Suraj Ltd Management Discussions.

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

Industry Structure and Development:

Suraj Limited ("the Company") is Indias leading Manufacturer of Stainless Steel seamless Pipes, tubes, and "U" tubes, Flanges & fittings with Electro polishing having a plant at Survey no. 779/A, Thol, Tal:- Kadi, Dist: - Mehsana. Our products find application in important industry segments like pharmaceuticals, dyes & pigments, Oil, Gas, Refinery, etc. The day to day management of the Company is looked by the Executive Director assisted by a team of competent technical & commercial professionals.

Financial Performance:

The companys overall operational performance has been average during the financial year 2019-20; it achieved sale and other income of 17,703.47 Lakhs as against last years 17,982.49 Lakhs. Profit before tax increase from 94.73 Lakhs to 158.69 Lakhs. Total Comprehensive Income is 86.07 Lakhs, Other Equity stood at 6,850.52 Lakhs.

Opportunities, Threats, Risks and Concerns:

As is normal and prevalent for any business, the Company is likely to face competition from large scale imports. There can be risks inherent in meeting unforeseen situation, not uncommon in the industry. Company is fully aware of these challenges and is geared to meet them. Company also recognizes the risks associated with business and would take adequate measures to address the associated risks and concerns. Some of these factors include competition from multinational Companies, duty free imports by customers against export obligations, our pricing strategy being mainly dependent on import affairs and dependence on imported raw material.

Internal Control Systems and their Adequacy:

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on Business Operations.

Key elements of the Internal Control Systems are as follows:

(i) Existence of Authority Manuals and periodical updating of the same for all Functions.

(ii) Existence of clearly defined organizational structure and authority.

(iii) Existence of corporate policies for Financial Reporting and Accounting.

(iv) Existence of Management information system updated from time to time as may be required.

(v) Existence of Annual Budgets and Long Term Business Plans.

(vi) Existence of Internal Audit System.

(vii) Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake measures as may be necessary.

The Company has appointed an Independent Auditor to ensure compliance and effectiveness of the Internal Control Systems in place.

The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally the Audit Committee approves all the audit plans and reports for significant issues raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required.

Human Resource/Industrial Relations:

Human Resources Development, in all its aspects like training in safety and social values is under constant focus of the management. Relations between the management & the employees at all levels remained healthy & cordial throughout the year. The Management and the employees are dedicated to achieve the corporate objectives and the targets set before the company.

Business outlook:

Indias economic growth Domestic steel consumption is estimated to grow at 2%-2.5% in 2020, down from a 7.5% consumption growth in FY19, despite the lockdown to prevent the spread of COVID 19 that will hurt steel sales in March and April. The India Steel Production is projected to trend around 9650.00 Thousand Tonnes in 2021, according to our econometric models. The global steel industry is being impacted as our customers are hit by shutdowns, disrupted supply chains, collapsing confidence and delayed investment and construction projects, as well as a decline in consumption activity. Steel production in India has increased from 81 million tonnes (mt) in 2013-14 to 88 mt in 2014-15 with the capacity being increased from 100 mt in 2013-14 to 110 mt in 2014-15. The steel sector contributes nearly 2% of the countrys GDP and employs over 6 lakh people. Per capita finished steel consumption in 2018 was 224.5 kg for world and 590.1 kg for China (Source: World Steel Association). The same for India was 73.3 kg in 2018 (Source: JPC) and 75.7 kg (prov.) in 2019. The per capita consumption of India in 2018-19 was 74.1 kg and that in 2019-20 was 74.6 kg (prov.). After slower than expected growth in 2019, mainly due to the deep manufacturing recession in the developed economies, we are seeing a further decline in global steel demand in the second quarter of 2020. The duration of the present disruption is currently impossible to judge.

Cautionary Statement:

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.