Balaji Galvanising Industries Ltd

Pursuant to the revised Clause 49 of the Listing agreement, the Management Discussionand Analysis report covering the performance and outlook of the Company is given below:

Industry structure and developments

The India Steel Industry is expected to become the worlds second largest from thepresent fifth position. Massive Investment are now planned both In Government and Privatesectors by Indian and Multinational Companies. The new projects are going to be mostmodern, energy efficient and environment friendly. The Government In recent times Isfocusing to use the large Iron ore mines not for exports but to use it for domestic steelproduction. The per capita consumption of steel from the lowest level of 47 kgs againstthe per capila world average consumption of 190 kgs is bound to Increase gradually. TheCountry continues to lead in the production of sponge iron and pig iron. Efforts are beingmade to increase the rural demand by opening of more retail outlets and dealer outlets

The pricing of products Is largely depending on the input costs which have gone up dueto Inflationary pressure and the trend is continuing. As the economic slow down has beenovercome by the domestic industry and the lessons having been learnt to produce costeffective products all the Companies are now modernizing with energy efficient units andthe prices now are stable and the demand started gradually increasing over the previousyear. Wilh the expected GDP growth over 8.5% in the current year the Industry performanceappears to be promising

OPPORTUNITIES:

• The biggest opportunity before Indian steel soclor is that there is enormousscope for increasing consumption of steel in almost all sectors in India.

The Steel sector was one of the primary vehicle of economic development In independentIndia. India Is endowed with essential raw material such as iron are and coal. TheIndustry has widespread forward and backward linkages with the rest of the economy Theindustry has passed through various phases of changing domestic and external policyenvironment. The industry as a whole has responded to the emerging compulsions of thechanging times. It has survived well with its Impressive array of achievements

• The Company's core competence In manufacture of galvanized wires and otherproducts finds easy demand due to dearth of such capacities and only few units are comingup due to pollution norms. This brings the advantages In maintaining Its leadership Enlocal markets and the markets for such specialty products.

• With capacities to be fully utilized and measures being taken to further Improveon the same, the production in current year is slated to grow resulting in the revenues toimprove with better profitability.

THREATS:

• Technological changes often force the Industry structure to change. For adeveloping country like India where capital Itself Is costly, lechnologlcal obsolescenceis a major threat.

The Company's dependence on public secior Steel companies for raw material and increasein prices by them have posed threat to the realization. Efforts to develop alternativesources are proving costlier for the company

• Due to lower realizations and small size of operations, the company continues tosuflar in terms of large volume supplies. Scanty financial resources also place pressureon furcher growth In capacity

• The demand for steel is a derived demand and the purchase quantity depends onthe end-use requirement. This volatility of demand often affects the Integrated steelmanufacturers.

OUTLOOK

The Country's Steel Industry Is catching up the pace end tuning the steel majors fromall over the world. The Industry has gained strength from the Indian Economy and strongsectors like inlrastructure, Construction etc. Company Is looking towards new projects andtrying to complete the existing proiects on or before time. The Company Is planning tocurtail the operating cost and move further with the technological aspects. The increasingcost of raw material has continued to haunt the Company but can be set off due to rise Indemand thus pushing prices up leading to better realizations.

However the current economic turmoil has dented the growth curve of various industrieswhich in turn, has hit the Indian Steel Industry hard, But with the Government's plan toboost up the economy by Injecting funds In various industries like infrastructure andconstruction, growth Is expected in near luture.

RISKS & CONCERNS:

• Despite growing demand and Increase in production of steel products at domesticand global Level, there exists an imbalance in respect of supply and demand. Rising pricesof steel products at global level and domestic market may slow down the demand for steelproducts.

• The expected growth rate of Indian economy suffering a set back due to Inflationis a cause of concern and has put some mega infrastructural projects on hold. This maypush down the splraling demand for some time.

• Dynamic pricing of steel products have loomed large on the Company's pricingpollcy thereby reducing margin. The efforts for cost reduction and launch o| betterproduct mix can only offset the pressure which the Company is pursuing vigorously andbenefits may accrue in the current year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control systems are aimed at promoting operational efficiencles. TheCompany is conducting Internal audit at regular Intervals to ensure that:

a) Transactions are executed In accordance with the Company's policies andauthorizations.

b) Deployment of funds ere in accordance with the Company's policies.

The internal audit Is conducted as per the requirement of the Company and the report issubmitted to the Audit committee and to the Management. It reviews the policies andprocedures followed.

The Audit committee with three independent and non-executive directors meets regularlyto investigate any matter relating to the internal control system and reviews the internalAudit. The committee reviews the quarterly and half yearly financials before they aresubmitted to the Board of Directors.

Share Capital

During the year under review, Company has not allotted any shares.

Sacured Loans

There is no Secured Cash Credit outstanding. The outstanding loan as on 31st March 2010obtained for vehicle from Tate Motor Finance Limited is Rs 1.55 lacs. The Inter CorporateDeposits were 1.1 lakhs as against 5.34 lakhs in the previous year

Fixed Assets

Fixed Assets (Net Block) have decreased to Ra.214.60 lakhs from Rs.223.35 lakhs duringthe financial year on account of depreciation. There was an addition of Rs.9.85 lakhs onplant and machinery and electrical Installations during the year.

Current Assets

The Net current assets of the Company have increased to Rs.102.50 from Rs.53.74 lakhsdue to reduction In current liabilities.

Human Rosources

The Company believes that human assets are the biggest asset for the organization andhas created a favorable and congenial work environment to encourage Innovativeness andefficfent performance. The Company enjoys cordial employee relations

CAUTIONARY STATEMENT

The Management Discussion and Analysis report which seeks to describe the Objectives,projections, sstimates, predictions may be considered to be forward looking statements andare stated as required by applicable Laws and regulations. Actual results could differfrom those expressed or implied and are determined by many factors including global anddomestic demand - supply conditions, process, raw materials availability, tax laws,governmental policies and other statutes which may affect actual results which may bedifferent from what the Directors envisaged in terms of future performance and outlook.