Directors Report of Chrome Silicon Ltd.

Mar 31, 2018

Dear Members,

The Directors have pleasure in presenting the 36th Director’s Report of the Company together with the Audited Statements of Accounts for the Financial Year ended March 31, 2018.

FINANCIAL RESULTS:

(Rs. Lakhs)

PARTICULARS	Current Year 2017-18	Previous Year 2016-17
Gross Revenue	-	-
Profit/(Loss) Before Interest, Depreciation & Tax(PBIDT)	(1817.44)	479.39
Finance Charges	306.36	273.91
Profit/(Loss) before Depreciation and Tax(PBDT)	(2123.80)	205.48
Depreciation	58.40	56.17
Profit/(Loss) Before Tax(PBT)	(2182.20)	149.31
Provision for Tax	-	-
Profit/(Loss) After Tax (PAT)	(2182.20)	149.31
Profit/(Loss) brought forward from previous year	(916.08)	(1065.39
Adjustment in Depreciation
Profit/(Loss) carried to Balance Sheet	(3098.28)	(916.08)

Industry Overview:

The Government of India had announced a vibrant steel policy recently in which the need for growth of the domestic steel industry to strengthen the Make-in-India concept was recognized. The domestic steel production is now improving and consequently the demand for Ferro Alloy Products has also improved.

It is expected that at the current rate of GDP growth, the steel demand will grow threefold in next 15 years to reach a demand of 230 Million MT by 2030-31. It is anticipated that a crude steel capacity of 300 Million MT will be required by 2030-31, based on the demand projections as mentioned above. The demand for Ferro Alloys is 4 Million Tons per annum in 2030-31 based on the demand for steel.

Performance of your Company:

Your Company suspended its manufacturing operations during the Financial Year 2017-18 also. As a result, your Company incurred a net loss of Rs.2182.20 Lakhs during the Financial Year 2017-18 as against net profit of Rs.149.31 Lakhs in previous financial year.

Prospects:

The medium to long-term economic outlook in India continues to look promising and it is heartening to see the Government’s drive to continue to liberalize the economy and focus on social sector spending in building both hard and soft infrastructure. Steel is the most crucial ingredient in industrial development, infrastructure and construction industry and is, therefore, of strategic importance for national transformation. The progress in domestic steel industry is a pre-requisite for India to succeed in its industrial vision for ‘Make-in India’. This presents good potential growth of Ferro Alloys industry in the Country as it solely depends on steel industry. The total power generation in Telangana by the state sector was to the magnitude of 7,778 MW in the year 2014 and in the last four years, the capacity has been enhanced to 15,284 MW by Telangana State Government. This has made the state power surplus and thereby giving uninterrupted quality power to all the consumers. The Telengana State Government announced reasonable power tariff for the Ferro Alloys industry and fixed the power tariff of Rs.5 for KWh and hence Ferro Alloy Industry can run its industry profitably subject to other market driven factors.

Outlook of your Company:

Keeping in view of the encouragement given by the Telangana Government by way of giving uninterrupted and quality power supply along with reasonable power tariff to Ferro Alloy Industry, we are proposing to raise funds by way of issue of Compulsory Convertible Share Warrants for restarting the manufacturing operations of our plant in order to generate revenues and run the Company profitably.

The Company is exploring the various alternatives to restart the manufacturing operations on its own or through conversion or leasing the facilities to interested parties at the earliest. Therefore, the Shareholders wealth will be increased substantially in the foreseeable future as the demand for Ferro Alloys is quite promising both in Indigenously and for exports.

Projects under Implementation- Thermal Power Plant -120 MW (2x60MW):

You are aware that your Company is setting up 120MW (2x60MW) Coal Based Captive Power Plant at Bodepalli (Village & Gram Panchayat), Sirpur Kagaznagar Mandal, Asifabad, Komaram Bhim District, Telangana State. The estimated project cost is Rs. 696 Cr. The Company has obtained most of the clearances such as Environmental Clearance (EC), Consent for Establishment (CFE), NoC from Forest Department, Permission for water drawal and Airport Authority. Your Company has decided to setup the Captive power Project on priority basis through VBC Power Company Limited, a Special Purpose Vehicle Company and initiated the steps to hive off the power project division. The company has obtained a Fuel Supply Agreement with Western Coal fields by giving a Bank Guarantee of Rs.5.28 crores. The members and unsecured creditors have accorded their approval for scheme of arrangement between VBC Ferro Alloys Limited and VBC Power Company Limited at their meetings held on 5th December 2016. Company is actively pursuing the matter for getting various legal and statutory approvals.

Dividend & Reserves:

As the Company incurred losses during the year under review, the Directors could not recommend dividend for the Financial Year 2017-18. Due to inadequate profits, no amount has been transferred to Reserves.

Share Capital:

The Paid-up Share Capital as on 31st March 2018 was Rs.4.39 Cr. During the year under review, the company has not issued Equity Shares/ shares with differential voting rights / granted stock options / sweat equity.

Deposits:

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and as such, no amount of principal and interest was outstanding as on 31st March 2018.

Details of Subsidiary/Joint Ventures/Associate Companies:

Information pursuant to sub-section (3) of section 129 of the Act, i.e., the statement containing the salient features of the financial statement of a company’s subsidiary or subsidiaries, associate company or companies and joint venture or ventures is not applicable during the year, as there are no Subsidiary/ Joint Venture Companies.

However, your Company has promoted the following two power companies by way of Equity Investments:

Investment in KGPL 445 MW Gas Based Power Plant:

Konaseema Gas Power Limited (KGPL) (Associate Company), in which your Company has invested in equity, could not operate its plant during the financial year under review as there is no domestic natural gas supply. We are anticipating that the demand for power will soon increase and the State Governments will make arrangements for supply of natural gas to revive the stranded assets and consequently KGPL will resume profitable operations. The ONGC and RIL have taken exploration of new gas fields in KG Basin and domestic gas supplies are likely to resume in the coming years.

Investment in OPCL 20 MW Dam Based Hydel Power Plant:

20 MW Dam Based Hydro Electric Power Project by Orissa Power Consortium Limited (OPCL), in which your Company has invested in equity has generated 76.36 million units during the financial year 201717 and the said generation is below the designed energy level due to failure of monsoon and in turn low inflow to the Plant from upstream Rengali HEPP. OPCL established 3.42 MWp Solar Power Project and achieved COD on 31.10.2016 and generated 5.04 MU during the Financial year under review. Your Company is holding Equity Shares Capital of about 13.43% in OPCL.

Presentation of Financial Statements:

The Financial Statements for the year ended 31st March, 2018 are prepared in due compliance of the Indian Accounting Standards.

Corporate Social Responsibility Policy:

Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility is not applicable and hence the Company has not adopted any Corporate Social Responsibility Policy.

Cash Flow Statement:

A Cash Flow Statement for the year 2017-18 is annexed to the Statement of Accounts.

Board of Directors and Key Managerial Personnel:

a) Resignation of Directors:

i) Dr. D. Kinnera Murthy resigned from the office of Directorship w.e.f. 17.04.2017 and Board acknowledges hereby her invaluable services given to Company.

b) Reappointment/Change in designation of Directors: There are no Directors liable to retire at the Annual General Meeting on the Board of Directors. Sri M.V Ananthakrishna has been appointed as whole time director of the Company w.e.f. 07.04.2018.

c) Additional Director:

i) As per the provisions of the Section 149(4) of the Companies Act, 2013 and rules made there under, every Listed Company shall have at least one Women Director. Accordingly, Board of Directors appointed Smt. Deshraju Rekha as an Additional Director on 16.12.2017 and her tenure expires on the date of the ensuing Annual General Meeting and Board recommends her appointment u/s 149 and 160 of the Companies Act, 2013 at the ensuing Annual General Meeting(AGM).

ii) As per the provisions of the Companies Act, 2013 and Articles of Association of the Company, Board appointed Sri. R K R Gonela as an Additional Director on 16.12.2017 whose term of office expires on the date of ensuing Annual General Meeting and Board recommends his appointment u/s 149 and 160 of the Companies Act, 2013 at the ensuing Annual General Meeting(AGM)

As required under regulation 36 (3) of the SEBI (LODR), Regulations, 2015, brief particulars of the Directors seeking appointment/re-appointment are given as under:-:

Name of the Director	R.K.R. Gonela	Deshraju Rekha	M.V Ananthakrishna
Date of Birth	01.04.1939	12.05.1960	15.02.1958
Qualification	Degree in Law	BE	BE, MBA, CMC, FIMC
Expertise in specific functional areas	While holding the positions in different capacities, Sri R.K.R. Gonela was involved in Industrial Policy, Industrial Development and Industrial Management of Andhra Pradesh Government.	Transmission and System Operation, Open Access and Regulatory Advisory Services post Electricity Act Worked on First open access of Captive users from Andhra Pradesh to Chhattisgarh which enabled Surplus Power Plants to sell Electricity to needy power shortfall states.	Over three and half decades of experience in: General Management, Corporate Strategy, Turnaround Strategy, Cost Improvement, Onsite Power Generation, Cogeneration
Names of listed entities in which the person also holds the directorship and the membership of Committees of the board	VBC Industries Limited, and Orrisa Power Consortium Limited		VBC Industries Limited
Shareholding of nonexecutive directors.	Nil	Nil	Nil

No. of Shares held in the Company	Nil	Nil	Nil
Inter se relationship with any Director	Nil	Nil	Nil

Number of Meetings of Board:

During the year, five meetings of the Board of Directors were held, the details of which forms part of the report on Corporate Governance.

