Directors' cum Management Discussion and Analysis Report

Your Directors present the Statement of Profit and Loss for Financial Year (FY) ended on 31st March 2019 (FY 2018-19) and Balance Sheet as on that date along with Notes, Cash Flow Statement and Auditor's Report forming part thereof.

Financial Results

Summary of Financial Results on Consolidated and Standalone basis, for FY 2018-19 are as follows :

Aforesaid Financial Results achieved, in the opinion of your Directors, are satisfactory. Although there has been an increased demand in India and abroad, for refractories manufactured by your Company, the margins were under pressure due to selling price and cost of raw materials.

PAT is higher by 7.1% and 15.0% on Consolidated and Standalone basis compared to those of preceding FY 2017-18. Correspondingly EPS on Consolidated and Standalone basis has also been higher.

Dividend

Following your Company's policy of distributing profits, your Directors have recommended payment of Dividend @ 25% i.e. Rs. 2.50 per Equity Share for FY 2018-19, which is higher by 5% i.e. Rs. 0.50 per Equity Share than that paid for preceding FY 2017-18. If approved at the ensuing Annual General Meeting scheduled to be held on Saturday, 27th July 2019, will be distributed amongst eligible Shareholders on and after Thursday, 1st August 2019. Dividend including Dividend Distribution Tax (DDT) will entail outflow of Rs. 108.62 millions.

Industry Review, Future Outlook and Expansion Plans

During FY 2018-19, your Company having its manufacturing facilities in India and abroad in Peoples Republic of China, UK and USA, continued primarily to be a manufacturer of Specialized Refractories and Operating Systems for the Iron and Steel Industry and the German Subsidiary focused on foundry ceramics. With such a spread of manufacturing facilities, your Company has been catering to customers across the Globe selling in 58 Countries spanning 6 continents.

There has been a turnaround in the Steel sector during FY 2018-19 because of several remedial and proactive measures taken by the Governments in India and abroad. This has resulted in increased production as well as demand for Steel products particularly in Asia

Pacific. In India, Steel sector has also been a major beneficiary of Insolvency and Bankruptcy Code (IBC) which has resulted in release of idle capacities of several debt ridden entities. Improved plant utilisation and increased demand for Steel products also augurs well for your Company.

Uncertainty about BREXIT, ongoing global trade frictions, weakening of demand especially in Europe and China, are some of the concerns for FY 2019-20 and being closely monitored by your Company. However your Directors are of view that the positives outweigh the negatives in as much as Global Refractories market is expected to grow at CAGR of more than 5.2% till 2023. These have led your Directors to increase commitments towards capital expenditure inasmuch as your Company is now in the process of setting up new greenfield manufacturing facility in Visakhapatnam (India) and expanding manufacturing facility at Kandla Special Economic Zone, Gujarat (India) by creating additional capacities.

This optimism is also supported by World Steel Association's projection that Steel production will increase over next 3 to 5 years. Demand for Steel in India is also projected to grow by 7% or more in near term as the economy is expected to achieve faster growth from second half of FY 2019-20 post General Elections.

Your Company during FY 2018-19 derived 55.7% of Revenue from Operations on Standalone basis from exports. On Consolidated basis, 51.4% only of Revenue from Operations has been from Asia Pacific Region including India.

Subsidiaries

All subsidiaries of your Company performed satisfactorily during FY 2018-19. Total Revenue and PBT on consolidated basis for FY 2018-19 of your Company's immediate subsidiary, IFGL Worldwide Holdings Limited, Isle of Man are higher by 12.5% and 5.2% respectively than those of immediately preceding FY 2017-18. Further steps are being taken by the Management of your German and one of the US subsidiaries to improve their performance. As a part of ongoing corporate simplification, UK non-operating subsidiary, Hofmann Ceramic Limited was dissolved during FY 2018-19.

Corporate Governance/Vigil Mechanism etc

Report on Corporate Governance (CG Report) and related Report of the Statutory Auditors form part of this Report and are annexed hereto as Annexure 'A'. CG Report is in conformity with provisions of Regulation 34 of the SEBI LODR, 2015, amended to date.

