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Directors Report of Indsil Hydro Power and Manganese Ltd.

Jun 30, 2015

Dear Shareholders,

The Board of Directors of your Company are pleased to present the 25th Annual Report on the business of the Company along with the Audited Financial Statements of the Company for the year ended 30th June, 2015.

THE FINANCIAL PERFORMANCE

During the period under review, the Company has achieved, on standalone basis, revenue of Rs, 12,344 lakhs and net profit of Rs,1,215 lakhs. During the same period, the Company, on consolidated basis, has achieved revenue of Rs, 24,296 lakhs and net profit of Rs, 659 lakhs.

FINANCIAL RESULTS :

A. STANDALONE

The Standalone performance for the financial year ended 30th June, 2015 is as under:

The Financial Summary

Rs, in Lakhs

Sl. Current Year Previous Year Particulars No. 2014-15 2013-14

1. Revenue from Operations 12344 12404

2. Operating Expenses (10416) (10900)

3. Gross Profit 1928 1504

4. Depreciation (427) (398)

5. Profit Before Tax 1501 1106

6. Provision for Tax (286) (20)

7. Net Profit after Tax 1215 1086

8. Dividend (191) (191)

9. Tax on Dividend 38* (38)

10. Carried to Profit & Loss A/c 1062 857

* The tax on dividend was provided in the year 2013-14, the same is reversed and this amount is set-off against tax on dividend due to dividend received from foreign subsidiary.(viz) Indsil Hydro Global (FZE). This amount of Rs,38,12,449 is transferred back to surplus account.

B. CONSOLIDATED

The consolidated performance for the Financial Year ended 30th June, 2015 is as under:

The Financial Summary

Rs, in Lakhs

Sl. Current Year Previous Year Particulars No. 2014-15 2013-14

1. Revenue from Operations 24296 15848

2. Operating Expenses (22811) (14744)

3. Gross Profit 1485 1104 4. Depreciation (931) (701)

5. Profit Before Tax 554 403

6. Provision for Tax 105 105

7. Net Profit after Tax 659 508

8. Dividend (191) (191) 9. Tax on Dividend 38* (38)

10. Carried to Profit & Loss A/c 506 279

* The tax on dividend was provided in the year 2013-14, the same is reversed and this amount is set-off against tax on dividend due to dividend received from foreign subsidiary.(viz) Indsil Hydro Global (FZE). This amount of Rs,38,12,449 is transferred back to surplus account.

DIVIDEND & RESERVES

The Board recommends a dividend of Rs, 1.20 per equity shares of Rs, 10 per share (12%) on the equity share capital of Rs, 15,88,67,920/- for the financial year ended 30th June, 2015 aggregating Rs, 1,90,64,150/-. The total dividend payout works out to 15.69% of the net profit of the Standalone results. The dividend on equity shares is subject to the approval of the shareholders in the Annual General Meeting. The dividend, if approved, will be payable to those shareholders whose names appear in the Register of Members as on 9th December, 2015, the date fixed for the purpose.

In terms of the Companies Act, any unclaimed or unpaid dividend relating to the financial year 2007-08, is due for transfer on 11.01.2016 to the Investor Education and Protection Fund established by the Central Government.

The Company does not propose to transfer any amount to the General Reserves for the financial year ended 30th June, 2015.

STATE OF AFFAIRS

OPERATIONS :

During the year under review, the Company has achieved a turnover of Rs, 12344 Lakhs (2013-14 : Rs, 12404 Lakhs) resulting in a profit before tax of Rs, 1501 Lakhs before tax for the current year (2013-14 : Rs,1106 Lakhs).

The increase in profit is due to the decent performance of the Hydro Electric Power division of the Company which produced 50.53 million units of electricity during the year under review as against 38.23 million units for the previous year. Thus, your Company could manage a reasonable financial performance, though the Ferro Alloy division of your Company could not perform as expected during the year as a result of your Company unable to cope up with the sluggish market conditions.

Generally, the stainless steel industry globally went through a prolonged phase of demand slow down and still such situation continues.

FUTURE PROSPECTS :

The outlook and future prospects of the Company are presented in the "Management Discussion and Analysis Report" forming part of this Report.

RENEWABLE ENERGY CERTIFICATES (REC) :

As the shareholders are aware, your Company is a registered Renewable Energy (RE) generator under the new REC mechanism promulgated by the Central Government. This status entitles the Hydro Power Project (HPP) of your Company to receive Renewable Energy Certificates for every 1000 units of renewable energy produced. These certificates are tradable in the Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL). During the year under review, your Company could realize Rs, 2,58,43,500/- being the sale proceeds of 17229 REC units. As on date, your Company has RECs for a total value of Rs,13,78,60,137/-.

It is expected that the scope for demand for RECs would improve as there is a momentum towards complying with Renewable Purchase Obligations (RPO) of RECs. With RPO compliance drive initiated by various State Regulators in the Country, it is expected that the buyer's participation for RPO's would increase in the forthcoming trading sessions.

JOINT VENTURE AL-TAMMAN INDSIL FERROCHROME LLC

As the shareholders are aware, the ferro-chrome manufacturing operations of the Company's Joint Venture Al-Tamman Indsil Ferrochrome LLC in Sultanate of Oman commenced full scale commercial production from April, 2014 onwards. The Joint Venture, has been performing reasonably well during the year under review and it is expected, barring unforeseen circumstances, your Company's financial parameters will improve substantially when the Joint Venture declares dividends. Meanwhile, your Company has started receiving returns by way of dividend from its Wholly Owned Subsidiary viz., Indsil Hydro Global FZE, Sharjah Airport International Freezone, after it receives marketing fee from the JV for every ton of Ferrochrome sold by the JV.

SREE MAHALAKSHMI SMELTERS (P) LTD (SMS) - SUBSIDIARY OF THE COMPANY

As the shareholders are aware, the capacity of SMS plant was upgraded from 5 MVA to 7.5 MVA for the manufacture of Low Carbon Silico Manganese from that of High Carbon Silico Manganese. A huge hike in power tariff during the period under review resulting in under-utilisation of operations making it difficult for the Subsidiary to operate its plant at its capacity.

This, in turn, coupled with adverse market conditions, caused severe constraints resulting in the Subsidiary suffering huge financial losses. As a result, the management was constrained to declare temporary suspension of its plant with effect from 22nd May, 2015.

INDSIL HYDRO GLOBAL FZE, SHARJAH AIRPORT INTERNATIONAL FREEZONE (WHOLLY OWNED SUBSIDIARY)

The consolidated financial results incorporating the financial statement of the Wholly Owned Subsidiary, Indsil Hydro Global FZE is attached to the Annual Report as required under the Accounting Standards and Listing Agreement.

DISCLOSURE ON SUBSIDIARY/JOINT VENTURE

As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the Subsidiary Company / Joint Venture is attached (Form AOC-1) to this Report along with the financials (Annexure-1).

CONSOLIDATED FINANCIAL STATEMENTS:

The consolidated financial statements by consolidating the accounts of the Company, Sree Mahalakshmi Smelters Private Limited (Subsidiary of the Company) Al-Tamman Indsil Ferro Chrome LLC, Sultanate of Oman (the JV) and Indsil Hydro Global FZE, Sharjah Airport International Freezone (Wholly Owned Subsidiary of the Company) under the Accounting Standards 21 issued by the Institute of Chartered Accounts of India forms part of this Annual Report.

CHANGE OF FINANCIAL YEAR

It is mandatory that every Company shall, within the period of two years from 1st April, 2014 the date of commencement of the Act, should align its financial year end to 31st March as per the provisions of Section 2 (41) of the Companies Act, 2013.

Accordingly, the Board of Directors at its meeting held on 17th August, 2015 approved alignment of financial year of the Company to 31st March every year. The same was also informed to Bombay Stock Exchange Ltd and requisite Form MGT-14 was filed with the Ministry of Corporate Affairs.

Therefore, the next financial year of the Company will be for a period of 9 months from 1st July, 2015 to 31st March, 2016 and thereafter each financial year will be from 1st April to 31st March.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details as per the provisions of Section 186 of the Companies Act, 2013 are given under Notes to Financial Statements.

PARTICULARS OF CONTRACTS WITH RELATED PARTY

All the transactions of the Company with related parties are at arms length and have taken place in the ordinary course of business. Provisions of Section 188 of the Companies Act, 2013 is not applicable.

Form No. AOC - 2 pursuant to Clause (h) of Sub-section (3) of Section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 is attached as Annexure-2.

MATTERS AS MAY BE PRESCRIBED

As per Rule 8(5) of the Companies Accounts Rules, 2014 the following additional information are provided :

1. The financial summary or highlights The financial highlights including state of affairs of the Company, Dividend and Reserves is provided in the Board of Directors Report to the shareholders forming part of this Annual Report.

2. The change in the nature of business, There is no change in the nature of business. if any

3. The details of Directors or Key Managerial Personnel Sri S. Mahadevan and Sri R.Murali were appointed as Company who were appointed or have resigned during the year Secretary and Chief Financial Officer, respectively on 13.11.2014

4. a) The names of Companies which are Subsidiaries, Sree Mahalakshmi Smelters Private Limited

Joint Venture - Subsidiary

Indsil Hydro Global FZE,

Sharjah Airport International Freezone (SAIF)

- Wholly Owned Subsidiary

Al-Tamman Indsil Ferrochrome LLC, Sultanate of Oman

- Joint Venture

b) Any of the above have become ceased No during the year

5. The details of deposits under Chapter V of the Act The Company has not accepted deposits

6. The details of deposits which are in Compliance Not Applicable with requirement of Chapter V of the Act

7. The details of significant and material orders passed Nil by the Regulators / Courts or Tribunals impacting the going concern status and Company's operation

8. The details of adequacy of internal controls with Systems and procedures are in place to detect and protect reference to the financial statements the organizational resources both physical and intangibles.

