Hindusthan Udyog Ltd Management Discussions

Management Discussion and Analysis Report for the year under review is appended below:-

A. BUSINESS

The Company is engaged in the manufacturing of Alloy and Stainless Steel Castings with stringent quality requirements required in Turbines, Metal Shredding, Earth Moving and Mining Equipment, Power Plants, Pumps, Valves, Compressors and other Heavy Engineering Industries. It is also engaged in the manufacturing of Material Handling Equipments of varied nature required in Mines, Cement Plants, Power Plants and Other General Engineering Sectors. The Company has manufacturing units located in Kolkata and Nagpur.

B. REVIEW OF OPERATIONS & FUTURE PROSPECTS

The key operational highlights at both the Units were:- Nagpur Unit

• Development of Pump Casings in Super Duplex Stainless Steel grade.

• Impellers, Bowl and bell in CD4MCuN Grade developed.

• Development of 9.5 M/T single piece Discharge Bowl in Grey Cast Iron.

• Operation of new VTL Machine.

• Increase in Line moulding capacities by modification of existing line.

Kolkata Unit

• Successful development of Creep Steel Castings

• Development of Duplex Stainless Steel Grade 5A Castings with the help of technology for Hot Knockout which reduces chances of rejections of castings due to cracks.

• Removal of Low Alloy and plain Carbon Steel Items so as to concentrate on making of only High Alloy Steel Castings (H.A.S.) with good margins.

C. OPPORTUNITIES AND THREATS, RISKS AND CONCERNS

The Company sees opportunity in the development and supply of high contribution items.

Further, good opportunity also exists in catering of new export markets which needs to be aggressively tapped. However, your Company is exposed to certain risks and areas of concern for it are:-

(i) Demand for Companys highly sophisticated steel casting products in few critical segments only.

(ii) Stagnancy in the Market Demand due to General Economic conditions.

(iii) Heavy Dependence on Few Customers in the Export Market.

(iv) Currency Fluctuations in adverse direction.

(v) Fluctuations in raw material prices can affect the bottomline as most of the orders are fixed price orders with no price variation clause.

(vi) Pressure on Pricing.

(vii) Increase in Prices of Power and other Manufacturing Overheads.

D. INTERNAL CONTROL SYSTEM

The Company has internal control procedures commensurate with the nature of its business and size of its operations. The objective of these procedures are to ensure efficient use and protection of the Companys resources, accuracy in financial reports and due compliance of statutes and Company policies and procedures.

The Internal Audit function is conducted by a Senior Management Team of the Company. The reports of such audit, the progress in implementation of recommendations contained in such reports and the adequacy of internal control systems are reviewed by the Audit Committee of the Board in its periodical meetings.

E. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Industrial Relations were cordial during the year under review. At all levels, employees of the Company are fully committed to the growth of the Company and there was no loss of work due to any industrial relation problem during the year.