MANAGEMENT DISCUSSION AND ANALYSIS 

PERFORMANCE REVIEW:

In the competitive market, the Company was able to achieve Sales and Other Income, in monetary terms for the year to Rs. 26.46 cores as compared to Rs. 26.2462 cores in the brvious year and the Loss was increased to Rs. Rs. 0.99 cores as compared to Rs. 0.14 cores in the brvious year. The profitability of the Company was adversely affected due to the Company has made Bad debt of Rs.0.81 cores against old outstanding receivable amount mainly from Electricity Utility Companies of Gujarat and Odisha and debrciation charges for the year is higher by Rs. 0.59 cores as compared to brvious year due to change in useful life of the assets as brscribed under Schedule II to the Companies Act 2013.

During the year under review, Vadodara unit has produced imbrssive financial performance in all parameters, namely revenue growth, operating margins and resource utilization. The unit has posed a good performance with all round improvement in production, sales and profitability during the financial year 2014-15. The Current Financial year 2015-16 has begun with order of Rs. 20.00 crores at our vadodara unit and also Bhubaneswar unit expecting some export orders from Bangladesh.

Credit period extended to customers not getting honored results into high level of receivables with resultant strain on cash flow. Barring unforeseen circumstances, the Company expects to increase its volume of business in the current year. Credit period extended to customers not getting honored results into high level of receivables with resultant strain on cash flow. Barring unforeseen circumstances, the Company expects to increase its volume of business in the current year.

INDUSTRY OVERVIEW :

The Transformer Industry in India has been in the forefront for over 50 years and has a well matured technology base up to 800 KV class. The brsent size of Transformer industry is estimated to be Rs 10000 crore. Keeping pace with the developments the world over, it has attained the status of 'world class' over the period. Today, about 95 per cent of the transformers installed in the Indian power network are of indigenous origin. Energy efficient transformers with low losses and low noise levels are being developed to meet international requirements.

Manufacturing facilities for ancillaries like winding conductors, bushings upto 420 KV class etc. are well established. The only limiting factor for the industry is non availability of CRGO steel domestically.

The overall transformer industry in India is a matured one with domestic as well as export markets, as power sector development is key to the economic development. Demand generated from capacity additions, which is expected to be 76,000 MW during 12th five year plan; and replacement of demand, will increase demand further. Thrust and policy of Government of India to electrify all villages by 2020 and programmes like the RGGVY will provide opportunities and growth in the transformer industry. However, looking to current recession in the global market, cut throat competition, escalation in prices of raw materials, credit squeeze, delayed financial closure, delay in implementation of plans by government and environment concerns, we believe that there will be brssure on the margins in the short-run. OUTLOOK FOR THE COMPANY: The Transformers Industry and Power Industry of the country are closely associated and in a way are interdependent as electricity can't reach the end user without inserting transformers en-route for transformation of various voltage levels. As per the trust and policy of Government of India to electricity all villages by 2020, the demand of transformers is likely to grow exponentially in coming years. With upcoming projects and added efforts being put in for power generation, transmission & distribution, the long term prospects are bright. We hope to get a good number of orders in the coming years. Apart from India, globally the electricity distribution net work has to be replaced progressively over the next five years. Moreover, Indian made transformers have now been recognized for their quality and durability in international market. All these factors would improve the business for Transformer Industry tremendously.

FACTORS AFFECTING OUR FUTURE RESULTS OF

OPERATIONS :

Our future results of operations may potentially be affected by the following factors:

? Competitive conditions in the industry.

? Growth of power sector in India.

? Our ability to continuously operate and maintain our manufacturing facilities optimally.

? Technological changes in the industry.

? Escalation in prices as well as the availability of raw materials.

? General economic and business conditions in India.

HUMAN RESOURCES :

The Company continues its focus on development of human resource. The relations of the management with employees during the year continued to be cordial. Learning and development has been strengthened to bring value addition in the employee and to enhance Team Building leading towards success. The Company focuses on providing the employees motivating work environment and excellent career development opportunities

INTERNAL CONTROL SYSTEMS:

The Company has effective internal control systems for compliance of laws, rules and regulations to safeguard the interest of the Company. The Company maintains a system of internal controls designed to provide reasonable assurance regarding the effectiveness and efficiency of operations and for safeguarding the assets of the Company and for ensuring appropriate recording and reporting of financial information for ensuring reliability of financial controls and for ensuring compliance of applicable laws and regulations. The internal audit covers a wide variety of operational matters and ensures compliance with specific standards with regard to reliability and suitability of policies and procedures. The internal auditor reports to the top management through Chairman & Managing Director and continuously monitors adherence to lay down systems and policies through a structured internal audit process. Services of internal auditors are being outsourced through established audit firm. The systems are regularly reviewed and modified for changes in operating and regulatory requirements. The Audit Committee reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening the same from time to time.

RISKS & CONCERNS :

The unbrcedented variation in the prices of raw materials, particularly copper, transformer oil and special steels for lamination, is a major area of concern for executing transformer orders in uncertain market condition. Debrciation of Indian Rupee against US Dollar is also a concern which continues to adversely affect the profitability. The unutilized capacity in the transformer industry and intense competition adversely impact product prices and margins. The brsent challenge for the Company is successfully executing low prices orders, within the budgeted cost. The delay by government in implementation of its plans may lead to a fall in demand for transformers, in short term. Further, change in government policy on land acquisition for industrial projects, allotment of natural resources and its pricing and policy changes in environmental related laws is having major impact on investment in new projects. Almost all the players in the industry have expanded their existing capacities. Further, continued strong brsence of foreign (Chinese & Korean) transformer manufacturers is keeping the competitive brssures high, which is expected to continue during the year 2015-16 also.