The financial statements are prepared in accordance with the Accounting Standards issued by the ICAI.

DEPRECIATION

Depreciation on fixed assets is provided on Straight Line Method in accordance with the rates specified under Schedule II of the Companies Act, 2013, except the useful life of the Plant and Machinery based on the technical evaluation. As per the technical evaluation such useful life has been taken as 20 years.

EXTRACTS OF ANNUAL RETURN :

As per the requirements of provisions of the Companies Act, 2013, the Extract of the Annual Return in the prescribed Form MGT-9 is annexed to this Report (Annexure-3).

COMMITTEES OF THE BOARD OF DIRECTORS :

A. AUDIT COMMITTEE

An Audit Committee has been constituted by the Board of Directors of the Company to handle the activities as set out in Clause 49 of the Listing Agreement with the Stock Exchange read with Section 177 of the Companies Act, 2013.

COMPOSITION OF AUDIT COMMITTEE:

The Board constituted the Audit Committee which comprises of Dr. A K Sreedharan as Chairman, Dr. T C P Nambiar and Sri Vinod Narsiman as Members. All the recommendations of the Audit Committee were accepted by the Board. More details on the Committee like terms of reference are given in the Corporate Governance Report.

B. SHARE TRANSFER COMMITTEE

A Share Transfer Committee was constituted by the Board of Directors of the Company to expedite the process of Share Transfers in respect of share held in physical form and to take on record the volume of shares transacted in the Demat segment periodically. The Board constituted the Share Transfer Committee which consists of Sri S. Inderchand as Chairman and Smt D.Pushpa Varadarajan as Member.

C. STAKEHOLDERS' RELATIONSHIP COMMITTEE

This Committee considers and resolves the grievances of the shareholders of the Company. The said Committee comprises of Sri S.Inderchand as Chairman and Smt. D.Pushpa Varadarajan as Member. Earlier the Committee was known as Shareholders Grievance Committee and subsequently changed to "Stakeholders Relationship Committee" in the meeting of the Board of Directors held on 17/8/2015.

D. COMPENSATION COMMITTEE

A Compensation Committee has been constituted to administer Indsil Hydro Power and Manganese Limited Employee Stock Option Scheme. The Committee consists of Dr. A.K. Sreedharan as Chairman and Sri. Vinod Narsiman and Dr. T.C.P. Nambiar as Members.

E. CORPORATE SOCIAL RESPONSIBILITY

The objective of Corporate Social Responsibility (CSR) Committee is to improve the quality of life of the communities through long-term value creation for all stakeholders. Towards achieving this, the Company has commenced its CSR initiatives. The Company continues to remain focused on improving the quality of life and encouraging communities through health, education, old age homes and drinking water facilities in and around the area where the plants of the Company are situated.

CSR Committee consisting of Directors namely Sri S.N. Varadarajan, Executive Vice-Chairman as Chairman of the Committee and Sri Vinod Narsiman, Managing Director and Dr. A.K.Sreedharan, Independent Director as Members of the Committee was constituted by the Board of Directors of the Company .

The preference for spending CSR funds has been in and around the area where the plant is situated. However, the Company could not identify the Agencies / Trusts suitable in line with CSR Policy of the Company for spending the entire amount. The Company would endeavour to spend the entire CSR amount in the current year.

Expenditure of 2% of average net profit could not be fulfilled totally due to the Company not being able to identify suitable local area projects for CSR activities. Thus there was a short fall of Rs, 4,91,276/-. A mechanism to execute all identified local area projects in future is being put in place and will be monitored by CSR Committee.

CSR Policy was adopted by the Board of Directors on the recommendation of CSR Committee. Report on CSR as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Annual Report (Annexure-4).

F. NOMINATION & REMUNERATION COMMITTEE

Nomination and Remuneration Committee was framed by the Board of Directors as per the requirements of the provisions of the Companies Act, 2013. This Committee consists of :

1) Dr. A.K.Sreedharan, Chairman (Non-Executive, Independent)

2) Sri B.Balchand, Member (Non-Executive, Non-Independent)

3) Dr. T.C.P.Nambiar, Member (Non-Executive, Independent)

The said Committee has been empowered and authorized to exercise the powers as entrusted under the provisions of Section 178 of the Companies Act, 2013. The Company has a policy on Directors' appointment and remuneration including criteria for determining the positive attributes, independence of a Director and other matters provided under Section 178(3) of the Act. Nomination and Remuneration Policy was adopted by the Board of Directors. The concerned Policy is annexed to this Report (Annexure-5).

G. RISK MANAGEMENT COMMITTEE

The Company follows a risk appraisal mitigation and management process. As per the requirements of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The Committee has formulated a Risk Management Policy for Risk Management. The Risk Management Policy is periodically reviewed for improvement.

The Risk Management Committee duly constituted by the Board of Directors consists of :

1) Sri S.N.Varadarajan, Executive Vice-Chairman as Chairman of the Committee

2) Sri Vinod Narsiman, Managing Director as Member of the Committee

3) Dr. A.K. Sreedharan, Director as Member of Committee

H. POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION & REDRESSEL) ACT, 2013

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with the Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act,2013.

A Committee in this regard has been constituted in accordance with Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressel) Act, 2013.

During the financial year ended 30th June, 2015, the Company has not received any complaints pertaining to Sexual Harassment of women.

VIGIL MECHANISM

The Board has constituted Vigil Mechanism as per Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014. The Audit Committee has been authorized to oversee the Vigil Mechanism. Sri Vinod Narsiman, Managing Director has been nominated to facilitate the Vigil Mechanism.

The Vigil Mechanism is intended to provide adequate safeguards against victimization of employees and to facilitate to report the genuine concerns or grievances.

WHISTLE BLOWER POLICY

A Whistle Blower Policy was adopted by the Board of Directors in its meeting held on 17 August, 2015. The details of Whistle Blower Policy is published in the Company's website www.indsil.com.

POLICY ON MATERIAL SUBSIDIARY

The Board of Directors adopted a policy on Material Subsidiary and the same is published in the Company's website www.indsil.com.

EVALUATION OF BOARD'S PERFORMANCE

On the advice of the Board of Directors, the Nomination and Remuneration Committee consisting of three Directors of the Company formulated the criteria for the evaluation of the performance of the Board of Directors & its Committees, Independent Directors, Non-Independent Directors, Executive Director, Chairman and Managing Director. According to the evaluation, the Independent Directors of the Company have also convened a separate meeting for this purpose.

All the Board of Directors are aware of the performance and are familiar with the business of the Company.

STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL:

Statement pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Particulars of Employees Rule, 1975 and section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Annual Report (Annexure-6).

RESIGNATION OF DIRECTOR & REAPPOINTMENT OF INDEPENDENT DIRECTOR

There was no resignation and re-appointment of Independent Director(s) during the year under review.

MEETING OF INDEPENDENT DIRECTORS

Pursuant to Clause 49 (II)(6) of the Listing Agreement, a meeting of the Independent Directors to review the performance of the Chairman and that of the Board was conducted on 26th June, 2015 and all the Independent Directors attended this meeting.

AUDITORS:

The Board of Directors of the Company recommended M/s Raja & Raman, (Firm's Registration No.003382S) Chartered Accountants, 1055/11, First Floor, Gowtham Centre, Avanashi Road, Coimbatore 641018, the retiring Auditors to be reappointed as Statutory Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting for the financial year 2015-16 subject to the approval of the shareholders in the ensuing Annual General Meeting. The said item regarding appointment of M/s Raja & Raman, Auditors is placed before the shareholders for their approval.

The Auditors have consented and confirmed their eligibility and desire to continue as Statutory Auditors of the Company.

INTERNAL AUDITOR

Ms. K.R.Divya, (Membership No. 228896) Chartered Accountant, No.37, P.M.Samy Colony, 1st Street, R.S.Puram, Coimbatore 641 002 was appointed as Internal Auditor pursuant to the provisions of Section 138 of the Companies Act, 2013 by the Board of Directors of the Company to conduct the internal audit functions.

COST AUDITOR

Pursuant to Section 148 of the Companies Act, 2013 Sri B.Venkateswar, Cost Accountant was appointed by the Board of Directors of the Company for conducting audit of the Cost Account Records of the Company for the year 2015-16. He was the Cost Auditor of the Company for the previous year 2014-15 as well.

SECRETARIAL AUDITOR

KSR & Co, Company Secretaries LLP, a firm of Company Secretaries is the Secretarial Auditors of the Company. The Secretarial Audit Report submitted by them forms part of this Report (Annexure-7) .

AUDITOR'S REPORT & ACCOUNTING POLICIES & SECRETARIAL AUDIT REPORT

The Auditors' Report read with the Notes on Accounts are self-explanatory and does not require any further clarification.

A statement detailing significant Accounting Policies of the Company is annexed to the Accounts.

The Reports of the Statutory Auditors and the Secretarial Audit Report (both appearing elsewhere in this Annual Report) are without any adverse comments.

