HUEVO Y SUS PRODUCTOS

You should read the following discussion of our financial condition and results of operations together with our audited restated financial statements under Indian GAAP including the schedules, annexure and notes thereto and the reports thereon, which appear under “Financial Statements” in the Draft Red Herring Prospectus on page 95. You are also advised to read the Section titled “Risk Factors” on page 10 of the Draft Red Herring Prospectus, which discusses a number of factors and contingencies that could impact our financial condition, results of operations and cash flows. Unless otherwise stated, the financial information used in this Section is derived from our audited standalone financial statements under Indian GAAP, as restated. Our financial year ends on March 31 of each year, so all references to a particular financial year are to the 12-month period ended March 31 of that year.

We are in the business of manufacturing and export of Drop Forge Hand Tools and allied forging products. Our products have varied applications and are used in various industries like mechanical, maintenance, automobile, engineering, construction, electrical, and Do It Yourself (DIY) segment. We manufacture and sell these products under our brand “Gb tools” and also to various domestic and international customers under their brands. We are a recognized Star Export House by Government of India since 2009. We have over the years earned for ourselves a sound reputation for our quality products and are licensed by Bureau of Indian Standards to use ‘ISI’ Mark for most of our products.

Our overseas customers include some of the leading players spread across various business segments. We regularly export to various countries in Europe, Asia, North America & Latin America and has diversified customer base. We have consistently exhibited our ability to meet quality requirements of our overseas customers. In the financial year 2011-12, we exported products to 35 overseas customers which included names like Zavod Novosibirskiy Instrument JSC Russia, MaxTech Consumer Products Limited Canada, Stanley Black & Decker Inc LA USA, Cooper Tools Industrial LTDA, Brazil, Westfalische Gesenkschmiede GmbH Germany etc. In domestic market we route our sales mainly through a network of distributors spread all over India.

We are capable of manufacturing both standardized as well as customized products Our flexible manufacturing infrastructure enables us to extend our product range and change our product mix as per customer demand and requirement. We have, in the last few years, been successful in obtaining various product approvals from various domestic and international clients. At times, in order to meet the requirement of the customers, we also source products as per our specifications from other manufacturers and supply under our brand or as per directions of the customers. Our products have been inspected and accepted by various third party inspection agencies which are mostly appointed by our clients.

Our Company formally known as Ambika Forgings (a partnership firm till February 2011) has been in the Forging and Hand Tools business since April 1975 and our promoter Mr. Gian Parkash Bhandari has a vast experience of more than 37 years and in depth knowledge of Hand Tools Industry. Currently we have two manufacturing facilities, the main Manufacturing facility is located at Kapurthala Road, Jalandhar and the other unit at Industrial Area, Sansarpur Terrace, District Kangra,HP. Our existing manufacturing plant consists of forging shop, die shop, heat treatment shop, conventional and CNC machining shop, electroplating plants, powder coating plants backed by related quality assurance equipments.

Year 2010-11 2011-12

Amount (in `) %age Amount (in `) %age

Export Sales 2,828.35 52.27% 3,811.65 49.41%

Domestic Sales 2,551.77 47.73% 3,901.91 50.59%

Total 5,380.12 100.00% 7,713.56 100.00%

In the financial years 2010-11 & 2011-12, the revenue from our top five overseas customers were ` 1,926.11 Lacs & ` 2,515.96 lacs constituting 35.80% & 32.62% respectively of revenue from operations.

Our Product range

Product Category End-Use Industries

Jack Planes of all types, Chisels, Hacksaw, Hand drill machines, cutters

Furniture industry, housing and DIY segment Jack saw & chain pipe wrenches, Hammers, Socket sets,

Cutters, Demolition Hammers

Housing, DIY category, Engineering, Housing & construction

Spanners, pipe wrenches, pliers, tool kits All type of industries including automobiles & DIY segment

Our Strengths

We have over 37 years of industry experience which, coupled with our knowledge of the industry, positions us well to exploit the tremendous growth opportunities which growing hand tool industry is presently offering. Our following strengths and experiences help us to compete successfully in our industry.