Annual Evaluation of the Board, Committees and Individual Directors:

As per section 149 of the Companies Act, 2013 read with clause VII (1) of the schedule IV and rules made thereunder, the independent directors of the company had a meeting on 13.02.2018 without attendance of non-independent directors and members of management. In the meeting the following issues were taken up:

(a) Review of the performance of non-independent directors and the Board as a whole;

(b) Review of the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors;

(c) Assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The meeting also reviewed and evaluated the performance of non-independent directors. The company has 2 (two) non-independent directors namely:

i.) Sri. M.V. Ananthakrishna - Whole-Time Director

ii.) Sri. M.S Lakshman Rao - Director

The meeting recognized the significant contribution made by Sri. M.V. Ananthakrishna and Sri. M.S Lakshman Rao, non- independent directors in the shaping up of the company and putting the company on accelerated growth path. They have devoted more time and attention to bring up the company to the present level.

The meeting also reviewed and evaluated the performance the Board as whole in terms of the following aspects:

- Preparedness for Board/Committee meetings

- Attendance at the Board/Committee meetings

- Guidance on corporate strategy, risk policy, corporate performance and overseeing acquisitions and disinvestments.

- Monitoring the effectiveness of the company’s governance practices

- Ensuring a transparent board nomination process with the diversity of experience, knowledge, perspective in the Board.

- Ensuring the integrity of the company’s accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for financial and operational control and compliance with the law and relevant standards.

The meeting also noted that Sri. V.S Rao, Chairman of the Board of Directors of the company has performed exceptionally well by attending board meetings regularly, by taking active participation in the discussion of the agenda and by providing required guidance from time to time to the company for its growth etc.

It was noted that the Board Meetings have been conducted with the issuance of proper notice and circulation of the agenda of the meeting with the relevant notes thereon.

Policy on Directors Appointment and Remuneration Policy:

The Board, on recommendation of Nomination & Remuneration Committee, has framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Policy is also available on the website of the Company i.e., www.vbcfal.in

Auditors:

In terms of the provisions of the Section 139 of the Companies Act, 2013, the Shareholders have appointed M/s C.V. Ramana Rao, Chartered Accountants, Visakhapatnam as Independent Auditors for a term of five years (FY 2017-18 to 2021-22) from the conclusion of 35th Annual General Meeting to the conclusion of the 40th Annual General Meeting of the Company to be held in the calendar year 2022.

Auditors’ Report:

The following is the reply of the Board on the qualifications made by the Auditors in their Report:

No	Audit Qualification	Reply given by the Board
1	Non-provision of load shortfall charges for earlier years amounting to Rs. 42,60,26,056, pending disposal of company’s objections by various administrative authorities as per the directions of Forum for Redressal of Consumer grievances of CPDCL as stated in Note No. 2.28(a) to the standalone Ind AS financial statements has resulted in understatement of the loss for the year.	Company had approached the TSSPDCL / CPDCL with a request to waive the deemed energy charges/load shortfall charges and our request is in consideration. In the hope that we will get a favorable decision from the Government of Telanagana / TSSPDCL and hence, the Board the company is not providing any liability.
2	Non-provision of FSA charges for the year 2008-09 totaling to Rs 5,28,19,683, pending resolution of the appeals pending before various judicial authorities as stated in Note No. 2.28(b) to the standalone Ind AS financial statements, has resulted in understatement of the loss for the year.	Company approached the TSSPDCL /CPDCL with a request to waive the said charges by considering the orders of Hon’ble Courts. Hope that Company will get a favorable decision from the Government of Telanagana/ TSSPDCL and hence, the Board is not providing any liability.

3	As stated in Note No 2.30 to the standalone Ind AS financial statements, the books of account are maintained under "going concern” concept, though the Ferro Alloys plant of the company did not carry out any production activities during the entire year, due to commercially unviable operations because of high power tariff, besides the entire workmen have been retrenched in earlier years	At the request of the Ferro Alloys Manufactures, the Government of Telangana is giving a reasonable tariff for sustainance Ferro Alloy Industry to compete with Overseas market. Company is taking necessary steps for restarting its manufacturing operations by refurbishing the plant and machinery with substantial investment. Hope that the Company will resume its manufacturing operations shortly. Therefore, books of accounts are prepared under going concern concept.
4	The company has considered the diminution as temporary in nature as stated in Note No 2.34 to the standalone Ind AS financial statements the value of its investment of Rs 143,06,46,210 in the equity of M/s. Konaseema Gas Power Ltd, whose net-worth has completely been eroded and not in operation for more than four years.	KPGL is not operating its power generation plant due to lack of natural gas. As informed by KGPL, the government of India is taking active steps to revive the power sector units including Gas based power generating units. Therefore, there is hope that KGPL restarts its manufacturing operations during this financial year.
5	Note No. 2.36 that balances lying in the lenders’, sundry creditors, like, suppliers’, service providers’, employees’ and customers’ accounts are subject to confirmation.	Company is yet to receive responses.
6	No physical verification of inventories has been carried out during the year. Further the inventory is lying with the company for more than five years. Accordingly, we are unable to express our opinion on the realisability of the amount at which the same are stated in the books of account.	Company is having internal control procedures to monitor the balance of inventories and is taking steps to verify stocks periodically.
7	Note No. 2.03 with marks (#) that 124.589 Lakhs of shares acquired by the company in Konaseema Gas Power Limited, the title in respect of which is in the process of transfer.	Company made its request to KGPL to give effect of transfer by getting approval of its lenders.

Cost Audit Report:

The Company discontinued the Cost Audit as there are no manufacturing operations during the Financial Year 2017- 18 and consequently the Company has not appointed Cost Auditors for the Financial Year 2018-19.

Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company had appointed M. Nagakishore, Practicing Company Secretary to conduct the Secretarial Audit and give a Secretarial Audit Report for the Financial Year 2017-18 to be annexed to the Report of Board of Directors.

The Board has gone through the report of the secretarial auditor and decided to address all the issues in an appropriate manner and while specifically authorizing the Whole-Time Director to take all such steps as may be required in this regard in order to ensure proper compliance of all the applicable/provisional laws.

Internal Audit & Controls:

The Company appointed M/s K.S. Rao & Co., Chartered Accountants, Hyderabad, as its Internal Auditors. Their scope of work includes review of Records, Ledgers, voucher checking and the internal controls applied and practiced by the Company to ensure the Assets are safeguarded and payments are made only for the benefits received and also review of operational expenditure, effectiveness of internal control procedures and systems, and assessing the internal control strengths in all areas.

The internal control procedures and systems are adequate commensurating with the nature and size of the operations of the Company.

Internal Auditors findings are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

Particulars of Loans, Guarantees or Investments under Section 186:

The particulars of loans, guarantees and investments have been disclosed in the Financial Statements. Extract of Annual Return (MGT-9):

Pursuant to section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in form MGT-9 is provided as Annexure-III.

Particulars of Employees:

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

Our Non-executive Directors draw remuneration only by way of sitting fee. The details of the same are provided in the Corporate Governance Report which forms Annexure to this report. Hence, the ratio of remuneration of each Non-executive Director to the median remuneration could not be given.

(ii) the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

Name of the Person	% increase in remuneration in the financial year
M.S. Lakshman Rao	Nil
R. Dharmender	Nil

(iii) the percentage increase in the median remuneration of employees in the financial year: Nil

(iv) the number of permanent employees on the rolls of company: 20.

(v) the explanation on the relationship between average increase in remuneration and company performance;

There is no increase of the salary of the employees during the year under review.

(vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

The Remuneration to Key Managerial Personnel is below the norms being practiced in Comparable Industries for such experienced persons.

(vii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: There is no increase of salaries to the employees.

(viii) the key parameters for any variable component of remuneration availed by the Directors: There is no variable component of remuneration availed by Directors

(ix) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: Not Applicable as Company paid only sitting fees to Non-executive Directors.

(x) Affirmation that the remuneration is as per the remuneration policy of the company. The Company affirms remuneration is as per the remuneration policy of the Company. None of the employees is drawing Rs. 8,500,000/- and above per month or Rs.1,02,00,000/- and above in aggregate per annum, the limits prescribed under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Management Discussion & Analysis

Pursuant to SEBI (LODR), Regulations, 2015, a Report on Management Discussion & Analysis is enclosed as Annexure -IV

Corporate Governance:

Pursuant to Reg. 27 of SEBI (LODR), Regulations, 2015 Report on Corporate together with the Auditors Certificate regarding compliance of the conditions of Corporate Governance and Management Discussion and Analysis Report forms part of this Report.

Familiarisation Programmes:

The Company familiarises its Independent Directors on their appointment as such on the Board with the

Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, etc. through familiarisation programme. The Company also conducts orientation programme upon induction of new Directors, as well as other initiatives to update the Directors on a continuing basis. The familiarisation programme for Independent Directors is disclosed on the Company’s website www. vbcfal.in

Particulars of Contracts or Arrangements with Related Parties:

Your Company has formulated a policy on related party transactions which has been placed on the website of the company i.e. www.vbcfal.in. There are no related party transactions except mentioned in the Financial Statements.

Accordingly, the details of Related Party Transactions are annexed in Form AOC-2 is not applicable. Declaration by Independent Director(s):

All the Independent Directors have submitted declarations to the Company to the effect that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013.

DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM:

The Audit Committee consists of the following members as of date:

a) RKR Gonela Independent Director - Chairman

b) V.S. Rao, Independent Director - Member

c) Rekha Deshraju, Non-executive Director - Member

All the members of the Audit Committee are independent Directors.

NOMINATION & REMUNERATION COMMITTEE

Terms of reference:

The main term of reference of the Committee is to approve the fixation/revision of remuneration of the Managing Director/Whole Time Director of the Company and while approving:

- To take into account the financial position of the Company, trend in the industry, appointee''s qualification, experience, past performance, past remuneration etc.

- To bring out objectivity in determining the remuneration package while striking a balance between the interest of the Company and the Shareholders.