EMPLOYEE STOCK OPTION SCHEME :

Pursuant to the SEBI (Share Based Employee Benefits) Regulations, 2014 (the ESOP Regulations) issued by SEBI on October 28, 2014, the Company has obtained approval of the shareholders through Postal Ballot replacing the INDSIL ESOS 2008 with "INDSIL ESOS 2015" in conformity with such regulations and accordingly executed Variation Deed of Trust with the concerned Registering Authority in Coimbatore. The results of the Postal Ballot passing the resolution to this effect by the shareholders were furnished to the Bombay Stock Exchange accordingly and such results were published in the newspapers and website of the Company www.indsil.com.

A copy of the INDSIL ESOS 2015 and the registered Variation Deed was furnished to the Bombay Stock Exchange for the Exchange to take the same on record. A corporate announcement to this effect has been published in the Bombay Stock Exchange website.

A disclosure with regard to ESOS of the Company as on 30th June, 2015 is covered in the Corporate Governance Report.

The Company has already obtained a certificate from Raja & Raman, Chartered Accountants and Statutory Auditors with respect to the implementation of the Company's ESOS. A copy of the same is also be available for inspection during the working days of the Registered Office of the Company between 9.30 am to 5.30 pm.

CORPORATE WEBSITE:

The website of the Company, www.indsil.com carries a comprehensive database of information of interest to the stakeholders including the corporate profile, information with regard to products, plants and financial performance of the Company, Policies and other matters.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of Independence as applicable under the provisions of Section 149(6) of the Companies Act, 2013 read with relevant rules and Clause 49 of the Listing Agreement.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

A familiarization programmer for Independent Directors was conducted on 11th May, 2015.

INSURANCE:

All the properties of the Company including buildings, plant & machinery and stocks have been adequately insured.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion and Analysis report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) is enclosed to this Annual Report as ( Annexure-8).

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors based on the representations received from the Management and pursuant to Sub-section 3 (c) of Section 134 of the Companies Act, 2013 hereby confirm that :

(i) in the preparation of Annual Accounts, the applicable accounting standards have been followed and wherever required, proper explanation relating to material departures have been given

(ii) 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 or loss of the Company for that year:

(iii) 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 deducting frauds and other irregularities.

(iv) have prepared the Annual Accounts on a going concern basis:

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

(vi) have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CODE OF CONDUCT

The Board of Directors approved a code of conduct which is applicable to the members of the Board and all designated employees in the course of day to day business operations of the Company. The code is posted in the Company's website www.indsil.com.

All the Board members and the Senior Management Personnel have confirmed compliance with the code.

PREVENTION OF INSIDER TRADING

The Company adopted a Code of Conduct for Prevention of Insider Trading in order to regulate the trading in Securities by the Directors and designated persons of the Company as per SEBI (Prohibition of Insider Trading Regulations, 2015).

CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchange, a separate section on Corporate Governance Practices followed together with a certificate from the Company's Secretarial Auditors KSR & Co, Company Secretaries LLP, Practicing Company Secretaries, Coimbatore confirming compliance (provided elsewhere in the Annual Report) form an integral part of the Directors' Report.

INDUSTRIAL SAFETY

Your Company has laid high emphasis on safety of all the personnel and mitigation of damage to equipment. The Company has thoroughly followed all the safety measures.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134 (3) (m) of the Act read with the Companies (Accounts) Rules 2014 is enclosed to this report (Annexure-9).

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments in the business operations of the Company for the financial year ended 30th June, 2015 upto the date of signing of the Director's Report.

NUMBER OF BOARD MEETINGS:

The Board of Directors met five times in the year 2014-15. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report.

LISTING FEE

Listing fee for the financial year 2015-16 has been paid to Bombay Stock Exchange where the shares of the Company are listed.

DECLARATION

The Company has been regular in filing all forms and returns with the Registrar of Companies as required under the Companies Act, 2013 and has not defaulted in payment of dividends.

ACKNOWLEDGEMENTS

Your Directors are extremely thankful to State Bank of Travancore, Export Import Bank of India, IDBI Bank Limited, Yes Bank Limited, Standard Chartered Bank and The Federal Bank Limited for their continued support.

Your Directors acknowledge and express their grateful appreciation for the co-operation and support received from Government Authorities, Kerala State Industrial Development Corporation, employees, customers and suppliers. They also thank the shareholders for the confidence reposed by them in the management of the Company and for their continued support and co-operation.

For and on behalf of the Board

Place : Coimbatore

Date : 2nd November, 2015 Sd/- Sd/-

VINOD NARSIMAN S.N. VARADARAJAN

Managing Director Executive Vice-Chairman

DIN: 00035746 DIN: 00035693


Jun 30, 2014

Dear Members,

The Directors have great pleasure in presenting the 24th Annual Report of your Company together with the Audited statements of account for the year ended 30th June 2014.

FINANCIAL RESULTS: Rs in lakhs Particulars 2013-14 2012-13

Profit before depreciation and Financial charges 1875.25 718.63

Less:Financial Charges 371.04 295.52

Profit before Depreciation 1504.21 423.11

Less:Depreciation 397.84 379.55

Profit before taxes and extraordinary items 1106.37 43.56

Less:Extraordinary items -- --

Profit before tax 11069.37 43.56

Less:Provision for Tax 221.36 8.30

Add/Less:Deferred Tax asset/liability (-)200.87 7.01 (MAT Credit)

Profit after tax 1085.88 28.25

Add:Balance brought forward 4641.73 4706.41

Surplus available for appropriation 5727.61 4734.66

Less : Transfer to General Reserve -- --

MAT Credit Reserve

Less : Proposed Dividend 190.64 79.43

Less : Tax on proposed Dividend 38.12 13.50

Balance carried over to Balance Sheet 5498.84 4641.73

Paid-up equity share capital 1588.68 1588.68

Earnings per share (Rs.) 6.84 0.18

Book value per share (Rs.) 53.20 47.80

REVIEW OF OPERATIONS:

Your Company''s financial performance for the year was reasonable when compared to the rest of the ferro alloy industry. This is on account of the decent performance by the hydro electric power division during the year under review. This resulted in lower cost of electricity for the Company for the year as a whole. Therefore, your Company could manage a reasonable financial performance.

The power plant produced 38.23 million units of electricity during the year as against 14.96 million units for the previous year. The Company registered a PBDIT of Rs.1875.25 lakhs for the current year as against Rs. 718.63 Lakhs in the previous year. The Company registered a PBT of Rs. 1106.37 lakhs for the current year as against Rs. 43.56 Lakhs for the previous year.

FUTURE PROSPECTS:

The outlook and future prospects of the Company are presented in the "Management Discussion and Analysis Report" forming part of this Report.

RENEWABLE ENERGY CERTIFICATES (REC):

As the members are aware, your Company got successfully registered as an RE generator under the new REC mechanism promulgated by the Central Government. This status entitles the Hydro Power Project of your Company (HPP) to receive Renewable Energy Certificates for every 1000 units of renewable energy produced. These certificates are tradeable in the Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL). During the year under review, your Company could realize Rs. 2,42,58,000/- being the sale proceeds of 16172 REC units. As on date, your Company has RECs for a total value of Rs. 6,51,78,000/-

As per current indications there is scope for demand for RECs as there is a momentum towards complying with Renewable Purchase Obligations (RPO) of RECs. With RPO compliance drive initiated by various State Regulators in the Country, it is expected that the buyer''s participation for RPO''s would increase in the forthcoming trading sessions.

JOINT VENTURE - AL-TAMMAN INDSIL FERRO CHROME LLC

The Joint Venture ferro chrome manufacturing operations in Sultanate of Oman commenced full scale commercial production from April, 2014 onwards.

SREE MAHALAKSHMI SMELTERS (P) LTD (SMS) - SUBSIDIARY OF THE COMPANY:

The capacity of SMS plant was upgraded from 5 MVA to 7.5 MVA for the manufacture of Low Carbon Silico Manganese from that of High Carbon Silico Manganese. The State of Andhra Pradesh faced severe powercut during the period under review resulting in under-utilisation of operations resulting in the subsidiary not being able to operate at its full capacity. This, in turn, resulted in the subsidiary suffering financial losses.

CONSOLIDATED FINANCIAL STATEMENTS:

The consolidated financial statements by consolidating the accounts of the Company, Sree Mahalakshmi Smelters Private Limited (Subsidiary of the Company) & the JV Company M/s Al-Tamman Indsil Ferro Chrome LLC, Sultanate of Oman under the applicable Accounting Standards of the Institute of Chartered Accountants of India form part of this Annual Report.

DIVIDEND:

Your Directors recommend payment of dividend at 12% on the equity share capital of Rs.15,88,67,920 for the year ended 30th June, 2014. The dividend, if approved, will be paid to those members whose names appear on the Register of members of the Company as on 15th December, 2014 the date fixed for the purpose, subject to the approval of the shareholders.

The aggregate dividend payout for the year 2013-14 amounts to Rs. 228.76 Lakhs including corporate dividend tax.

