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Notes to Accounts of Ferro Alloys Corporation Ltd.

Mar 31, 2018

NOTES ON STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2018

STANDALONE ACCOUNTS

(Rs. in Lacs)

49 Financial Instruments - Fair Values and Risk Management

I.. Fair Value Measurements

A. Financial instruments by category*

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

FVOCI

Amortised Cost

FVOCI

Amortised Cost

FVOCI

Amortised Cost

Financial assets

Non-current investments

12.25

6.00

20.30

1.80

4.00

2.30

Other non-current financial assets

-

912.26

-

866.09

-

863.15

Trade receivables

-

850.86

-

5,585.22

-

1,452.65

Cash and cash equivalents

-

1,428.36

-

501.46

-

290.70

Bank balances other than above

-

2.34

-

4.42

-

4.42

Other current financial assets

-

51.04

-

59.88

-

80.31

12.25

3,250.86

20.30

7,018.87

4.00

2,693.53

*Exclude financial instruments measured at cost

Financial liabilities

Borrowings

-

3,931.19

-

11,043.26

-

8,627.08

Trade payables

-

4,234.11

-

7,560.37

-

7,316.04

Other financial liabilities

-

1,060.63

-

1,069.54

-

1,389.63

.

9,225.93

.

19,673.17

.

17,332.75

B. Fair Value Hierarchy

"This section explains the judgements and estimates made in determining the fair values of the financial instruments that are:

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table."

Financial assets and liabilities measured at fair value

- recurrina fair value measurements

(Rs. In Lacs)

As at 31 March 2018

Level 1

Level 2

Level 3

Total

Financial Assets Financial Investments at FVOCI

Investments

Equity Shares

12.25

-

-

12.25

Total Financial Assets

12.25

-

.

12.25

Financial assets and liabilities which are measured at amortised cost for which fair values are disclosed

As at 31 March 2018

Level 1

Level 2

Level 3

Total

Financial assets

Non-Current Investments

-

-

6.00

6.00

Other Non-Current Financial Assets

-

-

912.26

912.26

Trade Receivables

-

-

850.86

850.86

Cash and Cash Equivalents

-

-

1,428.36

1 ,428.36

Bank Balances other than above

-

-

2.34

2.34

Other Current Financial Assets

-

-

51.04

51.04

Total Financial Assets

-

-

3,250.86

3,250.86

Financial Liabilities

Borrowings

-

-

3,931.19

3,931.19

Trade Payables

-

-

4,234.11

4,234.11

Other Financial Liabilities

-

-

1,060.63

1,060.63

Total Financial Liabilities

-

-

9,225.93

9,225.93

Financial Assets and Liabilities measured at fair value - recurring fair value measurements

As at 31 March 2017

Level 1

Level 2

Level 3

Total

Financial Assets Financial Investments at FVOCI

Investments

Equity Shares Total Financial Assets

20.30

-

-

20.30

20.30

-

-

20.30

Financial assets and liabilities which are measured at amortised cost for which fair values are disclosed

As at 31 March 2017

Level 1

Level 2

Level 3

Total

Financial assets

Non-Current Investments

-

-

1.80

1.80

Other Non-Current Financial Assets

-

-

866.09

866.09

Trade Receivables

-

-

5,585.22

5,585.22

Cash and Cash Equivalents

-

-

501.46

501.46

Bank Balances other than above

-

-

4.42

4.42

Other Current Financial Assets

-

-

59.88

59.88

Total Financial Assets

-

-

7,018.87

7,018.87

Financial Liabilities

Borrowings

-

-

11,043.26

11,043.26

Trade Payables

-

-

7,560.37

7,560.37

Other Financial Liabilities

-

-

1,069.54

1,069.54

Total Financial Liabilities

-

-

19,673.17

19,673.17

Financial Assets and Liabilities measured at fair value - recurring fair value measurements

As at 1 April 2016

Level 1

Level 2

Level 3

Total

Financial Assets Financial Investments at FVOCI

Investments

Equity Shares Total Financial Assets

4.00

-

-

4.00

4.00

-

-

4.00

Assets and Liabilities which are measured at amortised cost for which fair values are disclosed

As at 1 April 2016

Level 1

Level 2

Level 3

Total

Financial Assets

Non-Current Investments

-

-

2.30

2.30

Other Non-Current Financial Assets

-

-

863.15

863.15

Trade Receivables

-

-

1,452.65

1 ,452.65

Cash and Cash Equivalents

-

-

290.70

290.70

Bank Balances other than above

-

-

4.42

4.42

Other Current Financial Assets

-

-

80.31

80.31

Total Financial Assets

-

-

2,693.53

2,693.53

Financial Liabilities

Borrowings

-

-

8,627.08

8,627.08

Trade Payables

-

-

7,316.04

7,316.04

Other Financial Liabilities

-

-

1 ,389.63

1 ,389.63

Total Financial Liabilities

-

-

17,332.75

17,332.75

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

There are no transfers between level 1 and level 2 during the year

Fair value of financial assets and liabilities measured at amortised cost

(Rs in Lacs)

