MANAGEMENT DISCUSSION & ANALYSIS REPORT

Mahamaya Steel Industries manufactures MS strips, MS channels, MS Girdersand MS Flats of various sizes. It is one of the few companies in the country to manufacture 600 MM joist and 250 MM angles. The Company has kept pace with modern time, by continuously modernizing its plant and equipment so that its product confines to specification as required by different customers. The Company's future performance is closely linked to dynamic changes in the economy and global steel scenario. Here's a look at the business environment and changing steel dynamics

BUSINESS ENVIRONMENT

Prime Minister Narendra Modi's leadership has seen India's economy doing better relative to other countries and much better compared with the country before Prime Minister Modi and his party took over.

First two years saw overhauling of economic policy as anticipated. In the fiscal year ended March 31, India's gross domestic product rose 7.6%, helping it overtake China as the fastest-growing big economy in the world. That's up from 6.6% in the last full fiscal year. Inflation is almost half of what it was at a couple of years ago. India's budget deficit has shrunk to 3.9% of GDP from 4.4%. Foreign-direct investment and foreign exchange reserves have reached new peaks.

Further, the government has promoted investing in infrastructure to boost GDP with a total budgetary allocation - US$ 20.32 billion (Rs 137,333 crore) or almost 30 percent of the Union Budget.

In the last two years, the government has relaxed foreign-investment rules in more than a dozen sectors including insurance, pensions and railways, cut red tape and pushed through legislative proposals to simplify bankruptcy procedures and strengthen intellectual property rights. It has also fast-tracked road building, railway and highways expansion. It has had some big legislative failures including the inability to get lawmakers' approval for the crucial Goods and Services Tax (GST) as well as a new law to streamline the process of acquiring land for important projects.

Economic think-tank NCAE recently projected India's economic growth rate to improve marginally to 7.7 per cent in 2016-17 against the backdrop of IMD's forecast of better monsoon rains this year.The agriculture sector has witnessed feeble growth on account of drought for two successive years. The average rate of growth in the agricultural and allied sectors' GDP for 2014- 15 and 2015-16 has been a low 0.5 percent. Two consecutive years of sub-par monsoon have had a significant impact on the output of both food as well as non-food crops.

The economic scenario is expected to change asIndia Meteorological Department (IMD) has brdicted monsoon for 2016-17 at 106 percent of the Long Period Average (LPA) with a model error of 5 per cent, "which may have a positive impact on agriculture and thereby the economy.

STEEL INDUSTRY OVERVIEW

Domestic finished steel production de-grew by 1.9 percent during the brvious fiscal as a substantial chunk of the incremental domestic demand was captured by the burgeoning steel imports. Despite a slowdown post September-2015, India's steel imports still managed to register over 25 percent annual growth in the last fiscal.

Moreover, due to the weak international steel prices, domestic manufacturers were reluctant to push exports, which contracted by over 27 percent during the brvious fiscal.On the raw material front, India's iron ore production grew by 23 percent in the last fiscal, reaching 155 million tonne. It is expected to increase further this year, and prices are unlikely to recover in the near term, which would be beneficial to domestic steel mills

According to a recent report released in June 2016 by rating agency ICRA, domestic steel players are likely to enjoy better profitability in the near term due to improved steel prices in the current year, supported by imposition of minimum import price (MIP) by the government,Post the operationalization of MIP, domestic hot-rolled coil (HRC) prices have witnessed a sharp increase of about 25 percent from their lows reached in February 2016.According to ICRA's research update report on the steel industry, players can see additional gains due to an increase in sales volumes, as imports are likely to reduce in the current year.Although MIP is scheduled to expire in the second quarter of the fiscal, currently buoyant international prices, along with the extension of safeguard duty (SGD) up to March 2018, will continue to help Indian steel producers.

However, the prospect of international prices declining again cannot be ruled out, given the still adverse demand- supply equation in the world, the final outcome of the anti- dumping investigations initiated by the Directorate General of Anti-Dumping and Allied Duties would be a key determinant of longer term price trends in the domestic market.

Although India's steel consumption growth improved to 4.6 percent during 2015-16 from 3.1 pe cent in the brvious fiscal, driven by the automobile and road construction sectors, a sustained recovery in other steel intensive sectors like capital goods and infrastructure is still not in sight.

OPPORTUNITIES AND THREATS

OUR STRENGTHS

We believe that the factors which contribute to our strengths are our ability to adapt to the everchanging environment, maintaining continuous growth, creating new market opportunities, efficient leadership qualities and maintaining goodcustomer relationship.