BOARD COMMITTEES

During the year, your Directors have re-constituted the Committees of the Board, as mandated under the Companies Act, 2013 and revised Clause 49 of Listing Agreement.

a. Corporate Social Responsibility Committee :

The Committee is being constituted. Meanwhile, your Company has already commenced its Corporate Social Responsibilities even from last year. As part of its socio-economic activities and to emphasize integral development of societal needs in and around its areas of operations, your Company had made its humble contributions to institutions viz: Swami Vivekananda Medical Mission, Palakkad, Kerala, Divine Province Funding Home, Rajakkad, Idukki District, Kerala. St. Benedict Church, Kuthungal, Idukki District, Kerala, Government Higher Secondary School, Rajakkad, Idukki District, Kerala and Unnadhi Training Centre, Coimbatore which are engaged in Community Mental Health Programme, Eye camps, Mobile Medical Utilities, protection, welfare and development of abandoned children and uplifting the below poverty-line children and such other social activities.

The amount so far contributed including that of last year is Rs. 21.69 Lakhs and your Company will continue its pursuit to fulfill its Corporate Social Responsibilities in future as well, as and when the Company''s budget allows.

b. Audit Committee:

The Audit Committee has been reconstituted with the scope of activities set out in Clause 49 of the Listing Agreement with the Stock Exchange read with section 177 of the Companies Act, 2013. The Committee consists of Dr. A.K. Sreedharan, Chairman, Dr.T.C.P. Nambiar and Sri Vinod Narsiman, Members.

c. Stakeholders'' Relationship Committee

This Committee considers and resolves the grievances of security holders of the Company. The said Committee comprises of Sri S.Inderchand as Chairman and Smt. D.Pushpa Varadarajan as Member.

d. Nomination & Remuneration Committee :

The scope of work and/or terms of reference for the said Committee, inter alia, includes matters as stated under Section 178(2) and 178(3) of the Companies Act, 2013 read with applicable provisions of the Listing Agreement. The Committee comprises of Dr. A.K.Sreedharan as Chairman and Dr. T.C.P. Nambiar & Sri B.Balchand as Members.

e. Compensation Committee :

The Compensation Committee deals with the allocation of ESOS under Indsil ESOS scheme to the eligible employees. The Committee consists of Dr. A.K. Sreedharan as Chairman and Sri Vinod Narsiman and Dr. T.C.P. Nambiar as members.

f. Vigil Mechanism :

The Board has constituted Vigil Mechanism as per Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014. The Audit Committee has been authorized to oversee the Vigil Mechanism. Sri Vinod Narsiman, Managing Director has been nominated to facilitate the Vigil Mechanism.

The Vigil Mechanism is intended to provide adequate safeguards against victimization of employees and to facilitate to report their genuine concerns or grievances.

EMPLOYEE STOCK OPTION SCHEME :

The Company implemented the Employee Stock Option Scheme ("Scheme") in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at 30th June, 2014 are given below: The total number of options in force:

On 28.1.2009 On 30.4.2010

Options granted 64,500 18,500

Exercise Price Rs 10 Rs 10

For options granted on 28.1.2009 :

As per the Scheme, the following options were exercised by the first set of eligible employees as per details shown below :

A. First set of eligible employees

Tranche No.of options No of shares Bonus Shares exercised transferred transferred @ 25% for from ESOS from ESOS each tranche Trust to eligible Trust to eligible employees employees

I st Tranche 16125 16125 -

II nd Tranche 16125 16125 10750

III rd Tranche 16125 16125 10750

IV th Tranche 11750 11750 7833

TOTAL 60125 60125 29333



Tranche Total shares No. of transferred from ESOS options lapsed Trust to eligible employees

I st Tranche 16125 NIL

II nd Tranche 26875 NIL

III rd Tranche 26875 NIL

IV th Tranche 19583 4375*

TOTAL 89458 NIL

along with 2,917 bonus shares

Balance shares in Trust account 7,292

Money realized by exercise of options Rs6,01,250/-

Any employee who received grant of options in any one year amounting to 5% or more of options granted during the year : NIL

Identified employees, who were granted options, during any one year, equal to or exceeding 1% of the issued capital of the Company at the time of grant : NIL

Diluted Earnings Per Share (EPS) pursuant to issue of share on exercise of options calculated in accordance with Accounting Standard (AS) 20 "Earnings per Share" :Rs6.84

The issue of equity shares pursuant to exercise of options will affect the statement of Profit & Loss of the Company, as the exercise has been made at par value of Rs. 10/- per share.

For options granted on 30.4.2010

As per the Scheme, the following options were exercised by the second set of eligible employees as per details shown below:

B. Second Set of eligible employees

Tranche No.of options No of shares Bonus Shares exercised re-issued re-issued @25% for from ESOS from ESOS each tranche Trust to eligible Trust to eligible employees employees

I st Tranche 4625 4625 3081

II nd Tranche 4625 4625 3081

III rd Tranche 4625 4625 3081

IV th Tranche 4000 4000 2665

TOTAL 17875 17875 11908

Tranche Total shares No. of re-issued from ESOS options lapsed Trust to eligible employees

I st Tranche 7706 NIL

II nd Tranche 7706 NIL

III rd Tranche 7706 NIL

IV th Tranche 6665 625*

TOTAL 29783 625

* alongwith 416 bonus shares

Balance shares in Trust account : 1050

Money realized by exercise of option : Rs. 1,78,750/-

Balance number of shares in Trust Account : 8342 (A B)

C.5000 options were granted to Sri : 5000 Rajan Jose, General Manager (Works) under Accelerated Vesting. Accordingly shares were transferred from ESOS Trust Account on receipt of remittance of Rs. 50,000/- from him to ESOS Trust Account which was subsequently transferred from ESOS Trust Account to the Company.

Balance number of shares in Trust Account : 3342

as on 11th October, 2014

The Company has received a Certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

The audited accounts placed before the shareholders in this meeting have been prepared recognizing the employee compensation cost using the intrinsic value.

INSURANCE:

All the properties of the Company including buildings, plant & machinery and stocks have been adequately insured. CORPORATE WEBSITE :

The website of your Company, www.indsil.com carries a comprehensive database of information of interest to the stakeholders including the corporate profile, information with regard to products, plants and various depots, financial performance of your Company and other details.

DIRECTORS:

Dr. Rama Iyer resigned from the Board with effect from 27th May, 2014. The Board of Directors took on record the same at their meeting held on 27th August, 2014 and expressed their appreciation to Dr. Rama Iyer for his contribution to the Company as Director during his tenure of Office.

Dr. T.C.P.Nambiar was co-opted as an Additional Director with effect from 27th August, 2014. The appointment of Dr. T.C.P.Nambiar as an Independent Director of the Company is placed before this meeting for your approval.

Dr. A.K.Sreedharan and Sri B. Balchand are retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Dr. A.K.Sreedharan, Sri K. Ramakrishnan and Dr. T.C.P.Nambiar are proposed to be appointed as Independent Directors and such proposals are placed before the members in this Annual General Meeting for approval.

AUDITORS:

The Board of Directors of the Company recommend M/s Raja & Raman, Chartered Accountants, Coimbatore, the retiring Auditors to be reappointed as Statutory Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting for the financial year 2014-15 subject to the approval of the shareholders in the ensuing Annual General Meeting. The said item regarding appointment of M/s Raja & Raman, Auditors is placed before the shareholders for their approval.

INTERNAL AUDITOR

The Board has appointed Ms. K.R.Divya, Chartered Accountant, 1055/11 Gowtham Centre, 1st Floor, Avanashi Road, Coimbatore 641 018 as Internal Auditor pursuant to the provisions of Section 138 of the Companies Act, 2013 to conduct the internal audit functions and to report to the Audit Committee.

AUDITOR''S REPORT & ACCOUNTING POLICIES

The Auditors'' Report read with the Notes on Accounts are self-explanatory and do not require any further clarification.

A statement detailing significant Accounting Policies of the Company is annexed to the Accounts.

SECRETARIAL AUDIT REPORT :

Pursuant to Section 204 of the Companies Act, 2013, a Company is required to appoint a Practising Company Secretary as Secretarial Auditor for the financial year ending 30th June, 2015.

Accordingly the Board of Directors have appointed KSR & Co Company Secretaries LLP, a Firm of Practising Company Secretaries in Coimbatore as the Secretarial Auditor for the aforesaid financial year.

COST AUDITOR

Pursuant to Order No. F.NO.52/26/CAB-2010 dated 2nd May, 2011 read with provisions as contained under Cost Accounting Records (Petroleum Industry) Rules, 2002 and General Circular No. 15/2011 dated 11th April, 2011 as issued by Cost Audit Branch of the Ministry of Corporate Affairs, your Company had appointed Sri B.Venkateswar, Cost Accountant for conducting audit of the Cost Accounting Records of the Company for the year 2013-14. The said appointment, has been made pursuant to Section 233B of the Companies Act, 1956 (presently Section 148 of Companies Act, 2013) and the audit is underway.

FIXED DEPOSITS

There were no Fixed Deposits from the public outstanding with the Company at the end of the financial year.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review as stipulated under Clause-49 of the Listing Agreement with the Stock Exchange is presented in a separate section forming part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000

The Board of Directors report that:

1. in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

2. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a fair view of the state of affairs of the Company at the end of the year and of the profit of the Company for that year.

3. the Directors have taken 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.

4. the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from KSR & Co Company Secretaries LLP regarding compliance of conditions of Corporate Governance form part of this Annual Report.

INDUSTRIAL SAFETY

Your Company has laid high emphasis on safety of all the personnel and mitigation of damage to equipment. The Company has thoroughly followed all the safety measures.