As at 31 M arch 2018

As at 31 March 2017

As at 1st April 2016

Carrying Amount

Fair Value

Carrying Amount

Fair Value

Carrying Amount

Fair Value

Financial Assets

Non-Current Investments

6.00

6.00

1.80

1.80

2.30

2.30

Other Non-Current Financial Assets

912.26

912.26

866.09

866.09

863.15

863.15

Trade Receivables

850.86

850.86

5,585.22

5,585.22

1,452.65

1,452.65

Cash and Cash Equivalents

1,428.36

1,428.36

501.46

501.46

290.70

290.70

Bank Balances other than above

2.34

2.34

4.42

4.42

4.42

4.42

Other Current Financial Assets Financial Liabilities

51.04

51.04

59.88

59.88

80.31

80.31

3,250.86

3,250.86

7,018.87

7,018.87

2,693.53

2,693.53

Borrowings

3,931.19

3,931.19

11,043.26

11,043.26

8,627.08

8,627.08

Trade Payables

4,234.11

4,234.11

7,560.37

7,560.37

7,316.04

7,316.04

Other Financial Liabilities

1,060.63

1,060.63

1,069.54

1,069.54

1,389.63

1,389.63

9,225.93

9,225.93

19,673.17

19,673.17

17,332.75

17,332.75

Financial Risk Management

The Company has exposure to the following risks arising from financial instruments:

- credit risk;

- liquidity risk; and

- market risk"

Risk Management Framework

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 Board of Directors have approved a Risk management policy which shall be reviewed by Board and the management from time to time.

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 and Committee at its meeting.

The Company''s Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

i. Credit Risk

Credit risk is the risk of financial loss to company if a customer or counterparty to the financial instrument fails to meet its financial obligations, and arises principally from the company''s receivables from customers.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, cash and cash equivalents, other balances with banks and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk other than trade receivable.

The company maintains its Cash and cash equivalents and Bank Deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit rating on a timely basis.

The gross carrying amount of trade receivables is Rs. 807.55 Lacs (31 March 2017 Rs 5,585.22 Lacs.)

During the period, the Company has made no write-offs of trade receivables. The Company management also pursue all options for recovery of dues wherever necessary based on its internal assessment. A default on a financial asset is when counterparty fails to make payments within 365 days when they fall due.

Loans and advances are related to balances recoverable from related parties. Provision is created in books of accounts on case to case basis depending upon the possibility/probability of recovery of the amount due to financial position of related parties. The gross carrying amount of loan and advances to related parties is Rs. 37.15 Lacs (31 March 2017 amounted to Rs. 37.02 lacs) (Rs. 40.13 lacs as on 1 April 2016).

Reconciliation of loss allowance provision - Loan and Advances to Related Parties

(Rs. In Lacs)

31 March 2018

31 March 2017

31 March 2016

Opening balance

37.02

20.45

-

Changes in loss allowance calculated at life time expected credit losses

16.57

20.45

Closing balance

37.02

37.02

20.45

ii. Liquidity Risk

Liquidity risk refers to risk of financial distress or extra ordinary high financing cost arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing. The Company''s objective is to maintain at all times optimum levels of liquidity to meet its cash and collateral requirements. Processes and policies related to such risk are overseen by senior management and management monitors the Company''s net liquidity position through rolling forecast on the basis of expected cash flows.

(a) Financing Arrangements

The group currently do not have access to the any undrawn borrowing facilities as on 31 March 2018.

(b) Maturities of Financial Liabilities (Rs. In Lacs) The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and excluding contractual interest payments and exclude the impact of netting agreements.

Carrying

Contractual cash flows

Amounts 31 March 2018

Total

Uptol year

Between 1 and 2 years

Between 2 and 5 years

More than 5 year

Non-derivative financial liabilities

Borrowings

3,931.19

3,931.19

2,312.18

-

1,619.01

-

Trade payables

4,234.11

4,234.11

4,234.11

-

-

-

Other financial liabilities

1,060.63

1,060.63

1,060.63

-

-

-

Total non-derivative liabilities

9,225.93

9,225.93

7,606.92

-

1,619.01

-

Carrying Amounts 31 March 2017

Contractual cash flows

Total

Upto 1 year

Between 1 and 2 years

Between 2 and 5 years

More than 5 year

Non-derivative financial liabilities

Borrowings

11,043.26

11,043.26

9,293.89

-

1,749.37

-

Trade payables

7,560.37

7,560.37

7,560.37

-

-

-

Other financial liabilities

1,069.54

1 ,069.54

1,069.54

-

-

-

Total non-derivative liabilities

19,673.17

19,673.17

17,923.80

-

1,749.37

-

Carrying Amounts 1 April 2016

Contractual cash flows

Total

Upto 1 year

Between 1 and 2 years

Between 2 and 5 years

More than 5 year

Non-derivative financial liabilities

Borrowings

8,627.08

8,627.08

6,458.49

-

2,168.59

-

Trade payables

7,316.04

7,316.04

7,316.04

-

-

-

Other financial liabilities

1,389.63

1 ,389.63

1,389.63

-

-

-

Total non-derivative liabilities

17,332.75

17,332.75

15,164.16

-

2,168.59

-

///. Market risk

Market risk is the risk that changes in market prices, foreign exchange rates and interest rates-will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

a) Equity Price risk

Commodity Price Risk is the risk that future cash flow of the Company will fluctuate on account of changes in market price of the material produced and sold by the company. The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the materials. The Company enters into contracts for procurement of materials and most of the transactions are short term fixed price contracts.

b) Currency Risk

Foreign currency risk is the risk that fair value of future cash flow of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities. The Company has foreign currency trade payables and receivables and is therefore, exposed to a foreign exchange risk. Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR). The risk is managed through a forecast of highly probable foreign currency cash flows.