Remuneration Policy:

The objectives of the remuneration policy are to motivate Directors to excel in their performance, recognize their contribution and retain talent in the organization and reward merit.

The remuneration levels are governed by industry pattern, qualifications and experience of the Directors, responsibilities shouldered, individual performance etc.

Composition of the Committee as on 31^st March, 2018:

Sri. R K R Gonela	Chairman	Independent non-executive Director
Sri. V.S. Rao	Member	Independent Non-executive Director
Smt. Deshraju Rekha	Member	Independent Non-executive Director

POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS’ INDEPENDENCE

1. Scope:

This policy sets out the guiding principles for the Nomination & Remuneration Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as independent Directors of the Company.

2. Terms and References:

2.1 "Director” means a director appointed to the Board of a Company.

2.2 "Nomination and Remuneration Committee means the committee constituted in accordance with the provisions of Section 178 of the Companies Act, 2013 and reg. 19 of SEBI (Listing Obligation and Disclosure Requirement), Regulations, 2015.

2.3 "Independent Director” means a director referred to in sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1) (b) of the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015.

3. Policy:

Qualifications and criteria

3.1.1 The Nomination and Remuneration Committee, and the Board, shall review on annual basis, appropriate skills, knowledge and experience required of the Board as a whole and its individual members. The objective is to have a board with diverse background and experience that are relevant for the Company’s operations.

3.1.2 In evaluating the suitability of individual Board member the NR Committee may take into account factors, such as:

- General understanding of the company’s business dynamics, global business and social perspective;

- Educational and professional background

- Standing in the profession;

- Personal and professional ethics, integrity and values;

- Willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively.

3.1.3 The proposed appointee shall also fulfil the following requirements:

- shall possess a Director Identification Number;

- shall not be disqualified under the Companies Act, 2013;

- shall Endeavour to attend all Board Meeting and Wherever he is appointed as a Committee Member, the Committee Meeting;

- shall abide by the code of Conduct established by the company for Directors and senior Management personnel;

- shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals including his shareholding at the first meeting of the Board in every financial year and thereafter whenever there is a change in the disclosures already made;

- Such other requirements as may be prescribed, from time to time, under the Companies Act, 2013, SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 and other relevant laws.

3.1.4 The Nomination & Remuneration Committee shall evaluate each individual with the objective of having a group that best enables the success of the company’s business.

3.2 criteria of independence

3.2.1 The Nomination & Remuneration Committee shall assess the independence of Directors at time of appointment/ re-appointment and the Board shall assess the same annually. The Board shall re-assess determinations of independence when any new interest or relationships are disclosed by a Director.

3.2.2 The criteria of independence shall be in accordance with guidelines as laid down in Companies Act, 2013 and reg. 16(1) (b) of the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015.

3.2.3 The Independent Director shall abide by the "Code for Independent Directors "as specified in Schedule IV to the companies Act, 2013.

3.3 Other Directorships/ Committee Memberships

3.3.1 The Board members are expected to have adequate time and expertise and experience to contribute to effective Board performance Accordingly, members should voluntarily limit their directorships in other listed public limited companies in such a way that it does not interfere with their role as Director of the company. The NR Committee shall take into account the nature of, and the time involved in a Director service on other Boards, in evaluating the suitability of the individual Director and making its recommendations to the Board.

3.3.2 A Director shall not serve as director in more than 20 companies of which not more than 10 shall be public limited companies.

3.3.3 A Director shall not serve an independent Director in more than 7 listed companies and not more than 3 listed companies in case he is serving as a whole-time Director in any listed company.

3.3.4 A Director shall not be a member in more than 10 committee or act chairman of more than 5 committee across all companies in which he holds directorships.

For the purpose of considering the limit of the committee, Audit committee and stakeholder’s relationship committee of all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under section 8 of the Companies Act, 2013 shall be excluded.

Remuneration policy for Directors, key managerial personnel and other employees

1. Scope:

1.1 This policy sets out the guiding principles for the Nomination and Remuneration committee for recommending to the Board the remuneration of the directors, key managerial personnel and other employees of the company.

2. Terms and Reference:

In this policy the following terms shall have the following meanings:

2.1 "Director” means a Director appointed to the Board of the company.

2.2 "key managerial personnel” means

(i) The Chief Executive Office or the managing director or the manager;

(ii) The company secretary;

(iii) The whole-time director;

(iv) The chief finance Officer; and

(v) Such other office as may be prescribed under the companies Act, 2013

2.3 "Nomination and Remuneration Committee” means the committee constituted by Board in accordance with the provisions of section 178 of the companies Act,2013 and reg. 19 of SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015.

3. Policy:

3.1 Remuneration to Executive Director and Key Managerial Personnel

3.1.1 The Board on the recommendation of the Nomination and Remuneration (NR) committee shall review and approve the remuneration payable to the Executive Director of the company within the overall approved by the shareholders.

3.1.2 The Board on the recommendation of the NR committee shall also review and approve the remuneration payable to the key managerial personnel of the company.

3.1.3 The Remuneration structure to the Executive Director and key managerial personnel shall include the following components:

(i) Basic pay

(ii) Perquisites and Allowances

(iii) Commission (Applicable in case of Executive Directors)

(iv) Retrial benefits

(v) Annual performance Bonus

3.1.4 The Annual plan and Objectives for Executive committee shall be reviewed by the NR committee and Annual performance Bonus will be approved by the committee based on the achievement against the Annual plan and Objectives.

3.2 Remuneration to Non - Executive Directors

3.2.1 The Board, on the recommendation of the Nomination and Remuneration Committee, shall review and approve the remuneration payable to the Non - Executive Directors of the Company within the overall limits approved by the shareholders as per provisions of the companies act.

3.2.2 Non - Executive Directors shall be entitled to sitting fees attending the meetings of the Board and the Committees thereof..

3.3 Remuneration to other employees

3.3.1 Employees shall be assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the organization. Individual remuneration shall be determined within the appropriate grade and shall be based on various factors such as job profile skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs.

VI. STAKEHOLDERS RELATIONSHIP COMMITTEE

A.) Composition:

The Details of Compostion of the Committee are given below:

Name of the Director	Designation	Category	No. of Meetings Attended
Sri. V. S. Rao	Chairman	Independent Non-Executive Director	4
Sri. M.V. Ananthakrishna	Member	Whole-Time Director	4
Smt. Deshraju Rekha*	Member	Independent Non-Executive Director	1

* Committee reconsituted on 16.12.2017

B) Powers:

The Committee has been delegated with the following powers:

- To redress shareholder and investor complaints relating to transfer of shares, Dematerialization of Shares, non-receipt of Annual Reports, non-receipt of declared dividend and other allied complaints.

- To approve, transfer, transmission, and issue of duplicate / fresh share certificate(s)

- Consolidate and sub-division of share certificates etc.

- To redress, approve and dispose off any, other complaints, transactions and requests etc., received from any shareholder of the company and investor in general.

The Board has delegated the power to process the transfer and transmission of shares to the Registrar and Share Transfer Agents, who process share transfers within a week of lodgement in the case of shares held in physical form.

The Company has designated an exclusive e-mail ID called [email protected] for complaints/ grievances.

VII. RISK MANAGEMENT COMMITTEE

A.) Composition:

The Details of composition of the Committee are given below:

Name of the Director	Designation	Category
Sri. V. S. Rao	Chairman	Independent Non-Executive Director
Sri. M.V. Ananthakrishna	Member	Whole-Time Director
Smt. Deshraju Rekha	Member	Independent Non-Executive Director

B) RISK MANAGEMENT POLICY:

The Company follows a comprehensive system of Risk Management. The Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well-structured risk management process.

UNPAID / UNCLAIMED DIVIDEND:

In terms of the provisions of the Companies Act, the Company is obliged to transfer dividends which remain unpaid or unclaimed for a period of seven years from the declaration to the credit of the Investor education and Protection Fund established by the Central Government. Accordingly, the Members are hereby informed that the 7 years period for payment of the dividend pertaining to financial year 20102011 will expire on 11.09.2018 and thereafter the amount standing to the credit in the said account will be transferred to the "Investor Education and Protection Fund” of the Central Government.

The details of Dividend of earlier years remain unclaimed by the shareholders as on 31.03.2018 are as given below:

Financial Year	Date of Declaration	Last Date of Claiming the Dividend	Unclaimed amount as on 31.03.2018	Due date for transfer to Investor Education and Protection Fund (IEPF)
2010-11	12-09-2011	11-09-2018	4,99,221	12-10-2018
2011-12	29-09-2012	28-09-2019	5,63,316	29-10-2019

Pursuant to provisions of Section 124 of Companies Act, 2013, the unclaimed dividend within the last date mentioned for the respective years, will be transferred to Investor Education and Protection Fund (IEPF) established by Government of India pursuant to Section 125 of the Companies Act, 2013.

NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR. Nil

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT:

There have been no frauds reported by the auditors u/s 143(12).

18. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 134(3) (f) & Section 204 of the Companies Act, 2013, Secretarial audit report as provided by Mr. M. Nagakishore, Practicing Company Secretary is annexed to this Report as an annexure.

Vigil Policy

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Company empowered the victimized Employees or Director to approach directly the Chairman of the Audit Committee for a solution to the issue so that the victimized Employee/Director is rescued. The said policy is available on the website of the Company www.vbcfal.in.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

The Board has appointed M/s K. S. Rao & Co, Chartered Accountant, Hyderabad as Internal Auditors for the year 2018-19. Deviations are reviewed periodically and due compliances are ensured. Summary of significant Audit observations along with recommendations and its implementations are reviewed by the Audit committee and concerns, if any, are reported to Board.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

A separate section on Corporate Governance for fiscal 2018 forms part of this Annual Report.

SECRETARIAL STANDARDS

The Company is in compliance with the applicable secretarial standards.

