Century Extrusions Ltd Management Discussions.

ECONOMIC REVIEW

a. Global Outlook

According to the World Bank, global GDP is projected to grow at 2.9 per cent in 2019, lower than the 3 per cent growth achieved in 2018. World Bank expects global growth to slow down further to 2.8 per cent in 2020. The International Monetary Fund (IMF) global growth forecasts, although slightly better than that of World Bank, indicate a slowdown nonetheless. IMF expects global economy to grow by 3.3 per cent in 2019, which is the weakest since 2009, after an estimated growth of 3.6 per cent in 2018. IMF however predicts global growth to recover to 3.6 per cent in 2020. Global economic growth has been slowing down since the second quarter of 2018 and there are no immediate signs of a pick-up. Growing trade tensions have contributed largely to this global slowdown.

The US economy registered strong growth in 2018, riding on the stimulus provided in terms of tax cuts. However, the positive effects of that stimulus seem to be fading and the US economy can slow down in the second half of 2019.

The protectionist stance of the worlds biggest economy is causing trade friction. China, Europe, Japan, Mexico, India, and many others stand affected. Some of the affected nations have already started retaliating by imposing higher tariffs on goods exported by US. This, if continued, will have wider ramifications across the entire global supply chain.

There has been a sharp downturn in growth in Europe as well. The 19-nation Euro Area is experiencing a contraction in domestic demand along with a steep drop in industrial production. Germany and France together account for almost half of the Euro Area economy. Germany is experiencing a protracted slump in manufacturing, while household spending in France has remained virtually stagnant. The other major economy, Italy, is in a recession. In the UK, the uncertainty over Brexit continues to linger, but the possibility of a "hard Brexit" seems to have been averted, with the European Union extending the deadline for UKs departure to 31st October, 2019.

Japan experienced impressive growth in 2017, but thereafter there has been a deceleration in consumer spending, investment and export throughout 2018. With no improvement in the various macroeconomic parameters, growth is likely to remain muted in 2019.

While the international crude prices have continued to firm up during the year under review, this is unlikely to continue.

A global slowdown will adversely impact international commodity prices, especially crude and industrial metals. One positive development is the change in stance of the main central banks which had earlier started winding down the quantitative easing undertaken in the aftermath of the global financial crisis of 2008. The US Federal Reserve had started raising interest rates since 2015 which continued until last year, but its recent announcements indicate a switch to a more accommodative strategy.

b. Indian Scenario

The Indian economy continues to be a bright spot in the world map. For one more year India has held on to its position of the fastest growing major economy in the world. According to Central Statistics Office (CSO), for 2018-19, Indias GDP growth rate has been estimated to be 7.0 per cent, down from the 7.2 per cent achieved in 2017-18. According to IMF, Indias GDP growth rate is expected to pick up to 7.3 per cent in 2019 and to 7.5 per cent in 2020. According to estimates by Asian Development Bank (ADB) and the Reserve Bank of India (RBI), the Indian economy will grow at 7.2 per cent in 2019-20. However, it is worth noting that IMF, ADB, RBI and CSO have reduced their growth forecasts for India in the wake of recent developments. In the October-December quarter of 2018, Indian economy grew at 6.6 per cent, its slowest in last five quarters.

Several high frequency indicators are hinting at a slowdown in the economy. In February, 2019, the industrial output growth slowed to a 20-month low of 0.1 per cent, mainly due to contraction in the manufacturing sector. During April-February 2018-19, the Index for Industrial Production (IIP) grew at 4 per cent as against 4.3 per cent in the same period of 2017-18. Capital goods output contracted by 8.8 per cent in February 2019 indicating a major slowdown in investment.

GLOBAL ALUMINIUM MARKET OUTLOOK

The year 2018 saw the global aluminium industry being impacted by various factors including constraints in supply of raw materials and imposition of various trade restrictions and sanctions by the US Government. Prices saw some never-before-seen highs and lows and a trade war between the U.S. and its allies created concern in the international market.

