ferro Alloys Industry. production in prescribed form ‘A’. B) TECHNOLOGY ABSORPTION: Energy audit by PAT Consultancy Services and by BICON Research & Development (R&D): Consultancy Pvt. Ltd., Kolkata. Further, energy audit has a) Specific areas in which R & D carried out by the company also been done by Bureau of Energy Efficiency (BEE), Government of India. R&D in the operation of Ferro b) Benefits derived as a result of the above R&D } Chrome Production and manufacturing of briquettes is a continuous process. Studies to recover the entrapped metal from the discharged slag are in progress. c) Future Plan of action i) The Company is analyzing and experimenting different methods of briquetting to cut down cost of production. ii) Water conservation and reclamation iii) Slag utilization and waste management iv) New and renewable energy d) Expenditure on R&D Recurring expenditure on R&D has been shown under e) Technology absorption, adaptation and innovation respective heads of accounts in Profit & Loss Account. i) Efforts, in brief, made towards technology absorption, adaptation Not applicable since no new technology has been adopted and innovation. ii) Benefits derived as a result of the above efforts, e.g. product Not applicable improvement, cost reduction, product development, import substitution etc. iii) Information regarding technology imported during last 5 years No technology has been imported during the last five years. C) FOREIGN EXCHANGE EARNINGS AND OUTGO: 1) Activities relating to exports, initiatives taken to increase exports, To explore new avenues of exports and to understand development of new export markets for products and services; and latest developments in the international markets, your export plans directors undertake foreign tours as and when required. 2) Total Foreign Exchange used and earned ` in lacs i) CIF value of imports 1350.21 ii) Expenditure in Foreign currency 429.42 iii) Foreign exchange earned on FOB basis 24502.69

By Order of Resolution Professional Resolution Professional For Ferro Alloys Corporation Limited Ritesh Chaudhry K.G. Somani Sr. General Manager (Legal) & Company Secretary Place: Noida Dated: 1st September, 2017

Ferro Alloys Corporation Limited 19 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

Annexure ‘D’ 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 2016-17 ` 4,06,858

The percentage increase in the median remuneration of employees in the Financial Year 11.99%

The number of permanent employees on the rolls of Company as on 31 March, 2017 774

Name of Director Ratio of remuneration to median Remuneration of all employees Non-Executive Directors Mr. Vineet Saraf 0.10 : 1 Independent Directors Mr. A.S. Kapre 0.17 : 1 Mr. Pinaki Misra 0.02 : 1 Mr. Umesh Khaitan 0.05 : 1 Mrs. Urmila Gupta 0.07 : 1 Mr. M.B. Thaker 0.18 : 1 Executive Directors Mr. R.K. Saraf 23.18 : 1 Mr. Manoj Saraf 14.30 : 1 Mr. Ashish Saraf 0.00 : 1 Mr. Rohit Saraf 14.40 : 1 Notes: 1. The ratio of remuneration to median remuneration is based on remuneration paid during the period 1st April, 2016 to 31st March, 2017. (2) Relationship between average increase in remuneration and company performance: a) The average increase in remuneration during Financial Year 2016-17 was 7.56% as compared with previous financial year. Net revenues of the Company during the financial year stood at ` 611.44 crores as against ` 569.33 crores in the previous year. b) The total employee cost for the Financial Year ended 31 March, 2017 was ` 45,43,48,058 against ` 42,24,05,062 for the Financial Year ended 31 March, 2016. The total employee cost as a percentage of net revenues was 7.43% (last year 7.42%).

20 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

(3) Comparison of the remuneration of the KMP against the performance of the Company: Particulars Crores Aggregate remuneration of KMP in Financial Year 2016-17 1.45 Revenue 611.44 Remuneration of KMPs (as % of revenue) 0.24 Profit before Tax (PBT) 35.11 Remuneration of KMPs (as % of PBT) 4.13

(4) 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 3.62%. The total managerial remuneration for the Financial Year 2016-17 was ` 211.08 lacs as against ` 79.49 lacs during the previous year. b) The percentage increase in remuneration was, as under: Mr. R.K. Saraf – Chairman & Managing Director - During the Financial Year 2016-17 was 454.93% as compared to the previous financial year. Mr. Manoj Saraf – Managing Director - During the Financial Year 2016-17 was 179.31% as compared to the previous financial year. Mr. Ashish Saraf – Joint Managing Director - During the Financial Year 2016-17 no remuneration has been paid. Mr. Rohit Saraf – Joint Managing Director - During the Financial Year 2016-17 was 181.22% as compared to the previous financial year. (5) Comparison of the each remuneration of the KMP against the performance of the Company: Particulars of Remuneration Key Managerial Personnel

Mr. R.K. Saraf Mr. O.P. Banka Mr. Ritesh Chaudhry

Remuneration in FY 2016-17 (` crores) 0.94 0.28 0.23 Revenue (` crores) 611.44 611.44 611.44 Remuneration as % of Revenue 0.15 0.05 0.04

Profit before Tax (PBT) (` crores) 35.11 35.11 35.11 Remuneration as % of PBT 2.68 0.80 0.66]

Ferro Alloys Corporation Limited 21 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

ANNEXURE ‘E’ Form No. MGT-9 EXTRACT OF ANNUAL RETURN as on the financial year ended on 2016-17 [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, ODISHA-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 Private Limited U72900DL2008PTC180106 Associate 30 2(6)

22 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

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 01.04.2016 of the year 31.03.2017 Demat Physical Total % of Demat Physical Total % of %Change Total Total during Share Share the year 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 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 1,96,1880 0 1,96,1880 0.11 1,96,1880 0 1,96,1880 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 2,100 7,839 0 1,780 0 1,780 0 0 b) Banks/FI 51,536 32,12 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 0 f) Insurance Companies 1,620 6,600 8,220 0 1,620 6,600 8,220 g) FIIs 25,51,800 120 25,51,920 1.38 0 120 120 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 2. Non-Institutions a) Bodies Corp. 1,03,97,560 10,550 1,04,08,110 5.62 1,22,25,352 9,955 1,22,35,280 6.60 i) Indian b) Individuals i) Individual shareholders 2,54,21,491 6,45,403 2,60,66,894 14.07 2,82,50,833 6,50,893 2,89,01,726 15.6 - holding nominal share capital upto ` 1 lakh ii) Individual shareholders 18,29,988 0 18,29,988 0.99 54,02,102 0 54,02,102 2.92 holding nominal share capital in excess of `1 lakh c) Others (specify) 27,99,649 43,840 28,43,609 0.47 25,37,971 42,883 25,80,854 1.39 Sub-total(B)(2):- 4,30,08,592 7,10,820 4,37,19,412 23.60 4,32,78,030 7,05,283 4,39,83,433 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

Ferro Alloys Corporation Limited 23 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17 ii) Shareholding of Promoters

Shareholder’s Name Shareholding at the beginning of Shareholding the end of the % the year 01.04.2016 year 31.03.2017 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

24 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

Shareholder’s Name Shareholding at the beginning of Shareholding the end of the % the year 01.04.2016 year 31.03.2017 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 6,90,00,000 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 10,00,000 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 22,424 0.01 0 22,424 0.01 0 0 trustee of FACOR Employees Welfare Trust 48 Ramkishan Durgaprasad Saraf, as 27,576 0.01 0 27,576 0.01 0 0 Trustee od FAL Employees Welfare Trust 49 Mohinidevi Umashakar Saraf Jtly with 1,56,72,291 8.46 0 1,56,72,291 8.46 0 0 Manjudevi Murlidhar Saraf, on behalf of Premier Commercial Corp. 50 Vanitadevi Vineetkumar Saraf Jtly with 12,00,000 0.65 0 12,00,000 0.65 0 0 Sunandadevi Yogeshkumar Saraf, on behalf of Geedee Sales Services 51 Murlidhar Durgaprasad Saraf Jtly with 12,00,000 0.65 0 12,00,000 0.65 0 0 Gaurav Vinod Saraf, on behalf of Deepee Sales Corporation Total 13,89,28,036 74.99 0 13,89,28,036 74.99 7,00,00,000 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

Ferro Alloys Corporation Limited 25 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17 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 01.04.2016 31.03.2017 S. Name No. of % of total No. of % of total No. shares shares of shares shares of the company the company 1 Bonanza Portfolio Ltd. 18,80,282 1.01 19,18,122 1.04 2 Cutting Edge Venture Pvt. Ltd. 18,36,837 0.99 18,36,837 0.99 3 Anil Agarwal 18,34,000 0.99 15,39,000 0.99 4 Queen Consultancy Services Pvt Ltd 14,17,623 0.77 14,17,623 0.77 5 Modex International Securities Ltd 12,50,150 0.67 12,84,550 0.69 6 BMA Wealth Creators Ltd. 6,18,377 0.33 3,84,133 0.21 7 Aqua Financial Consultants Private Limited 5,79,172 0.31 5,79,172 0.31 8 Pratibhuti Vinihit Limited 4,69,722 0.25 3,00,000 0.16 9 Suslil Kumar Jalani 4,20,000 0.23 4,20,000 0.23 10 Aroma Plantation Ltd. 3,64,402 0,20 2,64,988 0.14 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 25,000 0.01 25,000 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 14 Mr. O.P. Banka 500 - 500 - 15 Mr. Ritesh Chaudhry 0.00 0.00 0.00 0.00

26 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17 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 5,441.33 4,047.27 0 9,488.27 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) 5,441.33 4,089.22 0 9,534.31 Change in Indebtedness during the financial year i. Addition 3,335.46 115.00 0 3,450.46 ii. Reduction (585.08) (1,015.20) 0 (1,600.28) Net Change (2750.38) 900.20 0 (1,850.18) Indebtedness at the end of the financial year i) Principal Amount 8,193.94 4,047.27 0 11,351.65 ii) Interest Due but not paid 1.53 25.00 0 16.15 iii) Interest Accrued but not due - 16.95 0 16.69 Total (i+ii+iii) 8,195.47 3,189.02 0 11,384.49 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 13.95 14.29 - 14.33 42.57 contained in section 17(1) of Income Tax Act, 1961 (b) Value of perquisites u/s 17(2) 4.05 3.24 - 3.67 10.96 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 72.66 72.66 72.66 72.66 290.64 - Others, specify 5. Others, please specify -- --- Total (A) 90.60 90.15 72.66 90.66 344.17 Ceiling as per the Act

Ferro Alloys Corporation Limited 27 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

B. Remuneration to other directors 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, ` 70,000 ` 10,000 ` 20,000 ` 30,000 ` 0 Committee meetings - Commission ------Others, Please specify - - - - - Total (1) ` 70,000 ` 10,000 ` 20,000 ` 0,000 ` 0 2. Other Non-Executive Directors - Fee for attending Board, - - - - - Committee meetings - Commission ------Others, Please specify - - - - - Total (2) - - - - - Total (B)=(1+2) ` 70,000 ` 10,000 ` 20,000 ` 30,000 ` 0 Total Managerial Remuneration Overall Ceiling as per the Act

S. Particulars of Remuneration Name of Directors No. Mr. M.B. Mr. Keshaorao Mr. Vineet Thaker Pardhi Saraf 1. Independent Directors - Fee for attending Board, Committee meetings ` 75,000 ` 0- - Commission - - - - Others, Please specify - - - Total (1) ` 75,000 ` 0- 2. Other Non-Executive Directors - Fee for attending Board, Committee meetings - - ` 40,000 - Commission - - - - Others, Please specify - - - Total (2) - - ` 40,000 Total (B)=(1+2) ` 75,000 ` 0 ` 40,000 Total Managerial Remuneration Overall Ceiling as per the Act

28 Ferro Alloys Corporation Limited ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

C. Remuneration to Key Managerial Personnel Other than MD/WTD/Manager 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) NA 17.78 22.96 40.74 of Income Tax Act, 1961 (b) Value of perquisites u/s 17(2) Income Tax Act, 1961 NA 0.33 3.98 4.31 (c) Profits in lieu of salary under section 17(3) Income Tax Act, 1961 NA --- 2. Stock Option - - - 3. Sweat Equity - - - 4. Commission - As % of Profit - Others, specify - - - 5. Others, please specify - - - Total (A) 18.11 26.94 45.05 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 other than those disclosed in the report to the members under section 134 of the Companies Act, 2013. Further, members’ attention is drawn to State of Company’s Affairs and the contingent liabilities, commitments in the notes forming part of the Financial statements and the report under section 134 of the Companies Act, 2013, as aforesaid.

ANNEXURE ‘F’ ANNUAL REPORT ON CSR ACTIVITIES FOR FY 2016-17 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 training and vocational skill development; • Promoting education; and • Ensuring sustainable environment The CSR Policy has been uploaded on the Company’s website: www.facorgroup.in

Ferro Alloys Corporation Limited 29 ANNEXURE TO THE REPORT TO THE MEMBERS UNDER SIXTY FIRST ANNUAL REPORT SECTION 134 OF THE COMPANIES ACT, 2013 61 2016-17

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 ` 2192.19 lacs

4 Prescribed CSR Expenditure (two per cent of the amount as in ` 43.84 lacs item 3 above)

5 Details of CSR spent during the financial year: a) Total amount to be spent for the financial year; ` 44.54 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) Promoting Healthcare Healthcare Keonjhar, Dhenkanal 7.85 7.85 7.85 Direct and Jajpur b) Making available safe Healthcare Bhadrak, Keonjhar, 7.50 7.57 7.57 Direct drinking water Dhenkanal and Jajpur c) Promoting Education, Promoting New Delhi 0.50 0.75 0.75 Implementing enhancing vocation Education Agency skills especially among children d) Plantation expense Ecological Bhadrak, Dhenkanal 28.00 28.37 28.37 Direct balance and Jajpur TOTAL: 43.85 44.54 44.54 — 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 monitoring of CSR Policy is in compliance with CSR the company. objectives and Policy of the Company.

