MANAGEMENT DISCUSSION AND ANALYSIS

COMPANY PROFILE

ITD Cementation India Limited is a leading player in the Engineering, Procurement and Construction (EPC) area of the construction industry. As a civil engineering enterprise, its main activities include construction of maritime structures, urban transportation, foundation and specialist engineering, hydroelectric power and tunneling, dams and irrigation, industrial structures, highways and bridges and airports.

ECONOMIC OVERVIEW

Global economy

The World Bank's Flagship Report "Global Economic Prospects - Spillovers Amid Weak Growth" published in January 2016 states that global growth yet again fell short of expectations in 2015, slowing to 2.4 percent from 2.6 percent in 2014. The disappointing performance was mainly due to a continued deceleration of economic activity in emerging and developing economies amid weakening commodity prices, global trade and capital flows. Going forward, the Bank forecasts global growth to edge up, albeit at a slower pace, than envisioned in its June 2015 forecast, reaching 2.9 percent in 2016 and 3.1 percent in 2017-18. The forecast is subject to substantial downside risks.

On the back of the marked slowdown in the Chinese economy, which grew at its weakest pace in a quarter of a century, the International Monetary Fund (IMF) in January 2016, cut its global growth forecasts for the third time in less than a year. To back its forecasts, IMF cited a sharp deceleration in China trade and weak commodity prices that are hammering Brazil and other emerging markets. The Fund has forecast that the world economy would grow at 3.4 percent in 2016 and 3.6 percent in 2017, both years down by 0.2 percentage points from the brvious estimates made in October 2015.

Emerging market economies have been an engine of global growth during the 2000s, especially after the 2007-08 global financial crisis. However, times are changing. Growth rates in several emerging market economies have been declining since 2010. The global economy will need to adapt to a new period of more modest growth in large emerging markets, characterized by lower commodity prices and diminished flows of trade and capital.

Going forward, global growth should pick up, although at an apbrciably slower pace than brviously projected, reaching 2.9 percent in 2016 and 3.1 percent in 2017-18. Global inflation is expected to increase moderately in 2016 as  commodity prices Level off, but will remain Low by historical standards. A modest upturn in global activity in 2016 and beyond is brdicated on a continued recovery in major high-income countries, a gradual slowdown and rebalancing in China, a stabilization of commodity prices and an increase in global interest rates that is gradual and stays well contained.

All of these projections, however, are subject to substantial downside risks. Although it is still a low-probability scenario, a faster-than-expected slowdown in China combined with a more protracted deceleration in other large emerging markets is a risk. Empirical estimates suggest that a sustained 1 percentage point decline in growth in the BRICS (Brazil, the Russian Federation, India, China and South Africa) would reduce growth in other emerging and developing economies by around 0.8 percentage points and global growth by 0.4 percentage points. This suggests a substantial risk of contagion through other emerging markets with potential adverse effects for some advanced economies as well.

Policies can play an important role in mitigating risks and supporting growth. A combination of cyclical and structural policies could be mutually reinforcing. In the near term, policy actions need to be focused on building the ability to withstand financial market turbulence. Cyclical policies need to be supplemented with structural reform measures that boost investor confidence in the short term and enhance growth prospects in the long term.

Indian economy

In its January 2016 update to the World Economic Outlook, the IMF has stated that India is a bright spot in an otherwise recessionary global landscape and has kept India's growth projections unchanged from its October 2015 forecast of 7.3% for 2015-16. Furthermore, it has forecast Gross  Domestic Product (GDP) growth at 7.5% for 2016-17.

However, this growth projection is significantly lower than the growth estimates made by the Government at 8-8.5% for the entire fiscal 2015-16. While it is still valid that India's GDP growth is largely domestic demand-led, recent global events triggered mainly by poor economic data emerging from China brcipitating currency devaluation and market intervention by the Chinese government, continuing slide in commodity prices, alarming fall in crude oil prices and dollar outflows from emerging markets including from India, have put some doubt on the sustainability of India's GDP growth of 8% or more that has formed the basis for the Government's longer term fiscal consolidation plan.

