LGB Forge Ltd

INDUSTRY STRUCTURE AND DEVELOPMENT.

Your company's operation has been greatly affected due to continued recession in thewestern world. This forced the Company to accept orders at very low prices and the productportfolio had to be changed continuously. The quality cost due to such continuous changeof product has also impacted our profitability. Raw materials prices have alsocontinuously fluctuated aggravating the situation. With this the power crisis withfrequent shut down has caused enormous losses due to material rejection in the CNCDivisions

Each problem is being addressed to the best of the management ability and the Companyis confident of turning around in the current year. Your company will be part of thecountry's growth pattern and it will better its results in the current year.

OPPORTUNITIES

The Industrial development in India has been very good and it is continually in aexpansion rate in the current year. With particular reference to our Company's Product thegrowth of the 4 wheeler automotive market has been excellent.

THREATS

Hardening of interest rates, lack or inadequate credit facilities extended by the banksto the customers, materials and other inputs, fluctuating foreign currency, pricingpressure, global recession etc., are threat thrown to the auto component industry. Anyeconomic slow down leading to reduced growth in the vehicle industry, inflationarypressure and spiraling of input cost due to external factors may influence theprofitability of the company.

RISKS AND CONCERNS

The company recognizes that proper risk identification, evaluation and mitigation wouldhelp to achieve its target of sustained profitability and growth.

The upward variation in raw material prices adversely affects profitability. Hence thecompany constantly monitors raw material price and revises the selling prices of its'products accordingly.

The risk is assessed in Strategic Planning and Business Review & Planning. TheCompany continues to comply with the strictest of the environmental norms and regulations.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has adequate internal control systems to monitor internal business process,financial reporting and compliance with applicable laws. The company periodically reviewsthe adequacy and effectiveness of the control systems. The Audit Committee at theirmeetings regularly reviews the significant observations of the compliance and othermonitoring reports. The heads of various monitoring / operating cells and statutoryauditors are invited to attend the Audit Committee meetings

HEALTH, SAFETY, SECURITY ENVIRONMENT

The Company already has in place its own Safety System. Regular training is imparted tothe workers and staff at all levels. The increased focus on safety has resulted inimproved safety records at all our Plants and thus has improved the working environment.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Employer - employee relations continued to remain cordial during the year. Training anddevelopment of employees continue to be an area of prime importance. The devotion andcommitment of our employees has enabled the Company to fulfil its targets and deadlines intime. The total number of people employed in the Company as on 31st March 2010 was 285.

RISK MANAGEMENT

Risk Management is an integral part of the business process, With the help of experts,the Company mapped the risks at the business processes and enterprise levels and evolved arisk management framework. Mitigative measures have been identified in respect of thelatter. These would be periodically reviewed by the Board of Directors.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report contains forward looking statements basedupon the data available with the Company, assumptions with regard to global economicconditions, the government policies etc. The Company cannot guarantee the accuracy ofassumptions and perceived performance of the Company in future. Therefore, it is cautionedthat the actual results may materially differ from those expressed or implied in thereport.