(Chairman & Managing Director) (Chairman CSR Committee) Place : Noida Dated : 13th May, 2017

30 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT MANAGEMENT DISCUSSIONS AND ANALYSIS 61 2016-17

Industry structure and development During the year under review, revenue from operations Ferro-alloys are critical additives in the production of Iron & increased by 7.40% to ` 61,144.23 lacs (previous year Steel and the fortune of Ferro Alloys Industry is directly linked ` 56,933.35 lacs). However, EBIDTA increased by 280.10% with the growth of Iron & Steel Industry. The product mix of to ` 5,574.44 lacs (previous year ` 1,466.58 lacs) and profit Ferro Alloys consists of bulk Ferro Alloys viz., HC ferro after tax increased by 588.28% to ` 2016.82 lacs (previous manganese, silicon manganese, ferro silicon, HC ferro year ` (413.05 lacs) on account of improved market chrome, charge chrome, etc. and noble ferro alloys viz., conditions. ferromolybdenum, ferro-vanadium, ferrotungsten, ferro-silicon Production of Ferro Chrome for FY 2016-17 at 69,370 tons magnesium, ferro-boron and ferro-titanium. vis a vis 71,711 tons for FY 2015-16 was down by 3.26%. While China leads the production of Ferro Chrome, other However, improved ferro chrome prices assisted in improved notable players are South Africa, Kazakhistan and India. profitability for FY 2016-17. Although China has very limited chrome ore reserves, it is Production of Chrome ore at Company’s mines for FY 2016- the leading ferro chrome producer in the world on the back 17 was 1,70,516 tons vis a vis 1,36,616 tons for FY 2015-16 of heavy imports to fuel its growing ferro chrome production. reflecting an increase by 24.81%. South Africa is the world’s largest producer of Chrome Ore. Risks and concerns/Opportunities and Threats/Outlook India accounts for around 7-8% of the world’s Ferro Alloys production. India has emerged as a preferred supplier of ferro India, at a per capita steel consumption of 60 kg, is much alloys on account of abundant availability of key resources below the global average of 215 kg, thereby reflecting massive comprising chrome ore and manganese ore, trained and cost- under-penetration and immense opportunities for growth, effective manpower and favourable location. Interestingly, which will in turn, drive ferro-alloys demand. Further, the chrome ore production is confined significantly in the State visionary program ‘Make in India’ will support the investments/ of Odisha. expansion plans in Roads, Railways, Automobile Sector and Power Sector, which will fuel demand for Ferro Alloys in the According to the International Monetary Fund, the global coming years. economy is expected to grow at 3.4% in 2016-17 compared to 3.1% in 2015-16. The pick- up in global activity is projected Electrical energy is one of the major inputs in product on of to be gradual. The Indian GDP growth expanded to 7.5% in ferro-alloys and high power tariff is a threat for the ferro-alloys previous financial year due to improving economic sentiments industry. The ferro-alloys producers are now focusing on and is expected to pick up from 2016-17. The currency setting up their captive power units which is likely to reduce movements and interest rates, however, continue to be risks the input cost and ensure continuous supply of power. The for growth. 100 MW Captive Power Plant enables the Company to emerge self-reliant in its power needs and reduce Starting January, 2017, the chrome ore prices headed north dependence on the grid electricity. but for very short spell and took a plunge. However, with ferro chrome markets staging some recovery, the industry Further, it is hoped that the government would recognize the should get some breather given the rally of price increase challenges arising out of periodic administered price continues with other constituent costs remaining arrested. increases of power and input materials which hamper the competitiveness of this industry and take steps to address Financial Performance with Respect to Operational them urgently to enable the ferro alloys producers to compete Performance in the domestic as well as international markets. (` in lacs) Also, the cost-effective availability of key raw material is a Particulars For the year For the year global challenge. Although the volatility in prices of raw st st ended 31 ended 31 materials as well as disruption in the supply of inputs could March, 2017 March, 2016 adversely affect the profitability of the Company, the Company Income from Operations 61,144.23 56,933.35 is having adequate arrangements with domestic and EBITDA (Before 5,574.44 1,466.58 international Ore Suppliers to take care of such exigencies. exceptional items) The Company, although exposed to fluctuations in foreign Profit/(Loss) after tax 2,016.82 (413.05) exchange due to in import of materials and exports of finished Cash Profit 3,455.13 (322.38) products, has a comprehensive and robust risk management policy for insulating the Company for foreign exchange Note:- Financial Performance to be read in conjuction with exposure. accounting disclosure by resolution professional. The Company had provided a Corporate Guarantee of an

Ferro Alloys Corporation Limited 31 SIXTY FIRST ANNUAL REPORT MANAGEMENT DISCUSSIONS AND ANALYSIS 61 2016-17 amount of ` 517.90 crores, in tranches, to Rural Electrification statutory auditors from time to time and suitable changes/ Corporation Limited (REC) which had sanctioned a Term modifications are implemented so as to ensure that an Loan of ` 517.90 crores to Facor Power Limited, the effective scheme of checks and balances exists at all times. subsidiary of the Company against the security of the assets The management is reasonably satisfied with the existing of FPL, the personal guarantee of two of its directors and the internal control systems. The Audit Committee of Board of Corporate Guarantee of your Company, as aforesaid. REC’s Directors also reviews these matters from time to time in claim before NCLT is ` 740.86 Crores including interest as their meetings. st of 31 March, 2017. The Company also takes quarterly compliance certificate in The Company has been admitted for commencement of respect of various applicable laws from the concerned Corporate Insolvency Resolution Process w.e.f 6th July, 2017 departmental heads and places the same before the Board pursuant to order passed by the Hon’ble National Company of the Company. In light of the accounting disclosures by the Law Tribunal, Kolkata (NCLT, Kolkata) in an application filed resolution professional efforts are being made by the by REC under section 7 of the Insolvency And Bankruptcy company to improve its financial reporting. Code, 2016 (IBC Code, 2016). The Power of the board of directors of the company is suspended and affairs of the Material Development in Human Resource/ Industrial company in accordance with the IBC Code are being relations front including People Employed managed by Resolution Professional. Human resource is the Company’s principal asset. The overall An appeal against the order dated 6th July, 2017 of the industrial relations in the Company were cordial. Employees National Company Law Tribunal, Kolkata has, however, been are considered the most valuable asset and form the FACOR filed with the National Company Law Appellate Tribunal, New family and FACOR values association which is best Delhi (NCLAT, New Delhi), the outcome of which is awaited. demonstrated in long service period of employees in FACOR family. Notwithstanding the outcome of the appeal filed before the NCLAT, New Delhi, as aforesaid, the Company is actively The Company seeks to balance individual aspirations with engaged in working out a resolution plan which, shall be Company goals. The Company employs contract labour in placed before the Committee of Creditors, and final approval its manufacturing facilities. The Company recruits judiciously before the Adjudicating authority by the Resolution through Industry contacts, newspaper advertisements and Professional. However, in the unlikely event of resolution plan consultants. The Company maintained harmonious failing to get approved by the Committee of Creditors and relationship with all its workers. The manpower employed is NCLT, then the Company would be subjected to liquidation around 754 excluding indirect employment. process under the provisions of the said IBC Code, 2016. Cautionary Statement Further, a Corporate Guarantee issued jointly by the company Certain statements in the Management Discussion and on account of Facor Steels Ltd. has been invoked by Bank of Analysis Report describing the Company’s objective and India and a claim of ` 33.82 crores has been lodged. The predictions may be “forward-looking statements” within the company is contesting the said claim. meaning of applicable laws and regulations. Actual results Internal controls and systems and their Adequacy may vary significantly from the forward looking statements contained in this document due to various risks and The Company has implemented proper and adequate system uncertainties. These risks and uncertainties include the effect of internal controls commensurate with its size and nature of of economic and political conditions in India, volatility in operations to provide reasonable assurance that all assets interest rates new regulations and government policies that are safeguarded, transactions are authorised, recorded and may impact the Company’s business as well as its ability to reported properly, applicable statutes and corporate policies implement the strategy. The Company doesn’t undertake to are duly complied with. update the statements. Resolution Professional has relied The Company has an Audit Committee with Independent on the information & details furnished by the company officials Directors as members. The mechanism of internal control and Board of Directors and which may be subject to review. and checks are reviewed by the management, internal and

32 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

1. COMPANY’S PHILOSOPHY Corporate Governance at FACOR is based on the tenets 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 the most valuable asset and form the FACOR family. It is the undying spirit of FACOR which banishes all difficulties and reinforces the resolve to move forward for a better future. 2. BOARD OF DIRECTORS FACOR’s Board composition echoes Board diversity. This is best demonstrated 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 changes in the composition of the Board during the year and its composition as on 31st March, 2017 was as follows:- Name of Director Category No. of No of Whether No. of Outside shares Board last Outside Committee held to be Meetings AGM Directorship Position Held filled up attended Attended held Public Member Chairman Mr R.K. Saraf, Executive* 22,10,327 3 Yes 2 3 - Chairman & Managing Director Mr. Manoj Saraf, Executive* 9,40,493 4 Yes 1 - - Managing Director1 Mr. Vineet Saraf, Non-Executive* 5,14,118 4 Yes 3 1 - Director 1 Mr. A.S. Kapre Non-Executive Independent 25,000 4 Yes 4 3 3 Mr. Pinaki Misra Non-Executive Independent - 1 No 2 - - Mr. Rohit Saraf, Executive* 20,93,366 3 Yes 2 - - Jt. Managing Director1 Mr. Ashish Saraf, Executive* 9,34,629 2 Yes 4 - - Jt. Managing Director2 Mr. S.B. Mishra(Passed Non-Executive Independent - 0 NA 1 - 1 away on 12.08.2016) Mr. M.B. Thaker Non-Executive Independent 5,294 4 Yes 1 3 - Mr. Keshaorao Pardhi Non-Executive Independent 100 0 No 3 - - (Resigned on 12.11.2016) Mr. Umesh Kumar Khaitan Non-Executive Independent - 2 No 9 2 3 Mrs. Urmila Gupta Non-Executive Independent - 3 No 4 7 1 Woman Director * Represents Promoters. 1 Nephew of Mr. R.K. Saraf, Chairman & Managing Director 2 Son of Mr. R.K. Saraf, Chairman & Managing Director

Ferro Alloys Corporation Limited 33 SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

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 2016-2017 the Board met 4 times on 27th May, 2016, 12th August, 2016, 14th November, 2016 and 9th February, 2017 to deliberate on various matters. However, in view of the default in the repayment of the loan and interest amount to Rural Electrification Corporation Limited consequent upon invocation of Corporate Guarantee given by the Company for the loan given to Facor Power Limited, the subsidiary of the Company, and upon an application filed by REC under section 7 of the Insolvency and Bankruptcy Code, 2016 with the National Company Law Tribunal, Kolkata against your Company, the Company has been admitted for commencement of Corporate Insolvency Resolution Process w.e.f 6th July, 2017 and accordingly, Mr.K.G. Somani has been appointed as Interim Resolution Professional for the Company. Accordingly, in terms of the provisions of Section 17 of the Insolvency and Bankruptcy Code, 2016 from the date of appointment of the Interim Resolution Professional, the management of the affairs of the Corporate Debtor i.e. the Company vest in the IRP and the powers of the Board of Directors of the Company stand suspended and are to be exercised by the IRP. In terms of the provisions of the cited code, as above, the powers of the Board of Directors of the Company stand suspended and the operations of the Company are now managed by Mr. K.G. Somani, the Resolution Professional. Independent Directors Meeting The Independent Directors of the Company met on 9th February, 2017without 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 and discussed aspects relating to the quality, quantity 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 Codeis posted on the website of the Company www.facorgroup.in 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

34 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

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, 2017 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 No (Died on 12.08.2016) Mr. M.B. Thaker, Member Independent 4 4 Yes Mr. Umesh Khaitan, Member Independent 4 0 No (Appointment 14.11.2016) Four meetings of the Committee were held during the year ended 31 March, 2017on 27th May, 2016, 12th August, 2016, 14th November, 2016 and 9th February, 2017. 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 No (Passed away on 12.08.2016) Mr. M.B. Thaker, Member Independent 1 1 Yes Mrs. Urmila Gupta, Member Independent 1 0 No (Appointedw.e.f 14.11.2016) 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 meeting of the Committee was held during the year on 27th May, 2016.

Ferro Alloys Corporation Limited 35 SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

Details of remuneration paid to Executive Directors for the year 2016-17 are as under: Name of Director Total Remuneration including Period of Agreement perquisites and allowances (in `) Mr. R.K. Saraf, CMD 92,47,470.80 5 years w.e.f 29th June 2015 Mr. Manoj Saraf, MD 54,91,105.80 5 years w.e.f 1st January, 2016 Mr. Ashish Saraf, JMD - 5 years w.e.f 1st August, 2014 Mr. Rohit Saraf, JMD 55,23,711.80 5 years w.ef 1st August, 2014 Total 2,02,62,288.40 - 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 with the Non- Executive Directors vis-à-vis your Company. During the year 2016-17, 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 70,000/-* 25,000 Mr. M.B. Thaker 75,000/-* 5,294 Mr. S.B. Mishra 0/-* - Mr. Pinaki Misra 10,000/- - Mr. Keshaorao Pardhi 0/- 100 Mr. Vineet Saraf 40,000/- 5,14,118 Mrs.Urmila Gupta 30,000/- - Mr. Umesh Khaitan 20,000/- - Total 2,45,000/- * 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 on 27.05.2016 Mr. A.S. Kapre, Chairman 1 1 Mr. R.K. Saraf Member 1 0 Mr. Manoj Saraf Member 1 1 Mr. Rohit Saraf Member 1 1 Mr. M.B. Thaker Member 1 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. 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.

36 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

One meeting of the Committee was held during the year on 27th May, 2016. Further, the Status of Investors’ complaints received and resolved during the year 2016-17 is as under:- Investors complaints Resolved Not solved to the No. of pending received satisfaction of Shareholders complaints 12 12 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 on 27.05.2016 Mr. M. B. Thaker Chairman 1 1 Mr. R.K. Saraf Member 1 0 Mr. Manoj Saraf Member 1 1 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 Policycan 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 58th AGM D.P. Nagar, Wednesday, 10th September, 2014 Yes No RANDIA – 756135, Dist. Bhadrak (Odissa) 59th AGM -DO- Monday, 21st September, 2015 Yes No 60th AGM -DO- Thursday, 28th September, 2016 Yes No 5. DISCLOSURES a) Related Party Transaction: During FY 2016-17, 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 the SEBI (LODR) Regulations, 2015. Transactions entered into with related parties were in line with the Board’s policy on transactions with related parties.