The lower GDP growth rate in 2015-16 has also affected the Government's plan to contain the fiscal deficit at 3.9% of GDP and is expected to be higher at over 4.1% of GDP. Alarming levels of non-performing assets of banks, capital market volatility that has put a spanner in the public sector divestment plans of the Government, falling corporate profits and lower growth affecting tax collections (April to December 2015 tax mop-up has reached only 66% of the Budget target) are some of the major issues that the Government is grappling with, which has affected, inter alia, the infrastructure investment that was planned in the Budget for 2015-16.

Going forward, it is expected that the Government's focus on "Make in India" and improving the "Ease of Doing Business" will contribute to an industrial recovery coming through further capital investments in manufacturing. Expectations of a normal monsoon, a softer interest rate regime brought about by low inflation rates and benign commodity prices that are expected to continue through much of FY 2017 should further improve the consumption cycle, thus improving growth prospects for FY 2017. However, the setback on the introduction of the Goods and Services Tax (GST) has been a dampener for several industries that were looking forward to this major reform more from the ease of the business standpoint than from any major tax benefit accruing to their businesses. On a longer term basis, accelerating the GDP growth to 8% and beyond will be a challenge on account of labour productivity and rate of growth in investment - both by the government and the private sector.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Indian construction sector

The construction sector is the second largest industry of the country after agriculture, accounting for 11 percent of India's GDP. The Indian construction industry employs 35 million and its total market size is estimated at over H830,000 crore (US$ 126 billion). Construction activities in India are largely fragmented with only about 250 firms employing more than 500 people.

A majority of the players in the construction and infrastructure sector continue to remain stressed through a combination of factors, some of which are internal to

them like highly leveraged balance sheets and continued structural challenges across several fronts like delays in land acquisition and approvals, payment defaults, delays in claims redressal and settlement, elongated working capital cycle and risk aversion from lenders.

Engineering, procurement and construction (EPC) business

India's EPC market witnessed consistent changes over the last few years with solid growth in project size and complexity, increasing private clients and the entry of several foreign players. The concept of EPC has been evolving over the last few years and has emerged as a brferred form of contracting by clients along with PPP models. Specialized EPC sectors such as marine, tunnelling, hydro, industrial and oil and gas continued to brfer awarding projects in the EPC mode.

THREATS

The key challenges of the EPC sector include:

• The growth in revenues is not truly reflective in the bottom line. This is primarily due to significant cost overruns, regulatory bottlenecks and aggressive bidding positions taken by a few market players.

• With increasing working capital requirements and the resultant increase in leverage, the EPC players are left with limited opportunity to raise further capital to fuel growth in the current scenario.

• The recent turmoil in the financial sector, including the rupee debrciation, has increased the level of uncertainty in project execution. Therefore, the sector is reeling under significant liquidity constraints.

OPPORTUNITIES - KEY INFRASTRUCTURAL

SECTORS

Roads

India possesses the second largest road network across the world at 4.7 million km. This road network transports more than 60% of all goods in the country and 85% of India's total passenger traffic. Road transportation has gradually increased over the years with the improvement in connectivity between cities, towns and villages in the country. Sales of automobiles and movement of freight by road is growing at a rapid rate. Cognizant of the need to create an adequate road network to cater to the increased traffic and movement of goods, the Government of India has earmarked 20% of the investment of US$ 1 trillion reserved for infrastructure during the 12th Five-Year Plan (2012-17) to develop the country's roads.

Source: Ministry of Road Transport and Highways (MoRTH), Techsci Research Note: * As on July 2015

Some of the near term major road development initiatives include:

• The Government has unveiled investment plans totalling Rs.10 trillion (US$ 150 billion) in the highways and shipping sector by 2019.

• A total of 599 highway projects covering around 12,903 km of national highways have been sanctioned, involving an expenditure of Rs.108,000 crore (US$ 16.2 billion).

