Project Report “RISK MANAGEM

Project Report



Regn. No. 200626975

Course: Post Graduate Diploma in Business Administration

Specialization: Financial Management

Address: A-39, Block – A/5
Sector – 71, Noida – 201 301 (U.P.)

Mr. Anil Jain, FCA, CS, FICWA
Group Chief Financial Officer
D P Jindal Group
Academic year 2009
This is to certify that Mr. Pradeepta Kumar Puhan is an employee of Maharashtra Seamless Ltd. for the past two years.

We have no objection for him to carry out a project work titled “BUSINESS RISK MANAGEMENT” in our organization and for submitting the same to the Director, SCDL as a part of fulfillment of the “Post Graduate Diploma in Business Administration” program.

We wish him/her all the success.


Place: Gurgaon

Date: 4th May 2009

The successful completion of the project work gives me a feeling of elevation and encouragement to perform and grow. However there are always people who helped me in completing the endeavors. I take this opportunity to thank all the people whose tremendous support and guidance helped me in completing my project work successfully. I wish to express my thanks to all the staff members for their valuable suggestion and guidance to every step. I am highly grateful to my Guide I wish to express my sincere thanks to Mr. Anil Jain, Group CFO (D P Jindal Group) for valuable support without their help and cooperation the training never have been a successful.

Finally I am also thankful to my family and friends for continuous faith in me.
REGN. NO. 200626975


Business and Risk are inseparable. Risk is an event that can impact on the income and/or reputation of an organization. In project situation, which has primarily futuristic connotations, managing risk through analysis, identification, measurement and monitoring for mitigation are significant steps. Doing business is an effort wherein financial; material and manpower resources are brought together in an organized way to accomplish a desired goal within the given constraints. Business risk relates to uncertain events or situations that potentially can adversely affect the entire business of the organization or any specific business units. Risk is a function of event, probability and possible damage. The paper would provide a conceptual framework on causes of risk situations, process of management of risk and means to minimize or avoid the occurrence of risk situations. The paper would discuss typical risk events in a business life cycle. The endeavor is to share the learning from real life experience of professional managers handling different situations in the course of their employment.

Sd/- Sd/-
Signature of student Signature of supervisor
Date : 4th May 2009 Date : 4th May 2009

1. Objective of the research 6
2. Limitations of the research 7
3. Introduction 8
Company profile 15
Risk Management policy & procedure 25
Risk Management policy overview 25
Roles & responsibility 27
Risk Management systems 29
Sample Risk Form 36
Foreign Exchange Risk Management Policy 37
5. Conclusion 63
6. Suggestion and Recommendations 64
7. Bibliography 65

Objective of the research

The objective of the research is:

* To know how to manage day-to-day affairs of an organization
* To know the risks involved in doing business
* To know how to identify and mitigate business risks
* To know the mechanism of risk management in corporate sector


It is important here to mention the hurdles and limitation that may come while working on the project. It is necessary to enlist these problems or limitations of project work. The main limitations are as follows: –

1. Time availability is limited
2. Due to use of non-probability method of sampling, in spite of my despite efforts one can expect a little element of biasness.
3. Scope of the study is very wide. It becomes difficult for me to give complete description of each and every relevant topic.
4. May be some responses to the question were very ambiguous. It becomes very difficult to interpret from them.
5. As the study was limited so samples will be Convenience sample
6. Some responses may not be willing to give any answer of the question.


Maharashtra Seamless Limited (MSL) belongs to one of the eminent and respected Industrial House owned by D.P. Jindal Group having turnover of over INR 30 Billion (US $ 750 million) & market cap of INR 50 Billion (US $ 1.2 billion). Today it is one of the largest producers of Steel Pipes & Tubes (in both Seamless and ERW pipes) in India. The Company was incorporated in the year 1988 and started its commercial production in 1992. D.P. Jindal Group is in the businesses of manufacturing of Seamless Pipes & Tubes, ERW Pipes, Offshore Oil & Gas Drilling activities, Wind Power Generation, Merchant & Project exports etc. It also executes turnkey overseas projects through one of the group company.

MSL is the only Indian manufacturer of Seamless pipes & tubes up to 14″ OD and ERW pipes up to 21″ OD, having a capacity of 350000 TPA & 200000 TPA respectively. MSL is also having 3 Layer Polyethylene & Dual Fusion Bond Epoxy Coating facilities for cross country line pipes.
MSL’s major assets include Goodwill earned by performance as a leading player in the market scenario prevailing under all circumstances and the team of well-qualified and experienced professionals such as Ex-Bankers/CA/CS/MBA/Legal consultants, Marketing Executives etc.
i) “CPE Technology”, used for Seamless Pipes & Tubes production (upto 7″ OD), is the world renowned technology.
ii) “Plug Mill Technology”, used for Higher Dia Seamless Pipes & Tubes production (from 7″ to 14″ OD), is the most reliable technology, in higher dia segment.
iii) High Frequency Induction Welding Technology, is used for ERW Pipes & Tubes (upto 21″ OD).
iv) “FUSION BOND EPOXY (FBE)” used for its already existing 3 layer polyethylene (LPE) coating facility. It is considered to be equally effective but economical coating process and all major oil companies in India like IOCL, BPCL etc are now looking for coated cross country line pipe with this coating.
The basic Raw material required for manufacturing Seamless & ERW Pipes are Steel Round Billets are required to manufacture Seamless Pipe. Billets are procured both from indigenous suppliers and from abroad. Major Indigenous suppliers are JSPL, JSW & Kalyani and steel round billets are imported from renowned mills from Europe, Far East countries, Canada. HR Coils are required to manufacture ERW Pipes. Major Indigenous suppliers are SAIL, Essar, Ispat, JSW, Lloyds etc. In Seamless pipe, there are no welding or joints and is manufactured from solid round billets. It is mainly used for High-pressure applications such as Oil & Gas Exploration & Drilling, Air and Hydraulic cylinders, Bearings, Boilers, Automobiles etc. ERW (Electric Resistance Welded) pipes are welded longitudinally, manufactured from Strip / Coil and can be manufactured upto 24″ OD. It is mainly used for low/ medium pressure applications such as transportation of water / oil. SAW (Submerged Arc Welded) pipes are either longitudinally or spiral welded, manufactured from plate / coil and can be manufactured upto 100″ OD. It is used for transportation of large volume of liquid / gases. Depending upon the application, pipes are selected according to its uses and Seamless pipes cannot be substituted for others. Only ERW & SAW pipes can be substituted.
The exploration and production of crude oil is going up, this will lead to increasing demand of Seamless pipes mainly for Oil Companies & Tubular Goods (OCTG). Globally Exploration & Production activities have increased considerably which will lead to increase in demand of Seamless Pipe world over. We are also in the process of creating additional capacity to meet emerging market needs at competitive cost by reaping benefits of scale of production. As per market feedback from Indian as well international manufacturers, we do not foresee any possibility of lowering of demand in near future owing to Energy shortages. Thus, the demand appears to continue to remain buoyant.