Ferro Alloys Corporation Limited 37 SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

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 2016-17, the Company did not have any material pecuniary relationship or transactions with Non-executive Directors and there have been no materially significant related party transactions between the Company and the Directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements and the report to the members U/s 134 of the Companies Act, 2013. 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 non-filing of Form MGT-7 for financial year ended 31st March, 2016 due to oversight, 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 SEBI LODR Regulations, 2015 and/or under the Companies Act, 2013 and the rules framed thereunder. c) 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 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. d) Whistle Blower Policy: The Company has adopted the Whistle Blower Policy. However, no instances of fraud or other irregularities were observed during the year 2016-17which needed to be reported to the Board/Audit Committee. e) The Company has complied with all the mandatory recommendation of Regulation 27 SEBI (LODR) Regulations, 2015. The Company has not adopted the non-mandatory provisions of the said clause. f) 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. R.K. Saraf 4. Mr. Murlidhar Saraf 5. Mr. Sanjeev Saraf II Relatives of above Five Promoters as defined under Companies Act, 2013

38 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

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 MadencilikIthalat VeIhracat Anonim Sirketi. 20 Deepee Sales Corporation 40 Asim Minerals Pvt. Ltd. Disclosure of interest by Resolution Professional Mr.K.G. Somani, who is the Resolution Professional appointed for the Company has disclosed his interest, as under: As Partner i) K.G. Somani & Co., New Delhi As Director i) K.G. Somani Management Consultants (P) Ltd. New Delhi ii) KEI Limited, New Delhi iii) NTB Bowsmith Irrigation Ltd. Pune iv) K.G. Somani Insolvency Professionals Private Ltd. 6. MEANS OF COMMUNICATIONS • The financial results, important announcements, declarations are communicated to each Shareholders by means of advertisements in Financial Express and Samvaad. 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. 7. GENERAL SHAREHOLDERS INFORMATION AGM, Date, Time & Venue 28th September-, 2017 at 12 noon - at D.P. Nagar, Randia – 756135, Bhadrak (Odisha) Particulars of Director 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 31-3-2017 was a Director as on 31-3-2017 Mr. Rohit 16.12.1966 01.08.2004 Mining Operations B.Com 1. Vidarbha Iron & Nil 2093366 Saraf and Steel Co. Ltd. Administration 2. Facor Alloys Ltd.

Ferro Alloys Corporation Limited 39 SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

Financial Year ending 31st March, 2017 Date of Book Closure 23rd September, 2017 to 28th September, 2017 (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, 2016 5.40 4.51 26100.54 24523.20 May, 2016 5.00 4.06 26837.20 25057.93 June, 2016 5.58 4.40 27105.41 25911.33 July, 2016 6.60 5.10 28240.20 27034.14 August, 2016 5.65 4.36 28532.25 27627.97 September, 2016 7.56 4.50 29077.28 27716.78 October, 2016 9.09 6.37 28477.65 27488.30 November, 2016 10.75 6.35 28029.80 25717.93 December, 2016 7.98 6.11 26803.76 25753.74 January, 2017 8.40 6.50 27980.39 26447.06 February, 2017 10.05 7.15 29065.31 27590.10 March, 2017 9.94 8.43 29824.62 28716.21

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 2016 – 2017 2015 – 2016 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 43616 13446184 7.26 44505 13794047 7.45 501 to 1000 514 3912988 2.11 524 3970957 2.14 1001 to 2000 264 3850090 2.08 261 3813942 2.06 2001 to 3000 110 2781282 1.50 97 2478341 1.34 3001 to 4000 51 1821363 0.11 43 1538764 0.83 4001 to 5000 42 1918012 1.04 40 1849178 1.00 5001 to 100000 52 3753297 2.02 46 3283524 1.77 100001 to above 70 153785025 83.01 73 154539488 83.41 Total 44719 185268241 100.00 45589 185268241 100.00

40 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

Dematerialization of shares and liquidity as on 31st March: No. of equity 2016 – 2017 2015 – 2016 shares held No. of No. of No. of No. of shareholders shares held shareholders shares held Physical Mode 21182 714260 Physical 21300 720062 Physical Mode Mode Electronic Mode 23537 184553981 Electronic 24289 184548179 Electronic Mode Mode Total: 44719 185268241 Total: 45589 185268241 Total:

Shareholding pattern as on 31st March: Category 2016 – 2017 2015 – 2016 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 4848 0.00 14748 0.01 State Government Company / 38066 0.02 38066 0.02 State Financial Corporation Mutual Funds/ UTI 3880 0.00 3880 0.00 Insurance Companies 8220 0.00 8220 0.00 Bodies Corporate 12320717 6.65 10416681 5.62 Others 33964474 18.33 35858610 19.36 Total: 185268241 100.00 185268241 100.00 Plant Locations: Charge Chrome Plant Mining Complex D.P. Nagar Laxmi Bhawan P.O. – Randia – 756 135 Kuans, Bhadrak – 756 100 Dist. Bhadrak (Odisha) Dist. Bhadrak (Odisha) Tel.No. : +91-6784-240320 Tel.No. : +91-6784-250311/250598/251312 Fax.No.: +91-6784-240626 Fax No.: +91-6784-251782 E-mail: [email protected]; [email protected] E-mail : [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] Address of Resolution Professional Registered Office: K.G. Somani & Co. D.P. Nagar, Randia – 756 135 Chartered Accountants Dist. Bhadrak (Odisha) 3/15, Asaf Ali Road, 4th Floor, New Delhi - 110002 Tel.No.: +91-6784-240320 / 272 Tel.No.: 011-23252225 Fax.No.: +91-6784-240626 E-mail: [email protected] E-mail: [email protected]; [email protected]

Ferro Alloys Corporation Limited 41 SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

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 Rs.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 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 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. 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. c) Dematerialization of Shares: Shareholders are requested to convert their physical holding to demat / electronic form through any of the registered Depository Participants (DPs) to avoid the hassles involved in dealing in physical shares such as possibility of loss, mutilation, etc. and also to ensure safe and speedy transaction in respect of the shares held. d) Registration of National Electronic Clearing Services (NECS) / Electronic Clearing Services (ECS) mandate: NECS/ECS facility ensures timely remittance of dividend without possible loss / delay in postal transit. Shareholders/ Members holding shares in electronic form may register their NECS/ECS details with the respective DPs and Shareholders / Members holding shares in physical form may register their NECS/ECS details with the Registrars and Share Transfer Agents, to receive dividends, if declared, via the NECS / ECS mode. e) Updation of Address / Bank Details: To receive all communications/corporate actions promptly, shareholders holding shares in dematerialized

42 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

form are requested to please update their address / bank details with the respective DPs and in case of physical shares, the updated details have to be intimated to the Registrar & Share Transfer Agents. f) Consolidation of multiple folios (in respect of physical shareholding): Members are requested to consolidate their shareholdings under multiple folios to eliminate the receipt of multiple communications and this would ensure that future correspondence / corporate benefits could then be sent to the consolidated folio. g) Compliances of mandatory requirements and adoption of the non mandatory requirements The Company has complied with all the mandatory requirements and the following non-mandatory requirement: The statutory financial statements of the Company are unqualified. h) Non-Compliance of Any Requirement Of Corporate Governance Report None i) The Disclosures Of The Compliance With Corporate Governance Requirements Specified In Regulation 17 To 27 And Clauses (B) To (I) Of Sub-Regulation (2) Of Regulation 46 Of Listing Regulations I. Disclosure on website in terms of Listing Regulations Item Compliance status (Yes/No/NA) Details of business Ye s Terms and conditions of appointment of independent directors Yes Composition of various committees of Board of Directors Yes Code of conduct of Board of Directors and senior management personnel Yes Details of establishment of vigil mechanism/ Whistle Blower Policy Yes Criteria of making payments to non-executive directors Yes Policy on dealing with related party transactions Yes Policy for determining ‘material’ subsidiaries Yes Details of familiarization programmes imparted to independent directors Yes Contact information of the designated officials of the listed entity who are Yes responsible for assisting and handling investor grievances email address for grievance redressal and other relevant details Yes Financial results Ye s Shareholding pattern Ye s Details of agreements entered into with the media companies and/or NA their associates New name and the old name of the listed entity NA II. Annual Affirmations Particulars Regulation Number Compliance Status (Yes/No/NA) Independent director(s) have been appointed in terms 16(1)(b) & 25(6) Yes of specified criteria of ‘independence’ and/or ‘eligibility’ Board composition 17(1) Yes Meeting of Board of directors 17(2) Yes Review of Compliance Reports 17(3) Yes Plans for orderly succession for appointments 17(4) Yes

Ferro Alloys Corporation Limited 43 SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

Particulars Regulation Number Compliance Status (Yes/No/NA) Code of Conduct 17(5) Yes Fees/compensation 17(6) Yes Minimum Information 17(7) Yes Compliance Certificate 17(8) Yes Risk Assessment & Management 17(9) Yes Performance Evaluation of Independent Directors 17(10) Yes Composition of Audit Committee 18(1) Yes Meeting of Audit Committee 18(2) Yes Composition of Nomination & Remuneration Committee 19(1) & (2) Yes Composition of Stakeholder Relationship Committee 20(1) & (2) Yes Composition and role of Risk Management Committee 21(1),(2),(3),(4) NA Vigil Mechanism 22 Yes Policy for Related Party Transaction 23(1),(5),(6),(7) & (8) Yes Prior or Omnibus approval of Audit Committee for all relatedparty 23(2), (3) Yes transactions Approval for material related party transactions 23(4) Yes Composition of Board of Directors of unlisted material Subsidiary 24(1) Yes Other Corporate Governance requirements with respect to subsidiary 24(2),(3),(4),(5) & (6) Yes of listed entity Maximum Directorship & Tenure 25(1) & (2) Yes Meeting of independent directors 25(3) & (4) Yes Familiarization of independent directors 25(7) Yes Memberships in Committees 26(1) Yes Affirmation with compliance to code of conduct from members of 26(3) Yes Board of Directors and Senior management personnel Disclosure of Shareholding by Non- Executive Directors 26(4) Yes Policy with respect to Obligations of directors and seniormanagement 26(2) & 26(5) Yes Other Corporate Governance requirements 27 Yes

DECLARATION ON COMPLIANCE OF THE COMPANY’S CODE OF CONDUCT As provided under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board Members and the Senior Management Personnel have confirmed Compliance with the Code of Conduct for the year ended 31st March, 2017.

Place : Noida R.K. Saraf Date : 1st September, 2017 Chairman & Managing Director

44 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT CORPORATE GOVERNANCE REPORT 61 2016-17

AUDITORS’ CERTIFICATE To the Members of Ferro Alloys Corporation Limited We have examined the compliance of conditions of Corporate Governance by Ferro Alloys Corporation Limited (‘the Company’) for the year ended 31 March 2017, as per Regulations 17-27, clauses (b) to (i) of Regulation 46(2) and paragraphs C &, D of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’). The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised 2016) issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements. 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 specified in Regulations 17 to 27, clauses (b) to (i) of subregulation (2) of Regulation 46 and paragraphs C & D of Schedule V of the Listing Regulations, as applicable. We state that such compliance is neither an assurance as to the future viability of the Company nor as to the efficiency or effectiveness with which the Management has conducted the affairs of the Company. Restrictions on use This Certificate is issued solely for the purpose of complying with the aforesaid Regulations and may not be suitable for any other purpose.

For Salve & Co. Chartered Accountants, (Firm’s Regn. No. 109003W)

C.A. K. P. Sahasrabudhe Place :Nagpur Partner Date :1st September, 2017 Membership No. 007021

Ferro Alloys Corporation Limited 45 SIXTY FIRST 61 ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT 2016-17

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, 2017 the Statement of Profit and Loss,the Cash Flow Statement for the year then 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.

Auditors’ 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 thereunder. 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, 2017 and its profit 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. (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.

46 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT & ANNEXURE 61 2016-17

(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, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 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. iv. the Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of account maintained by the Company. For SALVE & Co. Chartered Accountants (Firm’s Registration No.109003W)

C.A. K.P. SAHASRABUDHE Place: Noida, UP Partner Date : 13th May, 2017 (Membership No.007021)

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, 2017. 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 werenoticed 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 have not been deposited by the Company on account of disputes:-

Ferro Alloys Corporation Limited 47 SIXTY FIRST ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 61 2016-17

Nature of dues ` /Lacs FORUM WHERE THE DISPUTE IS PENDING PERIOD 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, CUSTOMS DUTY 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 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 EXCISE DUTY 1190.47 Customs Excise & Service Tax Appellate Tribunal, Kolkata 2007-08 & 2008-09 79.88 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 3163.43 Commissioner Central Excise Customs & Service Tax, Bhubaneswar-II 2009-10, 2010-11, 2011-12 & 2012-13 & 2014-15 25.08 Additional Commissioner Sales Tax, Cuttack 1980-81, 1981-82, 2005-06 & 2006-07 SALES TAX 10.69 Sales Tax Tribunal, Cuttack 2000-01 & 2003-04 9.49 Addl. Commissioner of Sales Tax, Cuttack 2005-06, 2006-07, 2007-08 516.77 Joint Commissioner Commercial Taxes, Balasore 1999-2000, 2005-06, 2006-07 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. 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 : 13th May, 2017 (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 Corporation Limited (“the Company”) as of March 31, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

48 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 61 2016-17

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.

