We present the 63rd Annual Report of your Company and the Audited Financial Statement
of the Company for the financial year ended 31st March, 2019, and the audited Consolidated
Financial Statements of the Company for the Financial Year ended 31st March, 2019.
FINANCIAL RESULTS
Financial snapshot of the company during the year under review is, as under:
(Rs.in lacs)
Particulars |
Standalone |
Consolidated |
|
For the year ended 31st March, 2019 |
For the year ended 31st March, 2018 |
For the year ended 31st March, 2019 |
For the year ended 31st March, 2018 |
Revenue from operations |
57538.21 |
53908.25 |
57538.21 |
53908.25 |
Other income |
457.68 |
571.10 |
457.68 |
571.10 |
Profit / Loss before Depreciation, Finance |
5788.86 |
5561.31 |
5788.86 |
5549.92 |
Costs, Exceptional items and Tax Expense |
|
|
|
|
Less: Finance Cost |
928.24 |
986.48 |
928.24 |
986.48 |
Less: Depreciation / Amortisation / Impairment |
577.59 |
575.05 |
577.59 |
575.05 |
Profit / Loss before Finance Costs, |
4283.03 |
3999.78 |
4283.03 |
3988.39 |
Exceptional items and Tax Expense |
|
|
|
|
Add/(Less): Exceptional items |
(15.18) |
2487.87 |
(15.18) |
2487.87 |
Profit / Loss before Tax Expense |
4267.85 |
6487.65 |
4267.85 |
6476.26 |
Share of Profit/(Loss) of Associate |
- |
- |
(0.05) |
- |
Profit / Loss before Tax Expense |
4267.85 |
6487.65 |
4267.80 |
6476.26 |
Less: Tax expense (Current & deferred) |
1462.04 |
939.48 |
1462.04 |
939.48 |
Profit / Loss for the year (1) |
2805.81 |
5548.17 |
2805.76 |
5536.78 |
Total Comprehensive Income / (Loss) (2) |
(62.47) |
(55.88) |
(62.47) |
(55.88) |
Total (1+2) |
2743.34 |
5492.29 |
2743.29 |
5480.90 |
Balance of profit / loss for earlier years |
(1420.88) |
(6969.05) |
(1426.35) |
(6963.13) |
Less: Transfer to Debenture Redemption |
Not applicable |
Not applicable |
Not applicable |
Not applicable |
Reserve |
|
|
|
|
Less: Transfer to Reserves |
- |
- |
- |
- |
Less: Dividend paid on Equity Shares |
Not applicable |
Not applicable |
Not applicable |
Not applicable |
Less: Dividend paid on Preference Shares |
Not applicable |
Not applicable |
Not applicable |
Not applicable |
Less: Dividend Distribution Tax |
Not applicable |
Not applicable |
Not applicable |
Not applicable |
Balance carried forward |
1384.93 |
(1420.88) |
1379.41 |
(1426.35) |
STATE OF COMPANY'S AFFAIRS
During the year under review, revenue from operations increased by 6.73% to
Rs.57,538.21 lacs (previous year Rs.53,908.25lacs). However, EBIDTA increased by 4.09% to
Rs.5,788.86 lacs (previous year Rs.5561.31 lacs) and profit before exceptional items
and tax increased by 7.08% to Rs.4283.03 lacs (previous year Rs.3999.78 lacs).
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 ("NCLT, 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 dismissed vide order dated 8th January, 2019. An appeal was also
filed against the order of the Hon'ble NCLAT before Hon'ble Supreme Court of India
("Supreme Court"), which too was dismissed vide order dated 11th February, 2019.
Post dismissal of the appeal by NCLAT, New Delhi and the Supreme Court, the matter was
again heard by NCLT, Kolkata which granted exclusion of time pursuant to which the revised
date of completion of Corporate Insolvency of the Company was fixed to 19th April, 2019.
Thereafter, upon an application filed by REC Limited for change of Resolution Professional
and for grant of further exclusion of time before National Company Law Tribunal, Cuttack
("NCLT, Cuttack"). Pursuant to order dated 8th July, 2019, of NCLT, Cuttack Mr.
Bhuvan Madan, Resolution Professional has replaced Mr. K.G. Somani, Resolution
Professional w.e.f 8th July, 2019. Further, NCLT, Cuttack granted an exclusion of 30 days
which was followed by another application seeking further exclusion of time., Vide order
dated 8th August, 2019, NCLT, Cuttack has granted further exclusion of time of 98 days
from 7th August, 2019. Accordingly, the revised date for completing Corporate Insolvency
Resolution Process of the Company is 14th November, 2019.
Pursuant to decision of the Committee of Creditors of the Company and the order of
NCLT, Cuttack dated 8th August, 2019, as aforesaid, the resolution professional is
inviting prospective resolution applicants to submit resolution plans for the Company.
INDUSTRIAL SCENARIO
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. India is
currently the world's 3rd largest producer of crude steel and third largest consumer of
finished steel. The steel manufacturing is estimated to contribute to nearly 2% of the
national GDP and employs close to 2.5 million workers. From FY 2013 till FY 2018 the
finished steel production in India has increased by nearly 7% per annum. Production in FY
2019 is estimated to be marginally lower than previous year. Meanwhile consumption of
finished steel has increased by nearly 3.5% per annum during the time period FY 2013-18.