MSL believes in conducting its affairs with the highest levels of integrity, with proper authorizations, accountability, disclosure and transparency. The Company strongly believes in maintaining a simple and transparent corporate structure driven solely by business needs. Shareholders interests are on utmost priority and the management is only a trustee to carry out the activities in a truthful and fruitful manner.
The Board of Directors has adopted the Code Conduct and Ethics for Directors and Senior Management personnel. The Code has also been posted on the Company’s website

1. CRISIL has pronounced, “Double A” i.e. “AA” rating for the Company’s Debt Programme. This rating indicates high degree of safety with regard to timely payment of interest and principal on the instrument.
2. Fitch Ratings assigned a “AA (ind)” rating to the Company’s NCD Programme.
3. ICRA assigned a “LAA” rating to fund-based and non-fund-based facilities sanctioned by Company’s bankers. This is the high-creditquality rating assigned by ICRA.
4. ICRA assigned a “A1+” rating to short-term sanctioned bank limits for non-fund-based facilities. This is the highest-credit-quality rating assigned by ICRA.

It is a continuous endeavor of the management to keep a nice balance between retention of profit and dividend payout. MSL is a growing company and funding its capex and working capital requirement largely by internal accruals. Currently MSL is having a policy of dividend payout between 15% to 20% of the Earnings of the company. The diluted EPS for the year i.e. 2007-08 was Rs. 27.70/- and the Company had declared a dividend of 100% i.e. Rs.5.00 per equity share of Rs.5/- each.
The first ever Initial Public Offer (IPO) came out in the year 1991. The Company raised Rs.24.57 Crores through this IPO. The equity shares of Rs.10/- each were issued at par. In 2005, the Company had raised USD 75 Million through FCCBs. These FCCBs were fully converted into equity shares of Rs.5/- each at a premium of Rs.253.34 per share. The Company believes in judicious utilization of its funds raised from public/private placement of securities/financial institutions/internal accruals etc. To part finance its business plans, the Company had raised funds in the aforesaid years. The consistent Capex plans were supported largely by company’s internal accruals.

The Indian Pipe Industry is among the world’s top three manufacturing hubs after Japan and Europe. India is today at the centre stage of huge Economic turmoil across the Globe. As the US and Europe have receded into slowing down, China and India have emerged as the two engines which can fuel Economic growth in these tough times. This is the right moment for India to take its rightful position as Economic Superpower fueled by huge Entrepreneurial growth and emerging opportunities. The Steel prices have been extremely volatile and have increased considerably with the rise in the prices of scarce raw materials like coal and iron ore. However the Company has largely been able to pass on this burden as there has been a good demand in the market. The competition from China has eased out and your Company has regained its market share in the boiler segment. The recent imposition of export tax on steel pipes has been withdrawn by the government and rightly so, as it would have been a hurdle for all domestic players.

MSL has acquired a Seamless Plant in Romania having an installed capacity of 200000 TPA. The plant has been acquired on Assets Sale basis without any Liability, having the capacity to manufacture Seamless Pipes upto 6″ OD including Drill Pipes. The plant is being dismantled and will be relocated to, in the District of Raigad, Maharashtra and is likely to be operational in the next 2 years. Necessary land has been purchased and civil construction work has already started. The total cost of the project including setting up of the infrastructure at the new location for the facility and complete modernization is estimated to cost INR 325 Crores, which will be largely funded out of internal resources only. The Plant Facility would also include the Drill Pipe capability, which has a very strong demand in the current OCTG segment. It is likely to add to the substantial growth in the businesses and profitability of the Company.
The oil prices have crossed the $100 per barrel mark which is promoting exploration and drilling activity worldwide and in turn increase demand for seamless pipes. Recently the Company has bagged export orders from USA at high realizations and the market is expected to remain bullish in the near term.
Your Company is under process of procuring a state of the art solid state welder from Thermatool, UK which shall upgrade the ERW facility and also finalizing a full body ultrasonic testing machine from Tuboscope, USA which shall help the Company in obtaining Approvals from global oil MNCs.
Higher steel prices would lead to higher cost of production and ultimately reduce Company’s margins. US slowdown may affect the export business of the Company. Foreign exchange volatility, high cost of energy, rising interest rates may affect the business of the Company.

Owing to increased exploration activities, many new companies have come up in exploration activity. New opportunities have been generated; demands for Seamless & ERW pipes have been increased and in turn we are able to grow the revenues consistently. The company is able to pass on successfully the raw material price hike to the final customers both in domestic as well as exports markets. MSL had a JV with Hydril International LP, USA (now Tenaris) to manufacture premium thread connections which is a perfect situation for oil companies patronizing only premium connection. Tenaris is a global leader in manufacturing of seamless pipes & tubes and this new alliance should open up number of other business opportunities apart from premium threading. We have also developed & supplied 13 CR, casing & tubing, which is a high value added product, used in oil & gas wells. There are a few companies in the world who are manufacturing these grades. We also have a coating plant – 3LPE + DFBE for our own pipes as well as market requirement. It is considered to be equally effective but economical coating process and all major oil companies in India like IOCL, BPCL etc. are now looking for coated cross country line pipe with this coating and MSL will be now participating in the cross country coated line pipe tenders floated by these companies in near future.

