REPORT TO THE MEMBERS UNDER SECTION 134 OF THE COMPANIES ACT. 2013

We present the 62nd Annual Report of your Company and the Audited Financial Statement of the Company for the financial year ended 31st March, 2018, and the audited Consolidated Financial Statements of the Company for the Financial Year ended 31st March, 2018.

FINANCIAL RESULTS

Despite sluggish business phase during the year under review, the Company improved it bottom line numbers which is reflected in the financial results for the year which are, as under:

*Previous Year Figures have been regrouped/rearranged wherever necessary as the figures are rearranged/regroup due to IndAS.

During the year under review, revenue from operations decreased by 11.83% to ?53,908.25lacs (previous year Rs.61,144.23 lacs which includes Inter unit transfers of Rs.10,884.32 lacs). However, EBIDTA increased by 32.82% to Rs.8,049.18 lacs (previous year ?6,060.34 lacs) and profit after tax increased by 175.36% to Rs.5,492.29 lacs (previous year Rs.(1,994.58 lacs) on the back of improvement in prices .

STATE OF COMPANY'S AFFAIRS

Members may recall that the Company had executed Corporate Guarantee of Rs. 517.90 crores, in tranches, to Rural Electrification Corporation Limited which had sanctioned a Term Loan of Rs. 517.90 crores to Facor Power Limited, the then subsidiary of the Company against the security of the assets of FPL, the personal guarantee of two of its directors and the Corporate Guarantee of Ferro Alloys Corporation Limited, as aforesaid.

Members may recall that pursuant to a default in the repayment of the instalments and interest on the loan as per the repayment schedule and upon an application filed by REC under section 7 of the Insolvency and Bankruptcy Code, 2016 with the National Company Law Tribunal, Kolkata, Corporate Insolvency Resolution Process was initiated against the Company w.e.f 6th July, 2017 and Mr. K.G. Somani was appointed as Resolution Professional.

As reported last year, an appeal against the order of Hon'ble NCLT, Kolkata was filed before the Hon'ble National Company Law Appellate Tribunal, New Delhi (NCLAT, New Delhi) which was heard from time to time with the last hearing done on 5th March, 2018. The order is awaited.

Members may note that since Hon'ble NCLAT, New Delhi had not, during the hearings conducted before it, stayed the order of the Hon'ble NCLT, Kolkata, the Resolution Professional had, in compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 and the Corporate Insolvency

Regulations, 2016 invited expression of interest from eligible bidders, who submitted the bids in accordance with the norms set out by the Committee of Creditors after due deliberations. However, none of the bids tendered were accepted by the Committee of Creditors and accordingly the NCLT, Kolkata had been informed that none of the bids received had been accepted by the Committee of Creditors, on 2nd April, 2018.

Although in terms of the provisions of Insolvency and Bankruptcy Code, 2016 the 270 days' period for Corporate Insolvency Resolution Process got over on 2nd April, 2018, the said NCLT, Kolkata, vide its order 2nd April, 2018 directed Resolution Professional to continue with the management of the affairs of the Company. Further, post 2nd April, 2018 also the matter has been heard subsequently as well by NCLT, Kolkata but final decision in the matter has not been taken in view of the direction from Hon'ble NCLAT, New Delhi in its order dated 5th March, 2018 that any order passed shall be subject to decision of the appeals filed before it.

COMPANY OPERATIONS AFTER APPOINTMENT OF RESOLUTION PROFESSIONAL

The performance of the Company's Charge Chrome Division and Mining Division during the year under the management of Resolution Professional has been satisfactory which is best demonstrated, as under:

Further, the Resolution Professional continues to manage the affairs of the Company post 2nd April, 2018 in terms of the order dated 2nd April, 2018 of the Hon'ble NCLT, Kolkata. During the quarter ended 30th June, 2018, the performance of the Company has been, as under:

* Includes exceptional gain of Rs.2484.01 lacs arising due to sale of fixed assets.

INDUSTRIAL SCENARIO

India is currently the world's 3rd largest producer of crude steel and is expected to become the 2nd largest producer of crude steel in the world soon. The country is also the 3rd largest consumer of finished steel (83.5 million tonnes in 2016) in the world preceded by China (681.0 million tonnes in 2016) and the USA (91.6 million tonnes in 2016). During January-December 2017, the country's crude steel production crossed the 100 million tonnes mark for the first time in history, reaching 101.371 million tonnes (provisional; source: JPC), a growth of 6.18% over same period of 2016.

