MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The management of Sat Industries Limited is pleased to brsent its analysis report covering performance and outlook. The report contains certain forward looking statements which are subject to certain future events and uncertainties that could cause actual results to differ materially.

A. INDUSTRIAL STRUCTURE AND DEVELOPMENT

Your Company is engaged in the business of importing and exporting of goods with the head office at Mumbai and the branch office at Sharjah (UAE). The Company is engaged in the business of import and export of different merchandise.

B. OPPORTUNITIES AND THREATS

The Company see strong opportunities in the international marketing as the global market is revived in general and in the Middle East countries in particular. The Company deals in the commodities products such as galvanized steel, coils, sheets, leather products etc. In the Middle East countries, there is great spurt in the construction work and every State of the Middle East countries has chalked out long term plan for creation of the various infrastructure facilities such as bridges, roads, residential and commercial complexes, industrial estates etc. involving construction work of billions of dollars. In addition to this, the oil refineries operating in the Middle East countries are putting up more refineries and also carrying out modernization & expansion of their existing refineries. Following are the two significant threats to the Company's business :

(i) Competitive Business:

Since the company operates in world markets, competitive business can develop from any corner of the globe. The Company has to be on the lookout for tracking the competition and maintaining its competitive edge in terms of quality and value proportion.

(ii) Talent retention:

The Company has to ensure that the people working for it who constitute its major competitive advantage continue to contribute productivity to its business.

C. OUTLOOK

The future outlook of our Company like that of all other in international marketing is dependent on Government policy. Government policy needs to be clearly spelt out more particularly in respect of importing and exporting products with regard to benefits at par with other countries and bilateral trade agreements with the countries in the world . It may lead to opening up of new export markets. Barring unforeseen circumstances , the prospects are more than satisfactory.

D. RISK AND CONCERNS

With regard to international marketing involving import and export, there is no risk or concern except when the goods are exported on credit.

Your Company continues to follow suitable strategies to positively modify its risk profile by eliminating and significantly reducing key business and developing and implementing strategies to achieve the maximum possible degree of insulation from broad macroeconomic risks.

E. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has adequate internal control procedure commensurate with its size and nature of the business. These business control procedure ensures efficient use and protection of the resources and compliances with the policies, procedures and statutes. The internal control system provides for well-documented policies, guidelines, authorization and approval procedures. The Company is also planning to make a separate department for internal audit, which will carries out audit more extensively throughout the year. The prime objective of such audits is to test the adequacy and effectiveness of all internal controls laid down by the management and to suggest improvements.

F. FINANCIAL PERFORMANCE

The turnover during the year under report was Rs. 146657691/- and the loss incurred after providing for debrciation of Rs. 61100/- was Rs. 22616138/-. To improve the performance the

Company is taking all possible steps of cost control and cost reduction. These efforts will results in improved bottom line.

G. HUMAN RESOURCES/INDUSTRIAL RELATION:

The Company regards its human resources amongst its most valuable assets and proactively reviews and evolves policies and processes to attract and retain its substantial pool of technical and managerial resources through a work environment that encourages initiatives, provides challenges and opportunities and recognizes the performance and potential of its people.

In keeping with the time, the staff is imparted from time to time training in their respective fields to keep them updated with the changes in their respective fields.

R. KABRA & CO.

Chartered Accountants 515, Tulsiani Chambers, Nariman Point, Mumbai - 400 021.