Terruzzi Fercalx India Ltd Directors Report.

DIRECTORS

Dear Shareholders,

Your Directors are pleased to present the Fiftieth Annual Report of your Company together with the Audited Statements of Accounts for the year ended 31st December, 2013.

FINANCIAL HIGHLIGHTS

Rs. in Lacs
For the year ended on 31st December 2013 For the year ended on 31stDecember 2012
Sales and Income from other sources 1,233.23 1,113.30
Profit/(Loss) before taxation (500.92) (436.34)
Provision for taxation:
- Current tax - -
- Deferred tax (282.89) 127.88
- Prior period tax adjustment 1.34 (281.55 ) - 127.88
Net Profit/(Loss) after taxation (782.47) (308.46)

In view of the carried forward losses, your Directors regret their inability to recommend any dividend.

FINANCIAL RESULTS

Sales and Income for the current year ended 31st December, 2013 is Rs. 1,233.23 lacs. However, for the previous financial year ended 31stDecember, 2012, Sales and Income was Rs. 1,113.30 lacs. The loss after tax for the current year amounted to Rs. 782.47 lacs as against the loss after tax of Rs. 308.46 lacs in the previous year.

REVIEW OF OPERATIONS AND FUTURE PROSPECTS

The main reason for losses in the previous year was prolonged delay in completion of existing public sectors orders, lack of new orders, derecognition of deferred tax assets, exchange rate loss, and expenses on exceptional items shown separately in Profit & Loss account.

The Company has access to the latest technology and systems as well as markets in China, Europe, South America, Africa and other parts of the world, where the Promoters, Terruzzi Fercalx SpA have a presence and have sub-contracted part of the orders received by them in Zambia & Mongolia to the Company. Sourcing from India by the Terruzzi Fercalx group is expected to grow in the future. The Company with the help of Terruzzi Fercalx Group has expanded its geographical footprint in the international & domestic markets and has taken a number of initiatives which are expected to yield good results in the coming years. The

Company has also won 2 orders for hydration plants which will be manufactured in India.

TRANSFER OF LEASE RIGHTS IN LAND AND FACTORY LOCATED AT AHMEDNAGAR

Since the Companys manufacturing operations at Ahmednagar factory have been suspended, since 1998. Your Board of Directors felt that it would be in the interest of the Company to transfer its lease hold rights in the land and factory buildingjocated at Plot no. B-21, MIDC Industrial Area, Ahmednagar and has signed a Memorandum of Understanding on 27th February, 2014 to this effect with a prospective buyer. Since the book value of the above assets, is less than 20% of the Companys net worth as on 31st December, 2013, section 180(1)(a) of the Companies Act, 2013 is not applicable.

DIRECTORS

As per provisions of section 152 of the Companies Act,2013, Dr. Daniele Terruzzi and Ms. Paola Terruzzi, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Your Directors recommend their re-appointment.

At the Board Meeting held on 28th February, 2014,Mr. Ranganath Desai was re-appointed as Director designated as Executive Director - Finance for a further period of one year starting from 21st February, 2014 to 20th February, 2015, subject to approval of the shareholders at the ensuing Annual General Meeting. However, Mr. Ranganath Desai resigned as an Executive Director - Finance of the Company with effect from 4th July 2014 vide his letter dated 12th May 2014.The approval of shareholders is being sought for re-appointment of Mr. Ranganath Desai for a period starting from 21stFebruary, 2014 to 4th July, 2014.

On 14th November, 2013,Mr. Nicola Obert resigned as an Independent Director of the Company. The Board places on record its sincere appreciation for the valuable services rendered by Mr. Ranganath Desai and Mr. Nicola Obert during their respective tenure of directorship in your Company.

Mr. Anand Gadkari was appointed as an Additional Director, designated as Managing Director for a period of three years on 16th May, 2014, subject to approval of the shareholders at the ensuing Annual General Meeting.

Mr. Roberta De Filippis Delfico was appointed as an Additional Director on 16th May,2014, designated as Independent Director to hold the office till the ensuing Annual General Meeting, eligible for re-appointment for a period of five consecutive years from the conclusion of ensuing Annual General Meeting and not liable to retire by rotation.