• The Government of India signed the agreement for the third and last tranches of US$ 273 million loan, out of total US$ 800 million loan agreement with The Asian Development Bank, for constructing 6,000 kms of all-weather rural roads in Assam, Chhattisgarh, Madhya Pradesh, Odisha and West Bengal by December 2017.

• In November 2015, among various areas of infrastructure spending by the government, the roads segment led in terms of tenders issued (59% of the total tenders) and contracts awarded, with an increasing shift to EPC-type of contracts for road projects.

• India and Japan are planning to enter into a partnership and launch an infrastructure finance Company which will provide soft loans for Indian road projects with a credit target of H2 lakh crore (US$ 30 billion).

• The Ministry for Road Transport and Highways (MoRTH) is planning a compensation policy for the roads sector developers for any delays related to clearance for road projects.

• With the objective of reviving private investments in the roads sector, MoRTH is now working on two more models for attracting capital. One model proposes allowing bidding of a road project on the basis of the least brsent value and the other envisages selling-off road projects that have been built using government funds.

• MoRTH showcased revival of 34 projects worth more than H26,000 crore (US$ 3.9 billion) spanning over 4,084 km that are being restructured or converted from public-private partnership to EPC mode to get them going. Of these, five projects have been handed over to the state governments concerned while another 18 will be awarded in the EPC mode.

• The Indian government plans to set up a finance corporation with an amount of H1 trillion (US$ 15 billion), in collaboration with Japanese investors, to fund projects in the roads segment.

The Company had executed about 10 national highway projects for NHAI between 2002 and 2012. Presently, the Company is executing a highway project at Pune-Satara section of NH 4 that connects Mumbai with Chennai.

Railways and MRTS

The Indian Railways contributes to India's economic development, accounting for about 1% of the GDP and rebrsenting the backbone of freight needs of the core sector. It accounts for 6% of the total employment in the organised sector directly and an additional 2.5% indirectly through its dependent organisations. It has invested significantly in health, education, housing and sanitation. With its vast network of schools and investments in training, the Indian Railways plays an important role in human resource development. The Indian Railways, with nearly 63,000 route kilometres, fulfills the country's transportation needs, particularly, in respect of long-distance passenger and goods traffic. Freight trains carry nearly 1.2 million tonnes of originating goods and 7,500 passenger trains carry nearly 12 million passengers every day.

India's rapid pace of urbanisation, linked to its drive for greater economic prosperity through growth, has brought with it the brdictable problems of traffic congestion and pollution. Consequently, this has created the need to develop and operate more effective and efficient public transportation systems as part of the infrastructure development plan in numerous Indian cities.

Only 30% of the Indian population lives in urban areas. As per Government of India estimates, urbanization in India is expected to grow at an astonishing rate of 38%. Indian urban infrastructure and services, parts of which still bear markings of its British heritage, clearly isn't adequate to deal with such brssures.

In response to the growing challenges posed by urbanisation and raise the traditionally low investments in modern public transport systems, the Government has brpared ambitious plans to develop and operate rail-based mass rapid transit (MRT) systems across a large swathe of major Indian cities. This has been done through the Ministry of Urban Development, New Delhi, working closely with various state governments in Gujarat, Kerala, Karnataka, Maharashtra and Rajasthan. There are at least 40 metro projects in various stages of planning, execution and/or operation/expansion in the country.