Steel is the most versatile material, which has made the progress in every aspect on this earth possible. There are hundreds of varieties of steel because for each application it has to be made with specific properties to get the most optimum usage. Though the basic constituent of steel is iron, it is the proportion of other elements in it, which gives each type of steel, certain specific properties. These elements are added in liquid iron in the form of Ferro alloys to get the desired composition and properties. Thus, Ferro alloys are important additives in the production of steel and Ferro Alloys industry is vitally linked for its growth and development to that of the Steel Industry.

In the backdrop of the industry's scenario as above, your company's turnover for the current financial year, 2017-18 stands at Rs. 52610.47 lacs as against Rs. 60537.38 lacs including Inter unit transfers of Rs. 10884.32 lacs last year. Exports during the year were Rs. 30200.87 lacs. Further, your company has posted a profit before tax of Rs. 6487.65 lacs this year as against Rs. 3795.24 lacs in the previous year, reflecting a increase of 70.95%.

PROSPECTS

India is expected to overtake Japan to become the world's second largest steel producer soon, and aims to achieve 300 million tonnes of annual steel production by 2025-30. India is expected to become the second largest steel producer in the world by 2018, based on increased capacity addition in anticipation of upcoming demand, and the new steel policy, which has been approved by the Union Cabinet in May 2017, is expected to boost India's steel production.* Huge scope for growth is offered by India's comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors.

Rise in infrastructure development and automotive production is driving growth in the sector. Power and cement industries also aiding growth in the metals and mining sector. Demand for iron and steel is set to continue, given the strong growth expectations for the residential and commercial building industry. India holds a fair advantage in cost of production and conversion costs in steel and alumina. It's strategic location enables convenient exports to developed as well as the fast developing Asian markets. The Ministry of Steel aims to increase the steel production capacity to 300 million tonnes by 2030-31 from 128.28 million tonnes in 2016- 2017 indicating new opportunities in the sector. Under the Union Budget 2018-19, the Government added a surcharge of 10 per cent on aggregate duties of customs on imported goods to strengthen the domestic industry.

Government of India's focus on infrastructure and restarting road projects is aiding the boost in demand for steel. Further, likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel. The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, which seeks to create a globally competitive steel industry in India. NSP 2017 targets 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030. Metal Scrap Trade Corporation (MSTC) Limited and the Ministry of Steel have jointly launched an e-platform called 'MSTC Metal Mandi' under the 'Digital India' initiative, which will facilitate sale of finished and semi-finished steel products. The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and developmental activities in the iron and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).

India has a significant profile in mining of chrome and production of ferrochrome. On the back of depressed market conditions, the production of chrome ore progressively came down in keeping with the policy to conserve the resource and mining disruptions due to court interventions and environment issues. In any case, India with chrome ore reserve of 70 million mt has only one per cent share of global proven deposit. Around 85 per cent of world reserve of this ore is found in South Africa and Zimbabwe. As a result, India is importing growing quantities of high grade chrome ore for blending with locally mined material.

FUTURE STRATEGY AND GROWTH

The period till 1947 thus witnessed a small but viable steel industry in the country, which operated with a capacity of about 1 million tonne and was completely in the private sector. From the fledgling one million tonne capacity status at the time of independence, India has now risen to be the 3rd largest crude steel producer in the world and the largest producer of sponge iron. As per official estimates, the Iron and Steel Industry contributes around 2 per cent of the Gross Domestic Product (GDP). From a negligible global presence, the Indian steel industry is now globally acknowledged for its product quality. As it traversed its long history since independence, the Indian steel industry has responded to the challenges of the highs and lows of business cycles.

India's crude steel output grew 5.87 per cent year-on-year to 101.227 million tonnes (MT) in CY 2017. Crude steel production reached 93.183 million tonneduring April-February 2017-18. India's finished steel exports rose 102.1 per cent to 8.24 million tonne, while imports fell by 36.6 per cent to 7.42 million tonnein 2016-17. Exports and Imports of iron and steel stood at 14.6 million tonneand 13.1 million tonneduring April-February 2017-18, respectively. Total consumption of finished steel stood at 81.943 million tonneduring April-February 2017-18.

Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past. According to the data released by Department of Industrial Policy and Promotion (DIPP), the Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$ 10.56 billion in the period April 2000-December 2017.

DIVIDEND

Keeping in view the future requirement of funds in working capital and other purposes, no dividend is recommended for the financial year ended 31st March, 2018.

FINANCE

Cash and cash equivalent as at March 31, 2018 was Rs. 1428.36 lacs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept understrict check through continuous monitoring.

DEPOSITS

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies(Acceptance of Deposits) Rules, 2014.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 and the implementation 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 is provided in the Annual Report for the year except the subsidiary Facor Power Limited whose Management & Control have been taken over by Rural Electrification Corporation Limited w.e.f 7th November, 2017.

SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2018 was 1852.68 lacs. During the year under review, the Company has neither issued shares with differential voting rights nor granted stock options nor sweat equity.

INDUSTRIAL RELATIONS

Industrial relations with workers, trade unions, and with local populace remained amicable and pleasant throughout the year.

DIRECTORS

Mr.Vineetkumar Vithaldas Saraf shall retire by rotation at the ensuing 62ndAnnual General Meeting and, being eligible, offershimself for re-appointmentin accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company.

Further, all Independent Directors have given declarations that they meet the criteria of independence aslaid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of the 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.

Detail of Remuneration paid to Executive Director during the year.

Detail of Remuneration paid to Non-Executive Directors during the year.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

All Independent Directors (IDs) inducted into the Board are given an orientation. Chairman & Managing Director and the Senior Management give an overview of the operations of the Company, to familiarise the new IDs with the Company's business operations. The new IDs are given an orientation on the group structure, its operations, subsidiaries, Board constitution and procedures besides providing them with the financials of the Company for atleast 3 years and the corporate brochure etc. Also, plant visits are organized for each ID for familiarizing with the Company's operations and facilities.

BOARD EVALUATION

In view of the initiation of the Corporate Insolvency Resolution Process against the Company w.e.f 6th July, 2017, the powers of the Board of Directors of the Company stand suspended in terms of the provisions of section 17 of the Insolvency and Bankruptcy Code, 2016 and the same stood vested in the Resolution Professional. Accordingly, the exercise of evaluation of the Board could not be taken up during the year under review.

NOMINATION AND REMUNERATION POLICY

The Board, on the recommendation of the Nomination & Remuneration Committee, has framed a Nomination and Remuneration policy for the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters which can be accessed at www. facorgroup.in/investorrelations. Further, the Policy was reviewed by the Committee and the Board at their meeting held on 13th May, 2017.

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

Ferro Alloys Corporation Limited, (FACOR), believes in equal employment opportunity and remains committed to creating and nurturing a working environment for all employees to enable them work without fear of any prejudice, gender bias and sexual harassment. The Company does not tolerate sexual harassment at the workplace and has 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 thereunder. During the Financial Year 2017-18, the policy was reviewed at the meeting of the Board of Directors of the Company held on 13th May, 2017. Further, during FY 2017-18, the Company has not received any complaint of sexual harassment.

MEETINGS

During the year under review only one meeting of the Board, Audit Committee, Nomination and Remuneration Committee, Shareholders' Grievance Committee and the Corporate Social Responsibility Committee were convened and held, details whereof are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. Further, post initiation of Corporate Insolvency Resolution Process w.e.f 6th July, 2017 and suspension of the powers of the Board in terms of section 17 of the Insolvency and Bankruptcy Code, 2016, no meetings of the Board or Committees thereof have been held thereafter as all the powers of the board and/or its committees are being exercised by the Resolution Professional.

SUBSIDIARIES

The Report and Accounts of the Company are prepared in consolidated form and contains results of its subsidiaries Facor Realty and Infrastructure Limited and Facor Energy Limited. The annual accounts of the subsidiaries shall be available on request to the members of the Company and are available 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.