Exposure to currency risk

The summary quantitative data about the Group''s exposure to currency risk as reported to the management of the

Grnun is as follows:

(Figures In Lacs)

As at 31 March 2018

As at 31 March 2017

As at 1 April 2016

USD

JPY

USD

JPY

USD

JPY

Financial Asset

Trade Receivables

111.25

-

1,938.39

-

549.90

-

Net exposure to foreign currency risk(assets)

111.25

-

1,938.39

-

549.90

-

Trade Payables

(58.08)

182.21

318.43

288.80

Net statement of financial position exposure

(58.08)

-

182.21

318.43

288.80

-

Sensitivity analysis

A reasonably possible strengthening (weakening) of the INR against all other currencies at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Profit or loss, net of tax

Equity, net of tax

Strengthening

Weakening

Strengthening

Weakening

31 March 2018

5% movement

USD

5.54

(5.54)

5.54

(5.54)

JPY

1.90

(1.90)

1.90

(1.90)

31 March 2017

5% movement

USD

57.42

(57.42)

57.42

(57.42)

JPY

(10.41)

10.41

(10.41)

10.41

31 March 2016

5% movement

USD

8.54

(8.54)

8.54

(8.54)

c) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. Since the interest rates on loans obtained are fixed, the company does not have any interest rate risk.

The Company''s exposure to interest rate risk in minimal and hence no sensitivity analysis is presented.

50 Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity share holders of the Company. The primary objective of the Company''s capital management is to safeguard continuity, maintain healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through equity, internal accruals, long term borrowings and short term borrowings. In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

51 First Time Adoption of Ind AS

As stated in note 2, these are the Company''s first standalone financial statements prepared in accordance with Ind AS

The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS statement of financial position at 1 April 2016 (the Company''s date of transition). In preparing its opening Ind AS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian GAAP (previous GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Ind AS optional exemptions

(i) Deemed cost of Property, plant and equipment:

The Company has elected to measure items of Property, Plant & Equipment (PPE) at the date of transition to Ind AS at their fair value. The Company has used the fair value of PPE, which is considered as deemed cost on transition. Fair valuations are assessed as on 1 April, 2016.

(ii) Investments in Subsidiary:

Ind AS 101 permits a first-time adopter to choose the previous GAAP carrying amount at the entity''s date of transition to Ind AS to measure the investment in the subsidiary as the deemed cost. Accordingly, the Group has opted to measure its investment in subsidiary at deemed cost, i.e. previous GAAP carrying amount.

Ind AS mandatory exceptions

B. (i) Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

(ii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Reconciliations between previous GAAP

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Reconciliation of Equity

(Rs. In Lacs)

Particulars

As at 1 April 2016

As at 31 March 2017

Previous GAAP*

Adjustments

IndAS

Previous GAAP*

Adjustments

IndAS

Assets

Non-Current Assets

Property, Plant and Equipment

9,824.18

8,922.12

18,746.30

9,163.59

8,917.03

18,080.62

Capital Work-in-Progress

965.99

-

965.99

957.75

(0.00)

957.75

Asset Held for Sale

-

-

-

29.97

0.00

29.97

Intangible Assets

-

654.24

654.24

-

1,339.01

1,339.01

Investments in Subsidiary and Associates

21,910.91

(21,900.35)

10.56

21,910.91

(21,900.49)

10.42

Non-Current Financial Assets

-

-

(I) Investments

7.30

(1.00)

6.30

6.80

15.30

22.10

(li) Other Non-Current Financial Assets

863.15

(0.00)

863.15

863.76

2.33

866.09

Other Non-Current Assets

321.30

(0.00)

321.30

644.37

(0.01)

644.36

Current Assets

_

_

Inventories

6,888.40

(28.83)

6,859.57

7,774.01

(0.00)

7,774.01

Financial Assets

-

-

(i) Trade Receivables

1 ,452.65

0.00

1,452.65

5,585.22

(0.00)

5,585.22

(ii) Cash and Cash Equivalents

290.70

(0.00)

290.70

503.79

(2.33)

501.46

(iii) Bank Balances other than (ii) above

4.42

0.00

4.42

4.42

0.00

4.42

(iv) Other Current Financial Assets

100.76

(20.45)

80.31

96.90

(37.02)

59.88

Other Current Assets

3,793.15

(654.26)

3,138.89

3,977.11

(1,387.08)

2,590.03

Total Assets

46,422.90

(13,028.52)

33,394.38

51,518.59

(13,053.25)

38,465.34

Equity and Liabilities

Equity

Equity Share Capital

1 ,852.68

(0.00)

1,852.68

1,852.68

(0.00)

1,852.68

Other Equity

23,593.18

(12,848.89)

10,744.29

25,609.99

(12,865.45)

12,744.54

Non-Current Liabilities

Financial Liabilities

(1) Borrowings

3,024.95

(274.12)

2,750.83

2,057.72

(226.17)

1,831.55

Deferred Tax Liabilities (Net)

(160.63)

95.08

(65.55)

734.42

86.51

820.93

Long Term Provisions

1 ,439.58

(1,167.35)

272.23

1,108.99

(806.16)

302.83

Other Non-Current Liabilities

218.65

-

218.65

218.65

-

218.65

Current Liabilities

Financial Liabilities

(1) Borrowings

4,776.25

1,100.00

5,876.25

8,111.70

1,100.01

9,211.71

(li) Trade Payables

7,316.04

0.00

7,316.04

7,560.38

(0.01)

7,560.37

(Iii) Other Financial Liabilities

1 ,390.23

(0.60)

1,389.63

1,066.20

3.34

1,069.54

Other Current Liabilities

2,815.38

(1,127.59)

1,687.79

2,675.99

(1,151.48)

1,524.51

Short-Term Provisions

156.59

1,178.28

1,334.87

437.56

806.16

1,243.72

Current Tax Liabilities (Net)

-

16.67

16.67

84.31

0.00

84.31

Total Equity and Liabilities

46,422.90

(13,028.52)

33,394.38

51,518.59

(13,053.25)

38,465.34

The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.

