MANAGEMENT DISCUSSION AND ANALYSIS :

brSENT STRENGTH OF THE COMPANY :

The company has made extensive efforts in developing of various products used in steel and is working to survive in the business.

(b) FUTURE OUTLOOK :

In Construction and Infrastructure Industry there is good demand of steel. The Steel bars and wires proposed to be manufactured by the Company by using new raw materials, and imported coal, Pig Iron etc. will find a new market for these two industries. There is a bright future for the company. Once thedirectorsfind the proposal commercially viable and receive good orders, the company will immediately start its production unit which would start earning good amount of profit for the company.

(c) COMPANY'S ACTION PLAN :

The management of your company is trying to identify and explore all the available possibilities for smooth marketing of the products of steel plates, steel bars, wires for construction industry and cast iron products for automobile industry with best available remunerative prices and also provide after sales service.

The Company is looking forward to the approval from Bombay Stock Exchange for the scheme of Amalgamation where in the company has filed composite scheme of arrangement for re-organization of share capital of HeeraIspat Limited and amalgamation of Heavy Metal & Tubes Limited (transferor company)with HeeraIspat Limited (transferee company)

The brsent business of Heavy Metal & Tubes Limitedis to carry on the business into manufacture, ferrous, non-ferrous, iron and steel, stainless steel, carbon, steel and alloy steel pipes and tubes.

The line of business of HeeraIspat Limited &Heavy Metal & Tubes Limited is same. Due to the lack of working capital facilities and low profitability, the operations of HeeraIspat Limited have come to a standstill since last few years. The merger will bring in synergy in operations of HeeraIspat Limited and Heavy Metal & Tubes Limited . HeeraIspat Limited has accumulated losses and brsently the company is having minimal business activity and assets. The scheme seeks to reconstruct the issued, subscribed and paid up capital of the Transferee Company and merge the business of the Transferor Company along with all its assets and liabilities into the Transferee Company.

It would be very difficult to carry on business by HeeraIspat Limited in the current scenario and business conditions. By virtue of the proposed scheme, HeeraIspat Limited will be able to garner the all resources available with the Transferor Company. This will facilitate the business activities of HeeraIspat Limited and ultimately benefit the shareholders.

The Transferor Company i.e. Heavy Metal & Tubes Limited has good amount of resources and is carrying on the business in steel since 1991. Heavy Metal & Tubes Limited has positioned itself well in the market to carry on the business activity. By virtue of the proposed scheme the shareholders of the transferee company i.e. HeeraIspat Limited shall get the better value of their shares in the company. The shareholders of HeeraIspat Limited shall get liquidity and exit option.

WHILSTEL BLOWER POLICY :

A. OVER COMING BARRIERS OF CURRENT OPERATIONS :

This system is proposed to be established under the Chairmanship of ShriDineshkumarSamarataji Rao and he will be further assisted by Chief operational officer (COO) and Chief financial officer (CFO). The company's operational department ensures whistle blower upon failure / shut down or breaks down of manufacturing, supply systems and service utilities of its resort project division. Upon such intimation the company has established the UPS systems for overcoming power failure problems, has established data back up systems on CDs, and is also in the process of hiring the data warehouse for retrieval of the information.

The CFO blows the whistle upon any possible financial crunch or over/extensive financial liabilities. The short term financial management system ensures overcoming any unforeseen liabilities through overdrafts on deposits or temporary borrowing on Inter Corporate deposits basis. The long term financial planning ensures productive use of long term financial funds. The company as far as possible ensures making separation in usage of short term and long term funds.

B. POSSIBLE THREATS TO FINANCIAL SYSTEMS :

The company operates in a Steel Industry where in the company is required the company is required to make heavy financial investment in products, high cost of manpower which are basically in the nature of revenue (Short Term) but the product being generated is of long term usage and can be marketed over the years which generates revenue in years. Further the company also faces threats of possible shortage of short term funds due to non completion of final products or delay in completion of the final products.

C. MANAGEMENT'S ACTION PLANS (TO OVERCOME POSSIBLE SYSTEM FAILURES) :

These are areas which are difficult for any management to overcome and control. Even though the company's HRD and technical department ensures performance appraisal of manpower which to some extent help in eliminating this risk.