Rail-based systems are superior to buses because they provide higher carrying capacity, faster, smoother and safer travel, occupy less space and are non-polluting and energy-efficient. To summarise, a rail-based system needs one-fifth energy per passenger km, compared with road-based system; causes no air pollution in the city; has lesser noise levels; occupies no road space if underground and only about 2 metres width of the road if elevated and carries the same volume of traffic as nine lanes of bus traffic or 33 lanes of private motor cars either way. If it is a heavy capacity system, it is more reliable, comfortable and safer than road-based system and reduces journey time by anything between 50% and 75%, depending on road conditions. Rail-based mass transport may be a medium or heavy capacity system, also referred to as mass rapid transit system (MRTS) or metro system. The medium capacity systems are usually provided on corridors on which PHPDT (peak hour peak direction traffic) does not exceed 20,000 to 45,000. For traffic densities ranging between 45,000 - 75,000 PHPDT, the provision of heavy capacity system becomes necessary. Since the number of commuters to be dealt with is relatively less in the medium capacity system, its trains consist of 3 to 4 coaches and other related infrastructure is also of smaller size. In the case of heavy capacity system, which is to deal with traffic densities ranging from 45,000 to 75,000 PHPDT, trains have 8 to 9 coaches and other related infrastructure is also of a larger size.

Across the world, the practice is once the population of a city reaches the one million-mark, they start planning for a rail-based MRTS so that by the time the population reaches two million, one or two metro rail lines are already in operation.

Thereafter, the system is methodically expanded to serve the rising needs of the city. At brsent, 100 cities of the world have metro railways.

The main reasons for the slow take-off of metros in the Indian cities can be traced to the lack of clear-cut policy or lack of proper institutional arrangements. Lack of resources, legal framework and expertise are also the contributing factors.

Currently, no guidelines have been laid down by the Centre or any other authority indicating when planning for metro in a city has to begin and when it has to become operational. Nowhere has it been laid down as to what should be the level of traffic density and the population of a city to justify for the provision of a metro system.

Delhi Metro Rail Corporation Limited (DMRC) has now emerged as a dominant entity in India's metro rail sector and is heavily involved in the planning and execution of various other metro projects across the country either directly or in an advisory capacity. The Company, through its joint venture with the parent Company, has executed elevated and underground MRT projects in cities like Delhi, Bengaluru and Jaipur. Presently, it is executing elevated and underground metro projects for DMRC in Delhi and also an underground metro project for the Kolkata Metro Rail Corporation at  Kolkata. Airports

India's civil aviation industry is on a high-growth trajectory. The country aims to emerge as the third-largest aviation market by 2020 and the largest by 2030. Over the next five years, domestic and international passenger traffic are expected to increase at an annual average rate of 12% and 8% respectively, while domestic and international cargo are estimated to rise at an average annual rate of 12% and 10% respectively. The airlines operating in India are projected to record a collective operating profit of Rs.8,100 crore (US$ 1.29 billion) in fiscal year 2016, according to Crisil.

Revising its earlier ambitious plan, announced in March 2014, to develop 200 low cost airports in 20 years, the government recently stated that 14 greenfield airports at a total project cost of Rs.24,000 crore will be developed. All these projects will be undertaken by the Airport Authority of India (AAI), which is responsible for building, operating and maintaining aviation infrastructure in the country. According to the estimates, the highest investment is in the Navi Mumbai airport at Rs.15,149 crore, followed by Mopa in Goa which is expected to cost Rs.3,000 crore. Some of the other airports that will be coming up are in smaller towns like Kannur in Kerala, Bijapur and Shimoga in Karnataka, Pakyong in Sikkim and Kushinagar in Uttar Pradesh.

Ports

'The Maritime Agenda 2010-2020' to develop the maritime sector includes forecasts for traffic and capacity additions at the ports up to 2020. The estimated capacity of the ports would be 3,130 million metric tonnes (MMT) by 2019-20. The Union Ministry of Shipping has chalked out a combrhensive plan to raise Rs.100,000 crore (US$ 15 billion) to develop ports, build ships and improve inland waterways in the country.

India has 13 major ports and 200 non-major ports. In FY15, major ports handled 581.3 MMT of cargo, while non-major ports handled 471.2 MMT. Since ports handle almost 95% of trade volumes in India, the rising trade has contributed significantly to the country's cargo traffic. To support the growing demand, cargo capacity in India is expected to increase to 2,493.1 MMT by 2017. Likewise, cargo traffic at major ports and non-major ports is also expected to increase to 943.1 MMT and 815.2 MMT by 2016-17. Given the positive outlook, proposed investments in major ports are expected to total US$ 18.6 billion by 2020, while those in non-major  ports would be US$ 28.5 billion.