Reconciliation of Equity

(Rs. In Lacs)

Particulars

31 March 2017

1 April 2016

Total equity (shareholder''s funds) as per previous GAAP

27,462.68

25,445.86

Adjustments:

Impact on account of fair valuation of fixed assets

-

8,893.28

Impact on account of impairment of Investment in Subsidiary and Associates

(0.14)

(21,900.35)

Impact of interest charged as per EIR Method

(57.16)

3.73

Impact of interest charged as per EIR Method in Equity component

5.66

270.99

Depreciation and Amortisation

(5.09)

-

Impact on account of fair valuation of investment through OCI

16.30

(1.00)

Impact on account of provision of loans and advances

(16.56)

(20.45)

Tax effects of adjustments

11.56

(95.07)

Other Adjustment

28.84

-

Total adjustments

(16.59)

(12,848.88)

Net impact brought forward from Opening balance sheet

(12,848.88)

-

Total equity as per Ind AS

14,597.21

12,596.98

Reconciliation of total comprehensive income for the year ended 31 March 2017

(Rs. In Lacs)

Particulars

Amount

Profit aftertax under India GAAP Adjustments

2,016.817

Impact on account of fair valuation Fixed Assets

(3.56)

Impact of Provision for doubtful advances

(16.56)

Impact on account of impairment of Investment in Subsidiary and Associates

(0.14)

Impact on account of capitalisation of Spares

27.32

Impact of reclassification of remeasurement of employee benefit expenses

334.28

Impact of interest charged as per EIR Method

(57.16)

Tax effects of adjustments Total adjustments Profit after tax as per Ind AS

(104.12)

180.05

2,196.87

Other Comprehensive Income

Fair Valuation of Investment

16.30

Impact of reclassification of remeasurement of employee benefit expenses(net of tax) Total Comprehensive income for the year

(218.59)

1,994.58

D. Notes to First-Time Adoption:

1 Property, Plant and Equipment

The Company has elected to measure items of Property, Plant & Equipment (PPE) at the date of transition to Ind AS at their fair value. The Company has used the fair value of PPE, which is considered as deemed cost on transition. Fair valuations are assessed as on 1 April, 2016 and the same had an impact of Rs. 8,893 Lacs in accordance with stipulations of Ind AS 101 with the resultant impact being accounted for in the reserves and depreciation for the year ended 31 March 2017 increased by Rs. 3.56 lacs on leasehold land.

2 Investment in Subsidiary and Associates

The company had opted to carry its investment in subsidiary and associates at cost in accordance with Ind AS 27. Further, the company had carried out the impairment testing of investment value (at cost) in accordance with the Ind AS 36. The impairment testing has resulted in impairment of investment by Rs. 21,900.35 lacs with resultant impact being accounted for in the reserves on the transition date.

3 Other Investments (other than Subsidiary and Associates)

Under previous GAAP, the Company used to carry the investments in equity instruments of companies(other than subsidiary and associates) at cost. Under Ind AS, the Company elected to fair value the same through the other comprehensive income. As a result, the Company recorded downward fair valuation of Rs. 1 Lacs as on the transition date and upward fair valuation Rs. 16.30 lacs during FY 2016-17.

4 Inventory

As per Ind AS 16, spares meeting the definition of Property, Plant and Equipment have been capitalised on the date such spares were ready for their intended use. As a result, inventories as on 1 April 2016 decreased by Rs. 28.84 Lacs, Property Plant and Equipment as on 1 April 2016 increased by Rs. 28.84 Lacs and depreciation for the year ended 31 March 2017 increased by Rs. 1.52 lacs and other expenses decreased by Rs. 28.84 lacs during 2016-17 being booked as consumption under IGAAP.

5 Borrowings

Under previous GAAP, the Company has followed the policy of charging the transaction costs to the income statement or capitalized to Property, Plant and Equipment as and when incurred. Under Ind AS, transaction costs are amortized as an adjustment of interest expense over the term of the related loan using effective interest rate method. The above resulted in reduction in borrowings as at 1 April 2016 by rs. 0.68 lacs with corresponding reduction in reserves. Further, the financial liability (borrowings) needs to be measured at amortised cost using EIR and for the computation of EIR market rate of interest needs to be considered. The company had obtained certain loans which were at below market interest rate and application of EIR method had resulted in decrease of borrowings by Rs. 274.72 lacs with corresponding increase in reserves (including other equity). The above adjustment had decreased profit by Rs. 57.16 lacs during FY 2016-17.

6 Impairment of Financial Assets - Loans and Advances

As per Ind AS 109, the company is required to apply expected credit loss model for recognising the allowance for doubtful debts. As a result, the allowance for doubtful debts has been booked by Rs. 20.45 Lacs with corresponding decrease in reserves as at 1 April 2016.

7 Remeasurements of Post-Employment Benefit Obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year (net of tax) ended 31 March 2017 increased by Rs. 267.23 lacs (Rs 174.75 lacs). There is no impact on the total equity as at 31 March 2017.

