Facor Alloys Ltd Directors Report.

TO THE MEMBERS

The Directors submit the 19th ANNUAL REPORT on the business and operations of the Company together with the Standalone and Consolidated Audited Financial Statements for the year ended 31st March, 2022.

FINANCIAL RESULTS

Rs. in Lakh
Particulars

Standalone

Consolidated

2021-22 2020-21 2021-22 2020-21
Gross Revenue from operations 25733.74 14366.74 25733.74 14366.74
Other Income 2804.42 403.69 2831.14 403.91
Total Revenue 28538.16 14770.43 28564.88 14770.65
Operating expenses 25262.19 15248.97 25283.75 15285.66
Profit before interest, Depreciation, Tax and Amortization (EBIDTA) 3275.97 (478.54) 3281.13 (515.01)
Finance Costs 106.88 332.67 127.25 394.18
Depreciation and amortization expenses 149.95 200.33 168.93 200.33
Profit/(Loss) before exceptional item and tax 3019.14 (1011.54) 2984.95 (1109.52)
Exceptional item (395.57) 842.67 (386.56) 842.67
Profit/(Loss) before taxation 2623.57 (168.87) 2598.39 (266.85)
Taxation (including Deferred Tax) 852.77 (213.04) 852.77 (213.04)
Profit/(Loss) after Taxation (PAT) 1770.80 44.17 1745.62 (53.81)
Other Comprehensive Income (5.01) (30.63) (109.60) (208.70)
Total Comprehensive Income for the period Comprising profit/(loss) & Other comprehensive Income for the period 1765.79 13.54 1636.02 (262.51)

OVERALL PERFORMANCE

During the year under consideration, Company achieved the production of 69,626 M.T. as against 36,140 M.T. in the previous year recording an increase by 93%.

Ferro alloys are one of the important ingredient in the manufacturing of steel industry. The growth of Ferro alloys Industry is directly linked with the development of Iron and Steel Industry. The principal ferro alloys are chromium, manganese and silicon. The product series consists mainly of ferromanganese, silico-manganese, ferro-silicon and ferro-chrome.

Government of Indias Aatma Nirbhar Bharat mission had provided further boost to Ferro Industry by creating better infrastructure facility and road transport facilities to boost industry demand and smooth transportation of raw material and finished products.

Ferro industry has witnessed a drastic growth worldwide post covid-19. In India too, we have witnessed industry growth at a rate of approx. in the range of 40-50% in terms of revenue. Facor Alloys Ltd. (the Company) had also achieved a growth by 79% in terms of revenue as compared to previous years, despite the facts that company is mainly engaged in conversion of High Carbon Ferro Chrome and Silico Manganese. Your Company is not getting working capital assistance from any financial institutions due to ongoing litigation with BOI. Under such exigency, company had entered into conversion agreements and contributed to cater the industry demand and also being able to optimize its capacity utilization while putting its all of the best efforts. Your Company is exploring all available options to resolve the ongoing litigation at the earliest and expected to get working capital finance to achieve growth as per market trends in the years to come.

Exports (Deemed) are at Rs.47.38 crores as against Rs.71.40 crores in the previous year and during the year under review foreign currency earnings in rupee terms was NIL. The Company derived 18.42% of its total sales from deemed exports.

On account of above and other factors including higher sales realization, the profit before tax is at Rs.26.24 crores as compared to loss of Rs.1.69 crore in the previous year.

DIVIDEND

The Board has not recommended any dividend on the Equity Shares of the company for the financial year ended 31.03.2022 in order to keep surplus fund for meeting the internal financial requirements of the Company in the absence of non-availability of working capital limits with the banks.

SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2022 is 19.55 crores. During the year under review, the Company has not issued any further shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company.

The equity shares of the Company are listed on BSE Limited and the Company has duly paid the annual listing fees for the current financial year i.e. 2022-23.

ANNUAL RETURN

The annual return of the company as on March 31, 2022, in terms of the provisions of Section 134(3)(a) of the Companies Act, 2013 is available on the companys website www.facoralloys.in.

