Facor Alloys Ltd

TO THE MEMBERS

The Directors submit the 21^st ANNUAL REPORT on the business and operations of the Company together with the Standalone and Consolidated Audited Financial Statements for the year ended 31^st March, 2024.

FINANCIAL RESULTS

in Lakh

OVERALL PERFORMANCE

Plant operation is temporarily shut down w.e.f. 31-10-2023, which has caused lower revenue during the year. Top management had recently undergone a reshuffle and new management has taken over charge w.e.f. 9th April, 2024. New management is rigorously exploring all options including dialogues with corporate houses and lenders to get assistance to resume operations but due to prevailing stringent market conditions, lower steel demand coupled with stressed margins, management is not getting immediate respite, however, despite all odds, management is looking forward to revive the operations by utilizing manufacturing facilities for silico manganese as well as ferro chrome to explore market demand. Promotor entity is also infusing funds to meet running fund requirement. Company has state-of-art manufacturing facility and enjoying debt free status i.e. no financial obligation towards any financial institutions. Management is very keen and hopeful to overcome all odds and resume operation at the earliest.

During the year under consideration, Company achieved the production of 30,753 M.T. as against 70,062 M.T. in the previous year recording an decrease by 56% approx due to temporary shutdown of manufacturing facilities.

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

Government has approved inclusion of ‘Specialty Steel' under the Production Linked Incentive (PLI) Scheme with a 5-year financial outlay of 6322 Crore to promote the manufacturing of ‘ Specialty Steel' within the country by attracting capital investment, generate employment and promote technology up-gradation in the steel sector. Your Company is currently do not have working capital limits/ finance facilities with any financial institutions/ banks. Under such exigency, company had entered into conversion agreements and contributed to cater the industry demand and also being able to optimize its capacity utilization while putting it's all the best possible efforts. Your Company is exploring all available options and expected to get working capital finance to achieve growth as per market trends in the years to come.

Exports (Deemed) are at Rs. 27.29 crores as against Rs. 69.61 crores in the previous year and during the year under review foreign currency earnings in rupee terms was NIL. The Company derived 17.89% of its total sales from deemed exports as against 21.78% in the previous year.

On account of above and other factors including higher sales realization, the loss before tax is at Rs. 43.31 crores as compared to profit of Rs. 15.95 crore in the previous year.

DIVIDEND

The Board has not recommended any dividend on the Equity Shares of the company for the financial year ended 31.03.2024 in the absence of any profitability in the company.

SHARE CAPITAL

The paid up Equity Share Capital as on 31^st March, 2024 is Rs. 19.55 crores. During the year under review, the Company has not issued any further shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company.

The equity shares of the Company are listed on BSE Limited and the Company has duly paid the annual listing fees for the current financial year i.e. 2024-25.

ANNUAL RETURN

The annual return of the company as on March 31, 2024, in terms of the provisions of Section 134(3)(a) of the Companies Act, 2013 is available on the company's website www.facoralloys.in.

NUMBER OF MEETINGS OF THE BOARD

The Board met six (6) times in FY 2023-24 viz. on 17^th May, 2023, 12^th October, 2023, 14^th November, 2023, 2^nd December, 2023, 16^th January, 2024 & 14^th February, 2024. The maximum interval between two meetings i.e. 17.05.2023 and 12.10.2023, was exceed beyond 120 days which was in violation of the applicable laws.

CONSOLIDATED FINANCIAL STATEMENTS

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

SUBSIDIARIES

Pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's Subsidiaries and Associates' (in updated Form AOC-1) is given in the Note No.-38 of the consolidated financial statements. Further, the Consolidated Financial Statements presented by the Company also includes the financial results of the subsidiary companies.

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

DIRECTORS' RESPONSIBILITY STATEMENT

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

(i) that in the preparation of the annual accounts for the financial year ended 31^st March, 2024, the applicable accounting standards read with requirements set out under schedule III of the Companies Act, 2013 have been followed and there are no material departures from the same;

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

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

(iv) that they have prepared the annual accounts of the Company for the financial year ended 31^st March, 2024 on a going concern basis;

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

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

DECLARATION GIVEN BY INDEPENDENT DIRECTORS

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

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

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

During the year under review, no changes were made in the above policy. Salient features of this policy are enumerated in the Corporate Governance Report which forms part of the Annual Report. The above policy is available at the website of the Company at www.facoralloys.in.

AUDITORS AND AUDITORS' REPORT

Statutory Auditors

In terms of Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Members of the Company at their 19^th Annual General Meeting held on 28^th September, 2022 approved the reappointment of M/s K. K. Mankeshwar & Co., Chartered Accountants (Firm Registration no.106009W) as the Statutory Auditors of the Company for further term of 5 years i.e. from the conclusion of 19^th Annual General Meeting till the conclusion of 24^th Annual General Meeting of the Company to be held in the year of 2027.