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, 2017, 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 : 13th May, 2017 (Membership No.007021)

Ferro Alloys Corporation Limited 49 SIXTY FIRST ANNUAL REPORT BALANCE SHEET AS AT 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) Particulars Note As at As at Nos. 31st March, 2017 31st March, 2016 ------EQUITY AND LIABILITIES Shareholders’ Funds Share Capital ...... 2 1,852.68 1,852.68 Reserves and Surplus ...... 3 25,610.00 23,593.18 ------27,462.68 25,445.86 Non-Current Liabilities Long-Term Borrowings ...... 4 2,057.71 3,024.95 Deferred Tax Liabilities (Net) ...... 5 734.42 - Other Long-Term Liabilities ...... 6 218.65 218.65 Long-Term Provisions ...... 7 1,109.00 1,439.58 ------4,119.78 4,683.18 Current Liabilities Short-Term Borrowings ...... 8 8,111.71 4,776.25 Trade Payables a) Outstanding dues of micro and small enterprises 9 0.03 4.24 b) Outstanding dues of creditors other than micro and small enterprises ...... 9 7,560.34 7,311.80 Other Current Liabilities ...... 10 4,053.29 4,205.61 Short-Term Provisions ...... 11 210.76 156.59 ------19,936.13 16,454.49 ------TOTAL 51,518.59 46,583.53 ======ASSETS Non-Current Assets Fixed Assets Tangible Assets ...... 12 9,163.59 9,824.18 Capital Work-in-Progress ...... 12 957.75 965.99 Assets Held for Disposal ...... 12 29.97 ------10,151.31 10,790.17 Non-Current Investments ...... 13 21,917.71 21,918.21 Long-Term Loans and Advances ...... 14 1,508.13 1,184.45 Deferred Tax Assets (Net) ...... 5 - 160.63 ------33,577.15 34,053.46 Current Assets Inventories ...... 15 7,774.01 6,888.41 Trade Receivables ...... 16 5,585.22 1,452.64 Cash and Bank Balances ...... 17 508.20 295.12 Short-Term Loans and Advances ...... 18 4,012.20 3,831.35 Other Current Assets ...... 19 61.81 62.55 ------17,941.44 12,530.07 ------TOTAL 51,518.59 46,583.53 ======Significant Accounting Policies 1 Notes on Financial Statements 2 to 43 As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

50 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) Particulars Note Year Ended Year Ended Nos. 31st March, 2017 31st March, 2016 ------INCOME Revenue from Operations ...... 20 61,144.23 56,933.35 Other Income ...... 21 566.28 567.89 ------Total Revenue 61,710.51 57,501.24

EXPENSES Cost of Materials Consumed ...... 22 25,024.54 22,944.48 Changes in Inventories of Finished Goods and Stock-in-Process ...... 23 352.27 2,716.67 Employee Benefits Expense ...... 24 4,543.48 4,224.05 Finance Costs ...... 25 1,520.12 1,788.61 Depreciation ...... 26 543.26 467.66 Other Expenses ...... 27 26,215.78 26,149.46 ------Total Expenses 58,199.45 58,290.93 ------Profit/(Loss) Before Tax ...... 3,511.06 (789.69) Tax Expenses Current Tax ...... 692.88 - Tax for Earlier Years ...... (93.69) 0.35 Deferred tax ...... 895.05 (376.99) ------1,494.24 (376.64) ------Profit/(Loss) for the year 2,016.82 (413.05) ------Earning per equity share of face value of ` 1/- each. Basic and Diluted (in `) ...... 28 1.09 (0.22)

Significant Accounting Policies 1 Notes on Financial Statements 2 to 43 As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

Ferro Alloys Corporation Limited 51 SIXTY FIRST ANNUAL REPORT CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) 2016-17 2015-16 ------(A) CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before tax ...... 3,511.06 (789.69) Adjustment for: Depreciation ...... 600.62 524.96 Exchange difference on translation (Net) ...... (50.91) 1.05 Interest and Dividend Income ...... (72.94) (78.57) Finance Costs ...... 1,520.12 1,788.61 Profit/Loss on Sale of Fixed Assets (Net) ...... (36.31) 1.60 ------1,960.58 2,237.65 ------Operating Profit before Working Capital Changes ...... 5,471.64 1,447.96 Adjustment for: Trade and Other Receivables ...... (5,210.78) 537.92 Inventories ...... (885.60) 1,788.59 Trade Payables ...... (190.99) (266.47) Others ...... (124.25) 8.69 ------(6,411.62) 2,068.73 ------Cash Generated from Operations ...... (939.98) 3,516.69 Direct Taxes Paid/Adjusted ...... 19.85 (301.08) ------19.85 (301.08) ------Net Cash Flow from Operating Activities ...... (920.13) 3,215.61 (B) CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets ...... (114.17) (1,125.95) Sale of Fixed Assets ...... 188.72 5.96 Purchase of Investments ...... - 0.01 Sale of Investments ...... 0.50 2.31 Interest and Dividend Income ...... 81.00 104.83 ------Net Cash Flow (used in) /from Investing Activities ...... 156.05 (1,012.84) (C) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Long and Short Term Borrowings ...... 2,380.83 (321.09) Finance Costs Paid ...... (1,527.92) (1,761.47) Dividend/Corporate Tax on Dividend Paid ...... - (9.46) ------Net Cash Flow (used in)/from Financing Activities ...... 852.91 (2,092.02) ------Net Increase/(Decrease) in Cash and Cash Equivalents 88.83 110.75 ------Opening Balance of Cash and Cash Equivalents 244.72 133.97 Closing Balance of Cash and Cash Equivalents 333.55 244.72 ------Net Increase/(Decrease) in Cash and Cash Equivalents 88.83 110.75 ======As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

52 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

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 53 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

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 tern 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, 2017 31st March, 2016 ------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, 2017 As at 31st March, 2016 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, 2017 As at 31st March, 2016 No. of Shares No. of Shares Shares outstanding 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. 54 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------3. RESERVES AND SURPLUS Capital Reserve Balance as at the beginning and end of the year ...... 439.24 439.24 General Reserve: Balance as at the beginning and end of the year ...... 19,200.00 19,200.00 Statement of Profit and Loss Balance as at the beginning of the year ...... 3,953.94 4,366.99 Add: Profit/(Loss) for the year ...... 2,016.82 (413.05) ------5,970.76 3,953.94 ------TOTAL 25,610.00 23,593.18 ------

4. LONG-TERM BORROWINGS Secured From Banks : Rupee Term Loan Account - 82.24 Unsecured From related parties (Refer Note 4.1) ...... 1,432.71 1,582.71 Others ...... } 625.00 1,360.00 ------2,057.71 2,942.71 ------TOTAL 2,057.71 3,024.95 ------4.1 Terms of repayment : Payable after 31st March, 2018

5. DEFERRED TAX LIABILITIES / (ASSETS) (NET) Deferred Tax Liabilities: Difference between Book and Income Tax depreciation ...... 996.41 760.28 Deferred Tax Assets: Disallowance u/s 43B of the Income Tax Act, 1961 to be allowed on payment basis ...... 261.99 265.32 Unabsorbed Depreciation and Unabsorbed Business Loss .. - 655.59 ------261.99 920.91 ------Net Deferred Tax Liabilities / (Assets) ...... 734.42 (160.63) ------

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

Ferro Alloys Corporation Limited 55 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------7. LONG-TERM PROVISIONS Provision for Employee Benefits: P.L.Encashment (Unfunded) ...... 302.84 272.23 Others ...... 806.16 1,167.35 ------TOTAL 1,109.00 1,439.58 ------

8. SHORT-TERM BORROWINGS From Banks : (Secured) Cash Credit / Packing Credit Accounts (Refer Note 8.1) .... 2,914.53 4,200.12 Bills Discounted ...... } 5,197.18 576.13 ------TOTAL 8,111.71 4,776.25 ------8.1 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.

9. TRADE PAYABLES Trade Payables a) Outstanding dues of micro and small enterprises ...... 0.03 4.24 b) Outstanding dues of creditors other than micro and small enterprises ...... 7,560.34 7,311.80 ------TOTAL 7,560.37 7,316.04 ------

10. OTHER CURRENT LIABILITIES Current maturities of long-term debts - Rupee Term Loan from Banks ...... 82.23 582.84 Interest accrued but not due on borrowings ...... 16.69 16.95 Interest accrued and due on borrowings ...... 16.15 28.76 Unpaid dividends ...... 4.42 4.42 Other Payables * ...... 3,933.80 3,572.64 ------TOTAL 4,053.29 4,205.61 ------* Includes statutory dues, security deposits and advance from customers.

11. SHORT-TERM PROVISIONS Provision for Employee Benefits: P.L.Encashment (Unfunded) ...... 126.45 139.92 For Taxation ...... 84.31 16.67 ------TOTAL 210.76 156.59 ------

56 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS 12. 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 1.04.2016 Adjustments Adjustments 31.03.2017 1.04.2016 Year Adjustments 31.03.2017 31.03.2017 31.03.2016 (I) Tangible Assets Land Leased 17.39 - - 17.39 -- - - 17.39 17.39 Land Freehold 2,548.91 10.99 7.19 2,552.71 -- - - 2,552.71 2,548.91 Buildings 4,466.85 11.35 298.52 4,179.68 1,969.31 128.70 258.66 1,839.35 2,340.33 2,497.54 Roads and Drains 493.72 - 29.89 463.83 237.20 23.74 20.20 240.74 223.09 256.52 Railway Sidings 86.58 - - 86.58 82.25 - - 82.25 4.33 4.33 Plant and Machineries 10,612.07 43.00 1,196.28 9,458.79 6,700.46 342.98 1,106.66 5,936.78 3,522.01 3,911.61 Office and Other Equipments 720.52 21.52 67.70 674.34 455.19 43.00 62.19 436.00 238.34 265.33 Furniture and Fixtures 294.00 5.31 9.58 289.73 182.87 14.52 9.09 188.30 101.43 111.13 Vehicles 921.50 0.27 15.27 906.50 710.08 47.68 15.22 742.54 163.96 211.42 20,161.54 92.44 1,624.43 18,629.55 10,337.36 600.62 1,472.02 9,465.96 9,163.59 9,824.18 Previous Year 18,554.85 1,640.39 33.70 20,161.54 9,838.54 524.96 26.14 10,337.36 9,824.18 (II) Intangible Assets Goodwill 5,344.39 - - 5,344.39 5,344.39 - - 5,344.39 - - Previous Year 5,344.39 - - 5,344.39 5,344.39 - - 5,344.39 - - (III) Capital Work-in-Progress 957.75 965.99 (IV) Assets Held for Disposal - 29.97 - 29.97 -- - - 29.97 - Total: 10,151.31 965.99

(` in lacs) As at As at 31st March, 2017 31st March, 2016 ------13. NON-CURRENT INVESTMENTS Trade Investments : (At Cost) In Equity Shares of Subsidiary Companies - Unquoted, fully paid up 198,059,930 (Previous Year - 19,80,59,930) Facor Power Limited of ` 10/- each ... 20,614.20 20,614.20 100,000 (Previous Year - 100,000) Facor Realty & Infrastructure Ltd. of ` 10/- each ...... 10.00 10.00 200,001(Previous Year 2,00,001) Facor Energy Ltd.of GBP 1/- each ...... 182.05 182.05 ------20,806.25 20,806.25 In 15% Cumulative Redeemable Preference Shares of Subsidiary Company - Unquoted, fully paid up 1,100,000 (Previous Year : 1,1,00,000) 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. of ` 1/- each 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 ...... 1.55 2.05 7 Years National Savings Certificates ...... 0.05 0.05 ------Deposited with Government/Semi Government Authorities as Security Deposit...... 1.80 2.30 ------TOTAL 21,917.71 21,918.21 ------Aggregate cost of Quoted Investments 5.00 5.00 Market Value of Quoted Investments 20.30 4.00 Aggregate amount of Unquoted Investments 21,912.71 21,913.21

Ferro Alloys Corporation Limited 57 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------14. LONG-TERM LOANS AND ADVANCES (Unsecured and Considered Good) Capital Advance ...... 644.37 321.30 Security Deposits ...... 863.76 863.15 ------TOTAL 1,508.13 1,184.45 ------15. INVENTORIES (As per Inventory taken, valued and as certified by the Management) (At cost unless otherwise stated) Raw Materials (includes in transit ` Nil, Previous Year ` 9.39 lacs) ...... 4,515.79 3,237.88 Stock-in-Process (At Cost or Net realisable value whichever is lower) ...... 165.10 139.58 Finished Goods (At Cost or Net realisable value whichever is lower) ...... 2,648.33 3,026.12 Stores and Spare Parts (includes in transit ` 2.13 lacs, Previous Year ` Nil).... 394.53 441.04 Loose Tools ...... 50.26 43.79 ------TOTAL 7,774.01 6,888.41 ------

16. TRADE RECEIVABLES (Unsecured and Considered Good ) Over six months ...... 63.13 50.14 Others ...... 5,522.09 1,402.50 ------TOTAL 5,585.22 1,452.64 ------17. CASH AND BANK BALANCES CASH AND CASH EQUIVALENTS Cash in hand ...... 20.38 19.25 Cheques in hand ...... - 0.20 With Scheduled Banks: In Current Accounts ...... 313.17 225.27 In Current Accounts- For Unpaid Dividend ...... 4.42 4.42 ------317.59 229.69 ------337.97 249.14 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) ...... 51.10 6.75 With original maturity of more than twelve months (Refer Note No.17.2 below) 119.13 39.23 ------TOTAL 508.20 295.12 ------17.1 As Margin Money Deposit with Banks ` 1.10 lacs (Previous Year ` 6.75 lacs) 17.2 Fixed Deposit Receipts pledged with Government Authorities and with Banks ` 119.13 lacs (Previous Year ` 39.23 lacs)

58 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------18. SHORT- TERM LOANS AND ADVANCES (Unsecured and Considered Good ) Loans and Advances to Related Parties ...... 37.02 40.14 Others ...... 3,975.18 3,791.21 ------TOTAL 4,012.20 3,831.35 ------19. OTHER CURRENT ASSETS Interest accrued on Deposits...... 59.88 60.62 Claims Recoverable ...... 1.93 1.93 ------TOTAL 61.81 62.55 ------

(` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------20. REVENUE FROM OPERATIONS Sale of products, less returns ...... 63,419.63 59,426.01 Less: Excise Duty ...... 2,882.25 3,396.91 ------60,537.38 56,029.10 Add: Export Incentives ...... 606.85 904.25 ------TOTAL 61,144.23 56,933.35 ------Gross Sales ------20.1 PARTICULARS OF SALE OF PRODUCTS Ferro Alloys ...... 51,966.94 48,237.11 Chrome Ore ...... 11,393.23 11,133.64 Off Grade / By-products ...... 59.46 55.26 ------TOTAL 63,419.63 59,426.01 ------21 OTHER INCOME Interest Income: Interest on Deposits ...... 11.30 9.47 Other Interest ...... 61.64 70.50 Miscellaneous receipts ...... 47.46 89.90 Profit /( Loss) on Fixed Assets Sold/Discarded (Net) ...... 36.31 (1.60) Foreign Exchange Gain ...... 112.16 159.64 Liabilities/Provisions no longer required written back (Net) ...... 297.41 239.98 ------TOTAL 566.28 567.89 ------