Company profile

* Registered Office: Pipe Nagar,
N.H. 17, B.K.G. Road,
Taluka Roha, Distt.
Raigad-402 126, Maharashtra
* Tel.: 02194 – 238511
* Fax: 02194 – 238513
* Website
* Incorporation Date: 10.05.1988
* Chief Executive: Mr. D.P. Jindal, Chairman
* Chief Financial Officer: Mr. Anil Jain
* Company Secretary Name Mr. Pradeepta Kumar Puhan
* Market Lot of securities: 1 Business Group Name D P Jindal Group
* Industry Name: Pipe industry
* Registrar & Transfer Agent: Alankit Assignments Limited,
Alankit House, 2E/21, Jhandelwalan Extension,
New Delhi – 110 055
Phone : 011-23541234,42541234
Fax : 011-42541201
e-mail :
* Listed on: Mumbai Stock Exchange Ltd., NSE and Madras Stock Exchange.
* ISIN Code – INE271B01025

BSE Code

NSE Code 500265

MAHSEAMLES Market Cap 1,200 Cr.
Face Value Rs.5/-
Stock Prices

Scrip Code:500265 Company::MAHARASH SEA For the Period:October 2008 to April 2009
Month Open Price High Price Low Price Close Price No. of
Shares No. of
Trades Total Turnover(Rs.) * Spread (Rs.) H – L C – O October 2008 274.00 278.00 132.40 173.75 777027 4697 145,371,957.00 145.60 -100.25 November 2008 175.00 200.50 126.00 127.90 803749 8788 116,251,502.00 74.50 -47.10 December 2008 128.00 167.95 124.00 149.30 752797 8158 115,233,767.00 43.95 21.30 January 2009 152.00 174.45 120.25 125.85 262673 6740 38,741,460.00 54.20 -26.15 February 2009 127.00 135.95 115.00 122.60 1049692 12187 131,375,422.00 20.95 -4.40 March 2009 129.90 148.30 111.80 140.40 1109003 8765 143,228,257.00 36.50 10.50 April 2009 143.60 184.90 140.95 160.30 563613 9461 92,871,788.00 43.95 16.70 * Spread
H – L -> High – Low
C – 0 -> Close – Open

S. No. Name Designation 1 Mr. D.P. Jindal Chairman 2 Mr. Saket Jindal Managing Director 3 Mr. U.C. Agarwal, IAS (Retd.) Director 4 Mr. D.K. Parikh Director 5 Mr. S.P. Raj Director 6 Mr. S.D. Sharma Director

The Company has a Non-Executive Chairman who is also a promoter of the Company. One-half of the Board of the Company consists of Independent Directors. The number of Non-Executive Directors (NEDs) exceeds 50% of the total number of Directors. None of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5 Committees (as specified in Clause 49 of the Listing Agreement with Stock Exchanges), across all the companies in which they are Directors.

Chartered Accountants
New Delhi




NEW DELHI – 110 055
PHONE : 011-23541234,42541234
FAX : 011-42541201



402, Sarjan Plaza,
100, Anne Besant Road,
Opp. Telco Showroom,
Worli, Mumbai – 400 018
Sukhsagar Apptt.,
Flat No.8A, 8th Floor,
2/5, Sarat Bose Road,
Kolkata – 700 020
3A, Royal Court,
44, Venkatanarayana Road,
T. Nagar, Chennai – 600 017


Members Category Mr. U.C. Agarwal Chairman, Independent, Non-Executive Mr. D.P. Jindal Member, Non-Executive Mr. D. K. Parikh Member, Independent, Non-Executive

The terms of reference of the Audit Committee mandated by the statutory and regulatory requirements viz. Listing Agreement, Companies Act, 1956 etc., which are also in line with the mandate given by your Board of Directors, are:

a. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
b. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees;
c. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
d. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:
i. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s Report in terms of clause (2AA) of Section 217 of the Companies Act, 1956;
ii. Changes, if any, in accounting policies and practices and reasons for the same;
iii. Major accounting entries involving estimates based on the exercise of judgment by management;
iv. Significant adjustments made in the financial statements arising out of audit findings;
v. Compliance with listing and other legal requirements relating to financial statements;
vi. Disclosure of any related party transactions; and
vii. Qualifications in the draft audit report;

e. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval;
f. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems;
g. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit;
h. Discussion with internal auditors any significant findings and follow up thereon;
i. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
j. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
k. To look into the reasons for substantial defaults in payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors;
l. To review the functioning of the Whistle Blower mechanism, in case the same exists;
m. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

Name of the Members Category Mr. U.C. Agarwal Chairman, Independent, Non-Executive Mr. Saket Jindal Member, Promoter, Executive
The Board has constituted a Committee of three members under the Chairmanship of a Non Executive Director. The Committee generally meets twice in a month, to approve inter-alia, transfer/transmission of shares, issue of duplicate share certificates and reviews the status of investors’ grievances and redressal mechanism and recommends measures to improve the level of investor services.

S. No. Name Designation 1 Mr. D.P. Jindal Chairman 2 Mr. Saket Jindal Managing Director 3 Mr. S.P. Raj Wholetime Director 4 Mr. Anil Jain CFO 5 Mr. Manish Kumar President 6 Mr. R.K. Abrol V.P. – Works

1.1 Risk Management Policy Overview

Maharashtra Seamless Ltd. (MSL) is committed to effectively managing operational, financial and other risk in the context of MSL’s business strategies and with a view to achieving a balance between acceptable levels of risk and reward. MSL recognizes that risk management is of concern to all levels of the business and requires a risk management policy and process involving all personnel, with reporting structures to the MSL Board. The types of risk which may be faced by the company include:

Strategic Risk – The risk arising from concentration of resources in or dependence on a narrow range of products, markets, customers or suppliers.

Operational Risk – The risk associated with losses resulting from inadequate or failed processes, people and systems or from external events.

Market Risk – The risk associated with financial losses arising from MSL’s activities in its core business areas.

Credit Risk – The potential for financial loss where a customer or other party fails to meet their financial obligations to MSL.

Insurance Risk – The risk that a claim on a policy of insurance is not met by an insurer.

Financial Risk – The risk and losses associated with inadequate or inaccurate financial reporting.

Foreign Currency fluctuation Risk – The Foreign exchange risk is the possibility of a gain or loss occurred due to unanticipated changes in exchange rate.

This policy describes the risk management methodology, structure and system employed across the MSL Units. The policy was developed with reference to the Corporate Governance guidelines issued by the Stock Exchanges under Clause 49 of the Standard Listing Agreement.

1.2 MSL Risk Management System Overview

MSL’s risk management system (“the Policy”) focuses on:

1. Identifying risk;
2. ?Analyzing risk;
3. ?Evaluating risk; and
4. Managing risk.

The risks are documented and recorded in a risk management database that reports to all participants and stakeholders of the process.

