mahalaxmi seamless ltd Management discussions

Industrial Structure and Development

The company operates in cold drawn carbon steel seamless tubes. Due to sharp rise in steel prices raw material cost is becoming more expensive but the market acceptance of the price rise is relatively slow causing short term losses. The company is expanding its capacity to add a new bright annealing furnace. In addition, company has already made investments in a separate Stainless Steel seamless tubes plant. This plant is in response to the higher margins of SS tubes to improve its performance in the coming years.

Opportunity and Threats

Mahalaxmi Seamless Limited is basically a manufacturing Company i.e cold drawn seamless pipes and tubes. The company owns inventory for the year under review. Company has income from Interest and earnings from Foreign Income.

Segment- wise or product - wise performance

The company deals in only one product segment i.e. cold drawn seamless pipes and tubes Hence there is no reportable geographical/ different segment wise report.

Outlook

With political stability, economic indices are encouraging in general is showing good recovery in India as compared to rest of the world as help Indian industry to perform better.

Due to tremendous growth of the malls and hyper market culture, the demand of Iron and Steel Products both for industrial and domestic use is ever increasing. More over due to great potential line the growth of the industries, the demand of quality industry is increasing at geometric rate.

Risk & Concern

Due to sluggishness in the money market the velocity of circulation of the flow of money is taking a too long time to complete the business cycle. As a result of which all efforts made by the Company to improve its financials in the form of higher turnover is proved to be a futile exercise.

This has badly affected the performance of the Company during the Financial Year. Accordingly, the risk of doing business has increased to a large extent and is also a matter of concern over the future viability of the entire process of doing business to the steel industry.

Internal control systems and their Adequacy

The company has proper and adequate system of internal controls, which ensure that all the assets : are safeguarded and all transactions are authorized, recorded and reported correctly. The company maintains adequate and effective internal control s\ stem for purchase of raw materials stores, plant and machinery, equipment and other assets as well as lor sale of goods. The finance anti commercial functions have been structured to provide adequate support and controls for the business of the company.

Discussion on financial performance with respect to Operational performance

The income of the Company is Rs. 2,23,85,763/- in the current year as compared to Rs. 2,14,97,188/- in the previous year. The net profit of the Company is Rs. 40,22,461/- in the current year, as compared to net Loss Rs. 9,07,524/- in the previous year.

Material Developments in Human Resources/ Industrial Relations front, including number of people employed

The company has a team of professionally qualified personnel to look after technical and commercial aspects of business operations. Its technical team includes qualified engineers, skilled operators and expert maintenance staff. Employee relations have been cordial.

Cautionary Statement

Statement in this report on Management Discussion and Analysis describing the companys objectives, projections, estimates, expectations etc. are predictions may be "forward looking statements" within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectation of future events. Actual results could however differ from those expressed or implied. Many imported factors including global and domestic demand and supply conditions, prices, raw materials costs and availability, cost of fuel, determination of tariff, changes in government regulations, tax laws and other status may be effect the actual result which could be different from what the directors envisage in terms of future performance and outlook.