Now, as the five months of the year 2019 are over, the industry has started consolidating. Most of these issues surrounding the aluminium industry are expected to be resolved and supply as well as price is stabilizing during the first half of the year. The start of 2019 has already witnessed the lifting of sanctions on Rusal by the US Government and trade negotiations between the U.S. and China are taking shape in a positive manner. The US has lifted the tariffs on Canada and Mexico paving the way for an amicable trade equation within the North American supply chain. Concerns over raw material insecurity is also slowing down with Alunorte refinery about to start full production by the second quarter of 2019 and Alcoas worker issues getting solved. Going forward, while the outlook for aluminium industry in 2019 is expected to be moderately optimistic on the supply concerns, it is also expected to be bearish on the price part.

Here is an estimated projection on how all the verticals of the aluminium value chain are likely to perform in the rest of the year in terms of demand and supply and prices.

Primary Aluminium

Base metals prices continued to slide in the in the second quarter of 2019, driven by continuous market uncertainty over the prolonged U.S.-China trade war and a slower demand situation. LME aluminium prices at all-time low due to saturation and low demand and continued high aluminium exports from China. Since the supply shock was ruled out with the lifting of sanctions, which could have supported prices, prices are back to being determined by the trends in global economy, especially China. The projection is not bullish with an indication of oversupply of the metals. Along with that, aluminium is losing the cost support due to ample supply and falling prices of alumina. The tariffs could not stop the flow of aluminium from China as it diverted the export destinations. Currently hovering at a level of US$1720 to US$1760 per tonne, it is one of the lowest periods for LME aluminium in last two years. Analysts do not expect a significant recovery of the aluminium price in the second half of the year. LME aluminium price is likely to hover at the US$ 1800 per tonne level.

Aluminum production in the world in January-May 2019 amounted to 26.40 million tonnes, which is almost flat from the same period in 2018, according to preliminary data from the International Aluminum Institute (IAI). China produced about 14.93 million tonnes, slightly up from 14.88 Mt produced in the same period last year.

We expect a deficit aluminium market in 2019. As of June 2019, inventories of aluminium now stand at 1million tonnes in warehouses approved by the LME, one of the lowest. Alcoa projects a global aluminium deficit ranging between 1.5 million and 1.9 million tonnes. The company projected a slower global aluminium demand growth of 2 to 3 per cent in 2019, predominantly due to lower transport and electrical demand growth in China. Lower production expectations in Europe and South America are likely to contribute to a global deficit.

Downstream Aluminium

Downstream sector of aluminium is growing solid with more and more aluminium producers investing in downstream expansions. Global demand is slightly slow in the first five months due to lacklustre demand from China in the electrical and transport sector. 10% import tariffs on aluminium and punitive sanctions on Rusal by the U.S. have also affected the market dynamics as downstream producers in the U.S. had to pay more to source their metal. Growing demand from the transport sector moved the market and is likely to further support the downstream sector. Demand for aluminium downstream products was up 2.1 per cent in North America in the first quarter of 2019 and is likely to remain strong rest of the year driven by the automotive sector.

Rising production and slowing domestic demand is pushing aluminium product export from China and it is growing year on year. Aluminium products exports by China increased 12.9 per cent year-on-year to 1.94 million tonnes in the first four months of 2019.

On the product side aluminium FRP continues to lead downstream demand. FRP accounts for about 32% of the global aluminium usage followed by extrusions at 31%, castings at 22% and wire rods at 8%. FRP demand will continue to grow in 2019 driven by substitution trend in transport and growth in packaging driven by can stock and foil in emerging markets.

End Users

Transportation sector will be driving demands for aluminium in the coming decade as the metal is slowly replacing steel for lightweighting, high performance and fuel economy. The proposed tariff by Trump on Auto and auto parts import is looming large on the aluminium parts makers and auto makers of Europe and Japan. Currently Trump has postponed the tariffs for six months to open the door for further negotiations. However, he might impose the tariffs if the trade situations go worse.