Ferro Alloys Corporation Limited 59 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------22. COST OF MATERIALS CONSUMED Opening stock of Materials ...... 3,237.88 2,396.83 Add: Purchases (Refer Note 31) ...... 26,302.45 23,785.53 ------29,540.33 26,182.36 Less: Closing stock of Materials ...... 4,515.79 3,237.88 ------Cost of Materials Consumed ...... 25,024.54 22,944.48 ------

22.1 PARTICULARS OF MATERIALS CONSUMED Chrome Ore/Concentrate/Others ...... 16,769.19 16,101.35 Coke and Coal...... 7,479.23 6,140.16 Quartz ...... 105.94 72.83 Carbon paste/Electrode paste ...... 567.10 541.72 Miscellaneous ...... 103.08 88.42 ------TOTAL 25,024.54 22,944.48 ------

(` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------23. CHANGES IN INVENTORIES OF FINISHED GOODS AND STOCK-IN PROCESS Closing stock: Finished Goods ...... 2,648.33 3,026.12 Stock-in-Process ...... 165.10 139.58 ------2,813.43 3,165.70 Opening stock: Finished Goods ...... 3,026.12 5,663.09 Stock-in-Process ...... 139.58 219.28 ------3,165.70 5,882.37 ------Decrease/(Increase) in Inventories ...... 352.27 2,716.67 ------

60 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------

24. EMPLOYEE BENEFITS EXPENSE Salaries, Wages and Bonus...... 3,189.60 3,198.03 Contribution to Provident and Other Funds ...... 623.34 402.76 Welfare Expenses ...... 492.68 554.26 Directors’ Remuneration ...... 237.86 69.00 ------TOTAL 4,543.48 4,224.05 ------25. FINANCE COSTS Interest: On Fixed Loan ...... 36.84 207.85 On Others ...... 1,479.88 1,578.53 ------1,516.72 1,786.38 Other Borrowing Costs ...... 3.40 2.23 ------TOTAL 1,520.12 1,788.61 ------

26. DEPRECIATION Depreciation ...... 543.26 467.66 ------TOTAL 543.26 467.66 ------Depreciation is excluding ` 57.36 lacs (Previous Year ` 57.30 lacs) considered under cost of material consumed (Refer Note 30)

27. OTHER EXPENSES Power and Fuel ...... 13,471.27 14,005.86 Mining, Handling and other Production Expenses ...... 2,808.11 3,915.62 Freight, Shipment and Sales Expenses ...... 1,553.26 1,913.35 Royalty ...... 2,416.98 2,570.18 Stores and Spares ...... 221.74 176.13 Works Expenses ...... 1,954.04 1,696.93 Transport Expenses ...... 35.41 56.88 Repairs and Maintenance to Plant and Machinery ...... 2,123.51 870.72 Repairs and Maintenance to Buildings ...... 952.92 397.92 Insurance ...... 25.87 25.78 Rent ...... 209.60 196.40 Rates and Taxes ...... 103.59 72.54 Commission and Brokerage on Sales ...... 285.97 188.70 Payments to Auditors ...... 10.24 10.59 Directors’ Sitting Fees ...... 2.46 3.46 Miscellaneous Expenses ...... 40.81 48.40 ------TOTAL 26,215.78 26,149.46 ------

Ferro Alloys Corporation Limited 61 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------

27.1 PAYMENTS TO AUDITORS (A) Statutory Auditor Audit Fees...... 4.76 4.75 Tax Audit Fees ...... 0.15 0.15 Certification and Consultation Fees ...... 0.28 0.18 Reimbursement of Expenses ...... 2.07 3.05 ------Sub-Total (A) 7.26 8.13 ------(B) Cost Auditor Audit Fees...... 0.70 0.70 Management Services ...... 0.60 0.60 Certification and Consultation Fees ...... 0.24 0.24 Reimbursement of Expenses ...... 1.44 0.92 ------Sub-Total (B) 2.98 2.46 ------TOTAL (A + B) 10.24 10.59 ------

28. EARNING PER SHARE (BASIC AND DILUTED) (i) Net Profit after Tax ...... 2,016.82 (413.05) (ii) Weighted average number of equity shares (Nos. in lacs) ...... 1,852.68 1,852.68 (iii) Earning per Share: ( ` per share) ...... 1.09 (0.22)

62 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS 29. Disclosure pursuant to Accounting Standard - 15 ( Revised) “Employee Benefits” : Defined Contribution Plan : Amount of ` 277.21 lacs (Previous Year ` 282.82 lacs) 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 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Present value of Defined Benefit Obligation 1,889.05 412.15 1,843.94 444.03 at the beginning of the year Interest Cost 146.21 31.90 147.52 35.52 Current Service Cost 86.09 36.33 80.37 36.49 Acturial Losses/(Gains) 233.62 67.11 54.41 35.55 Benefits Paid (310.06) (118.20) (237.19) (139.44) Present value of Defined Benefit Obligation 2,044.91 429.29 1,889.05 412.15 at the close of the year

(b) Changes in the Fair Value of Plan Assets and reconciliation thereof : (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Fair Value of Plan Assets at the beginning 1,916.90 - 1,754.64 - of the year Add : Expected Return on Plan Assets 153.35 - 140.37 - Add/(Less) : Actuarial Gains/(Losses) 0.81 - 19.26 - Add : Contributions (33.62) - 239.82 - Less : Benefits Paid (310.06) - (237.19) - Fair Value of Plan Assets at the close of the year 1,727.38 - 1,916.90 -

Ferro Alloys Corporation Limited 63 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

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 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Present Value of Defined Benefit Obligation 2,044.91 429.29 1,889.05 412.15 Less : Fair Value of Plan Assets 1,727.38 - 1,916.90 - Present Value of unfunded obligation 317.53 429.29 (27.85) 412.15

(d) Amount recognised in the Statement of Profit and Loss are as follows (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Current Service Cost 86.09 36.33 80.37 36.49 Interest Cost 146.21 31.90 147.52 35.52 Expected return on Plan Asset (153.35) - (140.37) - Net acturial loss/(gain) 267.24 67.11 35.15 35.55 Net periodic cost 346.12 135.34 122.67 107.56

(e) Actuarial Assumptions as at the Balance Sheet date : Particulars 2016-17 2015-16 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% 7% 8% 8% Salary Escalation Rate 5% 5% 5% 5%

(f) Movement in net liability recognised in Balance sheet : (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Opening net liabilty (27.85) 412.15 89.30 444.03 Expenses as above 346.12 135.34 122.67 107.56 Contributions Paid (32.73) (118.20) (239.82) (139.44) Closing net liabilty 285.54 429.29 (27.85) 412.15

64 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (g) Other Disclosures : (` in lacs) Particulars 2016-17 2015-16 2014-15 2013-14 Gratuity PL Gratuity PL Gratuity PL Gratuity PL Encashment Encashment Encashment Encashment Defined Benefit Obligation 2,044.91 429.29 1,889.05 412.15 1,843.94 444.03 1,598.31 434.04 Plan Assets 1,727.38 - 1,916.90 - 1,754.64 - 1,380.61 - Surplus/(Deficit) (317.53) (429.29) 27.85 (412.15) (89.30) (444.03) (217.70) (434.04)

30. Raw Material Purchases include following being processing expenses: (` in lacs) 2016-17 2015-16 Power and Fuel ...... 56.80 58.50 Salaries and other benefits to employees ...... 99.73 101.68 Operating and other expenses ...... 417.53 446.34 Depreciation ...... 57.36 57.30 ------631.42 663.82 ------2016-17 2015-16 ` in lacs Percentage ` in lacs Percentage ------31. (a) 1. Value of Consumption of imported Raw Materials...... 552.91 2.21 681.60 2.97 2. Value of Consumption of indigenous Raw Materials...... 24,471.63 97.79 22,262.88 97.03 ------25,024.54 100.00 22,944.48 100.00 ======(b) 1. Value of Consumption of imported Components and Spare Parts: ...... 879.34 37.25 150.76 8.54 2. Value of Consumption of indigenous Components and Spare Parts: ...... 1,481.34 62.75 1,615.00 91.46 ------2,360.68 100.00 1,765.76 100.00 ======

32. C.I.F. Value of Imports : (` in lacs) 2016-17 2015-16 (a) Raw Materials...... 540.82 438.43 (b) Components, Stores and Spare Parts ...... 809.39 137.31 ------1,350.21 575.74 ------33. Expenditure in Foreign Currency : (i) Commission on Sales ...... 274.78 189.68 (ii) Travelling Expenses ...... 134.84 16.86 (iii) Subscription ...... 9.24 9.36 (iv) Miscellaneous...... 10.56 11.30 ------429.42 227.20 ------34. Earnings in Foreign Exchange on account of Export of Goods on F.O.B. basis ...... 24,502.69 20,570.06

Ferro Alloys Corporation Limited 65 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS 35. Corporate Social Responsibility Expenditure during the year amounts to ` 44.54 Lacs (Previous Year ` 72.87 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 ` 6,314.03 lacs (Previous Year ` 6,681.08 lacs). Amounts paid under protest ` 304.79 lacs (Previous Year ` 328.63 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 ` 2599.43 Lacs (Previous Year ` 415.97 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 19,80,59,930 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinates 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 ` 3,000 Lacs) for providing Working Capital Facilities to FPL. 39. Details on Segment Reporting : (` in lacs) FERRO ALLOYS CHROME ORE CONSOLIDATED DESCRIPTION TOTAL 2016-17 2015-16 2016-17 2015-16 2016-17 2015-16 1) REVENUE External Sales 52,026.40 48,292.37 409.75 - 52,436.15 48,292.37 Inter Segment Sales - - 10,983.48 11,133.64 10,983.48 11,133.64 Total Revenue 52,026.40 48,292.37 11,393.23 11,133.64 63,419.63 59,426.01 2) RESULT Segment Result before Interest & Tax 4,423.75 1,828.41 607.43 (829.49) 5,031.18 998.92 Unallocated Expenses ------Finance Costs (1,323.67) (1,513.60) (196.45) (275.01) (1,520.12) (1,788.61) Tax Expense - - - - (1,494.24) 376.64 Profit / (Loss) from ordinary activities - - - - 2,016.82 (413.05) Extraordinary Loss ------NET PROFIT / (LOSS) - - - - 2,016.82 (413.05) 3) OTHER INFORMATION Segment Assets 14,438.98 9,583.61 15,161.90 14,921.07 29,600.88 24,504.68 Unallocated Corporate Assets - - - - 21,917.71 22,078.85 Total Assets - - - - 51,518.59 46,583.53 Segment Liabilities 11,254.28 11,992.02 3,784.54 3,683.23 15,038.82 15,675.25 Unallocated Corporate Liabilities - - - - 823.15 21.09 Total Liabilities - - - - 15,861.97 15,696.34 Capital Expenditure 61.79 657.63 22.41 468.32 84.20 1,125.95 Depreciation / Amortisation 300.64 286.60 299.98 238.36 600.62 524.96 Non Cash expenditure other than Depreciation / Amortisation 1.41 1.37 0.33 0.15 1.74 1.52

66 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

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 31-03-2017 in the ordinary course of business.

(` in lacs) Particulars With Subsidiary With Enterprise With Key Companies where Significant Management influence exists Personnel & Relatives 2016-17 2015-16 2016-17 2015-16 2016-17 2015-16 i) Sale of Goods 417.95 - ii) Sale of Assets 2.00 - iii) Purchase of Goods 12,421.14 13,177.89 iv) Rent paid 104.22 82.10 23.14 23.18 v) Interest paid 153.43 151.13 vi) Electricity Charges Paid 8.46 8.82 vii) Maintenance Charges Paid 7.02 6.12 viii) Short Term Loans & Advances given 16.56 (3.85) (19.68) (2.84) ix) Clearing & forwarding and other service charges 17.94 11.57 x) Long Term Borrowings (150.00) (12.00) xi) Other Current Liabilities (1.40) (640.87) xii) Key Management Personnel and their Relative’s Remuneration 248.32 79.49 xiii) Balances outstanding at the year end a) Short Term Loans & Advances 37.02 20.45 - 19.68 b) Trade Payable 1,608.86 1,329.95 c) Long Term Borrowings 1,432.72 1,582.72 d) Other Long Term Borrowings 218.65 218.65 e) Other Current Liabilities 10.09 11.50 f) Key Management Personnel and their Relative’s Remuneration 187.10 364.09

Ferro Alloys Corporation Limited 67 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS III Disclosure in respect of Related Party Transactions during the year: (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. 1 SALE OF GOODS Facor Alloys Limited Others 417.95 - Total 417.95 - 2 SALE OF ASSETS Facor Alloys Limited Others 2.00 - Total 2.00 - 3 PURCHASE OF GOODS Facor Power Limited Subsidiary 12,421.14 13,177.89 Total 12,421.14 13,177.89 4 RENT PAID Facor Alloys Limited Others 79.80 57.75 GDP Infrastructure Private Limited Others 3.00 3.00 Saraf Enterprises (Pvt.) Ltd. Others 18.90 18.83 Saraf Bandhu Private Limited Others 1.80 1.80 Shri Durgaprasad Saraf Charitable Trust Others 0.72 0.72 Sub-Total 104.22 82.10 Relative of Key Mrs. Priti Rohit Saraf Management 23.14 23.18 Personnel Total 127.36 105.28 5 INTEREST PAID Shreeram Durgaprasad Ores Pvt. Ltd. Others 29.79 29.56 Rai Bahadur Shreeram and Company Pvt. Ltd. Others 123.64 121.57 Total 153.43 151.13 6 ELECTRICITY CHARGES PAID Facor Alloys Limited Others 8.46 8.82 Total 8.46 8.82 7 MAINTENANCE CHARGES PAID Facor Alloys Limited Others 7.02 6.12 Total 7.02 6.12 8 SHORT TERM LOANS & ADVANCES GIVEN Facor Power Limited Subsidiary - (13.50) Facor Energy Limited Subsidiary 16.56 9.65 Sub-Total 16.56 (3.85) Facor Steels Limited Others (19.68) - Boula Platinum Mining Pvt. Ltd. Associate - (2.84) Sub-Total (19.68) (2.84) Total (3.12) (6.69)