Material Changes and Commitments:

No material changes occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of this report which affecting Financial position of the Company as on 31.03.2018.

Material Orders, if any, Passed by the Regulators, Courts Etc.:

There are no orders passed by Regulators/Courts/Tribunals which have impact on the going concern status and Company’s operations in future.

Prevention of Sexual Harassment of Women at Work Place:

In order to prevent sexual harassment of women at work place as per provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year under review, there were no women employees employed by the Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The details of conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are as follows:

a) Conservation of Energy

The information in accordance with the provision of Section 134 of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 2014, regarding conservation of Energy is not applicable as there are no manufacturing operations during the year under review.

b) Technology Absorption

No expenditure is incurred by the Company attributable to Technology absorption during the year under review.

(c) Foreign exchange earnings and Outgo

During the year, there are no foreign exchange inflows/earnings or outflows/investments.

(d) Expenditure on Research and Development

No expenditure is incurred by the Company attributable to Expenditure on Research and Development during the year under review.

Human Resources:

The Cost of production of Ferro Silicon has exceeded the market price due to steep increase of power tariff. Accordingly, Company has closed down its production unit at Rudraram Village, Medak District. To reduce the fixed cost burden, your Company has entered into a cordial settlement with the worker’s union for Retrenchment under the Industrial Disputes Act on 30th June, 2014. Your Directors and Management express their appreciation for the commitment and devotion shown by the employees.

Directors’ Responsibility Statement:

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, the best of their knowledge and ability confirm that:

(a) in the preparation of the annual accounts for the year ended 31st March 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had 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 as at 31st March 2018 and of the profit and loss of the company for the year ended on that date;

(c) the Directors had 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;

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

(e) the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

Acknowledgements

Your Directors thank the Government of India and Government of Telangana for their support. They also place on record their appreciation for the help and encouragement received from Bank of India, and other Financial Institutions.

Your Directors sincerely thank Customers, Vendors and Members for their sustained support and cooperation.

For and on behalf of the Board

Sd/-

Place: Hyderabad V.S. RAO

Date: 01.06.2018 Chairman

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Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the 33rd Annual Report of the Company together with the Audited Statements of Accounts for the Financial Year ended March 31, 2015.

FINANCIAL RESULTS:

(Rs. in Lakhs) Current Year Previous Year PARTICULARS 2014-15 2013-14

Gross Revenue - 1260.03

Profit/(Loss) Before Interest, Depreciation & Tax(PBIDT) (213.47) (1404.30)

Finance Charges 493.06 516.02

Profit/(Loss) before Depreciation and Tax(PBDT) (706.53) (1920.32)

Depreciation 75.68 66.53

Profit/(Loss) Before Tax(PBT) (782.21) (1986.85)

Provision for Tax 64.96 21.55

Profit/(Loss) After Tax (PAT) (717.25) (1965.30)

Adjustment - Depreciation 80.92 -

Profit//(Loss) brought forward from previous year 258.31 2223.61

Profit available for appropriation - 258.31

Profit/(Loss) carried to Balance Sheet (539.86) 258.31

Industry Overview:

The domestic consumption of steel in China is declining due to slowdown in its economy and exported its excess production capacity to across the globe including India. This situation has driven global steel prices lower and impacted profitability of steel companies. Therefore, Ferro Alloys Industry could not sell its products at remunerative prices. Further to this, the Ferro Alloys units in Telangana State suffered due to high power tariff. Hence, they could not recover even variable cost also due to this high power tariff and most of Ferro Alloys manufacturers in Telangana suspended their manufacturing operations to avoid incurring of losses.

Performance of your Company:

Keeping in view of the above situation and to avoid further erosion of net worth, your Company suspended its manufacturing operations during the Financial Year 2014-15 also. As a result, your Company incurred a net loss of Rs.717.25 Lakhs during the Financial Year 2014-15 as against net loss of Rs.1965.30 Lakhs in previous financial year.

Prospects:

Steel is the most crucial material in industrial development and infrastructure construction, and is, therefore, of strategic importance for national transformation. The Government of India has recognized the importance of development of manufacturing sector and announced a series of policies to develop manufacturing sector particularly 'Make-in India' theme, designed to facilitate investment, foster innovation, enhance skill development and job creation, and build best- in-class manufacturing capability. The progress in domestic steel industry is a pre-requisite for India to succeed in its industrial vision for 'Make in India'. Hope that India will achieve a steel production capacity of 300 million tons by the year 2025. This presents good potential growth of Ferro Alloys industry in the Country as it solely depends on steel industry.

Projects under Implementation - Thermal Power Plant -120 MW (2x60MW):

You are aware that your Company is setting up 120MW (2x60MW) Coal Based Captive Power Plant at Bodepalli (V&GP),Sirpur Kagaznagar Mandal, Adilabad Dt. The estimated project cost is about Rs. 696 Cr. The Company has obtained most of the clearances such as Environmental Clearance (EC), Consent for Establishment (CFE), NoC from Forest Department, Permission for water drawal and Airport Authority. Your Company has decided to setup the power project on priority basis through VBC Power Company Limited, a Special Purpose Vehicle Company and initiated the steps to hive off the power project division. The Company is awaiting approval from Bombay Stock Exchange for filing of scheme before Hon'ble High Court of Hyderabad.

Dividend & Reserves:

As the Company incurred losses during the year under review, the Directors could not recommend dividend for the Financial Year 2014-15. Due to inadequate profits, no amount has been transferred to Reserves.

Share Capital:

The Paid up Share Capital as on 31st March, 2015 was Rs.4.39 Cr. During the year under review, the company has not issued Equity Shares/ shares with differential voting rights/ granted stock options/ sweat equity.

Deposits:

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 and as such, no amount of principal and interest was outstanding as on 31st March, 2015.

Details of Subsidiary/Joint Ventures/Associate Companies:

Information pursuant to sub-section (3) of section 129 of the Act, i.e., the statement containing the salient feature of the financial statement of a company's subsidiary or subsidiaries and joint venture or ventures is not applicable during the year, as there are no Subsidiary/Joint Venture Companies.

However, your Company has promoted the following two power companies by way of Equity Investments:

Investment In KGPL 445 Mw Gas Based Power Plant:

Konaseema Gas Power Limited (KGPL), in which your Company has invested in equity, could not operate its plant during the financial year under review as there is no natural gas supply. Information pursuant to sub-section (3) of section 129 of the Act, i.e., the statement containing the salient feature of the financial statement of KGPL, Associate Company is annexed as Annexure-I

Investment In OPCL 20 MW Dam Based Hydel Power Plant:

20 MW Dam Based Hydro Electric Power Project by Orissa Power Consortium Limited (OPCL), in which your Company has invested in equity has generated 75.22 million units during the financial year 2014-15 and the said generation is below the designed energy level due to failure of monsoon and in turn low inflow to the Plant from upstream Rengali HEPP. Your Company is holding Equity Shares Capital of about 13.43% in OPCL.

Presentation of Financial Statements:

The Financial Statements for the year ended 31st March, 2015 are prepared in due compliance of the Schedule III of the Companies Act, 2013.

Corporate Social Responsibility Policy:

Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility is not applicable and hence the Company need not adopt any Corporate Social Responsibility Policy.

Cash Flow Statement:

A Cash Flow Statement for the year 2014-15 is annexed to the Statement of Accounts.

Board of Directors and Key Managerial Personnel:

a) Independent Directors: During the year, Sri V.S. Rao and Sri M.V. Ananthakrishna were appointed as Independent Directors for a term of 5 years effective from 30th September 2014. They are not liable for retirement by rotation.

b) Additional Director:

As per the provisions of the Section 149(4) of the Companies Act, 2013 and rules made there under, every Listed Company shall have at least one Women Director. Accordingly, Board of Directors appointed Dr. B. Kinnera Murthy as an Additional Director on 31.03.2015 and her tenure expires on the date of the ensuing Annual General Meeting and Board recommends her appointment u/s 149 and 160 of the Companies Act, 2013 at the ensuing Annual General Meeting(AGM).

c) Resigned Directors: Dr. M.V. V.S Murthi resigned as Director of the Company w.e.f. 02.08.2014. Board of Directors placed on record their deep appreciation for the enormous contributions made by Dr. M.V.V.S. Murthi as Chairman of the Company. The Company and Board benefitted immensely from Dr. M.V.V.S. Murthi's vast experience, knowledge and insights of the Industry.

d) Key Managerial Persons Appointments and resignations:

Sri.R. Dharmender was designated as CFO on 31.03.2015 and Sri.V.V.V.S.N. Murty had resigned as Company Secretary on 23.04.2014 during the year under review.

e) Reappointment of Directors: Sri. Pramod Kumar Thatte, Director retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment.

None of the directors of the company is disqualified under the provisions of the Act or under the Listing Agreement with the Stock Exchanges.

Pursuant to the provisions of Clause 49 of the Listing Agreement, brief particulars of the Directors who are proposed to appointed/re-appointed are provided as an annexure to the notice convening the AGM.

Number of Meetings of Board:

During the year, six meetings of the Board of Directors were held, the details of which forms part of the report on Corporate Governance.

Annual Evaluation of the Board, Committees and Individual Directors:

Pursuant to the provisions of the Companies Act, 2013 and clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees as per the evaluation procedure approved by the Board.

