Management Discussion and Analysis Report Industry Structure & Development

The Prime Minister Mr. Narendra Modi, elected in 2014, former First Minister of Gujarat, already proved his business friendliness as well his ability to build urgently needed infrastructure in Gujarat.

Already in his first few months in office, Mr. Modi had launched important initiatives. For our business, the "Make in India" initiative is primarily important because it signals the government's willingness to make India a global site for the manufacturing industry. The initiative is aimed at providing an enabling environment by improving the ease of doing business in India and reducing bureaucracy.

These measures are now bearing fruit. The government was thus able to make some achievements in 2014-15 and 2015-16. This strong growth was driven primarily by a corresponding growth in the manufacturing sector.

INTEGRA Engineering India Ltd. was able to benefit from this positive development and recorded an order intake of around Rs. 13,535 (Rs.000) higher than the brvious year, 2014-15, rebrsenting an increase of almost 5%. Revenue was also boosted by around 14% with some delay to the order intake in the fiscal year 2015-16.

Opportunity & Threats

The Company has a very good opportunity in Indian Railway as its product is being used mostly by the Indian Railways. We can anticipate such opportunity because Indian Railway have envisaged an investment of INR 8.5 lakh crore in the next five years.

The total approximate earnings of Indian Railways on originating basis during F.Y. 2014-15 were Rs. 157,880 crore (US$ 23.68 billion) compared to Rs. 140,761 crore (US$ 21.11 billion) during the F.Y 2013-14, registering an increase of 12.16 percent. There are many infrastructure projects under way, such as investment in high speed networks and trains, new railway lines, re-development of stations, and new Metro projects. Relevant Opportunities in Indian Railways can be categorised in two ways, as described below:

> Manufacture of components used in Railway Signalling

> Manufacture of parts and solutions used in rolling stock projects. Threats

Common threats in the business can be divided into economic, political, legal/regulatory, and business risks. Amongst which is the offering of price by our competitiors in the market and change in government policy for the railway business.

Segment wise or products wise performance :

The operations of the Company are limited to one segment, namely engineering and manufacturing of machinery, components and job work.

Outlook

We plan to continue and expand our product portfolio for railway signaling products. In doing so, the new fuse monitoring system will be strongly promoted and gain in importance. At the same time, the areas of design and manufacturing of complete fabricated and wired enclosures for various customers in the infrastructure segments will be systematically expanded. In sheet metal processing, additional measures will be implemented to improve processes and create transparency with the planned introduction of modern systems. We are also working specifically on developing our manufacturing capabilitiesby increasing the know-how and building of structures and processes to supportfurther growth. In addition, the management team will be further strengthened, i.e. supplemented by professional team members and formed into a strong team.

The market response to the profile and the operating sites of INTEGRA Engineering Ltd. continues to be very positive. The management is confident that, with the improved economic environment and further development within the organization, it will be able to benefit from the investments. These developments can be summarized for INTEGRA Engineering Ltd. in many opportunities for continued expansion and positive growthof the business in the next few years.

Risks & Concerns

The main Risk in our railway business is change of technology, as Indian Railways is coming up with new technology based on electronics.

The main concern of the company should be about the sustainability in market and making profit by developing new products.

Internal Control Systems and their adequacy:

Company has a proper and adequate system of Internal Control commensurate with its size and the nature of its operations to ensure that all assets are safeguarded and protected against loss from un­authorised use or disposition and those transactions are authorised, recorded and reported correctly.

The Audit of Internal control system is carried out by an Independent firm of Chartered Accountants on a half-yealy basis and corrective actions are taken where shortcomings are identified. The Internal Auditors submit their half-yearly reports to the Audit Committee and the Board of Directors. Periodical MIS Reports are submitted to the Audit Committee and the Board for review. All the fixed assets of the company are physically examined and recorded at regular intervals

The Board of Directors at the recommendation of the Audit Committee re-appointed M/s. Shah & Shah Associates, Chartered Accountants, Vadodara as Internal Auditors of the Company for the financial year 2016-17.

Discussion on financial performance with respect to operational performance

Your Company has achieved turnover of 262,848 (Rs.000) for the financial year 2015-16. However, Company's turnover was Rs. 282,262 ('000)/- for the brvious period (January, 2014 to March, 2015). Further, Company incurred profit of Rs..13,018 (Rs.000) in the F.Y 2015­16. So, as compared to the brvious period of 15 months (January, 2014 to March, 2015) from F.Y 2015-16, there was an increase in the revenue of the Company.

Material Developments in Human resources/Industrial relations front, including no. of people employed:

The Company regards its human resources as the most valuable asset and proactively reviews and evolves policies and processes to attract and retain good people. The Company continues its focus on attracting and retaining the best talent in the industry. The Company further makes continuous efforts to upgrade the knowledge and skills of its brsent employees. As new business challenges emerge, there is a need to continue to be a learning organization that supports operational excellence, continuous improvement and rising standards of performance at all levels. With this in mind the Company reviews the HR Policies from time to time.