1.2.1 Identifying, Analyzing and Evaluating the Risk

Each business unit is responsible for identifying and documenting the risks to that business. The risks to the business, including its causes, are identified and documented. Each risk is then analyzed in terms of likelihood and consequence and the adequacy of existing controls. These criteria are used to determine the level of risk, ranging from ‘low’ to ‘extreme’, and to aid in identifying the order of priority in which risks and their associated mitigating actions should be addressed by the businesses.

1.2.2 Managing the Risk

The Board oversees, reviews and monitors the risk register half yearly, or in the case of escalated and high priority risks, quarterly.

The Board receives reports from the Risk & Compliance Management Committee. This Risk & Compliance Management Committee comprises the risk management delegates of all business units. It is charged with overseeing the management of all business risks across the units with a particular view to ensuring that mitigating actions are being performed and overall risks are minimized. In order to perform this task, the Risk & Compliance Management Committee may require input from various work teams or specialists within each business.


2.1 The Board

The MSL Board is responsible for overall oversight of risk management of the Company and reviews the risk register half yearly, or as required on escalation of high priority risks.

2.2 The Risk & Compliance Management Committee

The Risk & Compliance Management Committee shall be chaired by the MSL Chief Executive Officer and comprises of:

1. ?MSL Chief Financial Officer;
2. ?appointed Risk Management Coordinator, who serves as secretary and coordinator of the committee; and
3. ?appointed risk management delegates of each MSL business unit.

Additionally, the Committee may invite statutory and/or internal auditors and relevant business specialists to attend meetings.

The Committee is responsible for:

1. ?monitoring the process of identification, analysis and evaluation of all risk and reanalyzing and reevaluating as is appropriate;
2. ?prioritizing both internal and external risks facing MSL;
3. ?overseeing the management of risks with a view to improvement and minimization;
4. ?ensuring sufficient resources/infrastructure is allocated to managing risks within each business unit;
5. ?implementing and ensuring the efficient and effective operation of the risk management policy, system and database across the businesses of the MSL; and
6. ?escalation and reporting of risks according to defined escalation rules and tolerance limits to the Board.

The Risk & Compliance Management Committee meets quarterly and as required to address escalated risks from the business units.

2.3 The MSL Business Units

Each business unit has an appointed risk management delegate who will report to the Risk & Compliance Management Committee in relation to all aspects of its risk management. The delegate will perform the task of identifying, documenting, evaluating and recommending actions in relation to risks of the relevant business unit. Additionally the delegate will review and update of the business unit’s risk register on a quarterly basis. Additional work teams or business specialists may be requested to aid in this process. The Chief Executive Officer will ensure that the delegate has access to the required resources and information in order to complete this task. Each business is responsible for:

1. ?identifying potential and actual risks to both the Business and MSL;
2. ?monitoring all risk and reanalyzing and reevaluating quarterly or as appropriate;
3. ?educating employees and contractors at all levels of the business on the importance of risk management and assisting them with identifying such risks and bringing them to the attention of management as soon as possible;
4. ?documenting risks including causes, analysis and evaluation of such risk;
5. ?recommending and implementing actions for the treatment of risks;
6. ?implementation of the risk management database and processes, including training of required participants; and
7. ?reporting risks to the Risk & Compliance Management Committee, including immediate escalation of risks according to defined escalation and tolerance rules.


Risk management is a fundamental corporate governance matter.

3.1 Definitions

Risk: The chance of something happening that will have an impact upon objectives. It is measured in terms of consequences and likelihood.

Risk Management System:

The culture, processes and structures that are directed towards the effective management of risks.
Risk Management


The systematic application of management policies, procedures and practices to the tasks of identifying, analyzing, assessing, treating and monitoring risk.

3.2 Risk Management Methodology


The seven (7) main elements of the risk management process, as shown in the above diagram, are:

1. Establish the Context: Establish the strategic, organizational and risk management context in which the rest of the process will take place. Criteria against which risk will be evaluated should be established and the structure of the analysis defined.

2. Identify Risks: Identify what, why and how things can arise.

3. Analyze Risks: Determine the existing controls and analyze risks in terms of consequence and likelihood in the context of these controls. The analysis should consider the range of potential consequences and how likely these consequences are to occur. Consequence and likelihood may be combined to produce an estimated level of risk.

4. Evaluate Risks: Compare estimated levels of risk against the pre-established criteria. This enables risks to be ranked so as to identify management priorities. If the levels of risk established are low, then risks may fall into an acceptable category and treatment may not be required.

5. Treat Risks: Accept low priority risks and monitor them for proper control. For other risks, develop and implement a specific management plan, which includes consideration of specific policies and procedures covering such issues as avoidance/reduction/transfer of risk, insurance cover, business continuity and disaster recovery planning.

6. Monitor and Review: Monitor and review the performance of the risk management system and changes, which might affect it.

7. Communicate and Consult: Communicate and consult with internal and external stakeholders as appropriate at each stage of the risk management process to address issues related to the risk and the process to manage it.

3.3 MSL Risk Management Process

3.3.1 Establishing the Context

Risk management defines the criteria for the identification of risks within the context of the wider goals, objectives and strategies of the organization. Each business unit establishes and reviews the list of relevant contexts within which risks should be identified. These contexts may include categories such as ‘Business Continuity’, ‘Client Satisfaction’ and ‘Compliance’.

3.3.2 Identifying Risks

The MSL risk assessment methodology relies on the principle that those employees who have a very good knowledge of their respective areas of the business are in the best position to provide the necessary information and assessments of risks. A participative and structured approach in the form of “workshop” sessions with nominated representatives of each business unit may be adopted to identify and assess risks in each business unit. As each risk is identified, a Risk Form is raised which will serve as the repository of all information regarding this risk throughout the identification, analysis, evaluation and treatment steps in relation to that risk. Appendix A provides a sample Risk Form.

3.3.3 Analyzing and Evaluating Risks

Each risk is analyzed to identify the consequence and likelihood of the risk occurring and the adequacy of existing controls. Consequence and likelihood are measured using criteria suggested by the Institute of Chartered Accountants of India (ICAI) or any other competent authority as may be considered appropriate and beneficial to the Company. These measures are used to establish the priority and ranking of the risk, which in turn indicates the priority for risk treatment actions. The information resulting from this evaluation of the risk is recorded on the risk form and forms the basis of the Risk Register which is used for risk management, monitoring and reporting purposes. Each appointed business unit risk management delegate is responsible for immediately intimating any risks which meet defined escalation rules to the Risk Management Coordinator or relevant committee.

3.3.4 Treating Risks

Once the risks have been identified and assessed, risk treatment measures and actions are to be initiated immediately.