Construction sector is estimated to account for more than 50% of steel consumption in
India, followed by engineering & fabrication, automotive, packaging & other
sectors. Consequently, the steel consumption pattern in India has a close correlation with
the construction activity happening in the country. The real estate construction segment
has benefitted by the strong demand for residential space and commercial offices.
Meanwhile higher Government spending on infrastructure creation and capacity expansion
projects in the industrial sector has benefitted infrastructure and industrial
construction segments respectively. Consequently, the demand for construction materials,
from steel to cement has witnessed a steady increase.
Further, during the quarter ended 30th June, 2019, the performance of the Company has
been, as under:
(Rs.in lacs)
Particulars |
Quarter ended 30th June, 2019 |
Quarter ended 30th June, 2018 |
1. Revenue from operations |
12827.79 |
15297.17 |
2. Expenses |
12571.14 |
13617.74 |
3. EBITDA |
704.22 |
2229.69 |
4. Tax expense |
106.04 |
684.88 |
5. Total comprehensive Income |
234.50 |
1125.99 |
PROSPECTS
India has overtaken 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. 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.
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
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. 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. According to the latest March data from worldsteel, India's crude
steel production totalled 105.54 million tonnes in April'18-March'19, up by 2.4 million
tonnes or 2.3% YoY as compared to 103.14 million tonnes in April'17-March'18. Having
overcome the shocks of demonetisation and the Goods & Services Tax (GST)
implementation, the Indian economy is now expected to achieve faster growth starting in
the second half of 2019 after the election. While the fiscal deficit might weigh on public
investment to an extent, the wide range of continuing infrastructure projects is likely to
support growth in steel demand above 7% in both 2019 and 2020.
Steel demand in developing Asia excluding China is expected to grow by 6.5% and 6.4% in
2019 and 2020 respectively, making it the fastest growing region in the global steel
industry. In the ASEAN region, infrastructure development supports demand for steel.
Further, the steel industry and its associated mining and metallurgy sectors have seen a
number of major investments and developments in the recent past.
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, 2019.
FINANCE
Cash and cash equivalent as at March 31, 2019 was Rs.434.17 lacs. The Company continues
to focus on judicious management of its working capital. Receivables, inventories and
other working capital parameters were kept under strict 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 Accounting Standard 21 on Consolidated Financial Statements read
with Accounting Standard 23 on Accounting for Investments in Associates, the audited
consolidated financial statement 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, 2019 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. Ashish Ramkisan Saraf shall retire by rotation at the ensuing 63rd Annual General
Meeting and, being eligible, offers himself for re-appointment in accordance with the
provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of
Association of the Company.
Further, while Mr. A.S. Kapre and Mr. M.B. Thaker are proposed to be re-appointed as
Independent Directors for a second term of 5 (five) consecutive years w.e.f 10th
September, 2019 subject to ratification and approval by the shareholders at the ensuing
63rd AGM of the Company, approval of members is also being sought at the said ensuing 63rd
AGM, for reappointment of Mr. Umesh Kumar Khaitan and Mrs. Urmila Gupta, as Independent
Director, for a second consecutive term of 5 (five) years w.e.f 13th February, 2020.
Further, all Independent Directors have given declarations that they meet the criteria
of independence as laid 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.
Name of Director |
Total Remuneration |
1 Mr. R. K. Saraf |
1,08,90,000 |
2 Mr. Manoj Saraf |
63,34,989 |
3 Mr. Ashish Saraf |
- |
4 Mr. Rohit Saraf |
63,44,988 |
Detail of Remuneration paid to Non-Executive Directors during the year.
Name of Director |
Sitting Fee Paid |
1 Mr. A.S. Kapre |
- |
2 Mr. M.B. Thaker |
- |
3 Mr. Pinaki Misra |
- |
4 Mr. Umesh Khaitan |
- |
5 Mrs. Urmila Gupta |
- |
6 Mr. Vineet Saraf |
- |
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 at least 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. facor roup.in/investorrelations. 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.
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 which can be viewed at
www.facorgroup.in/investorrelations. During the Financial Year 2018-19, the policy was not
reviewed in view of the ongoing Corporate insolvency Resolution Process and the powers of
the Board and its Committees remaining suspended w.e.f 6th July, 2017. However, it is
confirmed that during FY
2018-19, the Company has not received any complaint of sexual harassment.
MEETINGS
During the year under review no meetings of the Board and/ or its Committees were
convened and held, as all the powers of the board and/or its committees are being
exercised by the Resolution Professional in view of the ongoing Corporate Insolvency
Resolution Process and the powers of the Board and its committees remaining suspended
w.e.f 6th July, 2017 in terms of section 17 of the Insolvency and Bankruptcy Code, 2016.