 Wide International Customer Base

We cater to large number of customers worldwide including names like Zavod Novosibirskiy Instrument JSC Russia, MaxTech Consumer Products Limited Canada, Stanley Black & Decker Inc LA USA, Cooper Tools Industrial LTDA, Brazil, Westfalische Gesenkschmiede GmbH Germany etc. Our products are accepted by customers in countries including Russia USA, Germany, Canada, Brazil, South Africa, UAE, Turkey, Poland, Kenya etc. We have been able to manufacture consistently the products which meet the stringent technical specifications of our customers . In FY2010-11 & FY 2011-12, we catered to 34 & 35 overseas customers respectively and our exports accounted to 52.57% and 49.41% of our revenue from operations by value. We are constantly striving to increase our customer base and reduce dependence on any particular customer. The region-wise break-up of export turnover for the last two financial years was as under: (` In Lacs) Region 2010-11 2011-12 Europe 888.20 961.71 North America 411.98 1091.37 South America 247.86 103.62 Asia 1,176.25 1,517.91 Africa 104.07 137.04 Total 2,828.36 3,811.65

 Wide product range of Hand Tools & Customization capability

We believe that we are one of the few hand tool manufacturers in the country providing a vast range of hand tools & allied forged products used in various industries in India & overseas. We manufacture a wide range of products such as, wrenches, spanners, pliers, Jack Planes, Jack Saw, hammers, Chisels, chain pipe wrenches, tool kits and other hand tools.

Our strength lies in understanding the customer requirement and execution capabilities to customize and manufacture the product as per the client specifications. This involves understanding of technical know how involved in processing of raw material like torque values, hardness, corrosion resistance, plating finish, packaging, lead content limitations etc. The process selection for customized products is done by qualified engineers on production lines.

 Long Term Marquee Customer Relationships

We have a successful track record of regularly exporting Hand Tool products to global customers. This is because of our ability to provide high quality Hand Tools to these customers on a continuous and uninterrupted basis. We have consistently and successfully demonstrated the ability to manage key client relationships. This is reflected in the long duration of our relationships and the repeat orders for our products from some of our large overseas customers. We believe that we are preferred supplier to many companies dealing in Hand tool products. Our regular overseas customers include names like Stanley Black & Decker Inc LA, USA, MaxTech Consumer Products Limited waterloo, Canada, and Zavod Novosibirskiy Instrument JSC, Russia, etc

 Strong management team

We believe that our experienced management has substantially contributed to the growth of our business operations. Our Promoter Director Mr. Gian Parkash Bhandari have more than 37 years of experience in Hand Tool industry. Empowerment of management by delegation of authority has been our strength in meeting management expectations and has helped our Company in building a large team of experienced professionals. We believe that the experience of our senior management team has translated into improved product quality, increased profitability and improved margins which give us competitive edge.

 Quality Assurance

Each of our Company’s products passes through stringent quality checks. The quality assurance measures taken by our Company include thorough checking of all raw materials, other inputs and finished goods to ensure quality, statistical methods to identify and animalize areas of improvement, experienced manpower for quality assurance activities, creation of data base for future reference and analysis etc. Each of the divisions is well equipped with modern quality checking and testing equipment in place for quality assurance and functions in a philosophy of providing quality products to customer.

We believe that our manufacturing units have adequate facilities and personnel to ensure compliance with the quality specifications and process parameters we have established. We are a ISO 14001: 2004 certified company for Development, Manufacturing, Procurement and Export of Hand Tools.

Business Strategy

The key elements of our business strategy are as follows:  Raise capacity and widen the product range  To diversify in Non-Sparking Tools segment

 Developing and Implementing New Processes to improve cost of production and Quality of our products.  Increase our Margin realization by moving up in the Industry Value Chain

 Further Strengthen our Relationships with Major Customers  Increase our presence in Domestic Market

Discussion on Result of Operations

(In ` Lacs)

Particulars Year ended

31.03.12