8 Deferred Tax

Deferred tax have been recognised on the adjustments made on transition to Ind AS.

9 Excise Duty

Under the previous GAAP, revenue from sale of products was presen


Mar 31, 2016

1. Terms/rights attached to Equity Shares:

The Company has only one class of Equity Shares having a par value of '' 1/- per share. The Equity Shares have equal rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act, 2013

2. Secured by hypothecation of stocks of raw-materials, finished products, book debts, and other receivables and by way of second charge on fixed assets of the Company by deposit of title deeds in respect of immovable properties and guaranteed by two Directors.

3. Disclosure pursuant to Accounting Standard - 15 ( Revised) “Employee Benefits” :

Defined Contribution Plan :

Amount of Rs, 282.82 (Previous Year Rs, 282.81) is recognized as expense and included in “Employee Benefits Expenses” in Note 24 of the Statement of Profit and Loss.

Defined Benefit Plan :

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with SBI Life Insurance in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of privilege leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recognized in the Statement of Profit and Loss and Balance Sheet for the respective plans.

(a) Reconciliation of Opening and Closing balances of the present value of the Defined Benefit Obligation :

4. Corporate Social Responsibility Expenditure during the year amounts to Rs, 72.87 Lacs (Previous Year Rs, 53.13 Lacs) which has been debited under different heads of accounts in the Statement of Profit and Loss.

5. The information related to Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the company.

6. Contingent Liabilities and Commitments

(I) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts, since disputed Rs, 6,681.08 lacs (Previous Year Rs, 6,027.52 lacs). Amounts paid under protest Rs, 328.63 lacs (Previous Year Rs, 379.61 lacs) have been debited to Advance Account.

(b) Counter guarantees in favour of Consortium Banks in respect of their outstanding with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

(II) Capital and other Commitments :

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs, 415.97 Lacs (Previous Year Rs, 599.91 lacs).

7. a) The Company has given corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of Term Loan of Rs, 51,790 Lacs (Previous Year Rs, 51,790 Lacs) to Facor Power Ltd. (FPL). The Company has also pledged 19,80,59,930 shares (Previous Year 19,80,59,930 shares) with REC out of 19,80,59,930 shares (Previous Year 19,80,60,000 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project.

b) The Company has given corporate guarantee to Central Bank of India of Rs, 3,000 Lacs (Previous Year Rs, 4,200 Lacs) for providing Working Capital Facilities to FPL.

8. Details of Loans given, Investments made and Guarantee given covered U/s 186(4) of the Companies Act, 2013 Loans given, Investments made and Guarantees given by the Company in respect of loans are given under the respective heads.

9. Previous Year''s figures have been re-grouped wherever necessary.


Mar 31, 2015

(Rs. in lacs) As at As at 31s1 March, 2015 31st March, 2014

1. SHARE CAPITAL

Authorised Share Capital:

220,000,000 (Previous Year - 220,000,000) Equity Shares of Rs. 1/- each 2200.00 2200.00

800,000 (Previous Year - 800,000) 0.01% Redeemable Preference 800.00 800.00

Shares of Rs. 100/- each

TOTAL 3000.00 3000.00

Issued, Subscribed and Paid up:

185,268,241 (Previous Year - 185,268,241) Equity Shares of Rs. 1/- each 1852.68 1852.68

fully paid up TOTAL 1852.68 1852.68

2.1 Terms/rights attached to Equity Shares:

The Company has only one class of Equity Shares having a par value of Rs. 1/- per share. The Equity Shares have equal rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act, 2013

Defined Benefit Plan :

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with SBI Life Insurance in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of privilege leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recongnised in the Statement of Profit and Loss and Balance Sheet for the respective plans.

3. Corporate Scocial Responsibility Expenditure during the year amounts to Rs. 53.13 Lacs which has been debited under different heads of accounts in the Statement of Profit and Loss.

4. There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding as at the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

5. Contingent Liabilities and Commitments

(I) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts, since disputed Rs. 6,027.52 lacs (Previous Year Rs. 4,848.54 lacs). Amounts paid under protest Rs. 379.61 lacs (Previous Year Rs. 352.83 lacs) have been debited to Advance Account.

(b) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

(II) Capital and other Commitments :

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs. 599.91 Lacs (Previous Year Rs. 848.49 lacs).

6. a) The Company has given corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of Term Loan of Rs. 51,790 Lacs (Previous Year Rs. 46,704 Lacs) to Facor Power Ltd. (FPL). The Company has also pledged 19,80,60,000 shares (Previous Year 15,10,74,299 shares) with REC out of 19,80,60,000 shares (Previous Year 17,81,00,000 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project.

b) The Company has given corporate guarantee to Central Bank of India of Rs. 4,200 Lacs (Previous Year Rs. 4,200 Lacs) for providing Working Capital Facilities to FPL.

7. Details of Loans given, Investments made and Guarantee given covered U/s 186(4) of the Companies Act, 2013 :

Loans given, Investments made and Guarantees given by the Company in respect of loans are given under the respective heads.

8. Previous Year's figures have been re-grouped wherever necessary.


Mar 31, 2014

1. Disclosure pursuant to Accounting Standard - 15 ( Revised) "Employee Benefits":

Defined Contribution Plan :

Amount of Rs. 245.23 (Previous Year Rs. 246.31) is recognised as expense and included in "Employee Benefits Expenses" in Note 25 of the Statement of Profit and Loss.