Risk treatment activities may include tasks to:

1. ?reduce the likelihood of risks;
2. ?reduce the consequence of risks;
3. ?reduce both the likelihood and consequence of risk;
4. ?transfer the risk in part or in whole;
5. ?accept the low priority risk and do nothing; and/or
6. ?avoid the risk by changing business practices.

A priority is further established for each risk treatment action reflecting the complexity of the treatment, effort, funding and resources required. Each risk treatment action must also indicate the position manager responsible and the estimated time for implementation. The actions are recorded on the Risk Form and form the basis of the Outstanding Risk Treatment Action Report, which is provided to and monitored by the Risk & Compliance Management Committee. Risks that have been treated are reevaluated and reprioritized. The risk register is updated accordingly.

3.3.5 Monitoring Risks

The risk profile of every business area is dynamic and therefore subject to continuous change with the ever-present chance of a risk occurring. To manage this change, the following process of scheduled maintenance has been adopted to update and maintain the Risk Management database.


Intimation of risks which have substantial impact to the business and meet determined escalation tolerance levels to the relevant Committee or the Risk Management Coordinator.


1. ?The appointed business unit risk management delegate will review the status of risks and treatment actions with key staff in their respective business units.
2. ?Any new or changed risks will be identified and escalated if deemed necessary. Note that there may be some external stakeholder impacts.
3. ?The appointed risk management delegates of each business unit will report to the Risk & Compliance Management Committee.
4. ?The Risk & Compliance Management Committee is provided with a current Risk Register and Outstanding Treatment Actions Report. Particular emphasis is to be given to Extreme and High Risk Issues and any respective outstanding Proposed Corrective Actions (Treatment).

Half yearly:

The Risk & Compliance Management Committee will report its collective findings to the Board on a half yearly basis.


1. ?The risk management process is reviewed by the Board for efficiency and effectiveness.
2. ?The risk contexts for each business unit are reviewed.
3. ?The Risk Management Plan will be subject to annual review by the Auditor.

3.3.6 Communicating and Documenting Risks

The appointed business unit risk management delegate and the MSL Risk Management Coordinator are responsible for ensuring effective communication across all internal and external stakeholders of the risk management process. They ensure that the Risk Management database is maintained and reported appropriately and in a timely fashion according to the procedures defined in this policy. Any new or reanalyzed risks which meet defined escalation criteria must be immediately escalated to the relevant process stakeholder.

3.4 Other Stakeholders

3.4.1 Shareholders and Corporate Governance

The head of each business unit will provide a letter of representation to the CFO at the end of each reporting period stating that the risk management system is operating effectively and efficiently within their relevant business unit. These letters of representation from the business units provide input for the letter of representation to be provided by the MSL Chief Financial Officer and Chief Executive Officer to the Board, and shareholders, stating that the information provided in the annual report is based on a sound system of risk management and internal compliance.

3.4.2 Other Stakeholders

Other stakeholders, including shareholders, government regulators, lenders and clients that may be impacted by some risk matters are considered when identifying risks.

Business Area: Risk Context: Risk Sub Category: Risk Issue:
(Describe what can happen and how it can happen) Likelihood: (tick one)
??Almost certain
??Rare Consequence Description:
(describe worst case impact of risk if it occurs – include financial dollar impact where possible)
Consequence: (tick one)
??Insignificant Overall Assessment of Existing Controls (tick one):

??Adequate ??Borderline (requires improvement) ??Inadequate or Ineffective
Description of Existing Controls:
(describe existing key controls to mitigate risk)
Control Assessment:
> > > > > Risk Rating: Proposed Risk Treatment Actions: Proposed Action Position Responsible Start
Low) Risk Assessment after Treatment: Consequence Likelihood Overall Control


Maharashtra Seamless Limited (MSL) is the manufacturer of Seamless and ERW pipes. The Company is procuring its major Raw materials i.e. Steel Round Billets / HR Coils from external sources including imports from China and other countries. Almost 25-30% of its revenues come from Exports. Further MSL also supplies finished products under deemed exports to big domestic oil sector companies like ONGC, Oil India Limited, IOCL, BPCL, HPCL, Reliance Petroleum and other reputed oil and gas explorers around the world, from which inflow is in foreign currency.


The objective of the “Foreign Exchange Risk Management Policy” is to minimize and mitigate risk arising from adverse currency movements by managing the uncertainty and volatility of foreign exchange fluctuations to achieve greater predictability and stability.

MSL operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar, EURO etc. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities. The exchange rate between Indian rupee and the US dollar and various other currencies has changed substantially in recent years and may fluctuate substantially in the future.

To mitigate the risk of changes in foreign exchange rates on cash flows denominated in US dollars MSL may enter into foreign exchange forward and option contracts.

The Definite Future Foreign Currency Net Inflow is represented by the Excess of Foreign Exchange Receipts over foreign exchange payments.

MSL’s risk management strategy is to identify risks it’s exposed to, evaluate and measure those risks, decide on managing those risks, taking measures to minimise those risks, regular monitoring and reporting to competent authorities. The risk management policies include implementing strategies for foreign currency exposures, specification of transaction limits; specifying authority and responsibility of the personnel involved in executing, monitoring and controlling such transactions.


3.1 The Board
MSL Board is responsible for overall risk management of the Company and reviews the forex risk quarterly, or as required on high priority risks. Some of the important policy considerations, as mentioned in Appendix, are required to be strictly adhered to at all operational level and monitored by the board or its appointed Risk Management and Compliance Committee.

3.2 The Risk Management & Compliance Committee

The Risk Management & Compliance Committee shall be chaired by the MSL Chief Executive Officer and comprises of:

i) MSL Chief Financial Officer;
ii) MSL Company Secretary who also acts as Risk Management Committee Coordinator; and
iii) Dealing person / delegates of MSL finance unit who is looking after or responsible for day to day treasury and foreign exchange related functions.

Additionally, the Committee may also invite statutory and/or internal auditors and relevant business specialists to attend meetings, if it is desirable.

The Committee is responsible for:
* monitoring the process of identification, analysis and evaluation of foreign exchange risk and re-analyzing and re-evaluating as it deems appropriate;
* prioritizing both internal and external factors affecting MSL Foreign exchange flows;
* overseeing the management of risks with a view to improvement and minimization of forex risk;
* ensuring adequate resources/infrastructure is allocated to the people who are managing forex risks;
* implementing and ensuring the efficient and effective operation of the risk management policy, system and database; and
* escalation and reporting of risks according to defined escalation rules and tolerance limits to the Board.