EVs (Electric Vehicles) have played a big role in driving aluminium demand in China till Q1 2019. In Q1 2019, aggregate sales of electric vehicles and plug-in hybrids remained explosive, growing 110 per cent to nearly 300,000 units. However, in April, sales of EVs and plug-in hybrids rose about 18 per cent to about 97,000. By May, monthly demand for EVs edged up only 1.8 per cent YoY to around 104,000 units. On March 26, 2019 the Chinese government slashed subsidies for EVs and plug-in hybrids by 50 per cent and it plans to phase out the subsidy program completely by the end of 2020. This has capped the sale of EVs in China and the market is not likely to regain its growth until the policies are changed.

So, aluminium demand from EVs will remain limited in 2019 unless there is a growing demand from Japanese, American or European carmakers.

Recycled Aluminium

Recycled aluminium will continue to play a significant role as more and more end users are focusing on increasing recycled content in their applications. Aluminium primary producers as well as the product manufacturers are investing in expanding their recycling capabilities. Close-loop-recycling will continue to play a significant part.

In 2019 total aluminium demand (Primary plus recycled) is projected to rise to around 90 million tonnes. While primary supply is likely to be around 65 million tonnes, about 25 million tonnes would be recovered from recycled scrap.

As for the trade scenario is concerned, Chinas strict scrap import policy implemented in 2018 and 50% tariffs on aluminium scrap imported from the US has changed the trade scenario between the two countries. In the first quarter of 2019, the US, the largest scrap exporter, exported 113,000 tonnes of aluminium scrap to China, down 36.5% from 178,000 tonnes exported in Q1 2018.

Aluminium cannot be seen as an independent commodity as the market is driven by forces that have impact on the entire value chain. The entire value chain moves together to bring about a turnaround in the market. H1 2019 can be seen as the settle down period after the disruptions started in 2018 and the aluminium sector will take it slow to bounce back to normalcy.

Rise in global economic growth rate is expected to increase the construction spending of customers in advanced and emerging economies, which in turn assists in aluminum market expansion.

INDIAN ALUMINIUM & ALUMINIUM EXTRUSION MARKET OUTLOOK

Aided by power and automotive sectors and the governments ‘Make in India thrust, aluminium demand in the country is expected to touch five million tonne (mt) by 2020 and eight mt by 2025 up from 3.2 mt now.kkpk

According to data by Aluminium Association of India (AAI) and Crisil Research, the countrys aluminium consumption clocked CAGR (compounded annual growth rate) of eight per cent during 2011-16. The same trend is expected to prevail till 2020.

Aluminium usage would look up as power demand is expected to shoot up from 290 Gw currently to 360 Gw by 2020-21 whereas auto demand is projected at 38 million units by then, up from 25 million units by the end of FY16.

Building & construction sector is billed as the next growth driver as aluminium with its light weight quality finds enhanced application. Further, the Government of Indias push for ‘Make in India especially in defence sector is expected to open up a gamut of opportunities for the white metal. Aluminium is widely used in defence equipment like military aircraft, ammunition hardware and missiles in the form of sheets, forgings and extrusions.

OPPORTUNITIES AND THREATS

We are constantly on the lookout for opportunities that knock on our doors, while keeping tab on the likely threats to our business.

MAJOR EXPANSION :

Expansion project at our existing plant located at (WBIIDC Industrial Growth Centre Plot No. 7A, Sector ‘B Nimpura, P.O. Rakhajungle, Dist-Paschim Medinipur, Kharagpur-721301, West Bengal), by installing a new Powder Coating Facility is likely to be commissioned by the end of June19.

Some Features of our Powder Coating Facility would be as under:

• We can handle profiles from 1.0 Mtr to 6.0 Mtrs length with a Production Capacity of 2000 Sq. Mtrs/Day (Approx. 5T/ Day)

• 50 mm extra has to be considered for Jig Marks (25 mm on either Ends)

• We have 7 Tank PT Process with Technology from M/s Chemitall Pre-treatment Chemicals & comprises of the Latest DM Spray Rinse as the ultimate Rinsing

• The Handling & Curing shall be done by Automatic Power & Free Conveyor

• The Protection Tape Application on Powder Coated Profiles will be done by Automatic Machine