Defined Benefit Plan :

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with SBI Life Insurance in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of privilege leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recongnised in the Statement of Profit and Loss and Balance Sheet for the respective plans.

2. There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding as at the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

3. Contingent Liabilities and Commitments

(I) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts, since disputed Rs. 4,848.54 lacs (Previous Year Rs. 3,933.25 lacs). Amounts paid under protest Rs. 352.83 lacs (Previous Year Rs. 282.83 lacs) have been debited to Advance Account.

(b) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

(II) Capital and other Commitments :

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs. 848.49 Lacs (Previous Year Rs. 243.51 lacs).

4. (a) The Company has given corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of

Term Loan of Rs. 46,704 Lacs (Previous Year Rs. 39,768 Lacs) to Facor Power Ltd. (FPL). The Company has also pledged 15,10,74,299 shares (Previous Year 8,68,24,299 shares) with REC out of 17,81,00,000 shares (Previous Year 15,31,24,369 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project.

b) The Company has given corporate guarantee to Central Bank of India of Rs. 4,200 Lacs (Previous Year Rs. 4,200 Lacs) for providing Working Capital Facilities to FPL.

5. Related Party Disclosure:-

I. List of related parties:-

A. Name and nature of relationship with the related party where control exists:

Facor Power Limited - Subsidiary Company.

Facor Realty and Infrastructure Limited - Subsidiary Company.

Facor Energy Limited - Subsidiary Company.

B. Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year :

1. Facor Alloys Limited 2. Facor Steels Limited

3. Rai Bahadur Shreeram and Company Private Limited. 4. Shri Durgaprasad Saraf Charitable Trust

5. Shreeram Shipping Services Pvt. Ltd. 6. Shreeram Durgaprasad Ores Pvt. Ltd.

7. Smt. Godavari Devi Saraf Janseva Trust 8. Saraf Enterprises (Pvt.) Ltd.

9. Saraf Bandhu Pvt. Ltd.

C. Key Management Personnel :

i) R.K. Saraf Chairman & Managing Director

ii) Manoj Saraf Managing Director

iii) Vinod Saraf Joint Managing Director

iv) Rohit Saraf Joint Managing Director

v) Ashish Saraf Joint Managing Director

D. Relative of a Key Management Personnel : i) Mrs. Priti Saraf

6. Previous Year''s figures have been re-grouped wherever necessary.

7. The Ministry of Corporate Affairs, Government of India, vide Circular No. 2 and 3 dated 8th February, 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to the fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements. The annual accounts of the subsidiary companies are available for inspection by any shareholder at the Registered office of the Company. The annual accounts of the subsidiary companies are also available for inspection at their respective registered offices.


Mar 31, 2013

1) General Information

Ferro Alloys Corporation Limited (FACOR) was incorporated in 1955. The Company is listed at Bombay Stock Exchange. It is one of the India''s largest producers and exporters of Ferro Alloys, an essential ingredient for manufacture of Steel and Stainless Steel. FACOR is also engaged in Chrome Ore exploration, mining and beneficiation in the state of Odisha. Chrome Ore is one of the main raw material for producing Charge Chrome / High Carbon Ferro Chrome. Facor is having about 84% stake in Facor Power Ltd. which is engaged in the generation of power.

2) Abridged fi nancial statement

The abridged financial statements have been prepared pursuant to Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956 as per notification F. No. 17/51/2012-CL-V, dated May 31, 2012 and are based on the annual financial statements for the year ended March 31, 2013 approved by the Board of Directors at their meeting held on May 27, 2013.

3. (Note 30 of notes to fi nancial statements)

Disclosure pursuant to Accounting Standard - 15 ( Revised) "Employee Benefi ts" :

Defi ned Contribution Plan :

Amount of Rs. 246.31 (Previous Year Rs. 255.40) is recognised as expense and included in "Employee Benefits Expenses" in Note 25 of the Statement of Profit and Loss.

Defi ned Benefi t Plan :

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with SBI Life Insurance in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of privilege leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recongnised in the Statement of Profit and Loss and Balance Sheet for the respective plans

4. (Note 37 of notes to fi nancial statements)

There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding as at the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

5. (Note 38 of notes to fi nancial statements)

Contingent Liabilities and Commitments

(I) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts, since disputed Rs. 3,933.25 lacs (Previous Year Rs. 3,870.71 lacs). Amounts paid under protest Rs. 282.83 lacs (Previous Year Rs. 270.63 lacs) have been debited to Advance Account.

(b) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

(II) Capital and other Commitments :

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs. 243.51 Lacs (Previous Year Rs. 76.12 lacs).

6. (Note 39 of notes to fi nancial statements)

a) The Company has given corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of Term Loan of Rs. 39,768 Lacs (Previous Year Rs. 39,768 Lacs) to Facor Power Ltd. (FPL). The Company has also pledged 8,68,24,299 shares (Previous Year 4,88,24,299 shares) with REC out of 15,31,24,369 shares (Previous Year 13,60,74,369 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project.

b) The Company has given corporate guarantee to Central Bank of India of Rs. 4,200 Lacs (Previous Year Rs. 4,200 Lacs) and to State Bank of Mysore of Rs. 300 Lacs (Previous Year Rs. 300 Lacs) for providing Working Capital Facilities to FPL.