The Risk Management & Compliance Committee meets quarterly and as required to address escalated risks.

3.3 Designated Officials to Undertake Transactions

The Board of Directors shall authorize persons from time to time to take appropriate actions and execute foreign exchange transactions on behalf of the Company.


Previously, MSL was adopting the policy of setting-off the net outflows from net inflows in a month. But, the said policy is fruitful when the average rate during the month is not volatile or does not change rapidly. But in today’s scenario, the market is highly volatile. The matching of outflow with inflow at the same time is not achieved because of the inflows and outflows are affected on different dates. To avoid the foreign exchange rate fluctuations, if the funds are kept in EEFC account, MSL will loose interest. In this volatile market, this practice would not be appropriate..

The imports and exports are not very consistent all the time and the same is dependent on the export commitments of the Company and the same is followed by procurement of raw materials, manufacturing of goods, dispatch of the same to the customers and finally realization of funds. This chain of activities takes a minimum period of 03-04 months putting the Company exposed to foreign exchange gain or loss due to unanticipated changes in Foreign exchange rates.

A key assumption in the concept of foreign exchange risk is that exchange rate changes are not predictable and that this is determined by how efficient the markets for foreign exchange are.

Considering the recent rise in volatility in the forex market all over the world – particularly in US Dollar and based on the assumption that currency exchange rates fluctuations are not precisely predictable, it becomes imperative for MSL to adopt a “Foreign Exchange Risk Management Policy” to protect the company against the unpredictable currency fluctuation financial risk.


4.2.1 Kinds of Foreign Exchange Exposures.

Risk management techniques vary with the type of exposures (Translation and economic) and terms of exposure.

Translation exposures, results from the need to restate foreign subsidiaries’ financial statements into the parent’s reporting currency and is the sensitivity of net income to the variation in the exchange rate between a foreign subsidiary and its parent.

Economic exposure is the extent to which a firm’s market value, in any particular currency, is sensitive to unexpected changes in foreign currency. Currency fluctuations affects the value of the firm’s operating cash flow, income statement, and competitive position, hence market share and stock price. Currency fluctuations also affect a balance sheet by changing the value of the firm’s assets and liabilities, accounts payable, accounts receivables, inventory, loans in foreign currency, investments (CD) in foreign banks; this type of economic exposures is called balance sheet exposure.

Transaction exposure is a form of short term economic exposure due to fixed price contracting in an atmosphere of exchange-rate volatility.
4.2.2 Foreign Exchange Exposure identification

The officials handling day to day forex matters are responsible for identifying, measuring and documenting the foreign exchange risks to the company including its causes, These Forex risks are then analyzed in terms of likelihood and consequence and the adequacy of existing controls. These criteria are used to determine the level of risk, ranging from ‘low’ to ‘extreme’, and to aid in identifying the order of priority in which risks and their associated mitigating actions should be addressed by the company.

Risk Estimation procedure for three major headings are given below:

Inflow: It is estimated on the basis of Definite Export Contracts in hand and their tentative inflow dates, based on production and shipment planning.

Outflow: It is estimated on the basis of Import Contract and their tentative outflow based on the due date of letter of credit and their estimated shipment date.

Value of Exposure: Then estimated Monthly Net Inflow, excess of Inflow over Outflow, is arrived at and hedged.

4.2.3 The risks facing the organization.

In MSL’s context, the type of risks which may be faced by the company and identification of the same is enumerated here below:

Credit Risk

Credit risk refers to the risk of default committed by the counterparty in fulfilling its obligation resulting in a financial loss. Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which MSL grants credit terms in the normal course of business.

Liquidity Risk

Liquidity risk is a financial risk from possible loss of liquidity. Liquidity of an organization depends upon:

– The company’s short term need for cash
– The company’s existing amounts of cash on hand
– The liquidity of the organization’s assets
– The company’s reputation in the market place in terms of being able to transact trades or being able to borrow from it.

The factors affecting the volatility:

Current domestic and global market conditions which affect directly the key foreign currencies are being analyzed regularly.


Once MSL recognizes its exposure, then MSL has to deploy resources in managing it. A heuristic for firms to manage this risk effectively is presented below which can be modified to suit MSL’s specific needs i.e. some of the following tools could be used.

Forecasts : After determining exposures, MSL’s first step is to develop a forecast on the market trends and what the main direction/trend is going to be on the foreign exchange rates and for a specified period. MSL will make forecast of the valid assumptions. Along with identifying trends, a probability should be estimated for the forecast coming true as well as how much the change would be.

Risk Estimation : Based on the forecast, a measure of the Value at Risk (the actual profit or loss for a move in rates according to the forecast) and the probability of this risk should be ascertained. The risk that a transaction would fail due to market-specific problems should be taken into account. Finally, the system risk that can arise due to inadequacies such as reporting gaps and implementation gaps MSL’s exposure management system should be estimated.

Benchmarking: Given the exposures and the risk estimates, MSL has to set its limits for handling foreign exchange exposures. MSL will decide whether to manage its exposures on a cost centre or profit centre basis.

Note: i) Cost centre approach is a defensive one and the main aim is to ensure that cash flows of a firm are not adversely affected beyond a point. ii) A profit centre approach on the other hand is more aggressive approach where the firm decides to generate a net profit on its exposure over time.

Hedging Based on the limits to manage exposure, MSL decides an appropriate hedging strategy. There are various financial instruments available such as: futures, forwards, options and swaps and issue of foreign debt.

Stop Loss: MSL’s risk management decisions are based on forecast which is estimates of reasonably unpredictable trends. It is imperative to have stop loss arrangements in order to rescue MSL if forecasts turn out wrong. MSL ensure adequate monitoring system in place to detect critical levels in the foreign exchange rates for appropriate measure to be taken.

Reporting and Review : MSL reviews reports which include profit/loss status on open contracts after marking to market, the actual exchange/interest rate achieved on each exposure, and profitability vis-à-vis the benchmark and the expected changes in overall exposure due to forecasted exchange/interest rate movements. .

4.4.1 Definition of Hedging

Hedge is an action taken in order to reduce the risk of adverse Foreign Exchange rate movements, by taking an offsetting position. These would include measures, such as buying/selling forwards for the purpose of safeguarding the value of net cash flow.

4.4.2 Importance and Objectives of Hedging

The purpose of hedging is to reduce the loss due to the unpredictability arising on account of exchange rate movements and currency movements on cash flows, earnings and equity.