Policy on Directors Appointment and Remuneration Policy:

The Board, on recommendation of Nomination & Remuneration Committee, has framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Policy is also available on the website of the Company i.e., www.vbcindia.co.in

Auditors:

At the Annual General Meeting held on 30th September 2014, M/s Brahmayya & Co., Chartered Accountants, Vijayawada, were appointed as statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s Brahmayya & Co., Chartered Accountants, Vijayawada, as Statutory Auditors for the Financial Year 2015-16 of the Company, is placed for ratification of shareholders. In this regard, the Company has received a certificate from the Auditors to the effect that if they are appointed, it would be in accordance with the provision of the Section 141

of the Companies Act, 2013. Auditors' Report:

The Auditors' Report contained a qualification regarding non-provision of Fuel Surcharge Adjustment and deemed energy charges. As advised by the Legal Counsel, your Company has not made any provision for Fuel Surcharge Adjustment(FSA) charges and deemed energy charges levied by TSSPDCL due to the cases pending before various Forums/Courts. Your Directors are of the view that there are bright chances of winning the cases.

The Auditors' Report contained a further qualification for maintenance of books under Going concern basis. It is reported that the Company initiated effective steps to meet the power requirements of the Company by setting up 120 MW Coal based power plant at Bodepalli V&GP, Sirpur Kagaznagar Mandal, Adilabad District, Telangana State through VBC Power Company Limited by transferring its power division by way of demerger. Accordingly, the books of accounts of the Company are maintained under "Going concern Concept " as Board is confident of construction of Captive Power Plant starts on completion of demerger activities.

Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.

Cost Audit Report:

The Company discontinued the Cost Audit as there are no manufacturing operations during the Financial Year 2014- 15 and consequently the Company has not appointed Cost Auditors for the Financial Year 2014-15.

Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company had appointed M/s Venkatachalam & Co., Practicing Company Secretaries to conduct the Secretarial Audit and give a Secretarial Audit Report for the Financial Year 2014-15 to be annexed to the Report of Board of Directors.

Secretarial Audit Report received from M/s Venkatachalam & Co in the prescribed Form MR-3 is annexed to this Report (Annexure-II). The Report does not contain any qualification, reservation or adverse remarks. It is replied to the observations of Secretarial Auditors that the company will file certain e forms shortly. The Company has paid the dues relating to EPF as of date. The Company is exploring a suitable candidate for the position of Company Secretary.

Internal Audit & Controls:

The Company appointed M/s K.S. Rao & Co., Chartered Accountants, Hyderabad, as its Internal Auditors. Their scope of work includes review of Records, Ledgers, voucher checking and the internal controls applied and practiced by the Company to ensure the Assets are safeguarded and payments are made only for the benefits received and also review of operational expenditure, effectiveness of internal control procedures and systems, and assessing the internal control strengths in all areas.

The internal control procedures and systems are adequate/commensurating with the nature and size of the operations of the Company.

Internal Auditors findings are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

Particulars of Loans, Guarantees or Investments under Section 186:

The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.

Extract of Annual Return (MGT-9):

Pursuant to section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in form MGT-9 is provided as Annexure- III.

Particulars of Employees:

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

Executive Director Ratio to Median remuneration

M.S. Lakshman Rao 2.90

Our Non-executive Directors draw remuneration only by way of sitting fee. The details of the same are provided in the Corporate Report which forms Annexure to this report. Hence, the ratio of remuneration of each Non-executive Director to the median remuneration could not be given.

(ii) the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

Name of the Person % increase in remuneration in the financial year

M.S. Lakshman Rao NIL

R.Dharmender NIL

(iii) the percentage increase in the median remuneration of employees in the financial year: NIL

(iv) the number of permanent employees on the rolls of company: 7

(v) the explanation on the relationship between average increase in remuneration and company performance; There is no increase of the salary of the employees during the year under review.

(vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

The Remuneration to Key Managerial Personnel is below the norms being practiced in Comparable Industries for such experienced persons.

(vii) variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and previous financial year ":

Particulars March 31,2015 March 31,2014 % Change

Market Rs.23.72 Cr. 29.22 Cr. 23.18 Capitalization (Rs. in Lakhs)

Price Earnings (1.208) (4.077) (237.5) Ratio

(viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: There is no increase of salaries to the employees

(ix) comparison of the each remuneration of the Key Managerial Personnel against the performance of the company;

(Rupees in Lakhs.)

Particulars M.S. Lakshman Rao R.Dharmender

Remuneration in FY 2014-15 12.51 5.17

Revenue 23.91 23.91

Remuneration as % of

Revenues 52.32 21.62

Profit/(Loss) before Tax(P/(L)BT) (782.21) (782.21)

Remuneration (as % of P/(L)BT) (1.60) (0.66)

(x) the key parameters for any variable component of remuneration availed by the Directors: There is no variable component of remuneration availed by Directors

(xi) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year : Not Applicable as Company paid only sitting fees to Non-executive Directors

(xii) Affirmation that the remuneration is as per the remuneration policy of the company.

The Company affirms remuneration is as per the remuneration policy of the Company.

None of the employees is drawing Rs.5,00,000/- and above per month or Rs.60,00,000/- and above in aggregate per annum, the limits prescribed under section 197 (12) of the Companies Act, 2013.

Management Discussion & Analysis

Pursuant to clause 49 of the Listing Agreement with Stock Exchange, a Report on Management Discussion & Analysis is enclosed as Annexure -IV

Corporate Governance:

Pursuant to clause 49 of the Listing Agreement with Stock Exchange, a Report on Corporate together with the Auditors Certificate regarding compliance of the conditions of Corporate Governance forms part of this Report as Annexure -V.

Particulars of Contracts or Arrangements with Related Parties:

Your Company has formulated a policy on related party transactions which has been placed on the website of the company i.e. www.vbcindia.co.in.

The details of Related Party Transactions are annexed in Form AOC-2 as Annexure-VI.

Declaration by Independent Director(s):

All the Independent Directors have submitted declarations to the Company to the effect that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013.

Disclosure of Composition of Audit Committee and Providing Vigil Mechanism:

The Audit Committee consists of the following members:

a) M.V. Ananthakrishna, Independent Director - Chairman

b) . V.S. Rao, Independent Director - Member

c.) Pramod Kumar Thatte,Non-executive Director - Member

The above composition of the Audit Committee consists of two independent Directors.

Vigil Policy

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Company empowered the victimized Employees or Director to approach directly the Chairman of the Audit Committee for a solution to the issue so that the victimized Employee/Director is rescued. The said policy is available on the website of the Company www.vbcindia.co.in

Risk Management Policy:

Risk Management Policy has been approved by the Board of Directors and the company is taking steps to mitigate and minimize various Business risks which have impact on the operations of the company.

Material Changes and Comments:

No material changes occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report which affecting Financial position of the Company as on 31.03.2015.

Material Orders, if any, Passed by the Regulators, Courts Etc.:

There are no orders passed by Regulators/Courts/Tribunals which have impact on the going concern status and Company's operations in future.

Prevention of Sexual Harassment of Women at Work Place:

In order to prevent sexual harassment of women at work place as per provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year under review, there were no cases filed against anybody for sexual harassment.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The details of conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are as follows:

a) Conservation of Energy

The information in accordance with the provision of Section 134 of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 2014, regarding conservation of Energy is not applicable as there are no manufacturing operations during the year under review.

b) Technology Absorption

No expenditure is incurred by the Company attributable to Technology absorption during the year under review.

(c) Foreign exchange earnings and Outgo

During the year, there are no foreign exchange inflows/earnings or outflows/investments.

(d) Expenditure on Research and Development

No expenditure is incurred by the Company attributable to Expenditure on Research and Development during the year under review.

Human Resources:

The Cost of production of Ferro Silicon has exceeded the market price due to steep increase of power tariff. Accordingly, Company has closed down its production unit at Rudraram Village, Medak District. To reduce the fixed cost burden your Company has entered into a cordial settlement into the worker's union for Retrenchment under the Industrial Disputes Act on 30th June, 2014. Your Directors and Management express their appreciation for the commitment and devotion shown by the employees.

Directors' Responsibility Statement:

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, the best of their knowledge and ability confirm that:

(a) in the preparation of the annual accounts for the year ended 31st March 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had 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 as at 31st March 2015 and of the profit and loss of the company for the year ended on that date;

(c) the Directors had 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;

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

(e) the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

Acknowledgements

Your Directors thank the Government of India and Government of Telangana for their support. They also place on record their appreciation for the help and encouragement received from Bank of India, PTC India Financial Services Limited (PFS) and other Financial Institutions.

Your Directors sincerely thank Customers, Vendors and Members for their sustained support and co-operation.

for and on behalf of the Board Sd/-

Place : Hyderabad V.S. RAO Date : 12.08.2015 Chairman

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Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 32nd Annual Report of VBC Ferro Alloys Limited with audited statement of accounts for the 12 months period ended 31st March, 2014.

FINANCIAL RESULTS:

(Rs. in Lakhs)

Current Year Previous Year PARTICULARS 2013-2014 2012-2013

Gross Revenue 1583.14 3210.75

Profit/(Loss) before Interest, Depreciation &Tax (1404.29) (716.63)

Less: Interest 516.03 347.70

Profit/(Loss) before Depreciation and Tax (1920.32) (1064.33)

Less: Depreciation 66.53 71.26

Profit/(Loss) before Tax (1986.85) (1135.59)

Less: Provision for Taxation including Deferred Tax Charge for the year 21.55 (38.43)

Profit/(Loss) after Tax (1965.30) (1174.02)

Profit brought forward from previous year 2223.61 3397.63

Profit available for Appropriation 258.31 2223.61

Profit carried to Balance Sheet 258.31 2223.61

INDUSTRY OVERVIEW:

In general, Ferro alloys industry in India is currently passing through a very difficult financial position because of high power tariffs coupled with low market realizations. Particularly, the units in erstwhile Andhra Pradesh are hit further due to severe power cuts imposed by power distribution companies along with steep tariff hike and FSAs.

As the manufacture of Ferro Alloys is highly power-intensive, on an average 40% of the total cost per ton of Ferro alloys is accounted towards cost of power. To overcome this, your Company has taken necessary steps for setting- up a Captive Power Plant on priority basis.