68 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. 9 CLEARING & FORWARDING AND OTHER SERVICE CHARGES Shreeram Shipping Services Pvt. Ltd. Others 17.94 11.57 Total 17.94 11.57

10 LONG TERM BORROWINGS (Inter Corporate Deposit) Rai Bahadur Shreeram and Company Private Limited Others (150.00) (12.00) Total (150.00) (12.00)

11 OTHER CURRENT LIABLITIES Facor Alloys Limited Others - (640.74) Shreeram Durgaprasad Ores Pvt. Ltd. Others 0.08 (0.01) Rai Bahadur Shreeram and Company Private Limited Others (1.48) (0.12) Total (1.40) (640.87)

12 KEY MANAGEMENT PERSONNEL AND THEIR RELATIVES’ REMUNERATION Shri R. K. Saraf Key Management 19.85 17.00 Personnel Shri Manoj Saraf Key Management 20.93 20.83 Personnel Shri Ashish Saraf Key Management - 20.83 Personnel Shri Rohit Saraf Key Management 21.35 20.83 Personnel Commission Directors 186.19 - Total 248.32 79.49

13 BALANCES OUTSTANDING AT THE YEAR END (A) Short Term Loans & Advances Facor Energy Limited Subsidiary 37.02 20.45 Sub-Total 37.02 20.45 Facor Steels Limited Others - 19.68 Sub-Total - 19.68 Total 37.02 40.13

(B) Trade Payables Facor Power Limited Subsidiary 1,608.86 1,329.95 Total 1,608.86 1,329.95

Ferro Alloys Corporation Limited 69 SIXTY FIRST ANNUAL REPORT NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2017 61 2016-17

STANDALONE ACCOUNTS (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. (C) Long Term Borrowings Rai Bahadur Shreeram and Company Private Limited Others 1,137.72 1,287.72 Shreeram Durgaprasad Ores Pvt. Ltd. Others 295.00 295.00 Total 1,432.72 1,582.72

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

(E) Other Current Liabilities Rai Bahadur Shreeram and Company Pvt. Ltd. Others 7.76 9.25 Shreeram Durgaprasad Ores Pvt. Ltd. Others 2.33 2.25 Total 10.09 11.50

(F) Key Management Personnel and their Relatives’ Remuneration Shri R. K. Saraf Key Management 0.15 0.22 Personnel Shri Manoj Saraf Key Management 0.76 0.56 Personnel Commission Payable Directors 186.19 363.31 Total 187.10 364.09 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. Details of Specified Bank notes (SBN) held and transacted during the period 08-11-2016 to 30-12-2016 are as under : ( in ` ) Particulars SBNs Other Denomination Notes Total Closing Cash in hand as on 08.11.2016 1839500 929401 2768901 (+) Permitted receipts - 6719466 6719466 (-) Permitted payments 26000 6566461 6592461 (-) Amount deposited in Banks 1813500 - 1813500 Closing Cash in hand as on 30.12.2016 - 1082406 1082406 43. 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 R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

70 Ferro Alloys Corporation Limited SIXTY FIRST 61 ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT 2016-17

TO THE MEMBERS OF FERRO ALLOYS CORPORATION 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, 2017, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then 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.

Auditors’ 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) 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 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, 2017, and their consolidated loss and their consolidated cash flows for the year ended on that date.

Other Matters We did not audit the financial statements of three subsidiaries whose financial statements reflect total assets of ` 67109.56 Lacs as at 31st March, 2017, total revenues of ` 12236.49 Lacs and net cash flows amounting to ` (18.98) 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 ` 0.09 Lacs for the year ended 31st March, 2017, 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, insofar as it relates to the aforesaid subsidiaries and associate, is based solely on the reports of the other auditors. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified

Ferro Alloys Corporation Limited 71 SIXTY FIRST 61 ANNUAL REPORT INDEPENDENT AUDITORS’ REPORT & ANNEXURE 2016-17 in respect of the above matters with 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, 2017 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, 2017 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 Group and its associate incorporated in India during the year ended 31stMarch, 2017. iv. The Group has provided requisite disclosures in its consolidated financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8thNovember, 2016 to 30thDecember, 2016 and these are in accordance with the books of accounts maintained by the Group.

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

C.A. K.P. SAHSRABUDHE Place: Noida, UP Partner Date:13th May, 2017 (Membership No.007021)

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, 2017 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

72 Ferro Alloys Corporation Limited SIXTY FIRST ANNUAL REPORT ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT 61 2016-17 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 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, 2017, 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. SAHSRABUDHE Place: Noida, UP Partner Date:13th May, 2017 (Membership No.007021)

Ferro Alloys Corporation Limited 73 SIXTY FIRST ANNUAL REPORT CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) Particulars Note As at As at Nos. 31st March, 2017 31st March, 2016 ------EQUITY AND LIABILITIES Shareholders’ Funds Share Capital ...... 2 1,852.68 1,852.68 Reserves and Surplus ...... 3 579.43 7,160.60 ------2,432.11 9,013.28 Non-Current Liabilities Long-Term Borrowings ...... 4 2,067.91 47,157.69 Deferred Tax Liabilities (Net) ...... 734.42 - Other Long-Term Liabilities ...... 5 218.65 218.65 Long-Term Provisions ...... 6 1,178.96 1,488.33 ------4,199.94 48,864.67 Current Liabilities Short-Term Borrowings ...... 7 9,514.37 6,807.73 Trade Payables a) Outstanding dues of micro and small enterprises 8 0.03 4.24 b) Outstanding dues of creditors other than micro and small enterprises ...... 8 6,937.96 6,594.41 Other Current Liabilities ...... 9 76,677.38 24,204.19 Short-Term Provisions ...... 10 213.83 158.53 ------93,343.57 37,769.10 ------TOTAL 99,975.62 95,647.05 ======

ASSETS Non-Current Assets Fixed Assets Tangible Assets ...... 11 61,715.96 63,402.19 Intangible Assets ...... 11 5,162.73 5,162.73 Capital Work-in-Progress ...... 11 10,415.25 10,863.88 Assets Held for Disposal ...... 11 29.97 ------77,323.91 79,428.80 Non-Current Investments 12 9.21 9.80 Long-Term Loans and Advances 13 1,701.36 1,378.80 Other Non- Current Assets 14 150.45 150.31 Deferred Tax Assets (Net) - 160.63 ------79,184.93 81,128.34 Current Assets Inventories ...... 15 8,276.47 7,820.57 Trade Receivables ...... 16 5,770.84 1,602.28 Cash and Bank Balances ...... 17 810.98 497.77 Short-Term Loans and Advances ...... 18 5,820.28 4,482.73 Other Current Assets ...... 19 112.12 115.36 ------20,790.69 14,518.71 ------TOTAL 99,975.62 95,647.05 ======Significant Accounting Policies 1 Notes on Financial Statements 2 to 36 As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

74 Ferro Alloys Corporation Limited SIXTY FIRST CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) Particulars Note Year Ended Year Ended Nos. 31st March, 2017 31st March, 2016 ------INCOME Revenue from Operations ...... 20 61,670.60 57,368.19 Other Income ...... 21 611.65 604.80 ------Total Revenue 62,282.25 57,972.99

EXPENSES Cost of Materials Consumed ...... 22 32,480.28 30,581.42 Changes in Inventories of Finished Goods and Stock-in-Process ...... 23 352.27 2,716.67 Employee Benefits Expense ...... 24 5,132.43 4,742.44 Finance Costs ...... 25 11,078.97 9,033.99 Depreciation ...... 26 2,264.20 2,166.41 Other Expenses ...... 27 16,059.88 15,126.09 ------Total Expenses 67,368.03 64,367.02 ------Profit/(Loss) Before Tax ...... (5,085.78) (6,394.03)

Tax Expenses Current Tax ...... 692.88 - Tax for Earlier Years ...... (93.69) 0.35 Deferred Tax ...... 895.05 (376.99) ------1,494.24 (376.64) ------Profit/(Loss) after Tax but before share of Profit / Loss from (6,580.02) (6,017.39) Associate & Minority Interest Share of Profit / (Loss) from Associate After Tax ...... (0.09) (0.05) Minority Interest ...... (1,194.08) (777.42) ------Profit/(Loss) for the year (5,386.03) (5,240.02) ======Earning per equity share of face value of ` 1/- each Basic and Diluted ( in ` ) ...... 28 (2.91) (2.83) Significant Accounting Policies 1 Notes on Financial Statements 2 to 36

As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

Ferro Alloys Corporation Limited 75 SIXTY FIRST CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) 2016-17 2015-16 ------(A) CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before tax ...... (5,085.78) (6,394.03) Add : Income from associate after Tax ...... (0.09) (0.05) Adjustment for: Depreciation ...... 2,321.56 2,223.71 Exchange difference on translation (Net) ...... (50.91) 1.05 Interest and Dividend Income ...... (97.04) (107.41) Finance Costs ...... 11,078.97 9,033.99 Sale of project scrap ...... (22.10) (8.55) Profit/Loss on Sale of Fixed Assets (Net) ...... (35.50) 0.84 ------13,194.98 11,143.63 ------Operating Profit before Working Capital Changes 8,109.11 4,749.55 Adjustment for: Trade and Other Receivables ...... (6,395.02) (70.94) Inventories ...... (455.90) 2,451.62 Trade Payables ...... 52,556.68 9,054.38 Others ...... (243.36) 24.55 ------45,462.40 11,459.61 ------Cash Generated from Operations ...... 53,571.51 16,209.16 Direct Taxes Paid/Adjusted ...... 19.85 (301.08) ------19.85 (301.08) ------Net Cash Flow from Operating Activities ...... 53,591.36 15,908.08

(B) CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets and Capital work in progress ...... (377.42) (2,669.42) Sale of Fixed Assets ...... 196.25 9.34 Sale of Investments ...... 0.59 2.35 Interest and Dividend Income ...... 100.28 129.86 ------Net Cash Flow used in Investing Activities (80.30) (2,527.87) (C) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Long and Short Term Borrowings ...... (42,383.14) (4,242.00) Other Non- Current Assets ...... (0.14) (0.51) Finance Costs Paid ...... (11,078.97) (9,033.99) Miscellaneous Expenditure/Income ...... 22.10 8.55 ------Cash Flow used in Financing Activities ...... (53,440.15) (13,267.95) Adjustment to networth on consolidation i) Foreign Currency Translation Reserve ...... (1.06) 0.41 ii) Adjustment to minority interest ...... - 0.01 (1.06) 0.42 ------Net Cash Flow (used in) /from Financing Activities ...... (53,441.21) (13,267.53) Net Increase/(Decrease) in Cash and Cash Equivalents ...... 69.85 112.68 ------Opening Balance of Cash and Cash Equivalents ...... 278.19 165.51 Closing Balance of Cash and Cash Equivalents ...... 348.04 278.19 ------Net Increase/(Decrease) in Cash and Cash Equivalents ...... 69.85 112.68 ======As per our report of even date attached, For and on behalf of the Board, For SALVE & CO. O.P.BANKA R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102) C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570) Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

76 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

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 subsidiariesand 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 1stOctober, 2011 from 1stTurbine of 50 MW and 1stBoiler. 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 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

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, 2017 31st March, 2016 ------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, 2017 As at 31st March, 2016 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, 2017 As at 31st March, 2016 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 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------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 ...... (8.66) (9.07) Add: Movement during the year ...... (1.06) 0.41 ------Balance as at the end of the year ...... (9.72) (8.66) General Reserve: Balance as at the beginning of the year ...... 19,200.00 19,200.00 Statement of Profit and Loss Balance as at the beginning of the year ...... (12,469.98) (7,159.00) Add: Profit/(Loss) for the year ...... (5,386.03) (4,533.56) Less: Change in Minority Interest ...... (1,194.08) (777.42) ------Balance as at the end of the year ...... (19,050.09) (12,469.98) ------TOTAL 579.43 7,160.60 ------

4. LONG-TERM BORROWINGS Secured From Banks & Financial Institution : Rupee Term Loan Account - From Banks ...... - 82.24 - From Banks - Vehicle Loan (Refer Note 4.1) ...... 10.20 4.97 - From Rural Electrification Corporation Limited (Refer Note 4.2 (a) and (b)) - 44,127.77 ------10.20 44,214.98 Unsecured From related parties (Refer Note 4.3) 1,432.71 1,582.71 Others 625.00 1,360.00 ------2,057.71 2,942.71 ------TOTAL 2,067.91 47,157.69 ------4.1 -Vehicle loan is secured against hypothecation of specified vehicles. Terms of repayment : Payable in equal monthly instalments. 4.2 (a) Loan from Rural Electrification Corporation Limited (REC) is secured by first charge on all present & future immoveable properties, moveable fixed assets including lease hold land, project assets, book debts, commission receivables, intangibles, goodwill, uncalled capital, Trust & 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 corporate guarantee by Ferro Alloys Corporation Ltd. and personal guarantee of two Promoter Directors.

Ferro Alloys Corporation Limited 79 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (b) Term loan from REC is re-payable in 44 quarterly instalment of ` 1161.31 lacs each starting from December 31,2015. No Instalment has been paid till 31st March, 2017. REC has declared Term loan account as Non Performing Assets (NPA) and has recalled total outstanding Term loan. Total amount due as on 31st March 2017 is ` 51,097.52 lacs (Previous Year ` 2,322.61 lacs). Rate of interest on the said loan varies from 12.25% to 14% per annum. Interest of ` 18,486.76 lacs due on term loan is outstanding for the period December 31, 2014 to March 31, 2017 (Previous Year ` 9,402.39 lacs for the period December 31, 2014 to March 30, 2016). 4.3 Terms of repayment : Payable after 31st March, 2018 (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------5. OTHER LONG-TERM LIABILITIES ...... 218.65 218.65 ------TOTAL 218.65 218.65 ------

6. LONG-TERM PROVISIONS Provision for Employee Benefits: P.L.Encashment (Unfunded) ...... 331.47 292.73 Gratuity ...... 41.33 28.25 Others ...... 806.16 1,167.35 ------TOTAL 1,178.96 1,488.33 ------

7. SHORT-TERM BORROWINGS From Banks : (Secured) Cash Credit / Packing Credit Accounts (Refer Note 7.1 & 7.2) .... 3,817.19 5,731.60 Bills Discounted ...... } 5,197.18 576.13 ------9,014.37 6,307.73 Unsecured : From Related Parties ...... 500.00 500.00 ------TOTAL 9,514.37 6,807.73 ------7.1 Cash Credit facility of ` 902.66 lacs (Previous Year ` 1,531.48 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 ` 8,111.71 lacs (Previous Year ` 4,776.25 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.

