Facor Alloys Ltd Directors Report.

TO THE MEMBERS

The Directors submit the 18th 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, 2021.

FINANCIAL RESULTS

Rs. in Lakh

Particulars Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Gross Revenue from operations 14366.74 29139.31 14366.74 29139.31
Other Income 403.69 2842.20 403.91 3095.11
Total Revenue 14770.43 31981.51 14770.65 32234.42
Operating expenses 15248.97 29692.01 15285.66 29767.25
Profit before interest, (478.54) 2289.50 (515.01) 2467.17
Depreciation, Tax and
Amortization (EBIDTA)
Finance Costs 332.67 379.93 394.18 403.66
Depreciation and amortization expenses 200.33 239.02 200.33 256.57
Profit/(Loss) before exceptional item and tax (1011.54) 1670.55 (1109.52) 1806.94
Exceptional item 842.67 559.39 842.67 559.39
Profit/(Loss) before taxation (168.87) 2229.94 (266.85) 2366.33
Taxation (including (213.04) 1201.83 (213.04) 1201.83
Deferred Tax)
Profit/(Loss) after 44.17 1028.11 (53.81) 1164.50
Taxation (PAT)
Other Comprehensive (30.63) (104.05) (208.70) 1023.02
Income
Total Comprehensive 13.54 924.06 (262.51) 2187.52
Income for the period Comprising profit/(loss) & Other comprehensive Income for the period

OVERALL PERFORMANCE

During the year under consideration, Company achieved the production of 36140 M.T. as against 66500 M.T. in the previous year recording a surge/ downfall of 45.65%.

The demand for ferro alloys principally is determined by developments within the Stainless Steel industry. The global stainless steel market size was valued at USD 93.69 billion in 2018 and is expected to witness a CAGR of 5.2% from 2019 to 2025. Rising demand from end-use industries such as automotive, oil and gas, and construction is anticipated to propel the growth. Stainless steel caters to demand from various application segments such as building and construction, heavy industries, consumer goods, and others. Stable Stainless Steel industry scenario augurs well for the ferro alloys industry.

The Asia Pacific is mainly driven by the increasing production of stainless steel in China and India. Ferrochrome is widely used to manufacture stainless steel as it is resistant to corrosion and has an aesthetic appearance.

Exports (Deemed) are at Rs.71.40 crores as against Rs.145.32 crores in the previous year and during the year under review foreign currency earnings in rupee terms was NIL. The Company derived 49.74% of its total sales from deemed exports.

On account of above and other factors including lower sales realization, the Loss before tax was at Rs.10.12 crore as compared to Profit before tax of Rs.16.71 crore in the previous year. The COVID-19 pandemic has disrupted business operations partially due to lockdown and other emergency measures imposed by the State government. The management has continuously considered the possible effects that may impact the carrying amounts of property, plant and equipment, trade receivables, inventories, investments, loans and other assets. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration and accordingly the impact may be different in the future course of action. The Company will continue to monitor any material changes to future economic conditions and the consequent impact on its business, if any.

DIVIDEND

In view of the insignificant profit, the Directors regret their inability to recommend any dividend for the financial year ended 31st March 2021 on Equity Shares of the company.

SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2021 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 to the cited Stock Exchange.

ANNUAL RETURN

The annual return of the company as on March 31, 2021, 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 four times in FY 2020-21 viz. on 30th June 2020, 14th August, 2020, 11th November 2020 and 11th February 2021. 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-37 of the consolidated financial statements. The company will make available the Annual Accounts of the subsidiary companies and related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the Company and that of the respective subsidiary companies as well will also be kept open for inspection at the Registered Office of the Company. Further, the Consolidated Financial Statements presented by the Company include the financial results of the subsidiary companies.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to provisions 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, 2021, 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, 2021 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 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Policy of the Company on Directors appointment and remuneration (hereinafter referred to as "Nomination & Remuneration Policy") including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178, is attached as Annexure-1 to this Report.

AUDITORS AND AUDITORS REPORT

Statutory Auditors

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s K K Mankeshwar & Co., Chartered Accountants (Firm Registration no.106009W) were appointed as Statutory Auditors for a term of 5 years to hold office from the conclusion of 14th AGM held on 20th September, 2017 upto the conclusion of the 19th AGM to be held in 2022.

The statutory auditor has confirmed their eligibility and submitted the certificate in writing that they are not being disqualified to hold the office of the statutory auditor.

The Auditors Report to the Shareholders on the Standalone & Consolidated Audited Financial Results for the year under review has expressed unqualified opinion in the respective audit reports for the financial year 2020-2021. 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-2.

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

COST AUDITOR

Maintenance of cost 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 records of the Company for the year ended 31st March 2021. 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.

There are no qualifications, reservations or adverse remarks or disclaimers made in the Cost Audit Report for the financial year 2020-2021.

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-3 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 formed a Committee and adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under.

The company has complied with 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 at the Board Meeting held on 29th May, 2014 approved a Policy on CSR and the Policy was hosted on the website of the Company.

During the year under review, the Company has 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 31.03.2021, the details of which is provided in Annexure-4.

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.

TRANSFER OF UNCLAIMED EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) SUSPENSE ACCOUNT

During the year under review, there is no outstanding amount of dividend which remained unpaid or unclaimed for a period of seven years and equity shares whose dividend were unclaimed/ unpaid for seven consecutive years required to be transferred to the Investor Education and Protection Fund (IEPF) pursuant to Section 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001 and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

The details of shares/shareholders in respect of which dividend has not been claimed and transferred to the IEPF, as required are provided on our website www.facoralloys.in and on the website of the Ministry of Corporate Affairs.

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 was 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 102,00,000/- 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, Company has 8 Directors with an Executive Chairman. Out of the 8 Directors, 3 are Executive Directors and 5 are Non-Executive Directors. Out of the 5 Non-Executive Directors, 4 are Independent Directors including one Woman Independent Director and 1 is Non-Executive & Non Independent Director. The Composition of the Board is in conformity with the provisions of the Companies Act, 2013 and relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Mr. Ashim Saraf, Director, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for reappointment.

The Board in 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.

Currently, Mr. R. K. Saraf (Managing Director), Mr. Ashim Saraf & Mr. Anurag Saraf (Joint Managing Directors), 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.

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

Management Discussion and Analysis, Corporate Governance Report and Certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance are made a part of the Annual Report.

COMMITTEES OF THE BOARD

The Audit Committee formed by the Board of Directors of the Company consists of Mr. K. Jayabharat Reddy, Mr. K.L. Mehrotra & Mr. A.S. Kapre who are Non-Executive Independent Directors and Mr. R.K. Saraf, Managing Director of the Company. Mr. K. Jayabharat Reddy is the Chairman of the Committee. The Committees role, terms of reference and the authority and powers are in conformity with the requirement of the Companies Act, 2013 and the Listing Regulations.

Details on the composition of other 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.

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

Your directors place 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 board of directors also acknowledge the support extended by the analysts, bankers, government agencies, media, customers, business partners, members and investors at large. 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.