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

The Auditors' Report to the Shareholders on the Standalone & Consolidated Audited Financial Results for the year under review has expressed unmodified opinion in the respective audit reports for the financial year 2023-2024. There were no qualifications, observations or adverse comments on financial statements and matters, which have any material bearing on the functioning of the Company.

Secretarial Auditors

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

There are following qualifications / reservations / adverse remarks / disclaimers made in the Secretarial Audit Report for the financial year ended 31^st March, 2024 by the Practicing Company Secretary:

1. Non-compliance of regulation 17(2) for not holding board meeting during the quarter ended 30/09/2023 and having a gap of more than 120 days between the two board meetings held i.e. from 17.05.2023 to 12.10.2023.

2. Non-compliance of regulation 18(2) for not holding Audit committee meeting during the quarter ended 30/09/2023 and having a gap of more than 120 days between the two Audit committee meetings held i.e. from 17.05.2023 to 12.10.2023.

3. Non-compliance of regulation 33 w.r.t. Delay in submission of Unaudited Financial Results for the quarter ended on 30^th June, 2023 till the due date i.e. 14/08/2023. Stock exchange (BSE) imposed the monetary fine of Rs.2,98,100/-. The company informed that it has paid the monetary fine imposed by the BSE in full.

4. The company held its AGM for the year ended 31/03/2023 on 28/12/2023 as it has obtained approval from the Registrar of Companies, Vijayawada for holding its AGM beyond 30/09/2023. However, shareholders/members did not adopt financial statements for the year ended 31/03/2023 in the AGM of the company.

5. The Company has stated in its filing dated 31/10/2023: Temporary shutdown of the Plant Operations w.e.f. 31/10/2023 till further notice which might have an impact on the Company's earnings prospects.

6. The Company has informed that one major shareholder has sent Requisition cum Special Notice during the year for removal of present Managing Director and one other Director resulting to change in management of the Company.

7. The Company has been made a party/respondent in various Court cases/ suits/legal fights in the state of Telangana by its shareholders and Companies' Trade Union.Reply to Point No. 1,2 & 3.

The delay was occurred in the finalization of unaudited financial results for the quarter ended 30/06/2023 due to arising of certain technical issues at the data Server of the Company and non- generation of necessary reports required to finalize the financial results. The delay caused was beyond the control of the Company. Accordingly, the meetings of Audit Committee and Board of Directors scheduled on 9^th August, 2023 was cancelled. Further, the Company has informed the BSE Limited regarding delay in convening Board meeting on 5^th August, 2023.

Reply to Point No. 4

Members are aware that the resolution for adoption of Annual Audited Financial Statements of the Company on a standalone and consolidated basis, for the financial year ended March 31, 2023, including the Balance Sheet as at March 31, 2023, the Statement of Profit & Loss and Cash Flow Statement for the financial year ended on that date and the Reports of the Board of Directors and Auditors thereon (collectively referred to as ‘Financial Statement for Financial Year 2022-23'), were not approved by the Shareholders (one of the major shareholder namely M/s. Rai Bahadur Shreeram & Company Pvt. Ltd. holding more than 31% equity shares of the Company and forming part of the promoters' group voted against the resolution) in the 20th Annual General Meeting held on December 28, 2023.

In compliance with applicable law, the said Financial Statement for Financial Year 2022-23, were filed by the Company with the Registrar of Companies as provisional basis.

Accordingly, the above referred Financial Statement for Financial Year 2022-23, as originally placed at the 20th AGM, are being placed again without any modification or rectification before the members for consideration and adoption.

Your Board recommends the Ordinary Resolution as set out in the Notice to 21^st Annual General Meeting for your approval.

Reply to Point No. 5

This is already explained in the captioned "Overall Performance".

Reply to Point No. 6

A requisition cum special notice dated 02.11.2023 from the shareholder namely M/s. Rai Bahadur Shreeram & Company Pvt. Ltd. holding more than 31% equity shares of the Company and forming part of the promoters' group, under section 100 read with section 115 of the Companies Act, 2013 intended to move certain resolutions at an Extraordinary General Meeting to be called upon by requisition.

The Company obtained the legal opinion and noted the pendency of Writ Petition, vide No. 24776/2023, before the Hon'ble High Court of Andhra Pradesh wherein the subject matter of the proposed resolution(s) by the shareholders are already sub-judice in nature. Accordingly, in view of the advice given in the aforesaid opinion as well as in the best interest of the Company, it was decided to keep the agenda item(s) for removal / change in the management in abeyance till the pendency of the said Writ Petition.