PARTICULARS REQUIRED UNDER SECTION 217 (1)(e) & SECTION 217(2A) OF THE COMPANIES ACT, 1956

Particulars required under Section 217 (1)(e) of the Companies Act, read with relevant rules are annexed in Annexure-A. Information in accordance with Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure-B of this Report.

DECLARATION

The Company has been regular in filing all forms and returns with the Registrar of Companies as required under the Companies Act, 2013 and has not defaulted in payment of dividends. Accordingly, the Company has not committed any of the defaults specified under Section 184 (1) read with Rule 9 (1) of the Companies Act, 2013 disqualifying its Directors to act as Directors of other companies.

ACKNOWLEDGEMENTS

Your Directors are extremely thankful to State Bank of Travancore, The Federal Bank Limited, IDBI Bank Limited, Yes Bank Limited and Standard Chartered Bank for their continued support.

Your Directors acknowledge and express their grateful appreciation for the co-operation and support received from Government Authorities, Kerala State Industrial Development Corporation, Employees, Customers and Suppliers. They also thank the Shareholders for the confidence reposed by them in the management of the Company and for their continued support and co-operation.

Place : Coimbatore For and on behalf of the Board Date : 13.11.2014 Sd/- S.N. VARADARAJAN Executive Vice Chairman


Jun 30, 2013

The Directors have great pleasure in presenting the 23rd Annual Report of your Company together with the Audited statements of account for the year ended 30th June 2013.

FINANCIAL RESULTS:

Rs.in lakhs Particulars 2012-13 2011-12

Profit before depreciation and Financial charges 718.63 1557.60

Less : Financial Charges 295.52 248.44

Profit before Depreciation 423.11 1309.16

Less : Depreciation 379.55 367.08

Profit before taxes and extraordinary items 43.56 942.08

Less : Extraordinary items

Profit before tax 43.56 942.08

Less : Provision for Tax 8.30 183.09

Add/Less : Deferred Tax asset/liability (MAT Credit) 7.01 -244.48

Profit after tax 28.25 1003.47

Add : Balance brought forward 4706.41 3887.59

Surplus available for appropriation 4734.66 4891.05

Less : Transfer to General Reserve

MAT Credit Reserve

Less : Proposed Dividend 79.43 158.87

Less : Tax on proposed Dividend 13.50 25.77

Balance carried over to Balance Sheet 4641.73 4706.41

Paid-up equity share capital 1588.68 1588.68

Earnings per share (Rs.) 0.18 6.32

Book value per share (Rs.) 47.80 48.20

REVIEW OF OPERATIONS:

Your Company''s financial performance for the year was drastically affected due to an acute drought situation at your Company''s hydro electric power station in Rajakkad, Idukki Dist., Kerala. In fact, the drought conditions enveloped the entire State of Kerala and affected all the electric power stations in that State. The drought has been considered to be one of the worst in the past 2 decades. This resulted in the Company having to procure high cost power from the Kerala State Electricity Board to sustain its smelter operations and with a steep increase in the KSEB power tariff which occurred during the year 2012-13, the Company''s operating margins were severely affected. As a result, your Company could register a PBDIT of only Rs. 718.63 Lakhs as against Rs.1557.60 Lakhs for the previous year.

The PBT is only Rs. 43.56 Lakhs as against Rs. 942.08 Lakhs in the previous year.

The hydro electric power generated only 14.96 million units as compared to 43.52 million units in the previous year.

FUTURE PROSPECTS:

The outlook and future prospects of the Company are presented in the "Management Discussion and Analysis Report" forming part of this Report.

RENEWABLE ENERGY CERTIFICATES (REC):

As the members are aware, your Company got successfully registered as an RE generator under the new REC mechanism promulgated by the Central Government. This status entitles the Hydro Power Project of your Company (HPP) to receive Renewable Energy Certificates for every 1000 units of renewable energy produced. These certificates are tradeable in the Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL). During the year under review, your Company could realize Rs. 54,27,000/- being the sale proceeds of 3618 REC units. As on date, your Company has RECs for a total value of Rs. 2,55,95,141/-.

As per current indications there is scope for demand for RECs as there is a momentum towards complying with Renewable Purchase Obligations (RPO) of RECs by the end of FY 2013-14. With RPO compliance drive initiated by states like Punjab, Uttarakhand, Maharashtra and Chhattisgarh State Regulators, it is expected that the buyer''s participation for RPO''s would increase in the forthcoming trading sessions.

JOINT VENTURE PROJECT IN OMAN:

As reported in the last year''s Directors Report, the JV Project in Oman (Al-Tamman Indsil Ferro Chrome LLC) established in the Sohar Free Zone in Sultanate of Oman has built a world-class Ferro Chrome Smelter with an initial capacity to produce 75,000 tpy of Ferro Chrome.

The Company uses 2 x 24 MVA submerged arc furnaces to smelt the chromite. The two furnaces have been commissioned and production commenced during the second half of the year 2013. Both the furnaces are working currently.

Your Company receives enormous support from the Sohar Free Zone, and therefore there should be no bottle-necks in achieving the objectives of the Company in terms of its full scale commercial production.

The key markets for the JV project of your Company are the Far East and Europe.

SREE MAHALAKSHMI SMELTERS (P) LTD (SMS) - SUBSIDIARY OF THE COMPANY:

As the members are aware, the capacity of SMS plant was upgraded from 5 MVA to 7.5 MVA for the manufacture of Low Carbon Silico Manganese from that of High Carbon Silico Manganese. The State of Andhra Pradesh faced severe power cut during the period under review resulting in under-utilisation of operations resulting in the subsidiary not being able to operate at its full capacity. This, in turn, resulted in the subsidiary suffering financial losses.

CONSOLIDATED FINANCIAL STATEMENTS:

The consolidated financial statements by consolidating the accounts of the Company, Sree Mahalakshmi Smelters Private Limited (Subsidiary of the Company) & the JV Company M/s Al-Tamman Indsil Ferro Chrome LLC, Sultanate of Oman under the applicable Accounting Standards of the Institute of Chartered Accountants of India form part of this Annual Report.

DIVIDEND:

Your Directors recommend payment of dividend at 5% on the equity share capital of Rs.15,88,67,920 for the year ended 30th June 2013. The dividend, if approved, will be paid to those members whose names appear on the Register of members of the Company as on 9th December 2013, the date fixed for the purpose, subject to the approval of the shareholders.

The aggregate dividend payout for the year 2012-13 amounts to Rs. 93 Lakhs including corporate dividend tax.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company has commenced its Corporate Social Responsibilities. As part of its socio-economic activities and to emphasize integral development of societal needs in and around its areas of operations, your Company had made its humble contributions to institutions viz: Swami Vivekananda Medical Mission, Palakkad, Kerala, Divine Province Funding Home, Rajakkad, Idukki District, Kerala. St. Benedict Church, Kuthungal, Idukki District, Kerala, Government Higher Secondary School, Rajakkad, Idukki District, Kerala and Unnadhi Training Centre, Coimbatore which are engaged in Community Mental Health Program, Eye camps, Mobile Medical Utilities, protection, welfare and development of abandoned children and uplifting the below poverty line children and such other social activities.

The amount so far contributed is Rs. 12.56 Lakhs and your Company would continue its pursuit to fulfill its Corporate Social Responsibilities in future as well, as and when the Company''s budget allows.

EMPLOYEE STOCK OPTION SCHEME :

The Company implemented the Employee Stock Option Scheme ("Scheme") in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at 30th June, 2013 are given below: The total number of options in force:

On 28.1.2009 On 30.4.2010

Options granted 64,500 18,500

Exercise Price Rs. 10 Rs. 10

For options granted on 28.1.2009 :

As per the Scheme, the following options were exercised by the first set of eligible employees as per details shown below :

* alongwith 2,917 bonus shares

Balance shares in Trust account 7,292

Money realized by exercise of options Rs. 6,01,250/-

Any employee who received grant of options in any one year amounting to 5% or more of options granted during the year : NIL

Identified employees, who were granted options, during any one year, equal to or exceeding 1% of the issued capital of the Company at the time of grant : NIL Diluted Earnings Per Share (EPS) pursuant to issue of share on exercise of options calculated in accordance with Accounting Standard (AS) 20 "Earnings per Share" : Rs. 6.32

The issue of equity shares pursuant to exercise of options will affect the statement of Profit & Loss of the Company, as the exercise has been made at par value of Rs. 10/- per share.

For options granted on 30.4.2010

As per the Scheme, the following options were exercised by the second set of eligible employees as per details shown below:

Valuation of options :

As required, the employee compensation cost as a result of calculations made under Black Scholes model is Rs.15.21 and Rs. 63.66 per share having regard to the fact that the strike price is Rs. 10 per share and the stock price (price on the date of grant i e., 28.01.2009 & 30.04.2010) are Rs. 23.95 & Rs. 72.40 respectively.

The Company has received a Certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

The audited accounts placed before the shareholders in this meeting have been prepared recognizing the employee compensation cost using the intrinsic value.

INSURANCE:

All the properties of the Company including buildings, plant & machinery and stocks have been adequately insured.

DIRECTORS:

Smt. D. Pushpa Varadarajan and Sri K.S. Mahadevan are retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS:

M/s. K S G Subramanyam & Co Chartered Accountants are one of the Statutory Auditors of the Company till the financial year 2012-13 along with M/s Haribhakti & Co, as the Joint Statutory Auditors.