As per applicable provisions of Companies Act,2013, relevant rules and notifications relating thereto, Mr. Massimo Ferracci, Mr. Claudio Del Bianco and Mr. Massimiliano Altabella, Independent Directors have been appointed as Independent Directors for a period of five consectuive years from the conclusion of ensuing Annual General Meeting and not liable to retire by rotation. Also in the opinion of the Board, Mr. Massimo Ferracci, Mr. Claudio Del Bianco and Mr. Massimiliano Altabella and Mr. Roberto De Filippis Delfico, Independent Director fulfils the conditions specified in the Companies Act,2013 and rules made thereunder for their appointment as an Independent Directors of the Company and are Independent of the Management.The Company has received consent letters from them.

LISTING OF SECURITIES

The Companys shares are listed on the Bombay Stock Exchange. The annual listing fees have been paid by the Company for the year 2014-2015. Your Company would be completing its 25 years of listing with BSE on 26th May,2014.

DEPOSITORY SYSTEM

Your Companys equity shares are available for dematerialization through National Securities Depository Li"mited (NSDL) and Central Securities Depository Limited (CDSL). As on 31st December, 2013, 94.98% of the equity shares of your Company were held in dematerialized form.

CORPORATE GOVERNANCE

The Company is committed to maintain the standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI.

The Report on Corporate Governance in compliance with clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited and the Auditors Certificate forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report on the operations of the Company is provided in a separate section and forms part of this Report.

DEPOSITS

The Company has not invited/accepted any deposits from the public during the year ended 31st December, 2013. There were no unclaimed or unpaid deposits as on 31st December, 2013.

PARTICULARS OF EMPLOYEES

None of the employees has received remuneration/salary exceeding the limit as stated in Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended.

CONSERVATION OF ENERGY,TECHNOLOGYABSORPTION AND FOREIGN EXCHANGEEARNINGSAND OUTGO

Particulars required by Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988are given in Annexure A.

DIRECTORS REPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that: -

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed with proper explanations relating to material departures, if any.

(ii) appropriate accounting policies have been selected and applied consistently and the Directors have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st December, 2013 and of the loss for the year ended 31st December, 2013.

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the annual accounts have been prepared on a going concern basis.

AUDITORS

M/s. Suresh Surana & Associates LLP,Chartered Accountants, Statutory Auditors retires at the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed. The Board recommends their re-appointment.

SHIFTING THE REGISTERED OFFICE OF THE COMPANY

The Registered office of the Company has been shifted from Mumbai to Pune and all the compliances with the Bombay Stock Exchange, Registrar of Companies and other concerned authorities, have been duly complied with.

ACKNOWLEDGEMENTS

Your Directors wish to record their appreciation of the commitment of to the management team and all employees and also its bankers for their support.

Your Directors alsjD wish to record their appreciation for the invaluable support both managerial and techhical extended by the Companys Holding Company, M/s. Terruzzi Fercalx SpA,Italy

By Order of the Board
Place : Italy Dr. Daniele Terruzzi
Dated : 16thMay, 2014 Chairma n
Registered Office:
104,105 & 106, Trade Centre,
"C" Wing, First Floor, North Main Road,
Koregaon Park, Pune - 411 001

ANNEXURE A TO THE DIRECTORS REPORT

INFORMATION PURSUANT TO COMPANIES

(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

FORMA

CONSERVATION OF ENERGY

Details of energy consumption during the year are given below:

Power and Fuel Consumption

Electricity: Since the Companys engineering and manufacturing activities at its works have been suspended, consumption of electricity was nominal. There was no fuel consumption.

FORMB

RESEARCH AND DEVELOPMENT (R&D), TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

Your Company continued to absorb foreign technology for process equipments.

(1) Specific Areas

Development of detailed engineering/process/methods/materials and improvement in systems in the existing process.

(2) Benefits Derived

Cost reduction/improved utilization of machinery and energy. Technological upgradation and development.

(3) Future plan of action

Improvement in the existing products and processes in various areas in which the Company is engaged.

(4) Expenditure on R&D

No separate funds allocated.

FOREIGN EXCHANGE EARNINGSAND OUTGO

Earnings in foreign currency : Rs. 949.65 lacs

Outgo in foreign currency : Rs. 27.34 lacs

By Order of the Board
Place : Italy Dr. Daniele Terruzzi
Dated: 16th May, 2014 Chairman
Registered Office:
104,105 & 106, Trade Centre,
"C" Wing, First Floor, North Main Road,
Koregaon Park, Pune - 411 001