BUSINESS PERFORMANCE

During the financial year 2013-14, your Company could produce only 1,715 MT of Ferro Silicon as against 4510 MT in the previous year due to severe power cuts imposed by the power distribution companies resulting in lower turnover of at Rs 1260.03 lakhs as against Rs 2851.59 lakhs in the previous year.

The main reason for fall in turnover and profitability of the Company is lower capacity utilization and suspension of production activities from 19th June, 2014 due to power crisis in the then Andhra Pradesh. In addition to the power crisis, the hike in power tariff led to un-remunerative operations of the Company resulting in a net loss of Rs 1965.29 Lakhs as against net Loss of Rs 1174.02 lakhs in the previous year.

PROSPECTS

IndiaRss per capita steel consumption is about one-fourth of the global average. There are demands for better housing, sophisticated transport hubs and new infrastructure for better connectivity. Hence, the long term future of the Iron and Steel industry is optimistic and positive as Government of India is giving utmost importance to develop infrastructure facilities, which will enhance the consumption of the Iron and steel in the country. Further the bifurcation of the erstwhile Andhra Pradesh and the need for establishment of a new capital for Andhra Pradesh will create huge demand for steel. This presents a good potential growth for Ferro Alloys Industry in the Country.

DIVIDEND:

The Board of Directors has not recommended any dividend for the year 2013-14 in view of the loss during the year under review.

THERMAL POWER PLANT -120MW (2X60MW)

You are aware that your Company is setting up 120MW (2x60MW) Coal Based Captive Power Plant at Bodepalli (V&GP), Sirpur Kagaznagar Mandal, Adilabad Dt. The estimated project cost is Rs 696 Cr. The Company has obtained most of the clearances such as Environmental Clearance (EC), Consent for Establishment (CFE), NoC from Forest Department, Permission for water drawal and Airport Authority. Your Company has decided to setup the power project on priority basis through VBC Power Company Limited, a Special Purpose Vehicle Company and initiated the steps to hive off the power project division.

INVESTMENT IN KGPL 445 MW GAS BASED POWER PLANT

Konaseema Gas Power Limited (KGPL), in which your Company has invested in equity, could not operate its plant during the financial year under review as there is no natural gas supply.

INVESTMENT IN OPCL 20 MW DAM BASED HYDEL POWER PLANT

20 MW Dam Based Hydro Electric Power Project by Orissa Power Consortium Limited (OPCL), in which your Company has invested in equity has generated 93.12 million units during the financial year 2013-14 and the said generation has exceeded the Designed Energy.

DIRECTORS

APPOINTMENT OF INDEPENDENT DIRECTORS

Pursuant to the provisions of section 149 of the Act, which came in to effect from April 2014, every listed company is required to have at least one-third of the total number of directors as independent directors, who are not liable to retire by rotation. Accordingly, Board recommends and commends your approval for the appointment of Sri. M.V. Anantahkrishna, who was appointed as a Director under erestwhile Comapnies Act, 1956 as an "Independent Director" for a period of Five years as per Section 149 of the Companies Act, 2013.

Sri Pramod Kumar Thatte has been appointed as an additional director on 02nd August, 2014 and Board recommends for his appointment u/s 149 and 160 of the Companies Act 2013.

Sri V.S.Rao has been appointed as an additional director on 12th August, 2014 and Board recommends for his appointment u/149(4) and 160 of the Companies Act, 2013.

RESIGNATION OF Dr. M.V.V.S. Murthi and Sri M.N. Rao

Dr. M.V.V.S. Murthi and Sri M.N. Rao have resigned during the period under review. The Board accepted their resignations and has placed on record its appreciation for the valuable services rendered by them during their tenure as Directors of the Company.

REPLIES TO AUDIT QUALIFICATIONS

As advised by Legal Council, your Company has not made any provision for Fuel Surcharges Adjustment (FSA) charges due to the cases pending before various Forums/Courts. Your Directors are of the view that there are bright chances of winning the cases.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

In compliance with the requirements of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, the statement showing the particulars in relation to conservation of energy, technology absorbed and foreign exchange earnings and outgoings is furnished and the same forms part of this report.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement, Reports on Management Discussion & Analysis and Corporate Governance together with the Certificate of Auditors on Corporate Governance are provided separately in this Annual Report and the same forms part of Directors'' Report.

FIXED DEPOSITS

The Company has not accepted any fixed deposits.

PERSONNEL

The Cost of production of Ferro Silicon has exceeds the market price due to steep increase of power tariff. Accordingly, Company has closed down its production unit at Rudraram Village, Medak District. To reduce the fixed cost burden your Company has entered into a cordial settlement into the worker''s union for Retrenchment under the Industrial Disputes Act. Your Directors and Management express their appreciation for the commitment and devotion shown by the employees.

INSURANCE

All the movable and immovable assets of the Company have been adequately insured against various risks.

PARTICULARS OF EMPLOYEES READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, AS AMENDED

As per the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, as amended, there is no employee covered under Section 217(2A) of the Companies Act, 1956.

AUDITORS

M/s. Brahmayya & Co., Chartered Accountants, who are the statutory auditors of the Company, hold office till the conclusion of the forthcoming AGM and are eligible for re-appointment. Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules framed there under, it is proposed to appoint M/s. M/s. Brahmayya & Co., Chartered Accountants as statutory auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the AGM to be held in the year 2017, subject to ratification of their appointment at every AGM.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of annual accounts for the financial year ended 31st March, 2014, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) Such accounting policies have been selected and applied and that such judgments and estimates have been made as 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 of the Company for the period;

(iii) Proper and sufficient care for the maintenance of adequate accounting records have been taken 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;

(iv) The annual accounts of the Company have been prepared on a ''going concern'' basis.

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 repayment of deposits, payment of dividend, redemption of debentures and preference shares. Accordingly, the Company has not committed any of the defaults specified under Section 274(1)(g) of the Companies Act, 1956/ Section 152 (5) of Companies Act 2013 disqualifying its Directors to act as Directors of other Public Companies.

ACKNOWLEDGEMENTS

Your Directors thank the Government of India, erstwhile Government of Andhra Pradesh and Government of Telangana for their support. They also place on record their appreciation for the help and encouragement received from Bank of India, PTC India Financial Services Limited (PFS) and other Financial Institutions.

Your Directors sincerely thank Customers, Vendors and Members for their sustained support and co-operation. for and on behalf of the Board

for and on behalf of the Board Sd/- Sd/-

Place : Hyderabad M.V. ANANTHA KRISHNA M.S. LAKSHMAN RAO

Date : 12.08.2014 Director Managing Director

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Mar 31, 2012

The Directors have pleasure in presenting the 30th Annual Report of VBC Ferro Alloys Limited with audited statements of accounts for the 12 months period ended 31st March, 2012.

FINANCIAL RESULTS:

(Rs. in Lakhs)

Current Year Previous Year PARTICULARS 2011-2012 2010-2011

Gross Revenue 11627.21 12057.49

Profit before Interest, Depreciation &Tax (PBIDT) 1718.96 2047.82

Less: Interest 453.26 434.88

Profit before Depreciation and Tax (PBDT) 1265.70 1612.94

Less: Depreciation 101.57 127.22

Profit before Tax (PBT) 1164.13 1485.72

Less: Provision for Taxation including Deferred Tax for the year 361.51 466.23

Profit after Tax (PAT) 802.62 1019.49

Profit brought forward from previous year 3018.23 2421.96

Profit available for Appropriation 3820.85 3441.45

Transfer to General Reserve 270.00 270.00

Proposed Dividend 131.83 131.83

Tax on Proposed Dividend 21.39 21.39

Profit carried to Balance Sheet 3397.63 3018.23

DIVIDEND:

Your Directors recommend a dividend of Rs. 3/- (30 %) per Equity Share of Rs. 10/- each, for the financial year ended 31st March, 2012, inspite of reduced profits.

INDUSTRY OVERVIEW:

During the year under review, the exports of Ferro Alloys were drastically affected due to Euro Zone debt crisis. In addition to this, the units in Andhra Pradesh suffered production losses due to severe power cuts imposed by the power distribution companies, resulting in lower profitability. To overcome energy shortages, your Company has been taking steps to establish 2x60 MW Captive Power Plant for which almost all clearances were obtained.

BUSINESS PERFORMANCE

During the financial year 2011-12, your Company produced 15459 MT of Ferro Silicon against 16386 MT in the previous year, which is lower. The Turnover during the year was also lower at Rs. 11400 lakhs as against Rs.11929 lakhs in the previous year. Your Company exported 648 MT of Ferro Silicon to Italy and United Kingdom.

The power cuts and demand recession in exports led to decrease in profitability during the year under review. The profit after tax declined to Rs. 803 lakhs as against Rs.1019 lakhs in the previous year.

PROSPECTS

The Government of India' support to infrastructure development in both rural and urban segments led to a significant demand for steel and allied products. The steel industry is likely to grow further due to government's proactive plans to boost economic growth by infusing funds in various industries, such as construction, infrastructure building, automobile and power. The steel consumption in India is expected to grow exponentially. This presents good potential growth of Ferro Alloys industry in the Country which is backbone of steel industry.

THERMAL POWER PLANT -120 MW (2X60MW)

You are aware that your Company is setting up 120 MW (2x60MW) coal based Captive Power Plant at Bodepalli (V&GP), Sirpur Kagaznagar Mandal, Adilabad District, A.P. The estimated project cost is Rs.632 Cr. PTC India Financial Services Limited (PFS) had sanctioned term loan Rs.150 Cr and our application for balance Term Loan with Rural Electrification Corporation Limited (REC) is under consideration. The Company has obtained most of the clearances such as Environmental Clearance (EC), Consent for Establishment (CFE), NoC from Forest Department and Airport Authority.

