Southern Magnesium & Chemicals Ltd Management Discussions

Our company currently produces magnesium turnings, chips, granules, powders and magnesium pieces. These products are supplied to different industries and are produced as per our customers specifications.

OPPORTUNITIES, RISKS, CONCERNS THREATS & OUTLOOK:

Our company has always tried to go after orders where the value addition is high, although the volumes might be smaller. This is to maximize returns on our limited resources. This means our customer base is smaller and any problem with any one of them can adversely affect our operations to a larger extent. This can be seen in the first quarter results, where the sales were lower due to some problems at our customers end and we ended with a slight loss . We are in constant touch with all our customers and also trying to acquire new customers also and hope to catch up in the second half of the year.

INTERNAL CONTROL SYSTEMS & ADEQUACY:

The Company has established an appropriate system of internal control to ensure that there exists a proper control over all the transactions and that all its assets are properly safeguarded and not exposed to risk arising out of unauthorized use or disposal. The Internal Audit is conducted at all divisions for all the key areas of business. The Internal Control System is supplemented by a programme of Internal Audit to ensure that the assets are properly accounted for and the business operations are conducted in adherence to laid down policies and procedures. The Internal Audit is oriented towards review of controls and operational improvements.

FINANCIAL AND OPERATIONAL PERFORMANCE:

Highlights of financial and operational Performance are given below:

(INR in Lakhs)

SEGMENT WISE OR PRODUCT WISE PERFORMANCE: NOT APPLICABLE HUMAN RESOURCES, INDUSTRY DEVELOPMENT RELATIONS:

Relations with the employees remained cordial in general throughout the year. In order to optimize the contribution of the employees to the Companys business and operations, in- house training is given to the employees to induce contribution to productivity increase and development programmes for all levels of employees have been devised. Occupational Health Safety and Environmental Management are given utmost importance. Total Number of people employed was 31 during the year under review.

SENIOR MANAGEMENT DISCLOSURES:

The Companys senior management makes disclosures to the Board relating to all material financial and commercial transactions as when they occur.

CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable\ securities laws and regulations and such forward-looking statements involve risks and uncertainties. Actual results could differ materially from those expressed or implied, important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys 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. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements that speaks only as of their dates.

Details of changes in key financial ratios:

For and on behalf of the Board of