NUMBER OF MEETINGS OF THE BOARD

The Board met eight times in FY 2021-22 viz. on 12th April, 2021, 25th June 2021, 12th August, 2021, 27th August, 2021, 11th November 2021, 10th February 2022, 02nd March, 2022 and 28th March, 2022. The maximum interval between any two meetings did not exceed 120 days or / except as permissible by law in this regard.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 and implementation requirements of Indian Accounting Standards (‘IND-AS) under Companies Act, 2013 on accounting and disclosure requirements, and as prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audited Consolidated Financial Statements are provided in this Annual Report.

SUBSIDIARIES

Pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Companys Subsidiaries and Associates (in updated Form AOC-1) is given in the Note No.-39 of the consolidated financial statements. Further, the Consolidated Financial Statements presented by the Company also includes the financial results of the subsidiary companies.

Further, the company has already uploaded the Annual Accounts of the subsidiary company(s) on its website which is accessible to all the member. The annual accounts of the Company as well as its respective subsidiary company(s) shall also be kept open for inspection at the Registered Office of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to provisions the under Section 134 (5) of the Companies Act, 2013, your Directors hereby confirm:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2022, the applicable accounting standards read with requirements set out under schedule III of the Companies Act, 2013 have been followed and there are no material departures from the same;

(ii) that they have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit for the year under consideration;

(iii) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

(iv) that they have prepared the annual accounts of the Company for the financial year ended 31st March, 2022 on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) that they had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION GIVEN BY INDEPENDENT DIRECTORS

The Independent Directors have given declaration that they meet the criteria specified under Section 149 (6) of the Companies Act, 2013 read with the applicable rules framed thereunder as well as regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Company has a policy for remuneration of Directors, Key Managerial Personnel and Senior Management Personnel as well as well-defined criteria for the selection of candidates for appointment to the said positions which has been approved by the Board. The Policy broadly lays down the guiding principles for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 of Companies Act, 2013.

During the year under review, no changes were made in the above policy. Salient features of this policy are enumerated in the Corporate Governance Report which forms part of the Annual Report. The above policy is available at the website of the Company at: http:// facorallovs.in/assets/pdf/policv/Nomination%20and%20 Remuneration%20Policy-Revise.pdf

AUDITORS AND AUDITORS REPORT Statutory Auditors

In terms of Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Members of the Company at their 14th Annual General Meeting held on 20th September, 2017 approved the appointment of M/s K K Mankeshwar & Co., Chartered Accountants (Firm Registration no.106009W) as the Statutory Auditors of the Company for an initial term of 5 years i.e. from the conclusion of 14th Annual General Meeting till the conclusion of 19th Annual General Meeting whose current term is going to expire upon conclusion of the ensuing 19th Annual General Meeting of the Company.

The Board, upon due recommendation of the Audit Committee, recommending the re-appointment of M/s K.K. Mankeshwar & Co., Chartered Accountants (Firm Registration no.106009W) as the Statutory Auditors of the Company for another term of five (5) years i.e. from the conclusion of the ensuing 19th AGM till the conclusion of 24th AGM of the Company to be held in the year 2027 which shall be subject to approval of the Members at the ensuing AGM.

The proposed Auditors have confirmed their willingness and eligibility in terms of provisions of Section 141 and other relevant provisions of the Act.

The Auditors Report to the Shareholders on the Standalone & Consolidated Audited Financial Results for the year under review has expressed unmodified opinion in the respective audit reports for the financial year 2021-2022. There were no qualifications, observations or adverse comments on financial statements and matters, which have any material bearing on the functioning of the Company.

Secretarial Auditors

The Company has appointed Mr. Tumul Maheshwari of M/S. MT & Co., New Delhi, Company Secretaries to conduct secretarial audit and his Report on Companys Secretarial Audit is appended to this Report as Annexure-1.

There are no qualifications, reservations or adverse remarks or disclaimers made in the Secretarial Audit Report.

Cost Auditor

Maintenance of cost account records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are applicable for the business activities carried out by the Company during the period under review.

Mr. Prakash Uppalapati, Cost Accountant has been appointed by the Board as Cost Auditor of the Company to conduct audit of cost account records for the year ended 31st March 2022 pursuant to the provisions of Section 148 of the Companies Act, 2013 and the rules made there under. Members are requested to consider the ratification of the remuneration payable to Mr. Prakash Uppalapati being the Cost Auditor.