As regards the refusal to comply with the Special Notices referred to in the said Complaint is concerned, it is pertinent to note that the Special Notices were issued to call for passage of appropriate resolutions for the removal of the erstwhile Management in a general meeting of the Company. The said Special Notices were also sought to be enforced by the shareholders by way of C.P. No. 15 of 2024 before the Hon'ble National Company Law Tribunal, Amaravati Bench. Subsequent to the change in management C.P. No. 15 of 2024 pending before the Hon'ble National Company Law Tribunal, Amaravati Bench was withdrawn by the Company and the Special Notices are now infructuous.

Reply to Point No. 7

The Company always respects the law of land and proceed accordingly, in compliance with applicable laws. The Company also explores amicable resolutions wherever possible, in line with our commitment to maintaining good relations with our stakeholders while ensuring compliance with the law.

Cost Auditor

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

Mr. Prakash Uppalapati, Cost Accountant has been appointed by the Board as Cost Auditor of the Company to conduct audit of cost account records for the year ended 31^st March, 2025 pursuant to the provisions of Section 148 of the Companies Act, 2013 and the rules made there under. Members are requested to consider the ratification of the remuneration payable to Mr. Prakash Uppalapati being the Cost Auditor. There are no qualifications, reservations or adverse remarks or disclaimers made in the Cost Audit Report for the financial year 2023-2024.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

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

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

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

CHANGE IN THE NATURE OF BUSINESS, IF ANY

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

DISCLOSURE OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to the financial statements as designed and implemented by the Company are adequate and commensurate with the size and scale of its operation. The internal controls are tested for adequacy, efficiency and effectiveness through audits by the internal auditors and the observations, corrective and preventive actions are reviewed by the management and Audit Committee of the Board of Directors. During the financial year under review, no material or serious observation has been received from the Internal Auditors of the Company for inadequacy or ineffectiveness of such controls.

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

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

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

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

RISK MANAGEMENT POLICY

The 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.

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

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

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

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

CORPORATE SOCIAL RESPONSIBILITY

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

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

In view of the same, the Company has made the requisite CSR spending on the specified activities during the financial year ended 31.03.2024, the details of which is provided in Annexure-3.

ANNUAL BOARD EVALUATION

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

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

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

DISCLOSURE WITH RESPECT TO UNCLAIMED SUSPENSE ACCOUNT

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

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

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

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

VIGIL MECHANISM / WHISTLE BLOWER POLICY

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

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

PUBLIC DEPOSITS

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

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

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

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

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on date, the Company has total no. of 7 Directors out of which 1 is Whole-time Director and 6 are Non-Executive Directors. The 6 Non-Executive Directors consist of 3 Independent Directors including one Woman Independent Director and 3 are Non-Executive Non-Independent Directors. The Composition of the Board is in conformity with the provisions of the Companies Act, 2013 read with the rules framed thereunder and relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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

Mr. R. K. Saraf, Chairman & Managing Director and Mr. Ashim Saraf, Non-executive Director have resigned from the directorship of the company w.e.f. 05.04.2024 and 04.04.2024 respectively. Mr. Murlidhar Durgaprasadji Saraf and Mr. Gaurav Saraf have been appointed as the Non-executive Non-independent Directors w.e.f. 09.04.2024.

Mr. Ashish Santosh Agrawal has been appointed as a Whole-time Director w.e.f. 30^th May, 2024.

Mr. Piyush Agarwal, Company Secretary and Compliance Officer as well as KMP has resigned from the Company with effect from the closing of working hours as of 15.07.2024.

Currently, Mr. Ashish Santosh Agrawal (Whole-time Director), Mr. Vijay Vashisth (Dy. CFO) and Mr. Piyush Agarwal, Company Secretary, are the key managerial personnel of the Company. None of the Whole-time Key Managerial Personnel (KMP) of the Company is holding office in any other Company as a Key Managerial Personnel.

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

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

COMMITTEES OF THE BOARD

The Board of Directors have constituted all the requisite committees of Directors as are required by law from time to time. Details of composition of all the committees of the Board are provided in the corporate governance report and majority of the committees consists entirely of independent directors. During the year, all recommendations made by the committees were approved by the Board.

REPORTING OF FRAUDS BY AUDITORS OF THE COMPANY

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

CORPORATE GOVERNANCE

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

DISCLOSURE UNDER INSOLVENCY AND BANKRUPTCY CODE

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

DISCLOSURE UNDER ONE TIME SETTLEMENT

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

COMPLIANCE WITH SECRETARIAL STANDARDS

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

INDUSTRIAL RELATIONS

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

ACKNOWLEDGEMENT AND APPRECIATION

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

Further, the Board places on record their sincere appreciation for the significant contribution made by its employees through their dedication, hard work and commitment and also for the trust reposed in the company by all other stakeholders. The Company sincerely thanks the Central & State Governments for their continued support and warm co-operation extended towards the business as well as the Company's social functions. It looks forward to your continued support in the company's endeavour to accelerate access to innovative and affordable business.