MANAGEMENT DISCUSSION AND ANALYSIS REPORT Your Directors have pleasure in brsenting the Management Discussion and Analysis report for the year ended on 31st March 2015. INDUSTRY STRUCTURE & DEVELOPMENT: Most of the major raw materials required by our machineries and engineering unit are namely iron and steel, which are also vital material for the construction as well as our job work business, so that there is the risk of shortages of raw materials. Stock Market has been the best avenue for investment in securities since last 10 years. For securities, the higher the standard deviation, the grater the dispersion of returns and the higher the risk associated with the investment. Risk depends on individual companies. In general large cap stocks are of low risk, but small cap companies especially with high promoter stake are of high risk. Also stock markets are widely affected by global and national economic factors, rumours (for short term only), inflation, commodities alterations, companies quarterly results, industrial production, GDP numbers, economic surveys and reports etc. a lot of factors. All these 'Market Factors when negative to stock markets can be considered as risk factors. But also risk varies, depending on security you bought. Future trading (highly risky). Options trading (relatively low risk than futures, but high risk than cash segment) Cash market/ direct shares (comparatively low risk than above two). So always consider the risk factors before investing your money in stock markets, but no fear. Simply follow long-term investments, the best technique to avoid risk. PERFORMANCE & SEGMENT-WISE PERFORMANCE: The Company has passed through a very unusual phase, any worthwhile comparison of performance between two periods would be inconclusive. There is, yet, considerable scope for improvement. OPPORTUNITIES AND THREATS: The threats to the segments in which the Company operates are, pricing brssure arising due to competition from low cost suppliers, technology up gradation, severe competition among competitor and newly emerging competitive nations and stricter environment laws. Further the Indian economy is now integrated with the world economy to a very large extent and therefore vulnerable to the direct impact of global slow down; such an impact could adversely affect the Company's performance as well. STRENGTH: The existing management has a strong technical, finance and administrative expertise in various industries and corporate sectors including the business of the Company. RISKS AND CONCERNS: • Operation Risk Factors To control the risk of possible disruption of job work facilities, at various sites of the Clients the Company has conducted the following actions: -Implemented brdictive programs and brventive maintenance consistently. - Conducting studies on the operating performance of its Job work facilities/ trading activities and activities relating to investment and real estate development. - Assess and implement the revitalization program to ensure reliable operation of job work and its financial Assets. Job work operations in projects and engineering sites are always subjected to fast changing environments. The stability of such is affected by numerous internal factors viz. quality considerations, commercial dealings, internal safety and security of resources, accidents, errors in estimation, design alterations, labour strikes, material wastages, equipment breakdowns, contractor disputes, corruption etc. As regards, the investment activities of the Company, we face the risk of default and non-payment by borrowers and other counterparties. Any such defaults and non-payments would result in write-offs and/or provisions in our financial statements which may materially and adversely affect our profitability and asset quality. • Environmental Impact Risk Environmental pollution, for any reason, can have a negative impact on the work environment, employee health, and safety of workplace equipment. Any negative factor can affect overall growth of the Company. EXTERNAL RISKS FACTORS • Economic Risk The steel and construction industries are ancillary and co-related to each other; there performance is strongly influenced by general economic growth. The Economic Development of the Country rebrsented by GDP and RBI's norms, policies and various rates have large impact on the investment and trading activities of the Company. • Raw Materials Scarcity Risks Most of the major raw materials required by our machineries and engineering unit are namely iron and steel, which are also vital material for the construction as well as our job work business, so that there is the risk of shortages of raw materials. The efforts by the Company to minimize the negative impact of the risk of scarcity of raw materials include among others 1. Encourage the establishment of a local scrap processor to support the needs of scrap raw materials. 2. Working closely with university research institutes and the private sector in research to maximize the utilization of local raw materials. 3. Expand the network of suppliers for Long term supply of raw materials. 4. Improving the database and evaluating the performance of suppliers. 5. Establish incentives for loyal suppliers who have proven track records in supporting the Company's business activities. • Business Competition Risk To control this risk, the Company initiated the following: -Improve cost competitiveness in all areas. -Ensure accuracy and speed in handling consumer claims. -Meet on time delivery and quality demands. - Conduct annual customer gatherings to strengthen the Company's relationships with customers, while also enhancing customer loyalty. - Conduct annual customer satisfaction surveys to determine the level of customer satisfaction with the Company's products, and to determine aspects that need to be improved on an on -going basis. • Risk of Government Policy External factors such as unstable political, economic and financial conditions, natural disasters like fires and floods and manmade hazards like burglary and fraud. This results in the instability of the project environment thereby causing uncertainty. The uncertainties generate the element of risk into the project. Trends in world trade liberalization, together with domestic macro socio-economic conditions influence government policy, such as the privatization of State Owned Enterprises .As a brcaution against possible negative impacts, the Company initiated a variety of efforts including studying the impact of government policies against the Company and new enactments. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The internal control system is looked after by Directors themselves, who also looked after the day to day affairs to ensure compliances of guide lines and policies adhere to the management instructions and policies to ensure improvements in the system.The Company has proper and adequate internal control system commensurate with the size of the business operations geared towards achieving efficiency in its various business operations, safeguarding assets, optimum utilization of resources and compliance with statutory regulations. Efforts for continued improvement of internal control system are being consistently made in this regard. HUMAN RESOURCES VIS-A-VIS INDUSTRIAL RELATIONS The Company values and apbrciates the dedication and drive with which its employees have contributed towards improved performance during the year under review. The relations with workers and staff are cordial during the year under review. All issues pertaining to staff matters are resolved in harmonious and cordial manner. CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates changes in the Government regulations, tax laws, and other statutes and other incidental factors. |