The Government of India has allowed foreign direct investment (FDI) of up to 100% under the automatic route for projects related to the construction and maintenance of ports and harbours. A 10-year tax holiday is extended to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports. The government has also initiated the National Maritime Development Programme (NMDP), an initiative to develop the maritime sector with a planned outlay of US$ 11.8 billion.

The Indian government plans to develop 10 coastal economic regions as part of plans to revive the country's Sagarmala (string of ports) project. The zones would be converted into manufacturing hubs, supported by port modernisation projects and could span 300-500 km of the coastline. The government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation's ports and hopes to attract private investment in the sector.

Some of the near term major port development plans include:

• The Government of India's plan to invest Rs.70,000 crore (US$ 10.5 billion) in 12 major ports in the next five years under the Sagarmala initiative.

• The Government of India's plan to set up low-cost, non-major ports along coastlines under the Sagarmala project and its asking all the 12 major ports to accord priority berthing to such vessels and to encourage quicker movement of cargo.

• Jindal ITF plans to invest nearly Rs.500 crore (US$ 75 million) to further transloading operations in Haldia. The Company, which already transports imported coal in barges to NTPC's power plants in Farakka and Kahalgaon from the Sandheads, plans to transload cargo at the deep-drafted location at Kanika Sands and transport it to Haldia.

• A memorandum of understanding (MoU) has been signed between the Inland Waterways Authority of India (IWAI) and Dedicated Freight Corridor Corporation of India (DFCCIL) to create logistics hubs with rail connectivity at Varanasi and other places on national waterways. The

joint development of state-of-the-art logistics hubs at Varanasi and other areas would lead to the convergence of inland waterways with railways and roadways, thus providing a seamless, efficient and cost-effective cargo transportation solution.

The Visakhapatnam Port Trust (VPT) has outlined a Rs.3,000 crore (US$ 450 million) expansion-cum-modernisation plan aimed at enhancing the port's capacity by nearly 50%. The port is estimated to invest Rs.800 crore (US$ 120 million), a fourth of the planned investment, while seeking private partners to invest the remainder by way of public-private partnerships (PPPs).

Maharashtra's Jawaharlal Nehru Port Trust (JNPT) plans to build a satellite port at Wadhwan near Dahanu (bordering Gujarat), which is estimated to cost Rs.10,000 crore (US$ 1.5 billion) to build and likely to ease the congestion of ships at JNPT.

Plan to establish two new major ports, one at Sagar in West Bengal and the other at Dugarajapatnam in the Nellore district of Andhra Pradesh.

The Company has a major brsence in maritime works comprising construction of berths, quays, jetties, breakwater and other facilities for major and minor ports in both the public and private sectors. It is also engaged currently in executing reclamation and dredging works at JNP for a leading global port operator, apart from construction of berths, jetties and yards at many other ports in India.

Power

The Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India's focus on attaining 'Power for All' has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances and manpower).

The Planning Commission's 12th Five-Year Plan estimates total domestic energy production to reach 669.6 million tonnes of oil equivalent (MTOE) by 2016-17 and 844 MTOE by 2021-22. By 2030-35, energy demand in India is projected to be the highest among all countries according to the 2014 Energy Outlook Report by British oil giant, BP.

As of November 2015, total thermal installed capacity stood at 196.2 gigawatt (GW), while hydro and renewable energy installed capacity totalled 42.6 GW and 37.4 GW respectively. At 5.8 GW, nuclear energy capacity remained  broadly constant, compared with the brvious year. India's rooftop solar capacity addition grew 66% from last year to reach 525 megawatts (MW) and has the potential to grow up to 6.5 GW. India's wind power capacity, installed in FY2016, is estimated to increase 20% over the last year to 2,800 MW, led by favourable policy support that has encouraged both independent power producers (IPP) and non-IPPs.