The Consolidated Financial Statements have been prepared without the consolidation of Facor Power Limited (Subsidiary of the Company) as Rural Electrification Corporation Limited (REC) has taken over the management and control of Facor Power Limited by issuing a letter dated 7th November, 2017 under section 13(4)(b) of SARFAESI Act, 2002.

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 Company's Subsidiaries', Associates' and Joint Ventures (in Form AOC-1) is attached to the financial statements.

STATEMENT UNDER SECTION 134(5) OF THE COMPANIES ACT, 2013

On the basis of framework of internal financial controls established and maintained by the Company, the work performed by the internal, statutory, Cost and Secretarial auditors and external agencies, the reviews performed by Management, Mr. R.K. Saraf, Chairman & Managing Director of the Company has confirmed that the Company's internal financial controls were adequate and effective as on 31 March, 2018 and that as required under section 134(5) of the Companies Act, 2013 it is confirmed:

(a) That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) That we have selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) That proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) That the annual accounts have been prepared on a going concern basis;

(f) That proper internal financial controls were laid down by the company and that such internal financial controls are adequate and were operating effectively.

(f) That proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

AUDIT COMMITTEE

Audit Committee of the Company comprises of Mr. A.S. Kapre, Mr. M.B. Thaker, and Mr. Umesh Khaitan, all Independent Directors. The committee has been constituted in compliance with the provisions of Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI(LODR) Regulations, 2015] and assumes all responsibilities provided therein, discharging their duties diligently with transparency and accountability as their sole motivation. However, during the year under review, only one meeting of the Audit Committee was held on 13th May, 2017 as Corporate Insolvency Resolution Process was initiated against the Company w.e.f 6th July, 2017 and as a result, the powers of the Board and its committees stood suspended and vested in the Resolution Professional thereafter.

AUDITORS

Members of the Company, at the 61st Annual General Meeting of the Company had approved appointment of M/s K.K. Mankeshwar & Co. Chartered Accountants as the Statutory Auditor of the company from the conclusion of 61st Annual General Meeting till the conclusion of 66th Annual General Meeting (subject to the ratification at each annual general meeting held between the 61st Annual General Meeting and 66th Annual General Meeting, at a remuneration plus applicable taxes and reimbursement of expenses incurred by them incidental to their functions as may be decided by Interim Resolution Professional and/or the Board of Directors, as applicable. Accordingly, ratification of appointment of the Auditors is being put up for consideration and approval of the members of the Company as contained in the notice of the 62nd Annual General Meeting of the Company.

AUDITOR'S REPORT

The observations made in the Auditors' Report are self-explanatory and therefore, do not call for any further comments u/s 134(3) of the Companies Act, 2013.

COST AUDITORS

Pursuant to Section 141 & 148 of the Companies Act, 2013 read with The Companies (Cost Recordsand Audit) Amendment Rules, 2014, the costaudit records maintained by the Company in respect of its activity is required to be audited.

The Resolution Professional has considered and decided the appointment of M/s Niran & Co., Cost Accountant (Registration No. 000113), as Cost Auditor of the Company for the financial year 2018-19 on a remuneration of Rs.70,000/- (Rupees Seventy Thousand only) per annum plus applicable taxes and out of pocket expenses and applicable taxes.

In accordance with the provisions of Section 148(3) of the Act read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company. It is therefore, necessary for the members to pass an Ordinary Resolution under section 148 and other applicable provisions, if any, of the Companies Act, 2013 as set out at Item no.4 of the Notice.

None of the Directors / Key Managerial Personnel of the Company / their relatives / Resolution Professional, is, in any way, concerned or interested, financially or otherwise, in the resolution set out at Item No. 4 of the Notice.

Further, the report on Cost audit for Financial Year ended 31st March, 2018 would be filed with Central Government in accordance with the timelines specified under the Companies Act, 2013.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Ashish Saxena & Company, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for financial Year 2018-19. The Report of the Secretarial Audit.for FY 2017-18, in Form MR-3 is annexed to this report.

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

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed as Annexure 'A which forms part of this Report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report.

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, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report.

However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary, at the registered office and the same will be furnished on request. Further the details are also available on the Company's website: www.facorgroup.in

CORPORATE GOVERNANCE

Corporate Governance in your Company is about Commitment to values, ethical business conduct, nurturing good business ethics and creating value for its stakeholders in line with the principles of fairness, equity, transparency, accountability and dissemination of information. Your Company's efforts are driven by the fundamental objectives of maximizing value by employing resources in opportunities that generate consistent returns and position it for sustained growth.