THREATS AND RISKS

Degrowth in coal production, crude oil, natural gas, petroleum refinery products and reduced electricity generation will severelyaffect the Steel Industry in future. If these economic conditions persist then Indian steel industries will have to face a toughsituation. The year ahead appears to be challenging due to increase in competition, increasing interest rates, inflation, fluctuatingmarkets and foreign exchange as well due to occurrence of natural calamities. The Company has to overcome these issues byupgrading the current technologies used and serving to demands made by the customers. Rising fuel prices and shrinkage ofthe margins, Availability of finance at reasonable interest costs, Stiff competition owing to surplus capacities, volatile foreign exchange rates, Slowdown in the demand, etc. are major threats.

OUTLOOK

Long-term fundamentals of the Indian economy remain robust; howeverthe sluggish global environment has impactedsentiments in the domestic market in the short term. But it is expected to be only a temporary phenomenon and prospects forcoming times look better than last year. The rate at which there is increase in urbanisation, income and consumer demand inIndia, the demand for steel will increase at a constant pace.

In order to meet the opportunities upcoming, the Company has taken several steps to ensure that there has been sufficient increase in supply and distribution of products, technologyenhancement, customer engagements etc. The management strongly believes that there will be considerable improvement inthe external economic environment and consistency in consumer demand in the forthcoming financial year.

PERFORMANCE ANALYSIS

Recession in steel industry saw decline a sharp decline in finished products. The average sales price of billets & blooms has been decreased by 22 percent and the average sales price structures have been decreased by 23 percent. Likewise, the prices of end cutting (scrap) declined by 28 percent which in turn affected Company's performance and resulted in cash loss during financial year 2015-16.

Despite tough environment with the sector, the Company achieved a remarkable performance on the operational front. The Company has achieved a remarkable 10 percent increase in the capacity utilisation of both divisions and 30 percent increase in sales quantity of its main products (billets & blooms by 24 percent, structures by 35 percent). However, due to continuous fall in market prices of Company's products the revenues from operations grew by 6 percent. Revenues from operations for the year ended March 31, 2016 stood at Rs. 30926.31 lakhs against Rs. 29145.42 lakhs in the brvious year.

The average sales price of billets & blooms has been decreased by 22 percent and the average sales price structures fell by 23 per cent. Similarly the prices of end cutting (scrap) has decreased by 28 percent which resulted in increase in loss by Rs. 963.43 lakhs during financial year 2015- 16.

On the other hand. the prices of Power and Fuel have gone up by 9.75% resulting in increase in Loss by Rs. 473.92 Lakhs. Similarly Financial Costs has been increased by Rs. 192.09 Lakhs on account of increase in Interest Rates and Employee Cost, Administrative and Selling Expenses has increased by Rs. 23.00 Lakhs and Rs. 65.96 Lakhs respectively. However due to increase in capacity utilisation by 10 percent, the Company has able to save Rs. 62.72 Lakhs on account of Operational Efficiencies in Contractor Payments and Lower Burning Loss.

In spite of Cash Loss, the Company has timely cleared its all Statutory Dues such as Central Excise Duty, Service Tax, TDS, VAT, CST, and EPF & ESI Contributions. Also the Instalments of Term Loans from Banks and Financial Institutions has been cleared on respective due dates.

Also the Company is continuously working on up gradation and modernization of Plant & Machineries.

INTERNAL CONTROL AND SYSTEMS

Management firmly believes that a strong internal control system with flexibility is imperative to realize Company's vision. Accordingly the Company always gives priority to it to achieve Efficiency of Operation, Accuracy and Promptness of financial operating, Safeguard of Company assets, Compliance with laid down policies and procedures, and Compliance with rule and regulations.

HUMAN RESOURCE DEVELOPMENT / INDUSTRIAL RELATIONSHIP

As on 31st March 2016, the company has 327 employees in its family. Industrial and employee relations with the Company remain cordial throughout the year. It has been with the fulfilment of our market commitments, prompt communication, and participation in social activities and to provide challenging and safe working atmosphere in the company, wherein every employee can develop his own strength and deliver his expertise in the interest of the Company.

Board of Directors on record thanks to all of the employees for their valuable contribution towards the growth of the Company. Mahamaya Steel encourages its team members to go beyond the scope of their work, undertake voluntary projects that enable to learn and contribute innovative ideas in meeting goals of the company.

CAUTIONARY STATEMENT

The purpose of this Annual Report is to provide information to the members of the Company. The statements made in this report may contain certain forward looking statements regarding Company's objectives, projections, estimates and expectations. As forward looking statements are statements relating to the future the actual results could differ materially from those exbrssedor implied. Nothing in this Annual Report should be construed as a profit forecast.