CAPACITY EXPANSION:

Your Company is expanding its Ferro Alloy production capacity by setting up 3 furnaces with a rated capacity of 9 MVA each (3x9MVA) at Bodepalli (V&GP), Sirpur Kagaznagar Mandal, Adilabad District, A.P. for which the Company is in the process of obtaining permissions and clearances. The proposed Captive Power Plant will feed power to the expansion unit also.

STATUS OF RIGHTS ISSUE OF EQUITY SHARES

The Members of the Company have accorded their approval in the 29th Annual General Meeting of the Members of the Company for issue of shares on Rights basis to mobilize the equity contribution for the Captive Power Project as well as Ferro Alloy expansion project. The Company will approach Members after obtaining sanctions for entire debt funds to the Captive Power Plant from the Financial Institutions.

INVESTMENT IN KGPL 445 MW GAS BASED POWER PLANT

Konaseema Gas Power Limited (KGPL) in which your Company has invested in equity, was able to receive natural gas to operate its power plant at 54% only during the financial year 2011-12 as the natural gas production in KG basin has been drastically comedown. Consequently KGPL could generate, only 2279 million units of power during the financial year.

INVESTMENT IN OPCL 20 MW DAM BASED HYDEL POWER PLANT

20 MW Dam Based Hydro Electric Power Project by Orissa Power Consortium Limited (OPCL), in which your Company has invested in equity has generated 90.60 million units of power during the financial year 2011-12 there by showing good results and exceeding designed capacity during the year.

DIRECTORS

In accordance with the provisions of Section 255 of the Companies Act, 1956 and clause 108 of the Articles of Association of the Company, Dr. M.V.V.S.Murthi and Shri.M.V.Ananthakrishna, who are liable to retire by rotation and being eligible, offer themselves for re-appointment. Board recommends their re-appointment.

In accordance with the provisions of Clause 49 of the Listing Agreement with Stock Exchanges, brief particulars of Dr.M.V.V.S.Murthi and Shri.M.V.Ananthakrishna are annexed to the Notice of the Annual General Meeting which is forming part of this Annual Report.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

In compliance with the requirements of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, the statement showing the particulars in relation to conservation of energy, technology absorbed and foreign exchange earnings and outgoings is furnished and the same forms part of this report.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement, Reports on Management Discussion & Analysis and Corporate Governance together with the Certificate of Auditors on Corporate Governance are provided separately in this Annual Report and the same forms part of Directors' Report.

FIXED DEPOSITS

The Company has not accepted any fixed deposits.

PERSONNEL

Your Company has maintained cordial relations with all its employees. Your Directors and Management express their appreciation for the commitment and devotion shown by the employees.

INSURANCE

All the movable and immovable assets of the Company have been adequately insured against various risks.

PARTICULARS OF EMPLOYEES READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, AS AMENDED

Statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the Annexure forming part of this Report.

AUDITORS

M/s Brahmayya & Co., Chartered Accountants, the Auditors of the Company, who retire at the conclusion of the forthcoming Annual General Meeting have consented to continue in office, if re-appointed. They have confirmed that their re- appointment, if made, will be in accordance with the limits specified u/s 224(1B) of the Companies Act, 1956. Your Directors recommend their re-appointment for the financial year 2012-13.

COST AUDITOR

Pursuant to section 233B(2) of the Companies Act,1956, the Board of Directors on the recommendations of the Audit Committee appointed Shri A.V.N.S.Nageswara Rao, Cost Accountant as the Cost Auditor of the Company for the year ended 31st March, 2012. The Audit Report of the cost accounts for the year ended 31st March, 2012, will be submitted to the Central Government in due course.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of annual accounts for the financial year ended 31st March, 2012, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) Such accounting policies have been selected and applied and that such judgments and estimates have been made as 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 of the Company for the period;

(iii) Proper and sufficient care for the maintenance of adequate accounting records have been taken 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;

(iv) The annual accounts of the Company have been prepared on a 'going concern' basis.

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 repayment of deposits, payment of dividend, redemption of debentures and preference shares. 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 Public Companies.

ACKNOWLEDGEMENTS

Your Directors thank the Government of India and Government of Andhra Pradesh for their support. They also place on record their appreciation for the help and encouragement received from Bank of India, PTC India Financial Services Limited (PFS) and other Financial Institutions.

Your Directors sincerely thank Customers, Vendors and Members for their sustained support and co-operation.

for and on behalf of the Board

Sd/-

Place : Hyderabad Dr. M.V.V.S. MURTHI

Date : 24.05.2012 Chairman

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Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the 29th Annual Report of VBC Ferro Alloys Limited with Audited Statements of accounts for the 12 months period ended 31st March, 2011.

FINANCIAL RESULTS:

(Rs. in Lakhs) Current Year Previous Year PARTICULARS 2010-2011 2009-2010

Gross Revenue 12057.49 9265.50

Profit before Interest, Deprec iation &Tax(PBIDT) 2047.82 1247.43

Less: Interest 377.35 323.12

Profit before depreciation and tax(PBDT) 1670.47 924.32

Less: Depreciation 127.22 148.00

Profit before tax(PBT) 1543.25 776.31

Less: Provision for taxation 523.77 257.39 including Deferred Tax Charge for the year

Profit after tax(PAT) 1019.48 518.92

Profit brought forward from previous year 2421.96 3435.38

Income tax for earlier periods - (809.00)

Deferred Tax for earlier years - (504.82)

Profit available for appropr iation 3441.44 2640.48

Transfer to General Reserve 270.00 90.00

Proposed Dividend 131.83 109.85

Tax on Proposed Dividend 21.39 18.67

Profit carried to Balance Sheet 3018.22 2421.96

DIVIDEND:

Your Directors recommend a dividend of Rs. 3/- (30%) per Equity Share for the Financial Year ended on 31st March, 2011.

INDUSTRY OVERVIEW:

During the year under review, your Company had improved its performance in comparison with previous year. The manufacture of Ferro Alloys is highly power-intensive, on an average 40% of the total cost per tonne of Ferro alloys is accounted for by power. As such, producers, who have captive power generation, are protected against volatile market trends in this industry. Hence, your Company is taking steps to set up a Captive Power Plant.

BUSINESS PERFORMANCE

During the financial year 2010-11, your Company has produced 16386 MT of Ferro Silicon against 15,198 MT during the previous year and sold 16255 MT of Ferro Silicon at a value of Rs. 11372.16 lakhs as against 15,209 MT at a value of Rs. 8754.82 Lakhs during the previous year. Your Company has exported 1387 MT of Ferro Silicon to various countries like Italy, U.K, Netherlands, Germany, Korea, France, Poland, Romania and Belgium and Importers have acclaimed for its quality standards. The profit after tax increased to Rs. 1059.84 Lakhs from Rs. 518.92 Lakhs in the previous year.

PROSPECTS

The Economic recovery is expected to continue its positive momentum across the world. The Government of India has planned a spending of Rs. 1,00,000 Crores on Infrastructure in the 12th five year plan as against Rs. 46,100 Crores in the 11th five year plan. The Infrastructure industry is expected to register strong growth in the domestic sector thus boosting the steel consumption. The upward trend in the steel industry will create huge demand for Ferro Alloy Products.

With the consistent market demand and expected realizations, the prospects of your Company during the current year are expected to be very good.

THERMAL POWER PLANT -120MW (2X60MW)

You are kindly aware that your company is setting up a 120MW (2x60MW) coal based captive power plant at Bodepalli Village, Sirpur Kagaznagar Mandal, Adilabad Dt. The Company has obtained Coal Linkage from nearby M/s Western Coal Fields Limited and suitable land required 150 Acres (approx) has already been acquired.

Ministry of Forest & Environment (MoEF), Government of India has granted Environmental Clearance (EC) for the project. The Consent for Establishment (CFE) from State Pollution Control Board(PCB) is expected soon. Other Permissions for drawl of water and energy are also expected soon. The envisaged project cost is Rs. 632 Crores. The Company has approached Rural Electrification Corporation Limited (REC) and PTC India Financial Services Limited (PFS) for term loans. The required equity for the project will be obtained through issue of shares on Rights basis and partly internal accruals of the Company.

The financial closure of the project is expected to be completed by the end of year 2011.

Capacity Expansion:

Keeping in view the increase in demand for Ferro Alloys, your Company is also expanding its Ferro alloy production capacity by setting up 3 furnaces with a rated capacity of 9MVA each (3x9MVA) at Bodepalli (V&GP), Sirpur Kagaznagar Mandal, Adilabad District, which is a notified industrially backward area to utilize the opportunities/incentives provided by Government of Andhra Pradesh. The proposed Captive Power Plant will feed the power to the expansion unit also.

INVESTMENT IN KGPL 445 MW GAS BASED POWER PLANT

Konaseema Gas Power Limited (KGPL) in which your Company has a major investment of equity, has declared commercial operations with effect from 30th June, 2010. KGPL incurred a net loss of Rs. 5701.87 lakhs during its first year of operations mainly due to insufficient supply of gas. Notwithstanding the net loss, KGPL could earn a cash profit of Rs. 3090.18 lakhs for the year ended 31.03.2011.

INVESTMENT IN OPCL 20 MW DAM BASED HYDEL POWER PLANT

20 MW Dam Based Hydro Electric Power Project owned by Orissa Power Consortium Limited (OPCL), in which your Company has invested in equity incurred a net loss of Rs. 508 lakhs mainly due to failure of normal monsoon in the Brahamini Catchment area during the year ended 31.03.2011, which is its first year of commercial operations. Notwithstanding the net loss, OPCL could earn a cash profit of Rs. 194 lakhs for the year.

DIRECTORS

In accordance with the provisions of Section 255 of the Companies Act, 1956 and clause 108 of the Articles of Association of the Company, Dr.P.L.Sanjeev Reddy and Shri.M.N.Rao, who are liable to retire by rotation and being eligible, offer themselves for re-appointment. Board recommends their re-appointment.