8. TRADE PAYABLES Trade Payables a) Outstanding dues of micro and small enterprises ...... 0.03 4.24 b) Outstanding dues of creditors other than micro and small enterprises ...... 6,937.96 6,594.41 ------TOTAL 6,937.99 6,598.65 ------

80 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------9. OTHER CURRENT LIABILITIES Current maturities of long-term debts - Rupee Term Loan from Banks & Financial Institution (Secured) ...... 86.60 5,229.98 Interest accrued but not due on borrowings ...... 28.22 24.64 Interest accrued and due on borrowings (Refer Note 4.2 (b) ...... 18,502.91 9,431.15 Unpaid dividends ...... 4.42 4.42 Other payables * (Refer Note 4.2 (b) ...... 58,055.23 9,514.00 ------TOTAL 76,677.38 24,204.19 ------* Includes statutory dues, security deposits and advance from customers.

10. SHORT-TERM PROVISIONS Provision for Employee Benefits: P.L.Encashment (Unfunded) ...... 127.76 141.08 Gratuity ...... 1.76 0.78 For Taxation ...... 84.31 16.67 ------TOTAL 213.83 158.53 ------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 1.04.2016 Adjustments Adjustments 31.03.2017 1.04.2016 Year Adjustments 31.03.2017 31.03.2017 31.03.2016 (I) Tangible Assets: Land Leased 135.55 - - 135.55 5.08 1.13 - 6.21 129.34 130.47 Land Freehold 3,217.85 10.99 7.19 3,221.65 -- - - 3,221.65 3,217.85 Buildings 13,365.92 79.38 298.52 13,146.78 3,134.89 409.60 258.66 3,285.83 9,860.95 10,231.03 Roads and Drains 1,115.21 - 29.89 1,085.32 356.45 84.05 20.20 420.30 665.02 758.76 Railways Sidings 2,777.79 - - 2,777.79 478.48 184.74 - 663.22 2,114.57 2,299.31 Plant and Machinery 58,752.58 646.32 1,203.97 58,194.93 12,695.01 1,507.32 1,109.25 13,093.08 45,101.85 46,057.57 Office and Other Equipments 777.13 29.85 73.56 733.42 491.83 51.52 67.65 475.70 257.72 285.30 Furniture and Fixtures 340.47 6.11 11.78 334.80 203.39 18.37 11.11 210.65 124.15 137.08 Vehicles 1,043.36 23.43 19.43 1,047.36 758.54 64.83 16.72 806.65 240.71 284.82

81,525.86 796.08 1,644.34 80,677.60 18,123.67 2,321.56 1,483.59 18,961.64 61,715.96 63,402.19

Previous Year 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

(II) Intangible Assets: Goodwill 10,507.12 - - 10,507.12 5,344.39 - - 5,344.39 5,162.73 5,162.73 Previous Year 10,507.12 - - 10,507.12 5,344.39 - - 5,344.39 5,162.73

(III) Capital Work-in-Progress: 10,415.25 10,863.88

(IV) Assets Held for Disposal 29.97 - 29.97 -- - - 29.97 -

Total 77,323.91 79,428.80

Ferro Alloys Corporation Limited 81 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------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 ...... (2.65) (2.56) ------2.01 2.10 In Government Securities : Unquoted 5 Years National Savings Certificates ...... 0.20 0.20 6 Years National Savings Certificates ...... 1.95 2.45 7 Years National Savings Certificates ...... 0.05 0.05 ------2.20 2.70 ------TOTAL 9.21 9.80 ------12.1 Aggregate cost of Quoted Investments ...... 5.00 5.00 Market Value of Quoted Investments ...... 20.30 4.00 Aggregate amount of Unquoted Investments ...... 4.21 4.80 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 ...... 651.24 333.49 Security Deposits ...... 1,039.66 1,044.69 Prepaid Expenses ...... 10.46 0.62 ------TOTAL 1,701.36 1,378.80 ------14. OTHER NON-CURRENT ASSETS Unamortised Expenses...... 150.45 150.31 ------TOTAL 150.45 150.31 ------15. INVENTORIES (As per Inventory taken, valued and as certified by the Management) (At cost unless otherwise stated) Raw Materials (includes in transit ` 146.40 lacs, Previous Year ` 108.87 lacs) .... 4,779.76 4,056.55 Stock-in-Process (At Cost or Net realisable value whichever is lower) ...... 165.10 139.58 Finished Goods (At Cost or Net realisable value whichever is lower) ...... 2,648.33 3,026.12 Stores and Spare Parts (includes in transit ` 53.46 lacs, Previous Year ` Nil ) .... 633.02 554.53 Loose Tools ...... 50.26 43.79 ------TOTAL 8,276.47 7,820.57 ------82 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) As at As at 31st March, 2017 31st March, 2016 ------16. TRADE RECEIVABLES (Unsecured and Considered Good) Over six months ...... 63.13 50.14 Others ...... 5,707.71 1,552.14 ------TOTAL 5,770.84 1,602.28 ------

17. CASH AND BANK BALANCES CASH AND CASH EQUIVALENTS Cash in hand ...... 22.70 23.00 Cheques in Hand ...... - 0.20 With Scheduled Banks: In Current Accounts ...... 325.34 254.99 In Current Accounts- For Unpaid Dividend ...... 4.42 4.42 OTHER BANK BALANCES In Fixed Deposit Accounts : Bank Deposits (held as margin money/ security deposits) ...... 287.89 168.78 Bank Deposits (With original maturity of more than three months but less than twelve months) ...... 51.10 6.75 Bank Deposits ( held as a margin money/ security deposits and having original maturity more than 12 months) ...... 119.53 39.63 ------TOTAL 810.98 497.77 ------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 ` 233.83 lacs (Previous Year ` 114.72 lacs) represent margin money for Bank Guarantees and Letter of Credits issued by Bank. 17.3 As Margin Money Deposit with Banks ` 1.10 lacs (Previous Year ` 6.75 lacs) 17.4 Fixed Deposit Receipts pledged with Government Authorities and with Banks ` 119.13 lacs (Previous Year ` 39.63 lacs)

18. SHORT- TERM LOANS AND ADVANCES (Unsecured and Considered Good) Loans and Advances to Related Parties ...... - 19.69 Others ...... 5,820.28 4,463.04 ------TOTAL 5,820.28 4,482.73 ------

19. OTHER CURRENT ASSETS Interest accrued on Deposits...... 73.64 76.88 Claims Recoverable ...... 1.93 1.93 Unamortised Expenses...... 36.55 36.55 ------TOTAL 112.12 115.36 ------

Ferro Alloys Corporation Limited 83 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------20. REVENUE FROM OPERATIONS Sale of products, less returns ...... 63,946.00 59,860.85 Less: Excise Duty ...... 2,882.25 3,396.91 ------61,063.75 56,463.94 Add: Export Incentives ...... 606.85 904.25 ------TOTAL 61,670.60 57,368.19 ------

Gross Sales ------20.1 PARTICULARS OF SALE OF PRODUCTS Ferro Alloys ...... 51,966.94 48,237.11 Chrome Ore ...... 11,393.23 11,133.64 Power ...... 526.37 434.84 Off Grade / By-products ...... 59.46 55.26 ------TOTAL 63,946.00 59,860.85 ------

21. OTHER INCOME Interest Income: Interest on Deposits ...... 35.40 36.91 Other Interest ...... 61.64 70.50 Miscellaneous receipts ...... 47.44 90.06 Profit /( Loss) on Fixed Assets Sold/Discarded (Net) ...... 35.50 (0.84) Foreign Exchange Gain ...... 112.16 159.64 Liabilities/Provisions no longer required written back (Net) ...... 297.41 239.98 Sale of project scrap ...... 22.10 8.55 ------TOTAL 611.65 604.80 ------

22. COST OF MATERIALS CONSUMED Opening stock of Materials ...... 4,050.71 3,925.52 Add: Purchases ...... 33,203.11 30,706.61 ------37,253.82 34,632.13 Less: Closing stock of Materials ...... 4,773.54 4,050.71 ------Cost of Materials Consumed ...... 32,480.28 30,581.42 ------

84 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------23. CHANGES IN INVENTORIES OF FINISHED GOODS AND STOCK-IN PROCESS Closing stock: Finished Goods ...... 2,648.33 3,026.12 Stock-in-Process ...... 165.10 139.58 ------2,813.43 3,165.70 Opening stock: Finished Goods ...... 3,026.12 5,663.09 Stock-in-Process ...... 139.58 219.28 ------3,165.70 5,882.37 ------Decrease/(Increase) in Inventories ...... 352.27 2,716.67 ------

(` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------24. EMPLOYEE BENEFITS EXPENSE Salaries, Wages and Bonus...... 3,732.75 3,648.90 Contribution to Provident and Other Funds ...... 649.48 424.15 Welfare Expenses ...... 496.59 561.87 Directors’ Remuneration ...... 253.61 107.52 ------TOTAL 5,132.43 4,742.44 ------

25. FINANCE COSTS Interest: On Fixed Loan ...... 9,581.06 7,440.16 On Others ...... 1,479.88 1,578.53 ------11,060.94 9,018.69 Other Borrowing Costs ...... 18.03 15.30 ------TOTAL 11,078.97 9,033.99 ------

26. DEPRECIATION Depreciation ...... 2,264.20 2,166.41 ------TOTAL 2,264.20 2,166.41 ------

Ferro Alloys Corporation Limited 85 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) Year Ended Year Ended 31st March, 2017 31st March, 2016 ------27. OTHER EXPENSES Power and Fuel ...... 1,761.15 1,454.53 Mining, Handling and other Production Expenses ...... 2,808.11 3,915.62 Freight, Shipment and Sales Expenses ...... 1,553.26 1,913.35 Royalty ...... 2,416.98 2,570.18 Stores and Spares ...... 383.50 302.94 Works Expenses ...... 2,969.32 2,726.06 Transport Expenses ...... 35.41 56.88 Repairs and Maintenance to Plant and Machinery ...... 2,162.76 922.64 Repairs and Maintenance to Buildings ...... 1,004.20 427.21 Insurance ...... 46.94 50.58 Rent ...... 228.91 215.53 Rates and Taxes ...... 128.66 101.73 Commission and Brokerage on Sales ...... 285.97 188.70 Fixed Assets written off...... 5.68 - Payments to Auditors ...... 18.06 20.19 Directors’ Sitting Fees ...... 2.46 3.46 Miscellaneous Expenses ...... 248.51 256.49 ------TOTAL 16,059.88 15,126.09 ------

28. EARNING PER SHARE BASIC AND DILUTED (i) Net Profit after Tax ...... (5,386.03) (5,240.02) (ii) Weighted average number of equity shares (Nos. in lacs) ...... 1,852.68 1,852.68 (iii) Earning per Share: ( ` per share) ...... (2.91) (2.83)

29. Disclosure pursuant to Accounting Standard - 15 ( Revised) “Employee Benefits” : i. Defined Contribution Plan Amount of ` 307.91 lacs (Previous Year ` 317.08 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 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (a) Reconciliation of Opening and Closing balances of the present value of the Defined Benefit Obligation : (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Present value of Defined Benefit Obligation 1,918.07 433.81 1,871.09 468.77 at the beginning of the year Interest Cost 148.39 33.52 149.69 37.50 Current Service Cost 93.57 41.90 86.51 41.59 Actuarial Losses/(Gains) 238.48 73.32 53.30 37.74 Benefits Paid (310.51) (123.33) (242.52) (151.79) Present value of Defined Benefit Obligation 2,088.00 459.22 1,918.07 433.81 at the close of the year

(b) Changes in the Fair Value of Plan Assets (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Fair Value of Plan Assets at the beginning 1,916.90 - 1,754.64 - of the year Add : Expected Return on Plan Assets 153.35 - 140.37 - Add/(Less) : Actuarial Gains/(Losses) (33.62) - 19.26 - Add : Contributions 0.81 - 239.82 - Less : Benefits Paid (310.06) - (237.19) - Fair Value of Plan Assets at the close of the year 1,727.38 - 1,916.90 -

(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 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Present Value of Defined Benefit Obligation 2,088.00 459.22 1,918.07 433.81 Less : Fair Value of Plan Assets 1,727.38 - 1,916.90 - Present Value of unfunded obligation 360.62 459.22 1.17 433.81

Ferro Alloys Corporation Limited 87 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (d) Amount recognised in the Consolidated CWIP/ Consolidated Statement of Profit and Loss: (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Current Service Cost 93.57 41.90 86.51 41.59 Interest Cost 148.39 33.52 149.69 37.50 Expected return on Plan Asset (153.35) - (140.37) - Net actuarial loss/(gain) 272.10 73.32 34.04 37.74 Net periodic cost 360.71 148.74 129.87 116.83

(e) Actuarial Assumptions as at the Consolidated Balance Sheet date : Particulars 2016-17 2015-16 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 7.07% 7.07% 7.74% - 8% 7.74% - 8% Salary Escalation Rate 5% 5% 5% 5%

(f) Movement in net liability recognised in Consolidated Balance sheet : (` in lacs) Particulars 2016-17 2015-16 Gratuity PL Gratuity PL Encashment Encashment Opening net liability 1.17 433.81 116.45 468.77 Expenses as above 360.71 148.74 129.87 116.83 Contributions Paid (0.81) (123.33) (245.15) (151.79) Closing net liability 361.07 459.22 1.17 433.81

30. Contingent Liabilities and Commitments (I) Contingent Liabilities : (a) Claims against the Company not acknowledged as debts, since disputed ` 6,314.03 lacs (Previous Year ` 6,681.08 lacs). Amounts already paid under protest ` 304.79 lacs (Previous Year ` 328.63 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 ` 656.54 lacs (Previous Year ` 569.15 lacs). (II) Capital and other Commitments: (a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts ` 2599.43 lacs (Previous Year ` 680.99 lacs).