• Our Architectural Powder Coating Finishes on Aluminium Profiles will be Finish Choice for Durability, Colourful, Long Lasting and Superior Finish

• Our Powder Spraying System is from Renowned ITW Gema, Switzerland with Reciprocated Automatic Guns in Enclosed, Dust Free Atmosphere to give a Vibrant Finish

• We will issue Warranty Certificates in line with our Principal Powder suppliers for periods ranging from 10 to 25 Years after we become approved applicators for Interpon Powder Coatings (AkzoNobel), Jotun Powder Coatings, DuPont Coating Solutions, Asian Paints etc

• Our Powders would retain Colour, Gloss and Weathering Performance requirements of AAMA 2603, AAMA 2604 & in some cases AAMA 2605

• Our Quality Assurance Laboratory shall have latest testing technologies, to control the outcome of the final product & will have over 10 tests in house to ensure all coated parts meet the Industry standards. Powder Coated Profiles and Sample Panels will be stored for Warranty Periods

• Tests Conducted In Our Lab shall be Dry film Thickness Test, MEK Test, Impact Test, Cross Cut Test, Conical Mandrel Test, Pressure cooker Test, Hardness Test, Gloss Level, Etching Weight Loss Test, Chrome Conversation Rate etc Highlights - Why Powder Coating from Century Extrusions Ltd?

• M/s CEL can handle longer profiles up to a length of 6.0 Mtrs.

• M/s CEL will have advanced pre-treatment technology from M/s Chemitall Pre-treatment Chemicals.

• M/s CEL has incorporated the 7 Tank PT Process, which comprises of the latest DM Spray Rinse as the ultimate Rinsing.

• A fully fledged Analytical Laboratory to analyze the Pre-treatment Process has been incorporated.

• Adding feathers to our cap will be Powder Spraying System supplied by the global leaders from ITW Gema, Switzerland, who are the worlds leaders in Powder Spraying Systems well known for their Electrostatic and Corona guns.

• Our facility will have the versatile Powder Application with Reciprocated Automatic Guns for accurate and Controlled Coating Thickness to ensure Proper Coverage at all Corners and Crevices. This process will be done in an Enclosed, Dust Free Atmosphere to give a Vibrant Finish.

• The curing will be done in Power & Free Conveyorised Oven with a close control of temperature for enhanced life and super durability. To offer customers a high quality of finished product, a final testing lab with all the Equipments to carry out the tests like the Impact Resistance, Gloss Level, Dry film Thickness and Powder Curing etc will be done.

• A Production Capacity of 2000 Sq. Mtrs/day, we are well equipped to meet our Customer Demands.

• Advantages of PC on other Enhanced life for Aluminium profiles.

• Over 200 Color choice of RAL and NCS ranges.

• A wide of range of Customized Colors to select.

• Better Resistance to Impact and Ultra Violet Radiations.

• M/s CEL will be committed for its timely delivery and highlighted quality.

SUMMARY

Various steps are to be taken for promotion of aluminium sector and facilitating its growth. India is the right place where aluminium industry can hope to see a bright future. All these factors indicate that there is a highly promising future for the aluminium industry in the country further stimulated by the huge global market potential that will give a thrust to the industry.Taking into account the population growth and the ‘Per capita consumption increase, it is expected that the domestic consumption would be around 3.4 Million Tonnes by the end of 2019. This will exceed the planned growth of 9% projected. Higher consumption levels in packaging, building and structural, automotive and consumer durable sectors, besides normal consumption in electrical, transport and other industrial sectors will contribute to this. At the higher level of income, rapid rise in demand and consumption of aluminium is expected. With the continuing trend of economic growth, per capita income is likely to increase.

Recycling of aluminium is encouraged all over the world and India is also adopting similar policies, as recycling is lees capital intensive, less polluting and more energy efficient.

COMPANY OVERVIEW AND GROWTH STRATEGY

Improved service, prompt response and wider reach to dealers, distributors and the satisfaction of customers have been our continued endeavour for business development.