In accordance with the provisions of Clause 49 of the Listing Agreement with Stock Exchanges, brief particulars of Dr.P.L.Sanjeev Reddy and Shri.M.N.Rao are provided in the notes annexed to the Notice of the Annual General Meeting which is forming part of this Annual Report.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

In compliance with the requirements of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, the statement showing the particulars in relation to conservation of energy, technology absorbed and foreign exchange earnings and outgoings is furnished and forms part of this report.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement, Reports on Management Discussion & Analysis and Corporate Governance together with the Certificate of Auditors on Corporate Governance are provided separately in this Annual Report and forms part of Directors' Report.

FIXED DEPOSITS

The company has not accepted any fixed deposits.

PERSONNEL

Your Company is maintaining cordial relations with all its employees. Your Directors and Management express happiness for commitment shown by the employees.

INSURANCE

All the movable and immovable assets of the Company have been adequately insured against various risks.

PARTICULARS OF EMPLOYEES READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, AS AMENDED

Statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, as amended, is given in the Annexure forming part of this Report.

AUDITORS

M/s Brahmayya & Co., Chartered Accountants, the Auditors of the Company, who retire at the conclusion of the forthcoming Annual General Meeting have consented to continue in office, if re-appointed. They have confirmed that their re-appointment, if made, will be in accordance with the limits specified u/s 224(1B) of the Companies Act, 1956. Your Directors recommend their re-appointment for the financial year 2011-12.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of annual accounts for the financial year ended 31st March, 2011, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) Such accounting policies have been selected and applied and that such judgments and estimates have been made as 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 of the company for the period;

(iii) Proper and sufficient care for the maintenance of adequate accounting records have been taken 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;

(iv) The annual accounts of the company have been prepared on a ‘going concern' basis.

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 repayment of deposits, payment of dividend, redemption of debentures and preference shares. 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 Public Companies.

ACKNOWLEDGEMENTS

Your Directors thank the Government of India and Government of Andhra Pradesh for their support and place on record its appreciation for support and encouragement received from Bank of India.

Your Directors also thank all Members, Customers, Vendors, and its dedicated employees for their co-operation and

for and on behalf of the Board

Sd/- Dr. M.V.V.S. MURTHI Chairman

Place: Hyderabad Date : 26.07.2011

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Mar 31, 2010

The Directors have pleasure in presenting the 28th Annual Report of VBC Ferro Alloys Limited with Audited Statements of accounts for the 12 months period ended 31st March, 2010.

FINANCIAL RESULTS:

(Rs. in Lakhs) Current Year Previous Year PARTICULARS 2009-2010 2008-2009 Gross Revenue 9265.50 8496.37 Profit before Interest, Depreciation & Tax (PBIDT) 1247.43 806.87 Less: Interest 323.12 569.37 Profit before depreciation and tax (PBDT) 924.32 237.50 Less: Depreciation 148.00 138.88 Profit before tax(PBT) 776.31 98.62 Less: Provision for taxation including Deferred Tax Charge for the year 257.39 37.87 Profit after tax(PAT) 518.92 60.75 Profit brought forward from previous year 3435.38 3489.10 Income tax for earlier periods (809.00) (6.32) Deferred Tax for earlier years (504.82) 0 Profit available for appropriation 2640.48 3543.53 Transfer to General Reserve 90.00 10.00 Proposed Dividend 109.85 83.89 Tax on Proposed Dividend 18.67 14.26 Profit carried to Balance Sheet 2421.96 3435.38

DIVIDEND:

Your Directors have recommended a dividend of Rs 2.50/- per Equity Share for the Financial Year ended on 31st March, 2010.

INDUSTRY OVERVIEW:

During the year under review, the Indian Ferro Alloys Industry had shown signs of recovery in domestic and export markets. However, the prices are yet to stabilize. The units in Andhra Pradesh have suffered production losses due to severe power cuts imposed by the power distribution companies. However, the units with captive power have been able to maximize the production.

BUSINESS PERFORMANCE:

During the financial year 2009-10, your Company has produced 15,198 MT of Ferro Silicon against the production of 11,340 MT of Ferro Silicon during the previous year and sold during the year 15,209 MT of Ferro Silicon for a value of Rs. 8754.82 lakhs as against 11,723 MT for a value of Rs. 8144.68 Lakhs during the previous year. Your Company has exported 2,447 MT of Ferro Silicon to various countries like Italy, U.K, Netherlands, Germany, Korea, France, Poland, Romania and Belgium and acclaimed for its quality products. The profit after tax rose to Rs. 518.92 Lakhs as against Rs. 60.75 Lakhs in the previous year.

PROSPECTS

The signs of recovery of economic growth and a number of on-going domestic infrastructure development projects in India and China are boosting the global steel demand. The Infrastructure Industry, the largest end-use sector for steel, is expected to register strong growth in the domestic market as the Government of India has recognized the need for implementation of infrastructure projects on priority basis for economic prosperity. The National Steel Policy has a target for taking steel production to 110 mn MT by the year 2020 as against present capacity of only 72.76 mn MT. In turn the Ferro Alloys production will also has to go up substantially in the coming years.

With the consistent market demand and expected realizations, the prospects of your Company during the current year are expected to be good.

THERMAL POWER PLANT - 130MW (2X65MW)

To overcome the production losses and to increase the production of Ferro Alloys, your company is setting up a 130MW (2x65MW) coal based captive power plant at Bodepalli Village, Sirpur Kagaznagar Mandal, Adilabad Dt. The necessary coal linkage has been obtained, suitable land upto 94 acres has been acquired and the other steps such as Pollution Control Permission, water and other facilities are on the envil.

INVESTMENT IN KGPL 445 MW GAS BASED POWER PLANT

Konaseema Gas Power Limited (KGPL) in which your Company has a major investment of equity, has commenced operations in 2 of its gas units with open cycle operations and is generating power, which is being sold to APTRANSCO. The Project COD is expected to be declared after commissioning third steam boiler.

INVESTMENT IN OPCL 20 MW DAM BASED HYDEL POWER PLANT

Orissa Power Consortium Limited (OPCL), 20 MW Dam Based Hydro Electric Power Project, in which your Company invested in equity has started generation and selling power to PTC India Limited and declared COD in October, 2009.

DIRECTORS

Sri G. Narayanan, Director of the Company had resigned on 23.10.2009 for personal reasons. The Board accepted his resignation and had placed on record its appreciation for the valuable services rendered by him during his tenure as Director of the Company.

With a view to strengthening the Board, Sri M.V. Ananthakrishna has been co-opted as an Additional Director by the Board of Directors at their meeting held on 14th May, 2010 and his term of office concludes at the ensuing Annual General Meeting. Sri M.V. Ananthakrishna, being eligible, offers himself for appointment and considering his experience and expertise in Power Sector and Management, the Board recommends his appointment as a Non-Executive and Independent Director of the Company u/s 255 & 256 of the Companies Act, 1956.

In accordance with the provisions of Section 255 of the Companies Act, 1956 and clause 108 of the Articles of Association of the Company, Dr.M.V.V.S.Murthi, who is liable to retire by rotation and being eligible, offers himself for re- appointment. Board recommends his re-appointment.

Sri. M.S. Lakshman Raos tenure as the Managing Director is expiring on 31s1 October, 2010 and the Board recommends his re-appointment for a further period of 5 years with effect from 1st November, 2010 for approval by the Members.

In accordance with the provisions of Clause 49 of the Listing Agreement with Stock Exchanges, brief particulars of Dr.M.V.V.S. Murthi, Sri M.V. Ananthakrishna and Sri M.S. Lakshman Rao are provided in the Notes annexed/Explanatory Statement to the Notice of the Annual General Meeting and is forming part of this Annual Report.

CONSERVATION OF ENERGY& TECHNOLOGY ABSORPTION

In compliance with the requirements of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, the statement showing the particulars in relation to conservation of energy, technology absorbed and foreign exchange earning and outgoings is furnished and forms part of this report.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement, Reports on Management Discussion & Analysis and Corporate Governance together with the Certificate of Auditors on Corporate Governance are provided separately in this Annual Report and forms part of Directors Report.

FIXED DEPOSITS

The company has not accepted any fixed deposits.

PERSONNEL

Your Company is maintaining cordial relations with all its employees. Your Directors and Management express happiness for commitment shown by the employees.

INSURANCE

Your companys movable and immovable assets have been adequately insured against various risks.

PARTICULARS OF EMPLOYEES READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, AS AMENDED

There is no employee covered under Section 217 (2A) of the Companies Act, 1956.

AUDITORS

M/s Brahmayya & Co., Chartered Accountants, the Auditors of the Company, who retire at the conclusion of the forthcoming Annual General Meeting have consented to continue in office, if re-appointed. They have confirmed that their re-appointment, if made, will be in accordance with the limits specified u/s 224(1 B) of the Companies Act, 1956. Your Directors recommend their re-appointment for the financial year 2010-11.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of annual accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) Such accounting policies have been selected and applied and that such judgments and estimates have been made as 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 the period;

(iii) Proper and sufficient care for the maintenance of adequate accounting records have been taken 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;

(iv) The annual accounts of the company have been prepared on a going concern basis.

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 repayment of deposits, payment of dividend, redemption of debentures and preference shares. 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 Public Companies.

ACKNOWLEDGEMENTS

Your Directors thank all Members, Customers, Vendors, Regulatory & Government Authorities and Bank of India for the support extended by them. Your Directors place on record their sincere appreciation for the support and contribution of employees through their dedication, hard work and commitment and look forward to the future with confidence.

for and on behalf of the Board Sd/- Place: Hyderabad Dr. M .V. V. S. MURTHI Date : 14.05.2010 Chairman