There are no qualifications, reservations or adverse remarks or disclaimers made in the Cost Audit Report for the financial year 2021-2022.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not provided any guarantee, made a Loan and investment pursuant to Section 186 of the Companies Act, 2013 during the Financial Year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There are no contracts/arrangements/transactions which are not at arms length basis and there are no material contracts/ arrangements/transactions which are at arms length basis.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY AFTER CLOSE OF THE FINANCIAL YEAR

There are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year to which the financial statements relate and the date of the report.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year, there was no change in the nature of business of the company. Further, there was no significant change in the nature of business carried on by its subsidiaries.

DISCLOSURE OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to the financial statements as designed and implemented by the Company are adequate and commensurate with the size and scale of its operation. The internal controls are tested for adequacy, efficiency and effectiveness through audits by the internal auditors and the observations, corrective and preventive actions are reviewed by the management and Audit Committee of the Board of Directors.

During the financial year under review, no material or serious observation has been received from the Internal Auditors of the Company for inadequacy or ineffectiveness of such controls.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL

There are no significant and/or material orders passed by the Regulator(s) or Court(s) or Tribunal(s) impacting the going concern status of the Company and its business operations in future.

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

The information required under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are set out in Annexure-2 hereto forming part of this report.

RISK MANAGEMENT POLICY

The Companys Risk Management framework is designed to identify, assess and monitor various risks related to key business and strategic objectives and lead to the formulation of a mitigation plan. Major risks in particular are monitored regularly at executive meetings and the Board of Directors of the Company is kept abreast of such issues.

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

The Company has zero tolerance policy towards sexual harassment at the workplace.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

No complaints has been received by the committee during the year under review.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company has already approved a Policy on CSR as amended from time to time and the same is hosted on the website of the Company at www.facoralloys.in.

During the year under review, the Company has duly made CSR spending of 2% of the average net profit for last three financial years as per the applicable provisions.

In view of the same, the Company has made the requisite CSR spending on the specified activities during the financial year ended 31.03.2022, the details of which is provided in Annexure-3.

ANNUAL BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Independent Directors at their meeting without the participation of the Non-independent Directors and Management, considered/evaluated the Boards performance, performance of the Chairman and other Non independent Directors.

The Board subsequently evaluated its own performance, the working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship Committee) and Independent Directors (without participation of the relevant Director).

In the opinion of the Board, the independent directors possessing the necessary skills like integrity, expertise and experience (including the proficiency) etc. for being appointed on the Board of the Company.

DISCLOSURE WITH RESPECT TO UNCLAIMED SUSPENSE ACCOUNT

Pursuant to IEPF Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016 all unclaimed shares have already been transferred to the IEPF Authority.

All the corporate benefits in terms of securities accruing to on these unclaimed shares shall be credited to the aforesaid account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claim the shares.

Any person, whose unclaimed or unpaid amount has been transferred by the Company to IEPF may claim his/her refunds from the IEPF authority. The detailed procedure for claiming shares and/or dividend amount is available on the website of IEPF (www.iepf.gov.in).

The Nodal Officer for the purpose of IEPF is Company Secretary and the website address is www.facoralloys.in.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to Section 177 (9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors had approved the Policy on Vigil Mechanism/Whistle Blower and the same is hosted on the website of the Company. This Policy inter- alia provides a direct access to the Chairman of the Audit Committee.

Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

PUBLIC DEPOSITS

During the year under review, the Company has not invited any deposit from public.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197 (12) of the Companies Act, 2013 read with Rules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, during the year under review, there were no employees receiving remuneration in excess of 1,02,00,000/- per annum or 8,50,000/- per month requiring disclosure.

Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure forming part of the Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on date, the Company has total no. of 10 Directors out of which 1 is Executive Chairman & Managing Director and 9 are Non-Executive Directors. The 9 Non-Executive Directors consist of 5 Independent Directors including one Woman Independent Director and 4 are Non-Executive Non Independent Directors. The Composition of the Board is in conformity with the provisions of the Companies Act, 2013 read with the rules framed thereunder and relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Mr. Vinodkumar Vithaldasji Saraf, Director, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for re-appointment.