7. (Note 41 of notes to fi nancial statements)

Related Party Disclosure:- I List of related parties:- A Name and nature of relationship with the related party where control exists: Facor Power Limited - Subsidiary Company. Facor Realty And Infrastructure Limited - Subsidiary Company. Facor Energy Limited - Subsidiary Company. B Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year :

1 Facor Alloys Limited 2 Facor Steels Limited

3 Rai Bahadur Shreeram And Company Private Limited 4 Shri Durgaprasad Saraf Charitable Trust

5 Shreeram Shipping Services Pvt. Ltd. 6 Shreeram Durgaprasad Ores Pvt. Ltd.

7 Smt. Godavari Devi Saraf Janseva Trust 8 Saraf Enterprises Pvt. Ltd.

9 Saraf Bandhu Pvt. Ltd. C Key Management Personnel :

i) R.K. Saraf Chairman & Managing Director

ii) Manoj Saraf Managing Director

iii) Vineet Saraf (up to 31/01/2013) Joint Managing Director

iv) Vinod Saraf (w.e.f. 01/02/2013) Joint Managing Director

v) Rohit Saraf Joint Managing Director

vi) Ashish Saraf Joint Managing Director

D Relative of a Key Management Personnel : i) Mrs. Priti Saraf

8. (Note 42 of notes to financial statements)

Previous Year''s figures have been re-grouped wherever necessary.

9. (Note 43 of notes to financial statements)

The Ministry of Corporate Affairs, Government of India, vide Circular No. 2 and 3 dated 8th February, 2011 and 21st February 20 11 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to the fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements. The annual accounts of the subsidiary companies are available for inspection by any shareholder at the Registered office of the Company. The annual accounts of the subsidiary companies are also available for inspection at their respective registered offices.

10. Market value of quoted investment is Rs. 10.55 Lacs (Previous Year Rs. 28.65 Lacs)


Mar 31, 2012

1.1 Terms/rights attached to Equity Shares:

The Company has only one class of Equity Shares having a par value of Rs. 1 per share. The Equity Shares have equal rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act, 1956.

1.2 During the year 2007-08 Company had reached One Time Settlement with certain Preference Shareholders for pre-mature redemption of 226,058 0.01% Redeemable Preference Shares of Rs. 100/- each of Face Value of Rs. 226.06 lacs.

Small scale industrial undertakings to whom Rs. 0.47 lac (Previous Year Rs. 1.81 lacs) are due for a period exceeding 30 days have been identified based on the information available with the Company and are as follows : Indo Compressed Tools Pvt. Ltd., Rock Drill (India) Pvt. Ltd. and Odisha Air Products Pvt. Ltd.

2. Disclosure pursuant to Accounting Standard - 15 (Revised) "Employee Benefits" :

Defined Contribution Plan :

Amount of Rs. 255.40 lacs (Previous Year Rs. 233.02 lacs) is recognised as expense and included in "Employee Benefits Expense" in Note 25 of the Statement of Profit and Loss.

Defined Benefit Plan :

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favourable than the provisions of the Payment of Gratuity Act, 1972. The scheme is funded with SBI Life Insurance in form of qualifying insurance policy.

The Company also extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of privilege leave for encashment. This is an unfunded plan.

The following tables summaries the components of net expense recognised in the Profit and Loss account and Balance Sheet for the respective plans

3 There are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding as at the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors.

4 Contingent Liabilities and Commitments

(I) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts, since disputed Rs. 3,870.71 lacs (Previous Year Rs. 4,311.32 lacs). Amounts paid under protest Rs. 270.63 lacs (Previous Year Rs. 230.92 lacs) have been debited to Advance Account.

(b) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

(II) Commitments:

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs. 76.12 Lacs (Previous Year Rs. 605.69 lacs).

5 a) The Company has given corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of

Term Loan of Rs. 39,768 Lacs (Previous Year Rs. 39,768 Lacs) to Facor Power Ltd. (FPL). The Company has also pledged 4,88,24,299 shares (Previous Year 4,88,24,299 shares) with REC out of 13,60,74,369 shares (Previous Year 6,48,24,369 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project.

b) The Company has given corporate guarantee to Central Bank of India for granting a short term loan of Rs. NIL (Previous Year Rs. 12,500 Lacs) and to State Bank of Mysore for granting bank guarantee limit of Rs. 300 Lacs (Previous Year Rs. 300 Lacs) to FPL.

6 The revised Schedule VI to the Companies Act, 1956 has become effective from 01-04-2011 for preparation and presentation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Accordingly the figures for the previous year have been reclassified, wherever necessary to conform with the current year's classification.

7 The Ministry of Corporate Affairs, Government of India, vide Circular No. 2 and 3 dated 8th February, 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to the fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements. The annual accounts of the subsidiary companies are available for inspection by any shareholder at the Registered office of the Company. The annual accounts of the subsidiary companies are also available for inspection at their respective registered offices.


Mar 31, 2011

1 Contingent Liabilities:

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs. 605.69 lacs (Previous Year Rs. 690.07 lacs).

(b) Claims not acknowledged as debts, since disputed Rs. 4,311.32 lacs (Previous Year Rs. 4,676.34 lacs). Amounts already paid under protest Rs. 230.92 lacs (Previous Year Rs. 981.76 lacs) have been debited to Advance Account.