The objective of hedging is to:

– Minimize transaction and translation losses on balance sheet items; and to
– Protect the anticipated exposures and risks, in the process reducing the impact on profits.
4.4.3 Rules for Hedging

A hedging transaction should be done keeping in mind the following guidelines:

– The Group Hedging Policy should have approved the hedging instruments and procedure for transacting deals.
– There should be local know how of the hedging instruments.
– It should be possible to evaluate the deals as per the ‘marked-to-market’ concept in case of need and should be reported in accordance with the guidelines of the Group Hedging Policy.
– The hedging deals should be reported as per pre-defined reporting rules, regardless of the responsibility or hedged amount or duration of the hedge.
– The decision to hedge and not to hedge should be made keeping in mind not only the Hedging ratio of the group but also the relevant foreign exchange benchmark rate as mentioned in the commercial purchase and sale contract of the merchandise product.

However, hedging should not be done permanently and automatically as in most circumstances the associated hedging cost would be expensive. Hedging should be carried only after the following things have been taken care of:

1. There has been an assessment of the key currencies to track and exposures to hedge.
2. There is a mechanism in place, which allows real-time monitoring of market conditions as to allow the company to take advantage of favorable market development while minimizing the costs of hedging.
4.4.4 Natural Hedge

Natural hedge is a position that establishes assets and borrowings in same currency that provides an offset to the expected cash flows.

4.4.5 Hedging Ratio

Hedging ratio is the ratio of number of forward / option contracts need to hedge a position in the underlying instrument. Technically, it is defined as the total amount hedged divided by the total exposure including the sum of booked and open.

4.4.6 Identification of the Hedging Instrument:

There are various kinds of financial Instruments (forwards, derivatives etc.) one can adopt as a part of its Hedging Strategy. A derivative is a Final Contract whose value is derived from the value of some other financial asset, such as a Stock Price, a Commodity Price, an Exchange Rate, an Interest Rate, or even an Index of Prices. The main role of these instruments is that they reallocate risk among financial market participants.

Following Hedging Instruments can be used with Foreign Exchange being the only Risk assumed.

4.4.7 Basic Hedging Instruments

Spot Transactions

A spot transaction is a binding obligation between a company and the bank to buy/sell a specified amount of foreign currency at an agreed exchange rate in two business day’s time. A company using spot market to deal in foreign currency is using the simplest method of transaction available. However, it carries a huge risk, as it does not allow the company to protect against adverse movement in exchange rates between pricing a contract and the need to buy/sell the foreign currency.

FX Forward Contracts

A Currency forward Contract is affected when a company enters into an agreement with a bank to buy or sell foreign currency at some future date at a predetermined rate of exchange (called the “forward rate). The forward rate agreed upon by the customer and the bank will be applied when the transaction is actually effected.

Principal Only Swaps

This would be and instrument to hedge against or gain by the movement of one currency against another. Assuming constant interest rates, a corporate that has a fixed rate of INR Liability, and holding the view that the INR would appreciate against the dollar in future, will look at paying a fixed amount of USD receive fixed amount USD receive fixed amount in Indian rupee.
Interest Rate Swap

An interest rate swap is a negotiated contractual agreement between two parties to exchange a series of interest payments for a stated period of time. Usually, one party will make fixed rate payments while the other makes floating rate payments on the same Notional Principal amount. Fixed/Floating conversion can be used to accommodate interest rate views, without altering the underlying asset or liability, or to achieve better rates than are available in the primary markets.

Cross Currency Swaps

A Cross currency swap is an agreement between two parties to exchange principal amount in two different currencies, to pay interest based on those amounts during some period of time, and to re-exchange the principal amount at maturity and in the process also being able to swap cross border interest rates.

FX Options – Put or Call

A currency option provides the right, but not the obligation, to exchange a specified amount of one currency for another at an agreed rate of exchange (the Strike price), on or between predetermined future date(s). In return for the flexibility the buyer of the option pays the seller a fee or premium.

When the spot exchange rate on maturity is more favourable to the company than the option strike price, the option will be allowed to lapse and the underlying transaction will be transacted on the spot market.

An option to buy currency at a future date is called a Call Option and an option to sell currency at a future date is called a Put Option.

Cylinder Option

A Cylinder Option is a combination of two currency options. A company usually chooses this instrument when the company does not hold a strong view on the movement of currency or does not wish to leave itself to any risks.

In a Cylinder Option, the bank sells one option to the company at one strike rate and the company sells an option to the bank at a different strike rate. Both options may have the same principal amount and maturity date. The premium payable by the company to the bank is thus offset in part or in full by the premium payable by the bank to the company.

A Swaption is an option to enter into an interest rate swap at some future date. Generally one party sells and the other party buys the right to pay or to receive at a specified fixed rate in a standard fixed/floating swap.

– A Call Swaption is the right but not the obligation to pay a fixed rate.
– A Put Swaption is the right but not the obligation to pay fixed rate.


MSL is in the business of manufacturing of Seamless Pipes and the process cycle includes both import of raw materials and exports/deemed exports of Seamless/ERW Pipes. At the time of booking orders, MSL is able to estimate the value of export orders, and the cost of raw material associated to it in INR as well as USD terms. We need to synchronize wherein we will book or imports outflows and equivalent exports inflows for the respective execution dates for buying and selling at the same Spot rate. We further receive premiums for the differential time span between import and export transaction.

The benefit of the above method can only be available, if we will execute our import and exports orders with in the scheduled planned limit; otherwise it may lead to losses/gains on account of mismatch depending upon prevailing market conditions.

For the net open position, we need to decide, whether to hedge or not to hedge for the open exposure based on predetermined hedging principles as stated above.

Exchange Gains/Losses
Exchange gains/losses arise when there is a change in between any two of the three below:

1. The Exchange rate as on the transaction date.
2. The exchange rate as on the settlement date.
3. The exchange rate as on the reporting date.

This results in gains/losses in the underlying exposures, which have to be accounted for. Such unrealized exchange gains/losses should be updated periodically and should then be re-valued at the end of the reporting period until such asset or liability is settled. However, when the settlement occurs, i.e. when the organization settles its current liabilities or receives its current assets, the exchange rate gain/loss must be recorded as realized exchange gain/loss.
Revaluation Difference

Revaluation differences on the bank and cash balances of the company, every month-end, must be accounted for as gains/losses.