India's wind energy market is expected to attract investments totalling Rs.100,000 crore (US$ 15 billion) by 2020 and wind power capacity is estimated to almost double by 2020 from over 23,000 MW in June 2015, with an addition of about 4,000 MW per annum in the next five years.

The Company is engaged in several civil engineering works for both private and public sector power generation and distribution companies and also for companies manufacturing power plant equipment in India.

OUTLOOK

A number of factors are supporting the general feeling that an industrial recovery is not far ahead. Besides, the government's focus on 'Make in India' and improving the 'Ease of Doing Business', the signs of a revival in investment/ consumption cycle coupled with a fall in inflation/interest rates are expected to drive the manufacturing sector growth. Moreover, various announcements made in the FY15 and FY16 budgets to address the structural issues plaguing the industrial and infrastructure sectors are gradually gaining traction on the ground.

The Wholesale Price Index (WPI) and Consumer Price Index (CPI)-based inflation to come in at 2.7% and 4.9%, respectively, in FY17, assuming a normal monsoon, a moderate hike in procurement prices, benign global commodity prices and some weakness in the rupee.

The recovery in the construction sector is expected to be gradual and would be linked with on-ground impact of the policy measures as well as availability of funding. With high leverage, ability to raise funds via stake sale in subsidiaries, monetization of assets, or dilution of equity will be key in improving liquidity and capital structure of construction companies that have been aggressive in the BOT space in the past.

The reversal in the interest rate cycle and lowering of interest rates will help ease the debt servicing burden. However, this alone will not be sufficient for improving credit metrics. Any significant improvement in liquidity profile and credit metrics of construction companies will take time and will be contingent on improvement in working capital cycle (by way of faster execution and release of stuck receivables/ retention money), improvement in pace of execution and ability to raise long term funds by way of stake sale or equity placements.

The Company has maintained its focus on project selection for bidding after due evaluation of risks, profitability and project cash flow and has been able to build a strong and diverse order book worth Rs.520,434 lakh as on 31st December, 2015. The Company is also in the L1 status on a couple of large contracts amounting to over Rs.240,000 lakh, which are likely to be converted into firm contracts. The Company is confident of improving its performance in the coming year, although executional challenges will continue to exert brssure on profit margins for the next couple of quarters.

RISKS AND CONCERNS

Business environment risk: The demand for our services is largely dependent on growth of the infrastructure sector and the economic cycle. Our business is also influenced by changes in government policies and spending. Any change in policies or downturn in the economy that leads to lower spending on construction projects (including privately-funded infrastructure projects) could affect revenues.

Measures: The Indian economic scenario, over the next five years, is conducive to infrastructure investments. The year 2015 saw some steps being taken by the Government in according faster green clearances, addressing structural  issues to de-bottleneck and revive stalled investment projects and introduce a new arbitration law, all of which are likely to favorably impact the construction sector. Besides, initiatives like the 'Make in India' campaign, the proposed 100 'Smart City' projects and several high-speed railway and road corridor projects are likely to sustain infrastructure opportunities. The Twelfth Plan has outlined investment of a staggering US$ 1 trillion in infrastructure construction, benefiting focused players.

Operational risk: Our operations are subject to risks arising out of operational inefficiencies, internal failures, lack of adequate regulatory approvals and several hazards (risk of equipment failure and work accidents that may cause injury and loss of life).

Measures: The Company engages in project screening and evaluation, which negates project hazards. An appropriate insurance coverage or provisions of assessed costs for complying with such obligations has been made. The Company's professional project managers possess a rich industry experience, enabling the Company to reduce operational risks. The Company operates through ISO-certified processes and being a part of an internationally-acclaimed parent Company, enjoys access to superior equipment and technologies, reducing site risks. The Company participates in government projects backed by regulatory approvals and credible land titles, ensuring uninterrupted execution and secured cash flows.

Price escalation risk: Price escalation of multi-year infrastructure projects are the result of factors ranging from design changes to increasing cost of materials, machinery and labour as well as client delays. This can potentially cause time and cost overruns, impacting profitability.