(c) Counter guarantees in favour of Consortium Banks in respect of their out standings with Facor Alloys Limited and Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

2 (Refer Note 7 of Schedule K of Annual Accounts)

a) The Company has given a corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of Term Loan of Rs. 397.68 crores (Previous Year Rs. 140 crores). The Company has also pledged 4,88,24,299 shares (Previous Year 2,16,36,535 shares) with REC out of 6,48,24,369 shares (Previous Year 2,16,36,535 shares) held in FPL besides giving an undertaking to provide interest free unsecured subordinated loan or subscribe for equity / preference shares to FPL in case of cost overrun at any stage of the project

b) The Company has given corporate guarantee to Central Bank of India for granting a short term loan of Rs. 125 crores (Previous Year Rs. Nil) and to State Bank of Mysore for granting bank guarantee limit of Rs. 3 crores (Previous Year Rs. 3 crores) to FPL

3 (Refer Note 8 of Schedule 'K' of Annual Accounts)

I) Amounts due from the companies under the same Management : i) Facor Alloys Ltd. Rs. 86.58 lacs (Previous Year Rs. 333.09 lacs) ii) Facor Steels Ltd. Rs. 59.48 lacs (Previous Year Rs. 45.54 lacs) iii) Facor Energy Ltd. Rs. 5.90 lacs (Previous Year Rs. Nil)

II) Amount paid to FPL towards Share Application Money Rs. 1700 lacs (Previous Year Rs. 200 lacs)

4 (Refer Note 14 of Schedule 'K' of Annual Accounts) In view of no manufacturing / trading activities having been commenced by Facor Power Ltd. & Facor Realty and Infrastructure Ltd., the subsidiary companies, Consolidated Financial Statements required by directives of Securities and Exchange Board of India and AS 21 issued by ICAI have not been prepared and attached with this Annual Report. However, as required u/s. 212 of the Companies Act, 1956, the audited Financial Statements of the subsidiary companies for the year ended 31st March, 2011 are annexed.

Instructions:

1. Please send the duly completed and signed form (in original) to:

- The Registrar and Transfer Agents of the Company (in case of shares held in physical form) at the following address: Link Intime India Pvt. Ltd.,

C13 Pannalal Silk Mills Compound, LBS Road, Bhandup (West), MUMBAI – 400 078

- The Depository Participants ( in case of shares held in electronic form)

2. For any change of email particulars, fresh form needs to be submitted in the same format.

3. Please send the duly signed forms in original. Fax/Scanned copy of the signed forms shall not be accepted.

4. Please note that my change in email particulars revokes previous email details registered with the Depository Participants or the Registrar and Transfer Agents of the Company, as the case may be.


Mar 31, 2010

1 Contingent Liabilities:

(a) Estimated amount of contracts on Capital Account remaining to be executed and not provided for in accounts Rs. 690.07 lacs (Previous Year Rs. 757.54 lacs).

(b) Claims not acknowledged as debts, since disputed Rs. 4,676.34 lacs (Previous Year Rs. 3,254.25 lacs). Amounts already paid under protest Rs. 981.76 lacs (Previous Year Rs. 981.76 lacs) have been debited to Advance Account.

(c) Counter guarantees in favour of Consortium Banks in respect of their outstandings with Facor Alloys Limited and Facor Steels Limited. Due to the nature of the liability, its financial impact is not ascertainable.

2 (Refer Note 7 of Schedule K of Annual Accounts)

a) The Company has given a corporate guarantee to Rural Electrification Corporation Ltd. (REC) in connection with granting a facility of term loan of Rs. 140 crores to Facor Power Ltd (FPL). The Company has also pledged with REC its entire shareholding in FPL besides giving an undertaking to provide interest free unsecured subordinated loan to FPL in case of cost overrun at any stage of the project

b) The Company has given guarantee to State Bank of Mysore for granting bank guarantee limit of. Rs. 3 crores to FPL

3 (Refer Note 8 of Schedule K of Annual Accounts)

Amounts due from the companies under the same Management :- i) Facor Alloys Ltd. Rs. 333,09 lacs (Previous Year Rs. 66.00 lacs) ii) Facor Steels Ltd. Rs. 45.54 lacs (Previous Year Rs. 68.31 lacs) iii) Facor Power Ltd. Rs. 298.98 lacs (Previous Year Rs. 469.36 lacs)

4 (Refer Note 14 of Schedule T of Annual Accounts)

In view of no manufacturing / trading activities having been commenced by Facor Realty and Infrastructure Ltd., the subsidiary company, Consolidated Financial Statements required by directives of Securities and Exchange Board of India and AS- 21 issued by ICAI have not been prepared and attached with this Annual Report. However, as required u/s. 212 of the Companies Act, 1956, the audited Financial Statements of the subsidiary company for the year ended 31st March, 2010 are annexed.

5 (Refer Note 26 of Schedule K of Annual Accounts)

Related Party Disclosure:- I List of related parties:-

A Name and nature of relationship with the related party where control exists:

Facor Realty and Infrastructure Ltd., - Subsidiary Company. B Enterprise, over which key management personnel and their relatives exercise significant influence, with whom transactions have taken place during the year:

1 Facor Alloy Limited 2 Facor Steels Limited

3 Facor Power Limited 4 Rai Bahadur Shreerarn & Co. Pvt. Ltd.

5 Shri Durgaprasad Saraf Charitable Trust 6 Shreerarn Shipping Services Pvt. Ltd.

7 S. D. Ores Pvt. Ltd. 8 Smt. Godavari Devi Saraf Janseva Trust

C Key Management Personnel:

i) R.K. Saraf Chairman & Managing Director

ii) Manoj Saraf Managing Director

iii) Vineet Saraf Joint Managing Director

iv) Rohit Saraf Joint Managing Director

v) Ashish Saraf Joint Managing Director

Compiled from the Audited Accounts of the Company referred to in our Report dated 24th July, 2010

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