Hedging Gains/Losses

Hedges have to be evaluated as per the Marked-to-Market technique. This amounts to unrealized gains/losses in the reporting period. Such gains/losses should be updated in the books and should then be re-valued as per MTM, which should be accounted for at the end of the reporting period until such a hedges matures, as per relevant Accounting Standards (AS-11 / AS-30 alongwith its relevant rules). On maturity, the hedging gain/loss must be recorded as a realized Forex gain/loss.

Risk management policy is to be reviewed periodically to see its effectiveness in offsetting the exposure to changes in the hedged item’s fair value or Cash Flows attributable to the Hedged Risk.

If this review points to the need for a change in Policy, the changes are to be proposed and with due approval of the Competent Authority, it will be incorporated in the policy.

Sl. No. Date of Issue No. of Shares of Rs.10/- each Distn. Nos Amount 1 Since incorporation 70 01 to 70 700 2 29.12.1988 928,430 71 to 928500 9284300 3 18.10.1991 24,571,500 928501 to 25500000 245715000 24.03.2001 3,322,560 25500001 to 28822560 33225600 4 03.04.2006 511,236 28822561 to 29333796 5112360 Sub-division equity shares of Rs.10/- to Rs.5/- each. 58,667,592 01 to 58667592 293,337,960 5 09.05.2006 859,220 58667593 to 59526812 4,296,100 6 11.05.2006 85,922 59526813 to 59612734 429,610 7 11.08.2006 687,376 59612735 to 60300110 3,436,880 8 30.08.2006 601,454 60300111 to 60901564 3,007,270 9 25.09.2006 601,454 60901565 to 61503018 3,007,270 10 13.10.2006 1,374,752 61503019 to 62877770 6,873,760 11 30.10.2006 1,039,656 62877771 to 63917426 5,198,280 12 23.11.2006 1,976,207 63917427 to 65893633 9,881,035 13 21.12.2006 859,220 65893634 to 66752853 4,296,100 14 15.01.2007 859,220 66752854 to 67612073 4,296,100 15 07.02.2007 68,737 67612074 to 67680810 343,685 16 06.03.2007 1,391,937 67680811 to 69072747 6,959,685 17 16.03.2007 859,220 69072748 to 69931967 4,296,100 18 01.05.2007 429,610 69931968 to 70361577 2,148,050 19 13.06.2007 171,844 70361578 to 70533421 859,220 20 28.09.2007 1 70533422 5


No. of Equity Shares held No. of Shareholders % of Shareholders No. of Shares held % of Shareholding Upto 500 27445 94.44 3711342 5.26 501 to 1000 1010 3.47 797659 1.13 1001 to 5000 406 1.40 872503 1.24 5001 to 10000 55 0.19 399500 0.57 10001 to 20000 31 0.11 468965 0.67 20001 to 30000 17 0.06 422638 0.60 30001 to 40000 9 0.03 306476 0.43 40001 to 50000 4 0.01 185146 0.26 50001 to 100000 23 0.08 1636422 2.32 100001 to 500000 38 0.13 8504551 12.06 500001 & above 24 0.08 53228220 75.46 Grand Total 29062 100.00 70533422 100.00

CATEGORY NO. OF SHARES HELD % OF HOLDING Promoter 36035033 51.09 Mutual Funds 10211241 14.48 Financial Institutions/Banks 109682 0.15 Insurance Companies 1400928 1.99 Foreign Institutional Investors 4895108 6.94 Bodies Corporate 8837268 12.53 NRI/Foreign Companies 1256564 1.78 Indian Public & Others 7787598 11.04 Grand Total 70533422 100.000

* EBIDTA Margin/MT increased from Rs. 11500 to Rs. 18140 of Seamless Pipe but EBIDTA Margin (in %) decreased from 24.14% to 23.62%. This is mainly on account of falling input cost / better sales realization.

* EBIDTA Margin/MT decrease from Rs.1689 to Rs.1304 of ERW Pipe on account of inventory losses, due to falling steel price. EBIDTA Margin (in %) decreased from 4.75% to 3.52% Again, the reasons are same as mentioned for Seamless.

* Unrealized gain during the period of Rs.2.65 Crores on Overseas Dollar Deposits & Unrealized / MTM / Opportunity Loss of Rs.27.91 Crore on Forward contract entered into hedge future receivables has been accounted for in Profit & Loss Account, considering the closing exchange rate on that date, in line with revalent Accounting Standards & ICAI Announcement.



> Global Economy has witnessed strong recessionary pressures in the later part of the year 2008-09 and is expected to continue in the current year as well. Although the signs of recovery are seen on the horizon and to happen soon.

> Global Market Demand for Seamless Pipes from Oil & Gas Industry has softened. But it is likely to go up in the third quarter onwards. However, Domestic market conditions have not that adversely affected. Domestic Oil companies are continuing their ongoing project and Exploration & production activities.

> Some competition in the Domestic market for Seamless is expected from the Imports, which could have bearing on both revenues and margins.

> The company will be now putting up intensive and aggressive marketing approach by expanding customer base both within domestic as well as international market to reduce the recessionary impact


Risk is inherent part of Company’s business. Effective Risk Management is critical to any organization for achieving financial soundness. In view of this, aligning Risk Management to Company’s organizational structure and business strategy has become integral. Over a period of year, Maharashtra Seamless Ltd. (MSL) has taken various initiatives for strengthening risk management practices. MSL has an integrated approach for management of risk and in tune with this, formulated policy documents taking into account the business requirements / best business practices. These policies address the different risk classes viz., Operational Risk, Market Risk, Credit Risk, Insurance Risk, Financial Risk, Foreign Currency fluctuation Risk.

The foundation to minimizing risk was to understand it fully and to manage it effectively through proper allocation and application during various stages of the business. It is very essential that such factors of risks be analyzed and quantified to the extent possible before any decisions are taken by the management. The risk avoidance or minimization shall be beneficial for the organization, its employees, stakeholders and community at large.
Suggestions and Recommendations

1. The Company should train its employees at strategic level to apprehend/identify risks beforehand to minimize or avoid any untoward events.
2. The risks faced and remedial majors taken thereof should be recorded for future reference.
3. Sharing of information/data is essential for taking appropriate action at appropriate times.
4. Efforts should be made to educate new entrants to follow standard procedures.
5. Special training should be given to the staff members handling Forex matters.
6. Company should strictly follow its comprehensive system of internal controls, systems and procedures to monitor and mitigate risk.