M/s. K S G Subramanyam & Co, due to their pre-occupation, had submitted their letter of resignation from the office of the Statutory Auditors of the Company with effect from 13th August 2013 and their resignation was informed to the Bombay Stock Exchange on 26th August, 2013.

The present Statutory Auditors M/s Haribhakti & Co, Chartered Accountants, Coimbatore had expressed their unwillingness to continue as the Statutory Auditors of the Company and they will cease to be the Statutory Auditors of the Company from the forth coming Annual General Meeting of the Company.

The proposed retirement of the Statutory Auditors M/s Haribhakti & Co was informed to the Bombay Stock Exchange on 7th November, 2013.

M/s Raja & Raman, Chartered Accountants, 1055/11, Gowtham Centre, 1st Floor, Avinashi Road, Coimbatore 641 018 are willing to get appointed as Statutory Auditors of the Company and in this connection, they have submitted a letter to the Company, stating that their appointment is valid as it will be within the limit prescribed under sub section (1-B) of Section 224 of the Companies Act, 1956.

The Board of Directors of the Company recommend M/s Raja & Raman, Chartered Accountants, Coimbatore to be appointed as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting for the financial year 2013-14 subject to the approval of the shareholders in the ensuing Annual General Meeting. The said item regarding appointment of M/s. Raja & Raman, Auditors is placed before the shareholders for their approval.

COST AUDITORS

The Board has appointed Sri B. Venkateswar, Cost Accountant, Coimbatore as Cost Auditor of the Company pursuant to section 233B of the Companies Act, 1956 for the financial year 2011-12 & 2012-13. The cost Audit Report for the financial year 2011-12 approved by the Board of Directors of the Company on 5th November 2013 was filed on 1st February 2013 and for the financial year 2012-13, such a report will be filed.

POSTAL BALLOT

Board of Directors at their meeting held on 3rd July 2013 had adopted a resolution for Postal Ballot pursuant to Section 192 A of the Companies Act, 1956 in order to transfer the shares held by the Company in Al-Tamman Indsil Ferro Chrome LLC to its own arm "Indsil Hydro Global (FZE)", a 100% subsidiary of the Company in the Sharjah Airport International Free Zone.

The Postal Ballots received from the shareholders upto 6.8.2013 were scrutinized and result declared in favour of the resolution. Details of the Results were published on 9.8.2013 in The Mint and Makkal Kural.

The result was also informed to The Bombay Stock Exchange Ltd and posted in the Company''s website.

ENTERPRISE RESOURCE PLANNING (ERP) IMPLEMENTATION :

Your Company has successfully implemented an Oracle Enterprise Resource Planning (ERP) System. Your Company considers IT-Enterprise Resources Planning Integrated platform to be pivotal for ensuring smooth functioning of processes and has a crucial role in fulfilling operational as well as the functional information requirements of the organisation.

Besides facilitating integration across all business functions including Financial Accounting, it will facilitate informed decision making on a faster basis.

DEPOSITS

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956.

MANAGEMENT DISCUSSION & ANALYSIS

Management Discussion and Analysis for the year under review as stipulated under Clause-49 of the Listing Agreement with the Stock Exchange(s) is presented in a separate section forming part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000:

The Board of Directors report that :

1. in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

2. the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a fair view of the state of affairs of the Company at the end of the year and of the profit of the Company for that year.

3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from KSR & Co Company Secretaries LLP regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INDUSTRIAL SAFETY

Your Company has laid high emphasis on safety of all the personnel and mitigation of damage to equipment. The Company has thoroughly followed all the safety measures.

PARTICULARS REQUIRED UNDER SECTION 217 OF THE COMPANIES ACT, 1956 :

Particulars required under Section 217 (1) (e) of the Companies Act, read with relevant rules are annexed in Annexure-A. Information in accordance with Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure-B of this Report.

DECLARATION:

The Company has been regular in filing all forms and returns with the Registrar of Companies as required under the Companies Act, 1956 and has not defaulted in payment of dividends. Accordingly, the Company has not committed any of the defaults specified under Section 274(1)(g) of the Companies Act, 1956 (as amended by the Companies Amendment Act, 2000) disqualifying its Directors to act as Directors of other companies.

ACKNOWLEDGEMENTS:

Your Directors are extremely thankful to State Bank of Travancore, The Federal Bank Limited, IDBI Bank Limited, Yes Bank Limited and Standard Chartered Bank for their continued support.

Your Directors acknowledge and express their grateful appreciation for the co-operation and support received from Government Authorities, Kerala State Industrial Development Corporation, Employees, Customers and Suppliers. They also thank the Shareholders for the confidence reposed by them in the management of the Company and for their continued support and co-operation.

Place : Coimbatore For and on behalf of the Board

Date : 07.11.2013 Sd/-

S.N. VARADARAJAN

Chairman


Jun 30, 2011

The Directors have great pleasure in presenting the 21st Annual Report of your Company together with the Audited statements of account for the year ended 30th June 2011.

FINANCIAL RESULTS:

Rs. in lakhs Particulars 2010-11 2009-10

Profit before depreciation and Financial charges 1789.61 2044.38

Less : Financial charges 66.32 148.92

Profit before Depreciation 1723.30 1895.46

Less : Depreciation 354.45 348.53

Profit before taxes and extraordinary items 1368.85 1546.93

Less : Extraordinary items 22.50 ---

Profit before tax 1346.35 1546.93

Less : Provision for Tax 280.00 210.00

Add/Less : Deferred Tax asset/liability 11.85 22.05

Profit after tax 1054.50 1358.98

Add : Balance brought forward 3017.73 2825.48

Surplus available for appropriation 4072.23 4184.46

Less: Transfer to General Reserve - 1000.00

Less: Proposed Dividend 158.87 142.98

Less: Tax on Proposed Dividend 25.77 23.75

Balance carried over to Balance sheet 3887.59 3017.73

Paid-up equity share capital 1588.68 951.36

Earnings per share (Rs.) 7.55 14.34

Book value per share (Rs.) 43.03 62.61

REVIEW OF OPERATIONS:

Your Company's financial performance was on expected lines this year. Your Company's increased exposure to the European markets for its core product low carbon silicon manganese and most of the business were contractual in nature with price formula clause.

The Company registered a PBDIT of Rs.1,790 lakhs as compared to Rs.2,044 lakhs in the previous year. The PBT is Rs.1,346 lakhs as compared to Rs.1,547 lakhs in the previous year.

The hydro electric power generated 43.12 million units in the previous year. More detailed view is given in the "Management Discussion and Analysis Report" forming part of this Annual Report.

FUTURE PROSPECTS:

The outlook and future prospects of the Company are presented in the "Management Discussion and Analysis Report" forming part of this Report.

LOCK-OUT:

A lock-out was declared in the Company's Smelter division with effect from August 11, 2011. This lock-out was pursuant to industrial unrest in the factory which in turn was a consequence of temporary breakdown in talks for a long term settlement of wages. The situation is expected to be resolved any time soon and the factory is expected to commence normal operations from 1st November 2011. It is to be noted here that the Company's Hydro Electric Power Plant was unaffected and operations were normal.

JOINT VENTURE PROJECT IN OMAN :

As reported in the last year's Directors' Report, your Company along with a group sister company, was in the process of promoting a 75,000 tpy Ferro Chrome smelter in the Sultanate of Oman. Indusial group has a 50% interest in the JV with the Sultanate's largest chrome ore miner viz., the Muscat Overseas Group.

As shareholders are aware, the JV called Al-Tamman Indsil Ferro Chrome LLC was established in the Sultanate of Oman and the project was earlier expected to go on stream in its FIRST phase by December 2011. Your Company's stake is 25% in the entire venture.

Due to delay in environmental clearance, the project implementation scheme got delayed.

Having obtained the environmental clearance, your Company signed an agreement with the Sohar Free Zone in mid September this year.

The new JV Al-Tamman Indsil Ferro Chrome LLC is coming up in a 15 hectare plot in Sohar Free Zone and this is the FIRST Ferro Chrome Project in the Sultanate of Oman.

The JV will be building a world class ferro chrome smelter within Sohar Free Zone with an initial capacity to produce 75,000 tpa.

In the initial phase, two smelters with an investment of USD 35 million are expected to commence production by December 2012. The Second phase will follow with an additional investment of USD 45-50 million for building two additional smelters to produce ferro chrome which is the key ingredient in making stainless steel.

By the turn of 2014, around 1,50,000 tons of ferro chrome and 20,000 tons of low carbon ferro chrome are expected to be produced and the expected revenue will be in the range of USD 200 million.

ACQUISITION OF SREE MAHALAKSHMI SMELTERS (P) LTD (SMSPL):

Your Company, on October 24, 2011 has acquired a 51% stake in SMSPL and subsequently SMSPL would become a material subsidiary of your Company.

SMSPL operates a 8400 tpy silico manganese smelter at Garbham, Vizianagaram-Dist., Andhra Pradesh. The two key advantages that SMSPL enjoys are proximity to the Vizag Port and access to economical electric power from the Andhra Pradesh grid.

More than 80% of your Company's products are sold in the global markets and more than 50% of the main feed stock, manganese ore is imported. Consequent to the acquisition, your Company plans to carryout de-bottlenecking and capacity enhancement measures to increase the existing capacity by around 50%. The acquisition has been financed purely by internal accruals.

DIVIDEND:

Your Directors recommend payment of dividend at 10% on the equity share capital of Rs.15,88,67,920/-for the year ended 30th June 2011. The dividend, if approved, will be paid to those members whose names appear on the Register of members of the Company as on 8th December 2011, the date fixed for the purpose, subject to the approval of the shareholders.