SUBSIDIARIES
The Report and Accounts of the Company are prepared in consolidated form and contains
results of its subsidiary Facor Realty and Infrastructure Limited. The annual accounts of
the subsidiary 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 company. 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, 2019 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, no
meeting of the Audit Committee was held 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
The Company's Statutory Auditors, K.K. Mankeshwar & Co, Chartered Accountants
having Registration no. 106009W allotted by the Institute of Chartered Accountants of
India (ICAI) were appointed as Statutory Auditors of the Company for a period of 5 (five)
consecutive years at the 61st Annual General Meeting (AGM) of the Members of the Company
held on Thursday, 28th September, 2017. Their appointment was subject to ratification by
the Members of the Company at every subsequent AGM held after the 61st AGM held on 28th
September, 2017, as aforesaid.
Pursuant to the amendments made to Section 139 of the Companies Act, 2013 by the
Companies (Amendment) Act, 2017, effective from 7th May, 2018, the requirement of seeking
ratification of the Members for the appointment of Statutory Auditors has been withdrawn
from the Statute.
In view of the above, ratification of the Members for continuance of their appointment
at this AGM is not being sought. The Statutory Auditors have given a confirmation to the
effect that they are eligible to continue with their appointment and that they have not
been disqualified in any manner from continuing as Statutory Auditors of the Company. The
remuneration plus applicable taxes and reimbursement of expenses incurred by them
incidental to their functions shall be determined the Resolution Professional and/or the
Board of Directors, as applicable in consultation with the said Auditors.
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 Records and Audit) Amendment Rules, 2014, the cost audit 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 2019-20
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 of the 63rd AGM of the
Company.
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, 2019 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 RAA & Associates, LLP, a firm of Company Secretaries in Practice to
undertake the Secretarial Audit of the Company for financial Year 2019-20. The Report of
the Secretarial Audit, for FY 2018-19, 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 31st August, 2019
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
herewith as "Annexure D".
SECRETARIAL AUDIT REPORT
Report of Secretarial Auditor in Form MR-3, for FY 2018-19, forms part of the Report
under section 134 of the Companies Act, 2013.
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.
However, the review of the policy could not be taken up during the year under review by
the Board in view of the ongoing Corporate Insolvency Resolution Process and the powers of
the Board remaining suspended in terms of the provisions of section 17 of the Insolvency
and Bankruptcy Code, 2016.
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 2018-19 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. Further, no meetings
of the aforesaid committee has been held during the year under review in view of the
ongoing Corporate Insolvency Resolution Process and the powers of the Board remaining
suspended in terms of the provisions of section 17 of the Insolvency and Bankruptcy Code,
2016.
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 and the same
should be disclosed by the company in Board's Report. Accordingly, it is informed, as
under:
Name of Director |
Total Remuneration including Perquisites & Allowance / Sitting
Fee |
1. Mr. R.K. Saraf, Chairman & Managing Director |
- |
2. Mr. Manoj Saraf, Managing Director |
- |
3. Mr. Ashish Saraf, Joint Managing Director |
- |
4. Mr. Rohit Saraf, Joint Managing Director |
- |
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/investorrelations.
DETAILS OF DIRECTOR AND KMP
Pursuant to the provisions of section 203 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, during the year under review, Mr. Pinaki Misra, an Independent director on the
Board of the Company has resigned from the Board of the Company on 22nd September, 2018.
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 of Hon'ble
NCLT, Kolkata was filed before the Hon'ble National Company Law Appellate Tribunal, New
Delhi ("NCLAT, New Delhi") which was dismissed vide order dated 8th January,
2019. An appeal was also filed against the order of the Hon'ble NCLAT before Hon'ble
Supreme Court of India ("Supreme Court"), which too was dismissed vide order
dated 11th February, 2019.
Post dismissal of the appeal by NCLAT, New Delhi and the Supreme Court, the matter was
again heard by NCLT, Kolkata which granted exclusion of time pursuant to which the revised
date of completion of Corporate Insolvency of the Company was fixed to 19th April, 2019.
Thereafter, upon an application filed by REC Limited for change of Resolution Professional
and for grant of further exclusion of time before National Company Law Tribunal, Cuttack
("NCLT, Cuttack"). Pursuant to order dated 8th July, 2019, of NCLT, Cuttack Mr.
Bhuvan Madan, Resolution Professional has replaced Mr. K.G. Somani, Resolution
Professional w.e.f 8th July, 2019. Further, NCLT, Cuttack granted an exclusion of 30 days
which was followed by another application seeking further exclusion of time., Vide order
dated 8th August, 2019, NCLT, Cuttack has granted further exclusion of time of 98 days
from 7th August, 2019. Accordingly, the revised date for completing Corporate Insolvency
Resolution Process of the Company is 14th November, 2019.
Pursuant to decision of the Committee of Creditors of the Company and the order of
NCLT, Cuttack dated 8th August, 2019, as aforesaid, the resolution professional is
inviting prospective resolution applicants to submit resolution plans for the Company.
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 have
been transferred to the Investor Education and Protection Fund established by the Central
Government.
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.
By order of Resolution Professional
for Ferro Alloys Corporation Limited
(Ram Kisan Saraf)
Chairman & Managing Director
Place : Noida
Dated : 31st August, 2019
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