Success Drivers

Our Legacy: With an experience spanning a rich 29 years, our Company enjoys a number of first mover advantages comprising a comprehensive understanding of the aluminium and aluminium extrusions market, reputed brand and a strong customer base.

Integration: We possess in-house facilities for –

- Melting, casting and homogenization of billets,

- Extrusions manufacturing with three press lines

- Die manufacturing,

- Manufacturing various value added products of extrusions for engineering applications, and

- Manufacturing Power Transmission & Distribution Hardware

With 3 extrusion press lines, the Company has a capacity to produce 15000MT of Aluminium Extrusions, which as per the information available with the Company.

Die Library: The Company possesses an inventory of more than 5000 dies to manufacture over 3500 profiles. The Company maintains back-up dies for meeting the requirements of fast moving profiles.

Availability of raw material: The Company accesses raw material (aluminium ingots and billets) from three renowned and proximate primary metal manufacturers- Vedanta Aluminium, NALCO and HINDALCO, The Company is one of Indias largest institutional aluminum ingots/billets consumers with corresponding purchase economies.

Quality assurance: The Companys manufacturing facility is accredited with the prestigious ISO-9001:2015 certification endorsing its strong quality systems. Our Company continues to emphasize on maintaining the utmost quality and safety standards in its factory. Our Company is also ISO 14001:2004 and OHSAS 18001:2007 certified.

The Company supplies extrusions as per tolerances laid down by the Bureau of Indian Standards in accordance with BIS: 2673-1979, BIS: 3965-1981 and BIS: 6477-1983, and with even stringent tolerances as per customer needs based on mutual agreement.

The sharp focus on Quality in all its initiatives has enabled our Company to launch some specific value-added services Product applications: We manufacture extruded products for varied applications, viz.:

- Profiles for Architectural Applications such as Building Systems, Structural Glazing, Curtain Walls, Aluminium Rolling Shutters, Windows, Doors, Partitions, False Ceilings, Tower Bolts, Hand Rails, Door Handles, Hinges, Drapery Rods, Modular Furniture, etc.

- Profiles for Aluminium Form work

- Profiles for Road Transport Sections

- Profiles for Rail Coach Windows & Doors

- Profiles for manufacture of Automobile Components

- Profiles for Heat Transfer in Electronics & Electrical Gadgets

- Profiles for Electrical applications such as Tubes and Flats for Bus Bars, Transmission Line Hardware such as P.G. Clamps, H-Connectors, Repair Sleeves, Lugs, Solar Panels etc.

- Profiles for Engineering Applications such as Motor Housings, Gear Pump Casings, Ferrules, A.C.Louvres, Machinery Parts, Elevators, Pneumatic Actuators, Pneumatic Cylinders, Valve Bodies, etc.

- Profiles for various Defence Applications and many more.

The Company also has necessary set up to supply extruded & cold drawn round bars and hexagonal bars in straight lengths for various engineering applications. It also has a set up to supply extruded & cold drawn rods/wires in coil form to be used as armour rods, lamp pin stock, metallizing wire, rivet stock, welding filler wire (MIG & TIG), etc.

Customer profile: The Company possesses a portfolio of over 500 reputed customers. The Company has retained most of the customers over a period of 29 years.

FINANCIAL PERFORMANCE

The Company has reported a sales turnover of Rs. 25513 lacs as against Rs. 24273 lacs in the previous financial year, recording increase of about 5.11%. The increase in sales turnover of 5.11% from previous year to this year due to the optimum utilization of production capacity, which resulting the increase in production throughout the year of the financial year 2018-19.

The Profit after Tax (PAT) for the financial year is Rs. 403 lacs as against profit of Rs. 371 lacs reflecting increase of about 8.62% in the financial performance of the Company.

Future Outlook

Extrusions

Aluminium extrusions are used for their strength, flexibility, durability and sustainability in various sectors such as construction, transportation, electrical, machinery and consumer durables. They are 100% recyclable and emits no significant hazardous gasses during processing. The increased usage in green initiatives is driving the growth of the aluminium extrusion market. Market research analyst estimates the global aluminium extrusion market to witness a tremendous growth at a rate of around 7% during the forecast period.