88 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS 31. Details on Segment Reporting : (` in lacs) DESCRIPTION FERRO ALLOYS CHROME ORE POWER OTHERS CONSOLIDATED TOTAL 2016-17 2015-16 2016-17 2015-16 2016-17 2015-16 2016-17 2015-16 2016-17 2015-16 1) REVENUE External Sales 52,026.40 48,292.37 409.75 - 526.37 434.84 - - 52,962.52 48,727.21 Inter Segment Sales - - 10,983.48 11,133.64 11,710.12 12,551.33 - - 22,693.60 23,684.97 Total Revenue 52,026.40 48,292.37 11,393.23 11,133.64 12,236.49 12,986.17 - - 75,656.12 72,412.18 2) RESULT Segment Result before Interest & Tax 4,423.75 1,828.41 607.43 (829.49) 974.19 1,656.25 (12.18) (15.21) 5,993.19 2,639.96 Unallocated Expenses Finance Costs (1,323.67) (1,513.60) (196.45) (275.01) (9,558.85) (7,245.38) - - (11,078.97) (9,033.99) Tax Expense ------(1,494.24)376.64 Profit / (Loss) from ------(6,580.02)(6,017.39) ordinary activities Extraordinary Loss ------NET PROFIT / (LOSS) ------(6,580.02) (6,017.39) 3) OTHER INFORMATION Segment Assets 14,438.98 9,583.61 15,161.90 14,921.07 67,098.66 67,409.94 10.50 10.14 96,710.04 91,924.76 Unallocated Corporate Assets 21,918.11 22,079.25 Total Assets 118,628.15 114,004.01 Segment Liabilities 11,254.28 11,992.02 3,784.54 3,683.23 74,176.67 16,509.16 36.19 28.78 89,251.68 32,213.19 Unallocated Corporate ------823.15 21.09 Liabilities Total Liabilities 90,074.83 32,234.28 Capital Expenditure 61.79 657.63 22.41 468.32 263.25 1,543.47 - - 347.45 2,669.42 Depreciation / Amortisation 300.64 286.60 299.98 238.36 1,720.94 1,698.75 - - 2,321.56 2,223.71 Non Cash expenditure other than Depreciation / Amortisation 1.41 1.37 0.33 0.15 - - - - 1.74 1.52 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 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 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 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS II Transactions with Related Parties during the period ended 31-03-2017 in the ordinary course of business. (` in lacs) Particulars With Enterprise With Key Management where significant Personnel & Relatives influence exists 2016-17 2015-16 2016-17 2015-16 i) Sale of Goods 417.95 - - - ii) Sale of Assets 2.00 - - - iii) Rent paid/(received) 123.53 101.23 33.04 35.18 iv) Interest paid 215.79 213.76 - - v) Electricity Charges Paid 8.46 8.82 - - vi) Maintenance Charges Paid 7.02 6.12 - - vii) Short term Loan & Advances given (19.68) (2.84) - - viii) Clearing & forwarding and other service charges 17.94 11.57 - - ix) Long Term Borrowings (150.00) (12.00) - - x) Other Current Liabilities (1.40) (640.87) - - xi) Key Management Personnel and their Relative’s Remuneration - - 264.08 118.01 xii) Reimbursement of expenses 5.46 5.26 xiii) Personal Guarantee - - - (2,400.00) xiv) Balances outstanding at the year end a) Short Term Loan & Advances 2.21 21.89 - - b) Other Long-Term Liabilities 218.65 218.65 - - c) Long Term Borrowings 1,432.72 1,582.72 - - d) Short Term Borrowings 500.00 500.00 - - e) Other Current Liabilities 15.06 16.82 - - f) Key Management Personnel and their Relative’s Remuneration - - 187.10 364.09 g) Personal Guarantee - - 109,580.00 109,580.00

III Disclosure in respect of Related Party Transactions during the year: (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. 1 SALE OF GOODS Facor Alloys Limited Others 417.95 - Total 417.95 - 2 SALE OF ASSETS Facor Alloys Limited Others 2.00 - Total 2.00 -

90 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. 3 RENT PAID Facor Alloys Limited Others 99.11 76.88 GDP Infrastructure Private Limited Others 3.00 3.00 Saraf Enterprises (Pvt.) Ltd. Others 18.90 18.83 Saraf Bandhu Private Limited Others 1.80 1.80 Shri Durgaprasad Saraf Charitable Trust Others 0.72 0.72 Sub-Total 123.53 101.23 Mrs. Priti Rohit Saraf Relative of Key 23.14 23.18 Management Personnel Mrs. Sunanda Devi Saraf Relative of Key 9.90 12.00 Management Personnel Sub-Total 33.04 35.18 Total 156.57 136.41

4 INTEREST PAID Shreeram Durgaprasad Ores Pvt. Ltd. Others 29.79 29.56 Rai Bahadur Shreeram and Company Others 123.64 121.57 Private Limited Facor Alloys Limited Others 62.36 62.63 Total 215.79 213.76

5 ELECTRICITY CHARGES PAID Facor Alloys Limited Others 8.46 8.82 Total 8.46 8.82

6 MAINTENANCE CHARGES PAID Facor Alloys Limited Others 7.02 6.12 Total 7.02 6.12

7 SHORT TERM LOANS & ADVANCES GIVEN Facor Steels Limited Others (19.68) - Boula Platinum Mining Pvt. Ltd. Associate - (2.84) Total (19.68) (2.84)

8 CLEARING & FORWARDING AND OTHER SERVICE CHARGES Shreeram Shipping Services Pvt. Ltd. Others 17.94 11.57 Total 17.94 11.57

Ferro Alloys Corporation Limited 91 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. 9 LONG TERM BORROWINGS (Inter Corporate Deposit) Rai Bahadur Shreeram and Company Others (150.00) (12.00) Private Limited Total (150.00) (12.00)

10 OTHER CURRENT LIABLITIES Facor Alloys Limited Others - (640.74) Shreeram Durgaprasad Ores Pvt. Ltd. Others 0.08 (0.01) Rai Bahadur Shreeram and Company Others (1.48) (0.12) Private Limited Total (1.40) (640.87)

11 KEY MANAGEMENT PERSONNEL AND THEIR RELATIVES’ REMUNERATION Shri R. K. Saraf Key Management 19.85 17.00 Personnel Shri Manoj Saraf Key Management 20.93 20.83 Personnel Shri Ashish Saraf Key Management - 20.83 Personnel Shri Rohit Saraf Key Management 21.35 20.83 Personnel Shri Vineet Saraf Key Management 8.00 19.26 Personnel Shri Yogesh Saraf Key Management 7.76 19.26 Personnel Commission Directors 186.19 - Total 264.08 118.01

12 REIMBURSEMENT OF EXPENSES Facor Alloys Limited Others 5.46 5.26 Total 5.46 5.26

13 PERSONAL GUARANTEE Shri Vineet Saraf Key Management - (1,200.00) Personnel Shri Anurag Saraf Key Management - (1,200.00) Personnel Total - (2,400.00)

92 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS (` in lacs) S. Particulars Relationship 2016-17 2015-16 No. 14 BALANCES OUTSTANDING AT THE YEAR END (A) Short Term Loans & Advances Facor Steels Limited Others - 19.68 Boula Platinum Mining Pvt. Ltd. Associate 2.21 2.21 Total 2.21 21.89

(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 Others 1,137.72 1,287.72 Private Limited Shreeram Durgaprasad Ores Pvt. Ltd. Others 295.00 295.00 Total 1,432.72 1,582.72

(D) Short Term Borrowings Facor Alloys Limited Others 500.00 500.00 Total 500.00 500.00

(E) Other Current Liabilities Facor Alloys Limited Others 4.97 5.32 Rai Bahadur Shreeram and Company Others 7.76 9.25 Private Limited Shreeram Durgaprasad Ores Pvt. Ltd. Others 2.33 2.25 Total 15.06 16.82

(F) Key Management Personnel and their Relatives’ Remuneration Shri R. K. Saraf Key Management 0.15 0.22 Personnel Shri Manoj Saraf Key Management 0.76 0.56 Personnel Commission Payable Directors 186.19 363.31 Total 187.10 364.09

(G) Personal Guarantee Shri Vineet Saraf Key Management 54,790.00 54,790.00 Personnel Shri Anurag Saraf Key Management 54,790.00 54,790.00 Personnel Total 109,580.00 109,580.00

Ferro Alloys Corporation Limited 93 SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

CONSOLIDATED ACCOUNTS 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 1,129.17 27,462.68 30.65 2,016.82 Subsidiaries Indian 1 Facor Power Limited (1,021.03) (24,832.58) (130.46) (8,584.66) 2 Facor Realty and Infrastrucure Limited - - - - Foreign 1 Facor Energy Limited (8.14) (197.99) (0.19) (12.18) Minority Interest in all Subisidiaries, -- -- Associates (Investment as per equity method) Indian 1 Boula Platinum Mining Pvt. Limited 2.14 51.94 (0.00) (0.09) 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 81.1475 - the relevant Financial year in the case of foreign subsidiaries 5 Share Capital 24,106.00 162.30 10.00 6 Reserves & Surplus (32,100.84) (197.99) - 7 Total Assets 67,099.06 0.37 10.13 8 Total Liabilites 67,099.06 0.37 10.13 9 Investments 0.40 - - 10 Turnover 12,236.49 - - 11 Profit before taxation (8,584.66) (12.18) - 12 Provision for taxation - - - 13 Profit after taxation (8,584.66) (12.18) - 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.

94 Ferro Alloys Corporation Limited SIXTY FIRST NOTES ON CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ANNUAL REPORT ENDED 31ST MARCH, 2017 61 2016-17

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 31.03.2017 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 51.98 audited Balance Sheet (` in lacs) 6. Profit/(Loss) for the year (` in lacs) (i) Considered in Consolidation (0.09) (ii) Not Considered in Consolidation - 35. Details of Specified Bank notes (SBN) held and transacted during the period 08-11-2016 to 30-12-2016 are as under:

(in ` ) Particulars SBNs Other Denomination Total Notes Closing Cash in hand as on 08.11.2016 2476500 1047993 3524493 (+) Permitted receipts - 7882771 7882771 (-) Permitted payments 26000 7517788 7543788 (-) Amount deposited in Banks 2450500 - 2450500 Closing Cash in hand as on 30.12.2016 - 1412976 1412976

36. 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 R.K. SARAF Chartered Accountants Director (Finance) Chairman & Managing Director (Firm’s Regn. No.109003W) & CFO (DIN 00006102)

C.A. K.P. SAHASRABUDHE RITESH CHAUDHRY MANOJ SARAF Partner Sr. General Manager (Legal) & Managing Director (Membership No. 007021) Company Secretary (DIN 00234570)

Noida, UP : 13th May, 2017 Noida, UP : 13th May, 2017

Ferro Alloys Corporation Limited 95 SIXTY FIRST ANNUAL REPORT OUR PRINCIPAL ADDRESSES 61 2016-17

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.) Fax : 91-6784-240626 Mumbai - 400 057 Phone : 91-891-2569011 E-Mail : [email protected]; Phone : 91-22-26823931 E-Mail : [email protected] [email protected] Fax : 91-22-26823934 [email protected] E-Mail : [email protected] Fax : 91-891-2564077

Mr. Anil Banka Mr. Naresh Kumar Manager (Accounts) Dy. General Manager [Finance]

Head Office Kolkata Nagpur: Tumsar Everest House, 11th Floor, Block ‘F’, Shreeram Bhawan Shreeram Bhawan 46-C, Jawaharlal Nehru Road Ramdaspeth Tumsar- 441 912 Kolkata - 700 071 Nagpur - 440 010 Dist : Bhandara (Maharashtra) Phone : 91-33-40103400 Phone : 91-712-2436920-23 Phone : 91-7183-232251, 232233 Fax : 91-33-40103434 Fax : 91-712-2432295 & 233090 E-Mail : [email protected] Fax : 91-7183-232271 [email protected] Shri H.S. Shah E-Mail : [email protected] Dy. General Manager Mr. Pratap Lodge General Manager [East Zone]

Mining Complex Bhadrak Bhubaneswar: Chennai: Laxmi Bhawan, Kuans, GD-2/10, Chandrasekharpur Bhadrak - 756 100 37F, Whites Road, IInd Floor Bhubaneswar-751 023 [Odisha] Dist : Bhadrak [Odisha] Royapettah Phone : 91-674-2302881 / 882 Phone : 91-6784-250311/250598 Chennai - 600 014 Fax : 91-674-2302612 Fax : 91-6784-251782 Phone : 91-44-28411092-6 E-Mail : [email protected] E-Mail : [email protected]; Fax : 91-44-28411097 E-Mail : [email protected] Shri M.V. Rao [email protected] Resident Manager Mr. R.G. Chari 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

Sixty First Annual General Meeting on 28th September, 2017 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 Sixty First Annual General Meeting of the Company, to be held on Thursday, the 28st September, 2017 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, Report to members under section 134 of the Companies Act, 2013, and Auditors’ Report for the year 31st March, 2017 and the audited consolidated financial statement of the Company for the Financial Year ended 31st March, 2017. 2. Re-appointment of Mr. Rohitkumar Narayandasji Saraf (DIN: 00003994) as Director liable to retire by rotation. 3. Appointment of M/s. K.K. Mankeshwar & Co. Chartered Accountants, as Statutory Auditors. Special Business 4. Ratification of Cost Auditors’ Remuneration. 5. Reclassification of Promoter.

Signed this day of...... 2017 Affix Revenue Signature of Shareholder(s) : ...... 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 / POST

If undelivered please return to : FERRO ALLOYS CORPORATION LIMITED Facor House, Ground Floor, A45 to A-50, Sector-16 Noida - 201 301, U.P. www.artdesignprint.in : 9899578245 : www.artdesignprint.in