REPORT MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The objective of this Report is to brsent the Management's perception of the various developments in the business environment, challenges and opportunities before your Company as well as to provide an analysis of your Company's performance and is in accordance with the Clause 49 of the Listing Agreement with the Stock Exchanges. It should be read in conjunction with the Directors' Report to the Members, Financial Statements and Notes forming part thereof.

Insulators

The Insulator industry demand continued to remain more or less flat during the financial year 2014-15 as compared to the brvious year. The delay in projects continue resulting in offtake remaining stagnant. However, the anti-dumping duty imposed by the Government of India has resulted in reduction in imports of insulators from China into India and improvement in domestic market pricing.

The inflation index of insulators grew by 3% as per the Press Release of the Government of India, Ministry of Commerce & Industry, Office of the Economic Advisor, thus increasing the input costs.

The Global Insulators Industry Report 2015 forecasts the insulator market to grow at a Compounded Annual Growth Rate (CAGR) of 7.94% through to 2019.

The brdominant drivers for the insulator business are the growth in power and transmission sectors, rural electrification drive and expansion of core industries. The challenges are competition from Chinese products and low margins. Your Company besides these faces challenges like low capacity utilization due to lower market demands, rising costs, inadequate working capital among other factors.

Turnkey Projects:

This division depends on the growth of the power sector at the macro level. The Indian power sector is undergoing a significant change that is redefining the industry outlook. Sustained economic growth continues to drive power demand in India. The Government of India's focus to attain 'Power For AH' has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing on both market side as well as supply side.

The focus during the current year continued on completion, commissioning and handing over of carry forward projects. The segment continues to see significant delay in realization of receivables and hence your company is laying enormous stress on working capital management.

The experience acquired from the pursuit and execution of projects of various voltage ratings in different operating environments has given the foundation to address increased complexity and size of such projects.

Performance of Your Company

Due to the ongoing cash crunch, the Company's operations remained significantly affected for most of the year. Hence the revenues are very low and the losses are significant due to incurrence of employee and financial costs.

Your Company is focusing on taking appropriate steps in order to generate adequate funds for

Working capital

Funding cash losses incurred

Repayment of term loans

Investments required for scaling up business

The efforts taken should yield results in the coming financial period.

A. ENTERPRISE RISK ANALYSIS AND ITS MANAGEMENT:

Your Company has a composite Risk Management Policy and is focussed in managing ail types of risks. Your Company also leans towards insurance where risks are unavoidable. The exposure of your Company to various types of risks is detailed below along with the strategy employed to manage/mitigate the same.

a. Business Risks:

•Inability to pass on cost increases to customers due to brdatory pricing from Chinese competitors and intense competition.

•Postponement in order execution by customers due to the corresponding delay in the generation projects for which these T & D investments are being set up.

•Inadequate funds for working capital due to the cash losses incurred.

•Your Company is currently focusing on mitigation of business risks by

• Continuously expanding its geographic and customer exposure

• Monetisation of non electrical segment assets

b. Financial Risks:

The high cost of capital in India today poses a significant threat to the margins of the business. Your Company is also taking necessary steps to improve its financial leverage.

c. Foreign Exchange Risks:

The rupee was stable during the course of the financial year and there was no adverse impact on your Company's financials.

d. Contractual Risks:

Your Company has entered into certain large value supply and turnkey contracts with governmental agencies and private parties which incorporate stringent conditions with regard to supply, (construction, erection and commissioning in the case of project contracts), performance and warranty. All contracts are assessed before acceptance to ensure compliance and the capability to perform.

e. Asset protection:

The Company has ensured that the assets are properly safeguarded against all insurable risks using appropriate valuation methods and the adequacy of the same is reviewed periodically with the assistance of independent outside agencies.

B. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The objective of the internal control systems is to ensure optimal use of resources, safeguard your Company's assets, exercise control, and minimise system deficiencies and weaknesses. Internal Audit is  carried out by an independent professional audit firm to review all aspects of the internal control system and adherence to policies and procedures. The Audit Committee of the Board of Directors reviews the internal audit reports and the implementation of corrective actions and also addresses all aspects of your Company's functioning from this perspective as required under SEBI and Company Law guidelines.

C. OUTLOOK:

With the new Government, it is expected that the Power Sector will be given support to achieve the required infrastructure expansion in generation, transmission and distribution.

The strategy of certain large global customers to maintain a balance in the supply base between India and China means added export opportunities for your company's products.

The main threats in the nearterm are:

• Any further delays will further squeeze your Company's already brcarious liquidity position

• The inadequate co-operation from the bankers.

• Over capacity in Indian market

• Multiplicity of duties and taxes

D. CAUTIONARY STATEMENT:

Statements in the Management's Discussion and Analysis Report describing your Company's projections, estimates, expectations or brdictions may be 'forward-looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to your Company's operations include demand-supply conditions, raw material and fuel and energy prices, changes in Government regulations, tax regimes, and economic developments within the Country and other markets where your Company operates.