The growth of the automobile industry is anticipated to drive the growth of this market during the forecast period. Aluminium extrusion is replacing steel in automobiles and transport. It is preferred over other metals due to its light weight leading to reduced fuel consumption and reduced greenhouse gas emission. Moreover, aluminium is easily recyclable and resistant to corrosion, thus ensuring sustainability and durability of the vehicle.

Our Company has an installed capacity to produce 15000 MT of extrusions per annum. As against this, our production for the year was 12350 MT. We have a significant spare capacity to increase production and sales volume.

Our Company is planning to minimise the gap of installed capacity and actual production during the financial year 2019-20.

Hence The Company will positively work on 90% of its annual installed capacity from the financial year 2019-20.

The segment-wise expected demand growth is given hereafter:

1. Power Sector – Power and infrastructure sectors in India are witnessing and would continue to witness strong growth in the coming years with the boost from policy measures and budgetary allocations. Our country faces continuing power shortage. More investments to plug the gap means more aluminium extrusions.

2. The vibrant Real Estate Sector in our country - Triggered by growth opportunities in the construction sector with increasing government budgetary support for the housing sector, the Company eyes for a wider market as more homes and offices mean more aluminium extrusions. Aluminum being Green Metal and an effective substitute to wood and also being corrosion resistant favourably competes with other substitute materials such as steel and wood. The light weight, high strength and durability of aluminum alloys make aluminum attractive for building and construction.

3. Rapidly growing Transportation Sector - More road and more vehicles mean more aluminium extrusions. The Growing Vehicular aluminium content for light weighting of vehicles to save energy will drive aluminium demand further.

4. Engineering Applications- Aluminium Extrusions are increasingly being used to manufacture forged and forged &

machined components for use as parts of machinery, fastners, rivets, wire rope ferrules, motor housings for domestic pumps, hydraulic gear pump casings, heat sinks, ladders, elevators, etc.

5. The Sustained Agriculture Emphasis in our Country – More investments in irrigation mean more aluminium extrusions.

6. Solar Energy Industry is an emerging opportunity, which implies significant consumption opportunities for aluminium extrusions from solar panels over the years to come. Century Extrusions Ltd.

7. Indian Defence Sector: Aluminium extrusions are consumed in a wide range of applications in this sector, comprising tail-end fuse connectors for detonator shells and grenades, frame-work for tents and as a roll-over ‘mattress for tanks to navigate difficult terrains. Given the significant supply deficits, high growth potential and conducive government policies, a large opportunity

Power T & D Hardware

India today stands at the threshold of being an economic superpower. Power is one of the key requirements to support and sustain our economic growth. Power is a key ingredient in driving growth in manufacturing & services. Aluminium finds growing use in this space as it is directly used in the overhead transmission and distribution lines.

Power Transmission and Distribution Hardware Fittings are required for use on Overhead Transmission and Distribution Lines for connecting Insulators with Tower/Pole Cross Arms and Insulators with conductors.

The Company has manufacturing facilities for casting of Aluminium Alloys, manufacturing of Extruded products in Aluminium & its Alloys, Wire Drawing, Helical Products, Fabrication of Ferrous & Non-Ferrous Components, Argon Welding, Electric Arc Welding, Machining, Bundle Spacer Assembly, Vibration Damper Assembly, Conductor Accessories, Clamp Connectors for Hardware Assembly, and manufacturing of Tools, Dies & Moulds. Aluminium is also used in insulated and underground cables laid in large populated urban areas and in reserved forests (to avoid deforestation), Round Tubes are used for corona control rings, grading rings, mid-span compression joints, dead-end clamps and jointing sleeves, among others, signifying huge opportunities for extrusions in the power sector.

The Company has successfully registered itself as a supplier of its products with a number of State Electricity Boards during the year and the process is continuing. The process will get further momentum as company achieves requirements of minimum years of supply track record and experience, with each passing year. The Company has received substantial orders from the said State Electricity Boards, Transmission and Distribution Line State based utilities and Erection Contractors.