Your Company has adopted and put in place several Policies including on Vigil Mechanism (Whistle Blower), Prevention of Sexual Harassment, Insider Trading, Internal Control, Risks Management and Transfer Pricing etc commensurate to nature and size of business of your Company. These Policies have been hosted on your Company's website www.ifglref.com and are reviewed and updated from time to time. During FY 2018-19, no complaint and or alert was received either under Vigil Mechanism (Whistle Blower) or for Sexual Harassment. The Internal Complaints Committee in place is following provisions of Sexual Harrassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Disclosures

Extract of Annual Return, being Form MGT 9, form part of this Report as Annexure 'B' -this has also been hosted on your Company's website www.ifglref.com. Information regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure 'C'. Your Company entered into transactions with related parties in ordinary course of its business and at arms length only. Thus Form AOC-2 has not been annexed with details of these transactions. During FY 2018-19, your Company did not give loans, guarantees or investments under Section 186 of the Companies Act, 2013 (the Act). Evaluation of performance of your Company's Board of Directors and its Committees and Individual Directors including Independent Directors and Chairman of Board has been carried out. Outcome of such evaluation is that the Board and its Committees continued to function satisfactorily and flow of information thereto has been befitting nature of business and size of your Company. From time to time, Directors received briefings on key matters including regulatory, which furthered their performance.

Following Announcement of Quarterly and Annual Results, your Company made quarterly presentations, conference calls and interactions, resulting in enhanced confidence of Investors in your Company. Investor Relations Advisor, Strategic Growth Advisors Private Limited co-ordinated and/or facilitated these. As on 31st March 2019, 16.21% of your Company's shares was held by Mutual Funds.

A statement in Form AOC-1 having financial information of Subsidiary Companies form part of this Report as Annexure 'D'. Your Company does not have any Indian Subsidiary. Shareholders of your Company who are desirous of having complete Statement of Accounts and related detailed information of Subsidiary Companies, may send their request therefor to your Company's Registered Office. They are being kept for inspection at Registered Office of your Company and its Subsidiaries Companies and also available on Company's website www.ifglref.com.

Information including those to be provided following Section 134(3) of the Act read with relevant provisions of the Companies

(Accounts) Rules, 2014 and Regulation 34 and 53 of SEBI LODR, 2015 have been included in Annexures hereto including Audited Financial Statements and notes forming part thereof and have not been reproduced herein again. During FY 2018-19 your Company neither invited nor accepted Deposits.

Particulars of meetings of the Board of Directors and Committees held during FY 2018-19 and attendance are given in CG Report. Gap between two meetings of your Directors did not exceed one hundred twenty days. Between end of FY 2018-19 and date of this Report, there has been no material changes and commitments, if any, in financial position of your Company. There have also not been Orders, save those mentioned in Audited Statements and Report of the Statutory Auditors, passed by the regulators or courts or tribunals likely to impact going concern status or operations in future of your Company.

Following Regulation 17(8) read with Part B of Schedule II of SEBI LODR, 2015, Certificate on Financial Statements has been received from Director and Chief Executive Officer and Chief Financial Officer of your Company.

Directors Responsibility Statement

Your Directors state that:

a) in preparation of Annual Accounts, applicable Accounting Standards have been followed.

b) Accounting Policies selected and applied are consistent and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the Profit and Loss of your Company for that period.

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the Assets of your Company and for preventing and detecting fraud and other irregularities.

d) the Annual Accounts have been prepared on a Going Concern basis.

e) Internal Financial Controls i.e. policies and procedures for ensuring orderly and efficient conduct of business, including adherence to Company's Policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information, have been laid down and that such controls are adequate and operating effectively.

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

Financial Statements for FY 2018-19 have been audited in accordance with Generally Accepted Accounting Principles as indicated in Report of Statutory Auditors. CSR, Human Resource and Industrial Relations

CG Report include details of your Company's CSR Committee and Annual Report in compliance of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is forming part as Annexure 'E'.

Particulars of Nomination and Remuneration Committee have also been included in CG Report. Nomination and Remuneration Policy adopted by your Directors based on recommendation of the Committee is hosted on your Company's website www.ifglref.com. Said Policy inter-alia provide for matters concerning Directors appointment and remuneration including criteria for determining qualifications, positive attributes, Independence of Directors and those provided in Section 178(3) of the Act. For the sake of brevity said Policy has not been reproduced here.

An Annexure having information following provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report as Annexure 'F'. Said Annexure as per provisions of Section 136 of the Act is not being circulated amongst Shareholders. However, Shareholders desirous of having said Annexure may write to the Company Secretary at the Registered Office of your Company and obtain copies thereof.

During FY 2018-19, 4(Four) persons (including Executive Directors) employed with your Company received remuneration of Rs. 102 lacs per annum or more or Rs. 8.50 lacs per month or more. As on 31st March 2019, your Company have had 627 regular employees in India and 921 worldwide.