The aggregate dividend payout for the year 2010-11 amounts to Rs 1,85,64,027/- including Corporate dividend tax.

KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION (KSIDC) AWARD:

KSIDC had honored your Company with "Outstanding Entrepreneurship Award" and the award was presented by Sri Oommen Chandy, Hon'ble Chief Minister of Kerala to our Chairman Sri S. N. Varadarajan during the Golden Jubilee function of KSIDC held on 30th July 2011 at the Le Meridien Convention Centre, Kochi.

FORBES RANKING:

The global magazine, Forbes came out with the list of top 200 Companies having revenues "Under a Billion in the Asia Pacific Region". Your Company has been selected as one amongst them. Specifically, the magazine points out to your Company's consistent profitability, dividend track record and low indebtedness as key factors behind this selection.

EMPLOYEE STOCK OPTION SCHEME:

The Company implemented the Employee Stock Option Scheme ("Scheme") in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 the SEBI (Guidelines). The Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at 30th June, 2011 are given below:

The total number of options in force:

On 28.1.2009 On 30.4.2010

Options granted 64,500 18,500

Exercise Price Rs.10 Rs.10

For options granted on 28.1.2009 :

As per the Scheme, 1st tranche of 16,125 options (being 25% of 64,500 options granted) were exercised by the Eligible Employees and shares were issued to them accordingly from the ESOS Trust. This was before bonus issue.

Consequently the 2nd tranche of 16,125 options (being 25% of 64,500 options granted) were vested with Eligible Employees, which were exercised by them in full. As a result, 16,125 shares and 10,750 Bonus shares were re-issued by way of transfer from ESOS Trust. There were no options lapsed which were vested with the Eligible Employees as a result of not being exercised by the Eligible Employees.

Number of Options Granted (First Batch of Eligible Employees) 64,500

1st tranche of 25% transferred from Trust on 13.05.2010 16,125

2nd tranche of 25% transferred from Trust on 31.5.2011 16,125*

Balance number of shares in Trust account 32,250**

*10,750 Bonus shares were also transferred proportionately.

** Proportionate Bonus Shares already allotted and credited to ESOS Trust will be transferred to Eligible Employees as and when they exercise their balance 50% of options.

Money realized by exercise of options : Rs. 3,22,500/-

Any Employee who received a grant of options in any one year amounting to 5% or more of options granted during the year : NIL

Identified Employees, who were granted options, during any one year, equal to or exceeding 1% of the issued Capital of the Company at the time of grant : NIL

Diluted Earnings per share (EPS) pursuant to issue of share on exercise of options calculated in accordance with Accounting Standard (AS) 20 "Earnings per Share" : Rs. 7.55

The issue of equity shares pursuant to exercise of options will affect the Profit & Loss A/c of the Company, as the exercise has been made at par value of Rs. 10/- per share.

For options granted on 30.4.2010

As per the Scheme, out of 18,500 options granted to 2nd set of eligible employees, 25% of the options were vested on 30.04.2011. Accordingly, 4,625 shares were transferred to the eligible employees. There were no options lapsed which were vested with the Eligible Employees as a result of not being exercised by the Eligible Employees.

Number of Options Granted to second set of employees 18,500

1st tranche of 25% transferred from Trust on 12.8.2011 4,625*

Balance number of shares in Trust account 13,875**

*3,081 Bonus shares were also transferred proportionately. Proportionate Bonus Shares already allotted and credited to ESOS Trust, will be transferred to eligible employees as and when they exercise their balance 75% of options.

Money realized by exercise of options Rs. 46,250

Valuation of options:

As required, the employee Compensation Cost as a result of calculations made under Black Scholes model is Rs. 15.21and Rs. 63.66 per share having regard to the fact that the strike price is Rs. 10 per share and the stock price (price on the date of grant ie., 28.1.2009 & 30.4.2010) are Rs.23.95 & Rs.72.40 respectively.

The Company has received a Certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

The Audited accounts placed before the shareholders in this meeting have been prepared recognizing the employee compensation cost using the intrinsic value.

INSURANCE:

All the properties of the Company including buildings, plant & machinery and stocks have been adequately insured.

DIRECTORS:

Sri B. Balchand and Dr. S. Rama Iyer are retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS:

M/s. K.S.G. Subramanyam & Co., Company's existing Auditors are to retire at the ensuing Annual General Meeting and being eligible for reappointment, they have consented to continue to be the Auditors of the Company.

The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956.

DEPOSITS:

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956.

MANAGEMENT DISCUSSION & ANALYSIS:

Management Discussion and Analysis for the year under review as stipulated under Clause-49 of the Listing Agreement with the Stock Exchange(s) is presented in a separate section forming part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000:

The Board of Directors report that

1. in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

2. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a fair view of the state of affairs of the Company at the end of the year and of the profit of the Company for that year.

3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE:

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INDUSTRIAL SAFETY

Your Company has laid high emphasis on safety of all the personnel and mitigation of damage to equipment. The Company has thoroughly followed all the safety measures.

PARTICULARS REQUIRED UNDER SECTION 217 OF THE COMPANIES ACT, 1956:

Particulars required under Section 217 (1) (e) of the Companies Act, read with relevant rules are annexed in Annexure-A.

Information in accordance with Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure-B of this Report.

"GROUP" FOR INTER-SE TRANSFER OF SHARES:

As required under Clause 3(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation 1997, persons constituting "Group" (within the meaning as defined under the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are given in Annexure-C attached herewith and the said Annexure-C forms part of this Report.

DECLARATION:

The Company has been regular in filing all forms and returns with the Registrar of Companies as required under the Companies Act, 1956 and has not defaulted in payment of dividends. Accordingly, the Company has not committed any of the defaults specified under Section 274(1) of the Companies Act, 1956 (as amended by the Companies Amendment Act, 2000) disqualifying its Directors to act as Directors of other companies.

ACKNOWLEDGEMENTS:

Your Directors are extremely thankful to State Bank of Travancore, The Federal Bank Limited, IDBI Bank Limited, Axis Bank Limited , Standard Chartered Bank and Yes Bank Limited for their continued support.

Your Directors acknowledge and express their grateful appreciation for the co-operation and support received from Government Authorities, Kerala State Industrial Development Corporation, Employees, Customers and Suppliers. They also thank the shareholders for the confidence reposed by them in the management of the Company and for their continued support and co-operation

Place : Coimbatore For and on behalf of the Board

Date : 28.10.2011

Sd / -

S.N. VARADARAJAN

Chairman


Jun 30, 2010

The Directors have great pleasure in presenting the 20th Annual Report of your Company together with the Audited statements of accounts for the year ended 30th June 2010.

FINANCIAL RESULTS

Rs.in lakhs

Particulars 2009-10 2008-09

Profit before depreciation and Financial charges 2,044.38 1,053.54

Less: Financial charges 148.92 235.14

Profit before Depreciation 1,895.46 818.41

Less: Depreciation - 348.53 350.07

Profit before taxes and extraordinary items 1,546.93 468.33

Less: Irrecoverable advances written off - 91.97

Profit before tax 1,546.93 376.36

Less: Provision for Tax 210.00 115.00

Add : Deferred Tax asset 22.05 24.74

Less: Fringe benefit tax - 3.00

Profit aftertax 1,358.98 283.10

Add: Balance brought forward 2,825.48 2,652.93

Surplus available for appropriation 4,184.46 2,936.03

Less: Transfer to General Reserve 1,000.00 -

Less: Proposed Dividend 142.98 94.49

Less: Tax on Proposed Dividend 23.75 16.06

Balance to be carried over to Balance Sheet 3,017.73 2,825.48

Paid-up Equity Share Capital 951.36 944.91

Earnings per Share Rs. 14.34 Rs. 3.00

Book value per Share Rs. 64.36 Rs.50.30

REVIEW OF OPERATIONS:

Your Companys financial performance significantly improved this year on account of a highly value added product mix coupled with strong demand from European markets for its core product viz., low carbon silico manganese.

The Company registered a PBDIT of Rs. 2,044.38 lakhs as compared to Rs. 1,053.54 lakhs in 2008-09. PBT is Rs. 1,546.93 lakhs as compared to Rs. 376.36 lakhs in 2008-09.

A more detailed view is given in the "Management Discussion and Analysis Report" forming part of this Annual Report.

FUTURE PROSPECTS

The outlook and future prospects of the Company are presented in the "Management Discussion and Analysis Report" forming part of this Report.

PROJECT IN CHHATTISGARH STATE & EXPANSION OF CAPACITY IN KERALA:

Your Company is in the process of expanding its manufacturing facility of Low Carbon Sillico Manganese by setting up a green field 9 MVA SAF smelter in the State of Chhattisgarh and it is expected to go operational by June 2011. Your Company has also decided to carry out de-bottle-necking operations at its existing Palakkad, Kerala facilities, as a result of which the smelter would undergo a capacity expansion of around 25%.

With both the above projects in place, the capacity for production of low carbon sillico manganese is expected to go up from 14,400 tons per annum to 28,500 tons per annum.

JOINT VENTURE PROJECT IN OMAN :

Your Company, along with a Group sister Company is promoting a 75,000 tpy ferro chrome smelter in the Sultanate of Oman. The Indsil Group would be having a 50% interest in the JV with the Sultanates largest chrome ore miner viz., the Muscat Overseas Group.

