MANAGEMENT DISCUSSION AND ANALYSIS
(a) Industry Structure and Development:
The Stainless steel tube and pipe industry can be classified in the organized sector,in which the Company operates has witnessed a sharp growth in capacity over the past fewyears. The growth in the product markets have shifted from the traditional focus on oiland petrochemical sector to the power sector. This shift stands to become more prominentin the next few years as the installation of nuclear power plants becomes more criticalfor the growth of the economy. There has been a revival in demand in the Fertilizer sectorowing to the governments focus on increasing the agricultural produce.
(b) Opportunities and Threats:
The growth in the power (both thermal & nuclear)/ fertilizer/ oil and petroleumsector offer opportunities for the Company's products. However, the pricing volatility ofkey raw material ingredients (such as nickel) can affect demand and usage patterns of userindustry as well as affect the viability of major project investments. Apart from this,installation of LNG terminals can have a substantial contribution in the usage ofstainless steel tubular products. The threat of dumping of secondary quality products andimposition of antidumping duties by the government on major raw materials can have adverseeffect on the demand. The effect of Nuclear disaster in Japan can have an impact on theglobal view of operating and constructing nuclear power plants which can delay the growthplans of the Company.
The management firmly believes that the Stainless Steel Tubular industry has strongfundamentals and views that this is an essential product required during the furtherindustrialization of the country. Its expansion programme which is catered to meeting thedemand for value added products is going to give the Company a chance to participate inthe specialized markets which are currently dominated with few manufacturers. Theapprovals received from users abroad will help in redevelopment of an export market whichis currently negligible in the Company's portfolio.
(d) Risk and Concerns:
The uncertainty created by the Euro crisis may affect demand of Euro area. It may alsohave a further impact on the Indian Rupee, which would make imports more expensive. TheCompany however, is taking suitable steps to ensure protection of its margins as and whenrequired. The high rate of interest and lower monsoons may continue to dampen theinvestment scenario in India
(e) Internal Control Systems and their adequacy:
The Company has adequate internal control systems in technical and financial fields.
(f) Financial Performance:
The Financial Performance of the Company has improved with better capacity utilizationand product mix.
(g) Human Resources/ Industrial Relations:
The Company has maintained good industrial relations and is continuously adding to thehuman resources of the Company.
(h) Cautionary Statement:
Statements in this report on Management Discussion and Analysis describing theCompany's objectives, projections, estimates, expectations or productions may be"forward looking statements" within the meaning of applicable securities laws orregulations. These statements are based on certain assumptions and expectations of futureevents. Actual results could differ materially from those expressed or implied. Importantfactors that could make a difference to the Company's operations include economicconditions affecting global and domestic demand and supply, finished goods prices in thedomestic and overseas markets in which the Company operates, raw-materials cost andavailability, changes in Government regulations, tax regimes, economic developments withinor outside India and other factors such as litigation and industrial relations. TheCompany assumes no responsibility to publicly amend, modify or revive any forward lookingstatements on the basis of any subsequent developments, information or events.