REPORT ON CORPORATE GOVERNANCE ANNEXURE

Management's discussion and analysis report

1. Industry Structure and development.

The company's business is that of LPG marketing after bottling into cylinders. Total LPG business is in the hands of Govt. owned oil companies who are placed at a advantageous position because of sale at a subsidised price. There is revival of LPG business in a small way because of the recent change of policy in selling LPG by Govt owned oil companies.

2. Opportunities & Threats

Because of the subsidy given by Govt, oil companies have monopolized LPG business. Recently the govt. has announced new distribution policy of sale of LPG by Govt owned companies. This policy too is not open market driven price policy and LPG Bottling plants in private sector are still facing resistance from the customers because of higher sale rate. This policy of the Govt. is a threat towards the business opportunities of LPG Bottling Plants in private sector.

3. Outlook

Private sector LPG bottling plants cannot compete with Govt. oil companies who sell LPG at subsidized and Govt. controlled rates to demostic consumers. The future of LPG bottling plants is linked with Govt. policies.

The company is making efforts to revive sale of LPG to commercial segment. Company has entered into an agreement with LPG Infrastructure India Ltd. for filling of their LPG cylinders on contract basis. To cover up the losses the company has also started cylinder testing job for BPCL.

4. Risk and concerns.

Govt. decision to continue price support on LPG to Govt. owned oil companies to demostic consumers and fluctuations in prices of petroleum products in international market are matters of great risk and concern to the company.