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Directors Report of VBC Ferro Alloys Ltd.

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


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


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


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


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

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