In terms of Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on Corporate Governance, Management Discussion and Analysis along with your Company's Statutory Auditors' Certificate dated 14th August, 2018 confirming the above compliance is annexed to and forms part of the Directors' Report.

HUMAN RESOURCE DEVELOPMENT

The Company takes great pride in the commitment, competence and vigour shown by its workforce in all realms of business and its commitment in the trying times, in particular. The Company continues to take new initiatives to further align its HR policies to meet the growing needs of its business.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed here withas "Annexure D".

SECRETARIAL AUDIT REPORT

In respect of observation Secretarial Auditor in his report, the management submits that the non-filing of some forms was by oversight. Further, the company is taking action to complete the filing requirement.

RELATED PARTY TRANSACTION

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.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report.

PARTICULAR OF LOAN & INVESTMENT

There have been no transactions by the Company and the Directors, the management, the subsidiaries or the Resolution Professional except for those disclosed in the financial statements.

RISK MANAGEMENT POLICY

A company is exposed to uncertainties owning to the sector in which it is operating. The Company is conscious of the fact that any risk that could have a material impact on its business should be included in its risk profile. Accordingly, in order to contain / mitigate the risk, the Company has a Risk management policy approved by the Board. The Company's 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 and the Policy was reviewed by the Board at its meeting held on 13th May, 2017.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company approved a Policy on CSR and the Policy was parked on the website of the Company. As part of CSR initiatives, your Company during the financial year 2017-18 has amongst other activities, undertaken projects in areas of promoting healthcare, empowerment of woman, ecological balance. These projects are in accordance with Schedule VII of the Companies Act, 2013. The report on CSR activities is attached as Annexure to this Report

DISCLOSURE WHERE COMPANY IS REQUIRED TO CONSTITUTE NOMINATION AND REMUNERATION COMMITTEE:

The Company has constituted a Nomination & Remuneration Committee under Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Further, the Company has a Nomination & Remuneration Policy for appointment and remuneration of Directors Under Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. While terms of reference of the Committee include appointments of Directors as per the Nomination & Remuneration Policy of the Company, no new Director was appointed on the Board of Company during the year under review.

DISCLOSURE IF MD/WTD IS RECEIVING REMUNERATION OR COMMISSION FROM SUBSIDIARY COMPANY

As per Section 197(14) of the Act, 2013 A MD/WTD of company can receive remuneration or commission from any holding company or subsidiary company of such company. This should be disclosed by the company in Board's Report.

DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT

The Company has adopted the Vigil Mechanism Policy for the Company and the same is available on the website of the Company www.facorgroup.in

DETAILS OF DIRECTOR AND KMP

Pursuant to the provisions of section 2014 and other applicable provisions, if any, of the Companies Act, 2013 and the rules framed there under, Mr. R.K. Saraf, Chairman & Managing Director, Mr. Yashpal Mehta, Chief Finance Officer and Mr. Ritesh Chaudhry, Company Secretary are Key Managerial Personnel of the Company.

Further, neither any director has been appointed nor has any director resigned from the Board of the Company during the year under review.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. However, during the year under review, the Internal audit reports were reviewed by the Resolution Professional in view of the suspension of the powers of the Board and its Committees pursuant to the provisions of section 17 of the Insolvency and Bankruptcy Code, 2016.

DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE

Company has not issued any share under ESOP or Sweat Equity Shares during the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

As reported last year, an appeal against the order dated 6th July, 2017 of the Hon'ble NCLT, Kolkata was filed before the Hon'ble National Company Law Appellate Tribunal, New Delhi (NCLAT, New Delhi) which was heard from time to time by the said NCLAT, New Delhi with the last hearing being held on 5th March, 2018. The order is awaited.