A Joint Venture Company called Al-Tamman Indsil Ferro Chrome LLC has been established and the project is expected to go on-stream in its first phase by December 2011. Indsil Hydro Power & Manganese Ltd is expected to hold 25% stake in the entire venture.

The Company considers this investment an exciting opportunity because the project would have access to captive chrome ore from its JV partners mines. This factor coupled with the fact that electricity in Oman is available at economical levels would make the proposed chrome smelter a globally competitive one.

FINANCE:

The Companys debt equity ratio as on 30.6.2010 is 0.04 and the long term debt outstanding is Rs. 261 lakhs. The Company would become completely debt free this year.

DIVIDEND:

Your Directors recommend payment of dividend at 15% on the Equity Share Capital of Rs.9,53,20,750/-. The dividend, if approved, will be paid to those members whose names appear on the Register of members of the Company as on 13 September, 2010, the subject to the approval of the shareholders.

The aggregate dividend payout for the year amounts to Rs 1,66,72,851 including Corporate dividend tax.

ISSUE OF BONUS SHARES:

The Board of Director at its meeting held on 23ra August, 2010 approved to issue bonus Shares by capitalising the reserves, at the rate of two fully paid up equity shares for every three equity Shares held by the members on a record date which would be announced to the Bombay Stock Exchange.

EMPLOYEE STOCK OPTION SCHEME:

The Company implemented the Employees Stock Option Scheme ("Scheme") in accordance with the Securities Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 the SEBl (Guidelines). The Compensation Committee, constituted in accordance with the SEBl Guidelines, administers and monitors the Scheme.

Details of the total number of options are as shown below:

On 28.1.2009 On 30.4.2010

Options granted 64,500 18,500

Exercise Price Rs.10 Rs.10

For options granted on 28.1.2009:

As per the Scheme, INDSIL ESOS TRUST has been formed to manage and administer the Scheme and accordingly 64,500 shares were allotted to the said Trust on 28.1.2009. As per the Scheme, the vesting being graded, 16,125 options (being 25% of 64,500 options granted) were vested with eligible employees, which were exercised by them in full. As a result, 16,125 shares were re-issued as detailed below. There were no options lapsed which were vested with the eligible employees as a result of not being exercised by the eligible employees.

Name of the eligible No. of Date of 25% of the Date of Employee Options grant options vesting Granted vested

Sri V. Nat arajan* 10,000 28.1.09 2,500 29.1.10

Smt. B. Mee nakshi* 10,000 28.1.09 2,500 -

Sri S. Maha devan* 10,000 28.1.09 2,500 -

Sri K. Rajan Jose* 7,500 28.1.09 1,875 -

SriM. Kannan* 7,500 28.1.09 1,875 -

Sri K. Ramak rishnan* 7,500 28.1.09 1,875 -

Sri S. Chakr apani* 5,000 28.1.09 1,250 -

Sri M. P.L. Sukumar 3,000 28.1.09 750 -

Sri K. Jaya suriyan 2,000 28.1.09 500 -

Sri N. Sunda rarajan 2,000 28.1.09 500 -

64,500 16,125

Name of the eligible Exercise Shares Date of Employee price transferred transfer (Per to eligible Share) employees by ESOS Trust

Sri V. Natarajan* Rs.10 2,500 13.5.10

Smt. B. Meenakshi Rs.10 2,500 13.5.10

Sri S. Mahadevan* Rs.10 2,500 13.5.10

Sri K. Rajan Jose* Rs.10 1,875 15.5.10

Sri M. Kannan* Rs.10 1,875 13.5.10

Sri K. Ramakrishnan* Rs.10 1,875 04.6.10

Sri S. Chakrapani* Rs.10 1,250 31.5.10

Sri M. P.L.Sukumar Rs.10 750 13.5.10

Sri K. Jayasuriyan Rs.10 500 13.5.10

Sri N. Sundararajan Rs.10 500 13.5.10

16,125

64,500 shares allotted to INDSIL ESOS TRUST were listed on the Bombay Stock Exchange on 27" July 2010.

There is no variation in terms of the options granted as per the Scheme.

Money realized by exercise of options : Rs. 1,61,250/-

* No. of employees who received a grant of options in any one year amounting to 5% or more of options granted during the year : SEVEN

Identified employees, who were granted options, during any one year, equal to or exceeding 1 % of the issued Capital oftheCompanyatthetimeofgrant : NIL

Diluted Earnings Per Share (EPS) before except ional items pursuant to issue of share on~exercise of options calculated in accordance with Accounting Standard (AS) 20 : Rs. 14.34

"Earnings per Share"

The issue of Equity Shares pursuant to exercise of options will affect the Profit & Loss Account of the Company, as the exercise has been made at par value of Rs. 10/- per share.

For options granted on 30.4.2010

As recommended by the Compensation Committee, the Board of Directors of the Company at its meeting held on 30.4.2010 has approved the grant of 18,500 options to another batch of eligible employees of the Company as per the Scheme. The details of options granted are given below as required under the Guidelines:

SI. No. Name of the employee Designation No.of Options granted

1 Sri C.J.Andappan Advisor (Electrical) 3,000

2 Sri S.Varadarajan Manager (Admn.) 3,000

3 Sri V. D.Johnson Asst. Manager (Prodn.) 2,500

4 Sri V. Pushparajan Asst. Manager (Prodn.) 2,500

5 Sri N.Hariharan Pillai Deputy Chief Engr. (Elec.) 5,000

6 Sri K. Balamurugan Manager(Electrical) 2,500

TOTAL 18,500

The options were granted at face value of Rs.10/- each. All the eligible employees to whom the options are granted are senior managerial personnel.

As per the Scheme, the granted options will be vested from 30.4.2011 as graded vesting and hence the Company is not required to issue any shares during the year to these eligible employees. To this extent the disclosure relating to details of issue of shares under the Scheme and other disclosure to be made as per the Guidelines in the Directors Report will not arise during the year. These 18,500 options granted to another set of eligible employees were allotted as 18,500 fully paidup Equity Shares to INDSIL ESOS TRUST on 23rd August, 2010. The said shares will be re-issued to the eligible employees as and when they are entitled to exercise their options as per the Scheme.

Valuation of options:

As required, the employee compensation cost as a result of calculations made under Black Scholes model is Rs 15.21 per share having regard to the fact that the strike price is Rs. 10 per share and the stock price (price on the date of grant i.e., 28.1.09) is Rs.23.95 in respect of 64,500 shares.

The Company has received a Certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

The Audited accounts placed before the shareholders in this meeting have been prepared recognizing the employee compensation cost using the intrinsic value.

INSURANCE:

All the properties of the Company including buildings, plant & machinery and stocks have been adequately insured.

DIRECTORS:

Sri K.S. Mahadevan and Dr. A.K. Sreedharan are retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS:

M/s. K.S.G. Subramanyam & Co., Companys existing Auditors are to retire at the ensuing Annual General Meeting and being eligible for reappointment, they have consented to continue to be the Auditors of the Company.

The Company has received-a letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956.

DEPOSITS:

Your Company has neither invited nor accepted any fixed deposits from the public as per the provisions of Section 58A of the Companies Act, 1956.

MANAGEMENT DISCUSSION & ANALYSIS:

Management Discussion and Analysis Report for the year under review as stipulated under Clause-49 of the Listing Agreement with the Stock Exchange(s) is presented in a separate section forming part of this Annual Report.

DIRECTORS" RESPONSIBILITY STATEMENT UNDER SECTION 217 (2AA) OF THE COMPANIES (AMENDMENT ACT) 2000:

The Board of Directors Report that

1. in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

2. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a fair view of the state of affairs of the Company at the end of the year and of the profit of the Company for that year.

3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE:

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

INDUSTRIAL SAFETY

Your Company has laid high emphasis on safety of all the personnel and mitigation of damage to equipment. The Company has thoroughly followed all the safety measures.

PARTICULARS REQUIRED UNDER SECTION 217 OF THE COMPANIES ACT, 1956:

Particulars required under Section 217 (1)(e) of the Companies Act, read with relevant rules are annexed in Annexure-A of this Report.

Information in accordance with Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure-B of this Report.

"GROUP" FOR INTER-SE TRANSFER OF SHARES:

As required under Clause 3(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation 1997, persons constituting "Group" (within the meaning as defined under the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are given in Annexure-C attached herewith and the said Annexure-C forms part of this Report.

DECLARATION:

The Company has been regular in filing all forms and returns with the Registrar of Companies as required under the Companies Act, 1956 and has not defaulted in payment of dividends. Accordingly, the Company has not committed any of the defaults specified under Section 274(1) of the Companies Act, 1956 (as amended by the Companies Amendment Act, 2000) disqualifying its Directors to act as Directors of other companies.

ACKNOWLEDGEMENTS:

Your Directors are extremely thankful to State Bank of India, State Bank of Travancore, The Federal Bank Limited, IDBI Bank Limited, Axis Bank Ltd and Standard Chartered Bank for their continued support.

Your Directors acknowledge and express their grateful appreciation for the co-operation and support received from Government Authorities, Kerala State Industrial Development Corporation, Employees, Customers and Suppliers. They also thank the shareholders for the confidence reposed by them in the management of the Company and for their continued support and co-operation

Place : Coimbatore For and on behalf of the Board Date : 23.08.2010

Sd/- S.N. VARADARAJAN Chairman



 
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