MANAGEMENT DISCUSSION & ANALYSIS INDIAN ECONOMY

During the financial year 2014-15, the growth in the Indian Economy picked up moderately backed by stable government, low oil prices, low inflation and ease of brssure on current account deficit. The Gross Domestic Product (GDP) is estimated to have grown by 7.3% YOY in the fiscal year 2014-15, which is higher than 6.9% of the brvious year.

During the financial year 2014-15, the automobile industry grew by 8.68% as compared to the brvious financial year 2013-14, which was an excellent sign looking at the negative growth experienced in the brvious year. While domestic Sales Volumes during the year increased by 7.22%, the export increased by 14.89%. The government's first full-year budget, for the financial year 2015-16, envisions a boost to infrastructure spending, an improved business environment and a wider social security net, which is likely to give impetus to growth in the Indian Economy.

FUTURE OUTLOOK

The automobile sector has continued to grow in the current year as well, though moderately. The trend is likely to continue or even improve as government's efforts to improve business climate, growth of manufacturing sector, higher infrastructure spending and fiscal reforms begins to bear fruit in the coming year/s and have major impact on economic growth. Lower oil prices leading to lower cost of ownership of vehicles will also add to the growth of automobile sector.

OPPORTUNITIES AND THREATS

The economic growth envisaged in the near future will fuel domestic demand for automobiles. The Indian auto industry is one of the largest automotive markets in the world. Further India is becoming the auto hub for various multinational companies in auto sector. Out of the total production, the export made by International OEMs is around 15%. Therefore, India is manufacturing not only for domestic market but for export also. India has a great advantage in terms of largest and youngest manpower in the world at comparatively low cost.

The company is working in a highly competitive industry where the company has to compete with nitch players. Apart from that industrial relations and currency fluctuation are the risks continuously monitored by the company. However, shifts in consumer demand and expanded regulatory requirements for safety and fuel economy are factors which can affect the industry. These trends offer huge risks but equally provide growth opportunities for auto sector. To address them in a way that results in real competitive advantage, it is critical to understand the specific ways that these trends are already affecting companies in the industry. The company, with its vast manufacturing base and inhouse R&D center is well placed to take advantage of such opportunities.

RISKS & CONCERNS

The Company is exposed to external and internal risks associated with the Business. The operations are directly dependent on the growth of the Indian Automotive industry. General economic conditions impact the automotive industry and in turn the operations ofthe Company as well.

The Company has strong systems to manage the business risks and is continuously taking appropriate measures to mitigate these risks. Various Risks are identified, categorized based on their severity & probability/ likelihood of their occurrence. These operational risks are managed through a system of periodic review and control mechanism. Continuous efforts are made towards Mitigation of Risk arising due to external factors or unforeseen circumstances by way of having adequate Insurance coverage and exploring the possibilities of obtaining coverage wherever possible.

Apart from the regular operational risks that are managed through system of periodical review and control mechanism there are some key strategic risks that the Company is exposed to:

iEconomy Slowdown: Despite of the stable government at the center, the overall economic condition of the country is yet to gain momentum. Moreover, delay in policy reforms, decision making as well as high interest rates and low growth of GDP, affects the profitability of the Company.

Ii Inputs Cost Inflation: The Company is dependent on factors affecting the manufacturing costs viz. power & fuel, consumables, packing and forwarding, which are external factors and where the Company has minimal control. Such cost escalation may affect our profitability. However, the increase / decrease in cost of major raw materials is primarily passed through to the customers.

Iii Currency Debrciation: The potential change in the exchange rate of foreign currency in relation to INR is one of risk of the business of the Company. However significant amount of exposure is covered by the customers by quarterly adjustments.

ivIncrease in Competition: The Company operates in a highly competitive market and customers have started adopting de-risking strategies to maintain more than one source for a product.

vRegulatory Risk: The Change in Tax laws, government policies and regulatory requirements might affect Company's business.

INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY

The Company has adequate internal control systems for the management of processes, commensurate with the nature of business and the size and complexity of the operations. The company has documented control procedures for all business processes covering all aspects of key financial and operating functions. HUMAN RESOURCE

The Company's HR policies hinge on the brmise that employees are the most important resources for the company. The company HR process ensures that it is able to attract and retain the best talent thus ensuring the availability of a competent and motivated team of employees. The Company continuously endeavors to provide a fair compensation amongst industry of like nature, a clear career path, reward for performance and regular training and development for each level of employee.

To enhance the productivity, the Company provides professional environment to its employees and systematic upgradation in the skills of the employees through nurturing and appropriate training. The Company regularly assesses the competencies which are important for the development of business and arrange for appropriate training and development programs to cater different learning needs of employees in the areas of technology, management, leadership, cultural and other soft skills. The company's industrial relations remained cordial and harmonious in the year under review.

CAUTION STATEMENT

This report contains forward looking statements. All such statements are subject to risks of uncertainties. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include raw material availability and prices, demand and pricing in the markets, changes in Government regulations, tax regimes, economic developments and other incidental factors.