The Board at its meeting held on 12th April, 2021 accepted the resignation of Mr. O.P. Saraswat (Dy. CFO) and places on record its appreciation for his contributions to the Company and Mr. Vijay Vashisth has been appointed as the Dy. CFO to hold office with effect from 16th April, 2021.

Mr. Rohit Saraf, a non-executive director was ceased from office of Director w.e.f. 13th August, 2021, due to vacation of office in terms of section 167(1)(b) of the Companies Act, 2013. The Board places on record its appreciation towards valuable contribution made by him during his tenure as a Director of the Company.

Tenure of Mr. Ram Kishan Saraf as Executive Director was expired on 31.03.2022 and he was further re-appointed as Managing Director of the Company for a period of 5 years w.e.f 01.04.2022, by the shareholders at their Extra-Ordinary General Meeting held on 10.03.2022.

The shareholders of the Company at their Extra-Ordinary General Meeting held on 10.03.2022 have also appointed Mr. Manojkumar Umashankar Saraf & Mr. Vinodkumar Vithaldasji Saraf as NonExecutive Non-independent Directors w.e.f 01.04.2022.

Further, tenure of Mr. Ashim Saraf and Mr. Anurag Saraf as Executive Directors was expired on 31.03.2022 and thereafter they have been appointed as Non-Executive Additional Directors w.e.f 01.04.2022 which was further confirmed by the shareholders of the Company at their Extra-Ordinary General Meeting held on 30.06.2022.

The shareholders of the Company has also appointed Mr. Mahendra Bhawanji Thaker as an Independent Director of the Company w.e.f 30.06.2022 at their Extra-Ordinary General Meeting held on 30.06.2022.

Currently, Mr. R.K. Saraf (Managing Director), Mr. Vijay Vashisth (Dy. CFO) and Mr. Piyush Agarwal (Company Secretary & Compliance Officer) are the key managerial personnel of the Company.

None of the Whole-time Key Managerial Personnel (KMP) of the Company is holding office in any other Company as a Key Managerial Personnel.

Further, none of the Directors/KMP of the Company is disqualified under any of the provisions of the Companies Act, 2013 and relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company has formulated a code of conduct for all members of the Board and Senior Management Personnel. All concerned members/executives have affirmed compliance with the said code.

COMMITTEES OF THE BOARD

The Board of Directors have constituted all the requisite committees of Directors as are required by law from time to time.

Details of composition of all the committees of the Board are provided in the corporate governance report and majority of the committees consists entirely of independent directors. During the year, all recommendations made by the committees were approved by the Board.

REPORTING OF FRAUDS BY AUDITORS OF THE COMPANY

During the year under review, none of the Auditors of the company has reported to the audit committee under Section 143 (12) of the Companies Act, 2013 any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Boards report.

CORPORATE GOVERNANCE

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on the Corporate Governance, Management Discussion and Analysis, Certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance have been made a part of the Annual Report.

DISCLOSURE UNDER INSOLVENCY AND BANKRUPTCY CODE

During the year under review, there are no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016).

DISCLOSURE UNDER ONE TIME SETTLEMENT

During the year under review, your Company has not made any one time settlement with any of its Banks or Financial Institutions.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (SS-1 and SS-2) respectively relating to Meetings of the Board and its Committees including general meetings of the company which are mandatory in nature.

INDUSTRIAL RELATIONS

During the year under review, the overall industrial relations in the Company remained cordial.

ACKNOWLEDGEMENT AND APPRECIATION

The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, business associates and investors at large.

Further, the Board places on record their sincere appreciation for the significant contribution made by its employees through their dedication, hard work and commitment and also for the trust reposed in the company by all other stakeholders.

The Company sincerely thanks the Central & State Governments for their continued support and warm co-operation extended towards the business as well as the Companys social functions. It looks forward to your continued support in the companys endeavour to accelerate access to innovative and affordable business.

On behalf of Board of Directors
for Facor Alloys Ltd.
Place : Delhi R.K. SARAF
Dated : 29th July, 2022 Chairman & Managing Director