Measures: A majority of the Company's contracts have escalation clauses which protect it from volatile external conditions. The Company's strong parentage comprises technology and equipment, helping to engage in value engineering as a partial hedge against rising costs.

Competition risk: Our Company operates in a competitive market. If we are unable to bid for and win construction projects, we could fail to increase or maintain our volume of order intake and corresponding results.

Measures: The Company is brsent in multiple sectors within the infrastructure industry, helping mitigate risks arising out of an excessive dependence on a few areas.

The Company enters into joint ventures with players for large complex projects. The Company's promoter group enjoys an international reputation in handling complex challenging projects, the Suvarnabhumi International Airport in Bangkok standing as a testimony. This provides the Company with a credible brand with strong project execution skills.

Qualification risk: Bidding for Government tenders can take long and complex qualification requirements.

Measures: A net worth of about Rs.50,822 lakh (31st December 2015) br-qualifies the Company for most large government and private projects. Besides, the Company entered into joint ventures and consortium partnerships to pool capabilities and bid for large projects. The consortium model enabled the Company to deepen its civil engineering competence and graduate to higher margin projects with reduced competitive intensity.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place an internal control system commensurate with its size and nature of business. The Company has systems and operating procedures (SOP), documented through a manual that defines the processes to be followed and delegation of authority is exercised prudently across various managerial levels. An internal audit cell conducts audits to test the adequacy of internal systems and suggest continual improvements, round the year. These internal audit reports and adequacy of internal controls are reviewed by the Board's Audit Committee on a regular basis.

REVIEW OF FINANCIAL PERFORMANCE

Despite the difficult economic and operational environment brvailing in the economy and stresses and brssures that the construction industry was faced with, the Company, through a selective bidding strategy that was adopted and emphasis on execution was able to build a strong and diversified order book which stands at Rs.520,434 lakh as on 31st December 2015.

On a standalone basis, the Company achieved revenue from operations of Rs.273,609 lakh in 2015, an increase of over 102% over the revenues of Rs.135,241 lakh reported in the last year. Before tax and exceptional item, the Company made a profit of Rs.3,522 lakh in 2015, in comparison with a loss, before tax and exceptional item, of Rs.6,758 lakh  achieved in 2014. However, on account of an exceptional loss of Rs.12,397 lakh incurred in March 2015 pursuant to the settlement entered with NHAI of all claims, dues and outstanding, the Company has incurred a loss after tax of Rs.5,931 lakh for the year 2015. In 2014, the Company had taken credit for excess debrciation provided in the earlier years and reported a profit, after tax and exceptional item, of Rs.1,941 lakh.

On a consolidated basis, the revenue from operations stood at Rs.306,870 lakh during the year 2015, against a revenue of Rs.171,242 lakh achieved in 2014, an increase of about 79%. The Company has made a profit before tax and exceptional item of Rs.3,939 lakh in 2015, in comparison with a loss before tax and exceptional item of Rs.6,864 lakh in 2014. As explained earlier, due to the exceptional loss incurred pursuant to the settlement with NHAI, the Company has reported a loss after tax of Rs.5,931 lakh in 2015 against a profit after tax and exceptional item of Rs.1,941 lakh in 2014.

The Company's consolidated order book (excluding L1 status bids) as at 31st December, 2015 stands at Rs.520,434 lakh, rebrsenting a growth of 9.3% over the order book of Rs.476,298 lakh as at 31st December, 2014. This provides good visibility for the business for the next 2-3 years.

HUMAN RESOURCES DEVELOPMENT AND  INDUSTRIAL RELATIONS

The Company encourages a performance-oriented culture through transparent employee appraisal systems. The Company believes in creating a professional, congenial, safe and environment-friendly workplace and consequently has striven to make construction sites as injury-free as possible. As on 31st December, 2015, there were 1,798 employees on the Company's steady roster and 3,020 employees engaged on a project-to-project basis.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements have been brpared in accordance with all applicable accounting standards.