RISKS AND AREAS OF CONCERN

The Companys capability to assess and manage business risks is crucial in achieving targets. In the current economic scenario, the Company perceives the following risks and concerns.

a) Market Competition: The Company is operating in a highly competitive market as market dynamics are forever changing with entry of new players in the field of extrusion manufacturing. New players are targeting resellers consequently old players who were earlier in reseller markets are turning towards end users creating competition for the Company. With free market economy now prevailing in India, high quality imported extrusions are freely available in the local market. Hence unless Indian Extrusion Industry, particularly in the unorganized sector undertakes technological upgradation in the foreseeable future, over next five years, this sector may be wiped out of the market by availability of cheaper and superior quality imported products.

b) Delay in clearances/approval by Govt. agencies: There are delays in obtaining lease renewals for land mortgaged with financial institutions and banks. This adversely affects the financial facilities obtained from the Banks. c) Competition from local manufacturers: Some of the customers prefer local suppliers for faster deliveries. Further to compete with local suppliers, we have to sacrifice our margin to neutralize the effect of higher Freight and Central Sales Tax. We are located in a comparatively under-developed part of the country and the demand in this part is not good enough to account for our capacity. We have to sell a substantial quantity (over 70%) in other parts of India where our realization is lower compared to local supplies due to impact of the high freight and Central Sales Tax.

d) Retention of experienced manpower: Company faces a challenge in retaining the trained work force. The Company has created employee friendly policies and a conducive environment for work life balance.

e) Price Inflation Risk: Fluctuating raw material prices have been witnessed too often over the past few years. Continuous monitoring of aluminium metal inventory in order to get maximum benefit or alternatively to minimize loss by keeping ideal inventory levels in each circumstance is a major challenge, and this is regularly monitored at the highest level in the Company.

f) Trade Union Activities: Our Workmens unions operate under the control of three different political parties .It is a challenge to meet the ever-increasing expectations from the Unions, who at times put unreasonable demands due to inter-union rivalry in a bid to secure the support of larger number of workmen.

RISK MANAGEMENT

Your Company has a system based approach to business risk management. Backed by a strong internal control system, the current risk management framework consists of the following elements:

A strong and independent Internal Audit Function carries out risk focused audits enabling identification of areas where risk management processes may need to be improved. The Audit Committee of the Board reviews Internal Audit findings and provides strategic guidance on internal controls. The Audit Committee closely monitors the internal control environment within the Company and ensures that Internal Audit recommendations are effectively implemented.

The Senior Management of the Company periodically reviews the risk management framework to effectively address the emerging challenges in a dynamic business environment.

The Company strives to identify opportunities that enhance Organizational values while managing & mitigating risks that can adversely impact its future performance.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company has two business segments i.e. manufacturing of Aluminum Extruded Products and manufacturing of Power Transmission and Distribution Line Hardware. However, the Company does not fall under any of the criteria laid down under AS-17 and hence Segment Reporting is not applicable.

INTERNAL CONTROL SYSTEM

The internal control systems and procedure are continuously monitored to enhance its effectiveness and to be commensurate with the scale and nature of its operations. M/s Chhaparia & Associates, Chartered Accountants, Kolkata continue as the Companys internal auditors, directly reporting to the Audit Committee. During the year the Audit Committee of the Board regularly met to discharge its functions. The Audit Committee reviews compliance to the Revenue Recognition of the Company. Internal audit activities are undertaken as per the Annual Audit Plan as approved by the Audit Committee and the committee reviews compliance with the plan.

The Audit Committee regularly meets with the statutory auditors to review their observations on the financial reports.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Our Company believes that targets of the Company can only be reached with efforts from all its employees. Our Company recognizes that job satisfaction requires congenial work environment that promotes motivation among employees and therefore results in enhanced productivity, and innovation and also provide avenues for employee training and development to identify their potential and develop their careers in the Company.

The Company values contribution of its employees and follows the principle of informing all its employees about its future growth strategies.

CAUTIONARY STATEMENT

Statements forming part of the Management Discussion and Analysis covered in this report may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. The Company takes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.