During FY 2018-19 also, Industrial Relations in your Company remained cordial. Working environment provided to employees was conducive. Trainings were imparted, whereby employees achieved skills befitting their roles and responsibilities ultimately resulting in increased productivity. Compensation packages and benefits provided have been comparable with those of the peers and continued to motivate employees at large.

Consolidated Financial Statements

In accordance with IND AS 110 and other relevant provisions particularly Section 129(3) of the Act, Consolidated Financial Statements duly audited by Statutory Auditors, M/s Deloitte Haskins & Sells form part of this Annual Report. Consolidated Financial Statements have been prepared considering Financial Statements of Subsidiary Companies and Reports of Auditors relating thereto.

Directors and Key Managerial Personnel (KMP's)

Following provisions of Section 203 of the Act, your Company have Key Managerial Personnel, particulars whereof are appearing at Note 35 of Audited Statement of Accounts. During FY 2018-19 your approval was obtained through postal ballot for uninterrupted holding of office of Independent Director by Mr D G Rajan (DIN : 00303060), Mr K S B Sanyal (DIN : 00009497), Prof B Ray (DIN : 06965340) and Prof S Munshi (DIN : 03558948) till completion of their term i.e. upto conclusion of 15th Annual General Meeting of your Company, following provisions of Regulation 17 of SEBI LODR, 2015. All of the Independent Directors have given their statement of declaration under Section 149(7) of the Act. The Board is also of the opinion that Independent Directors continue to fulfil independence criteria and all conditions specified in the Act and SEBI LODR, 2015.

At the ensuing Annual General Meeting of your Company, Managing Director, Mr P Bajoria (DIN : 00084031) and Director and Chief Executive Officer, Mr K Sarda (DIN : 03151258) will retire by rotation and being eligible, have offered themselves for re-appointment for further period also liable to retire by rotation. Your Board and Nomination and Remuneration Committee have recommended said re-appointments and commended passing of resolutions proposed for the said purpose and more fully included in Notice of forthcoming Annual General Meeting.

All of your Directors and Senior Management Personnel as on 31st March 2019 have confirmed having complied with Code of Conduct for Board of Directors including Independent Directors and Senior Management Personnel of your Company. This code has continued to help your Company maintain standard of ethics and ensure compliance of legal requirements applicable.

Cost Auditor

For FY 2018-19, your Company has maintained accounts and records to the extent provisions of Section 148 of the Act were applicable. Your Directors have re-appointed M/s Mani & Co., as Cost Auditors of your Company for FY 2019-20 too and are seeking your approval for payment of remuneration not exceeding Rs. 3 lacs to them for that FY. In this regard your Directors commend passing of Ordinary Resolution proposed and included in Notice of forthcoming Annual General Meeting.

Secretarial Auditor

Secretarial Audit Report in Form MR-3 following provisions of Section 204 of the Act of M/s S M Gupta & Co., Practicing Company Secretaries forming part hereof as Annexure 'G'. Following Regulation 24A of SEBI LODR, 2015 they have also carried out Secretarial Compliance Audit for FY 2018-19. Both of said Report and Certificate are free of qualifications, reservations or adverse remarks.

Auditors' Report and Auditors

Report of the Statutory Auditors, M/s Deloitte Haskins & Sells (Regn No. 302009E), Chartered Accountant on Statement of Accounts for FY 2018-19 is self-explanatory. They have made no qualification, reservation or adverse remark or disclaimer in their Report. They have not reported any frauds under Section 143(12) of the Act. They will retire at conclusion of forthcoming Annual General Meeting and have not communicated their willingness to be re-appointed for further period, possibly because of provisions relating to rotation of Statutory Auditors in the Act and Rules framed thereunder. They, prior to being appointed as Statutory Auditors of your Company, were also Statutory Auditors of erstwhile IFGL Refractories Limited.

Your Board based on recommendation of Audit Committee, commend that in the vacancy caused following retirement of M/s Deloitte Haskins & Sells as Statutory Auditors of your Company, M/s S R Batliboi & Co. LLP (Regd No. 301003E/E300005) are appointed as Statutory Auditors of your Company for a period of five years i.e. from immediately after conclusion of ensuing 12th Annual General Meeting to conclusion of 17th Annual General Meeting. M/s S R Batliboi & Co. LLP have confirmed in writing their willingness to be so appointed and that they comply with all requirements and criteria specified and qualified to act as Auditors of your Company. Your Directors place on record their appreciation for services and professional advise received from M/s Deloitte Haskins & Sells over the years.

Acknowledgement

Your Directors thank all concerned particularly you the Shareholders for your continued support.