Mercury Metals Ltd

Management Discussion & Analysis Report Pursuant to Clause 49 of Listing Agreement.

i) Industry Structure and Development

The Company is engaged in the business of trading of ferrous and non ferrous metals.The Company intends to extend its area of operations to other metals including of tradingof precious metals. The metal industry in which the Company is dealing is recently havingtrends of volatility and there are very good chances for the Company to develop its areaof operation in the metal industry.

ii) Opportunities and Threats

The Metal industry to which the Company belongs is high capital investment sector.Presently this sector is very volatile and needed experienced management to cope up withthe increasing competition. This sector has good business opportunity looking toincreasing demand from infrastructure sector. The present management of the Company ishaving required level of skill and looking to expansion plans; the Company will includegood mixture of experience manpower at various levels. This sector is dominated by bigplayers and requires huge investment to compete in highly volatile market the managementis also looking to restructure the capital base of the Company.

iii) Internal Control system and their adequacy

The Company has adequate system of internal control commensurate with its size andoperations to ensure orderly and efficient conduct of the business. These controls ensuresafeguard of assets, reduction and detection of frauds and error, adequacy andcompleteness of the accounting record and timely preparation of reliable financialinformation.

iv) Financial performance with respect to operational performance

The financial performance of the Company for the year 2010-11 is described in theDirectors Report.

v) Human Resources/ Industrial Relations

Your Company has undertaken certain employees’ Development initiative which havevery positive impact on the moral and team spirit of the employees. The Company hascontinued to give special attention to Human Resource/ Industrial Relations development.Industrial relations remained cordial throughout the year and there was no incident ofstrike, lock-out etc.

vi) Cautionary Statement

Statement in this Management Discussion and Analysis describing the company’sobjectives, projections, estimation and expectations are "forward lookingstatements" Actual results might differ, materially from those anticipated because ofchanging ground realities.