S S Forgings & Engineering Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

The improvement in global economies is likely to offer much needed fillip to steel consumption in the region where clear focus on infrastructure development has already been prioritized. Therefore, steel consumption in the region is estimated to take a rebound steadily in 2012.

Your Company has entered into new area of the business of projects and infrastructure development. These industries are poised for huge growth for several years to support the GDP growth of India. The Government of India has estimated the GDP to grow approximately at 6.7% for the financial year 2012-13.

OUTLOOK, OPPORTUNITIES AND THREATS

Opportunities are available both in the domestic and overseas markets. Your Company, to explore opportunities with existing and new customers, has developed dedicated account teams to focus on each customer. Your Company’s expansion plans are very much a foot.

Your Company is undertaking continuous endeavors for expansion of its domestic and overseas customers by implementing new facilities. For establishing manufacturing facilities, your Company has started work for its Nardhana Plant. The Company has already purchased land situated at MIDC, Nardhana Industrial Area, Dist. Dhule and taking off possession from MIDC Authorities. The power and water has reached to the site and the Company will start building construction activity there. The company is expected to start production activity there in the Financial year 2012-13.

Your Company has proposed to diversified its activity in the business of projects and infrastructure development. As the company has taken up the new line of business, your directors are focusing towards this field. To unlock the potential and expertise of the management and in view of the available opportunities in infrastructure and related activities, the Company ventured into project and infrastructure development and related business. Accordingly, your Directors expect huge opportunity in these areas.

The Company being engaged in the Infrastructure and Realty sector and having expertise and support of group developers, it has huge potential for growth.

Your Company to address the concerns relating to rising interest rate, material cost, energy cost, availability of power and volatility in foreign exchange is taking steps to reduce the adverse impact on the profitability. Your Company is meeting the challenge at a global level by focusing on complex higher value adding products, design & development capabilities and entering into alliances.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has established internal control systems, which provide reasonable assurance with regard to safeguarding of the Company’s assets, promoting operational efficiency and ensuring compliances with various statutory provisions. The internal Audit Department reviews internal control systems in various business processes and also verifies compliance of the laid down policies and procedures. Reports of the internal auditor are reviewed by the senior management and are placed before the Audit Committee of the Directors. The statutory auditor also reviews their findings with the senior management and Audit Committee.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The key performance indicators providing an insight into the performance of the company vis a vis previous year performance is presented below:

PERFORMANCE

(Amount in Rs.)

MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

The industrial relations remained good across all locations. Human resource continued to be recognized as the most valued asset. The company is adequately manned with professionals in the field of Engineering, Finance and Administration etc. In order to meet the challenge of growth and new product line, the company has organized in-house training of its staff and workmen to improve soft skills, technical knowledge, work culture and efficient manufacturing practices.

The Company has formed work committee in order to increase workers participation in the management. This initiative has paid dividends and the Company has experienced improvement in efficiencies, overall workmen satisfaction and stability.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include raw material availability and prices, cyclical demand and pricing in the company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the company conducts business and other incidental factors.