Although in terms of the provisions of Insolvency and Bankruptcy Code, 2016 the 270 days' period for Corporate Insolvency Resolution Process got over on 2nd April, 2018, the said NCLT, Kolkata, vide its order 2nd April, 2018 directed Resolution Professional to continue with the management of the affairs of the Company. Further, post 2nd April, 2018, the matter has been heard subsequently as well by NCLT, Kolkata but final decision in the matter has not been taken in view of the direction from Hon'ble NCLAT, New Delhi in its order dated 5th March, 2018 that any order passed shall be subject to decision of the appeals filed before it.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

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 related and the date of the report.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act, 2013, unclaimed or unpaid Dividends detailed, as under.are due for remittance on the dates specified below to the Investor Education and Protection Fund established by the Central Government.

• Dividend for the year 2010-11, on or after 12th October, 2018

CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the Statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

ACKNOWLEDGEMENTS

The Company thanks the Central and State Governments for their continued support and co-operation extended towards the business as well as the company's social functions. The Management also thanks the shareholders, Business Associates, Financial Institutions & Banks, Customers and Suppliers for the faith reposed in the Company and in them and expresses its sincere appreciation to the dedicated and committed team of employees and workmen without whom reaching this far and maintaining the standard and quality of the products for which the company is famous, would not have been possible. The management also thanks the Resolution Professional and its team for the efforts put in sustaining the operations of the Company during the year without any hindrance.

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 companies

Part A: Subsidiaries

# Financial information is based on unaudited results.

Note :1. Due to loss of control and influence and curtailment of shareholder's rights, Facor Power Limited has lost the status of Subsidiary Company of Ferro Alloys Corporation Limited, therefore, the information related to the same is not incorporated. 2. Both i.e. (1) Facor Realty and Infrastructure Ltd. ; (2) Facor Energy Ltd. have not commenced operations.

Part B : Associate Statement persuant to Section 129(3) of the Companies Act, 2013 related to Associate Company

ANNEXURE 'B'

Form No. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2018

Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members,

Ferro Alloys Corporation Limited

D P Nagar Randia, Bhadrak

Orissa- 756135

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by FERRO ALLOYS CORPORATION LIMITED [CIN - L45201OR1955PLC008400] (hereinafter called the company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the FERRO ALLOYS CORPORATION LIMITED's books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit and to the best of our knowledge, we hereby report that in our opinion, the company has, during the audit period covering the financial year ended on 31st March, 2018 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by FERRO ALLOYS CORPORATION LIMITED ("the Company") for the financial year ended on 31st March, 2018 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made there under;

(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made there under;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (No such disclosure received by the company during the audit period)

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (Not applicable to the company during the audit period)

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (Not applicable to the company during the audit period)

(e) The Securities and Exchange Board of India (Issue and Listng of Debt Securities) Regulations, 2015; (Not applicable to the company during the audit period)

(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the company during the audit period)

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; (Not applicable to the company during the audit period) (vi) As informed to us the following other Laws are specifically applicable to the Company:

a) The Employees' Provident Funds and Miscellaneous Provisions Act, 1952

b) Employees' State Insurance Act, 1948

c) The Factories Act,1948

d) Equal Remuneration Act, 1976

e) The Payment of Wages Act, 1936

f) The Minimum Wages Act, 1948, and rules made there under

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The SEBI (Listing Obligaitons and Disclosure Requirements) Regulations, 2015.

During the period under review the Company has generally complied with the provisions of the Act, Rules, Regulations,

Guidelines, Standards, etc. mentioned above subject to the following observation(s):

a) The Company is yet to file Form MGT-7 for the financial year ended 31.03.2017

b) The company is yet to file Form MR1, IEPF 1 and IEPF 2, in respect of the events occurred during the audit period. We further report that:

a) The company has given the corporate guarantee in respect of Term Loan obtained by M/s Facor Power Limited (hereinafter mentioned as borrower), from Rural Electrification Corporation Limited. Pursuant to a default in the repayment of the installments and interest by the borrower and upon an application filed by REC (the lender) under section 7 of the Insolvency and Bankruptcy Code, 2016 with the National Company Law Tribunal, Kolkata, Corporate Insolvency Resolution Process was initiated against the Company w.e.f 6th July, 2017 and Mr. K.G. Somani was appointed as Resolution Professional

b) Pursuant to initiation of Corporate Insolvency Resolution Process, powers of the Board of Directors stand suspended wef. 6th July 2017 and management of the company had been entrusted to the Resolution Professional, Mr. K. G. Somani wef. 6th July, 2017

Post initiation of Corporate Insolvency Resolution Process w.e.f 6th July, 2017 and suspension of the powers of the Board in terms of section 17 of the Insolvency and Bankruptcy Code, 2016, no meetings of the Board or Committees thereof have been held thereafter as all the powers of the board and its committees are being exercised by the Resolution Professional

The Board of Directors of the Company is, otherwise, duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. No change in the composition of the Board of Directors took place during the period under review.

Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, in respect of the meeting held during the audit period, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions of the board, in respect of the meeting held during the audit period, were unanimous and recorded as part of the minutes. Further, with the vesting of the power of the Board w.e.f 6th July, 2017, all management decisions have been taken by the Resolution Professional.

We further report that there are systems and processes in the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. However, there is scope to improve these control and compliance systems through use of Compliance Software and tools.

On the basis of information provided, we further report that during the audit period there were no instances of:

a. Public/Right/Preferential issue of shares / debentures/ sweat equity

b. Redemption / buy-back of securities

c. Merger / amalgamation / reconstruction, etc.

d. Foreign technical collaborations

For Ashish Saxena & Co Company Secretaries

(Ashish Saxena) Proprietor

FCS - 6560 CP - 7096 Dt.: 13/08/2018 Place: Ghaziabad

Note : This report is to be read with our letter of even date which is annexed as 'ANNEXURE A and forms an integral part of this report.

'ANNEXURE A'

To,

The Members

FERRO ALLOYS CORPORATION LIMITED

D P Nagar Randia, Bhadrak

Orissa- 756135

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.

4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.

For Ashish Saxena & Co Company Secretaries

(Ashish Saxena) Proprietor

FCS - 6560 CP - 7096 Dt.: 13/08/2018 Place: Ghaziabad

ANNEXURE 'C'

Additional information as required under Section 134(3)(m) read with Rule 8(3) of Companies (Accounts) Rules 2014.

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:

Notes:

1. The ratio of remuneration to median remuneration is based on remuneration paid during the period 1stApril, 2017 to 31st March, 2018.

(2) Relationship between average increase in remuneration and company performance:

a) The average increase in remuneration during Financial Year 2017-18 was 3.87% as compared with previous financial year. Net revenues of the Company during the financial year stood at Rs.539.08 crores as against Rs. 611.44 crores in the previous year.

b) The total employee cost for the Financial Year ended 31 March, 2018 was Rs.43,46,24,591 against Rs.41,84,44,027 for the Financial Year ended 31 March, 2017. The total employee cost as a percentage of net revenues was 8.06% (last year 6.84%).

(3) Comparison of the remuneration of the KMP against the performance of the Company:

(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 3.31%. The total managerial remuneration for the Financial Year 2017-18 was Rs. 269.01 lacs as against Rs. 237.86 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 2017-18 was approximately 13.74% as compared to the previous financial year.

Mr. Manoj Saraf- Managing Director - During the Financial Year 2017-18 was approximately 9.34% as compared to the previous financial year.

Mr. Rohit Saraf-Joint Managing Director- During the Financial Year 2017-18 was approximately 11.09% as compared to the previous financial year.

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

Annexure 'E'

Form No. MGT-9

EXTRACT OF ANNUAL RETURN as on the financial year ended on 2017-18

[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:

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:-

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise Share Holding

ii) Shareholding of Promoters

iii) Change in Promoters' Shareholding (please specify, if there is no change)

iv) Shareholding Pattern of top ten shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

v) Shareholding of Directors and Key managerial Personal:

vi) Indebtedness

Indebtedness of the company including interest outstanding/accrued but not due for payment

vii) Remuneration of Directors and Key Managerial Personnel

A. Remuneration to Managing Director, Whole-time Director and/or Manager:

Remuneration to other directors

C. Remuneration to Key Managerial Personnel Other than MD/WTD/Manager

viii. Penalties/Punishment/Compounding of Offences:

There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations. However, members' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial statements.

Annexure 'F'

ANNUAL REPORT ON CSR ACTIVITIES TO BE INCLUDED IN THE BOARD'S REPORT OF FERROALLOYS CORPORATION LIMITED FOR FY 2017-18