MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. Economic scenario and Industry outlook:

Indian economic growth in 2014 rose to 5.2% from 4.7% last year. According to Economy Survey 2014-15 the economy would grow by 8.1-8.5 per cent under a new calculation method that makes India the world's top-growing big economy.

The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in near future. The medium term to long term growth prospects look positive in view of the Government's determination to bring in reforms.

With the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2015-16 and beyond. The Economy is expected to grow in future at a higher rate than in 2014-15.

Economic situation in the country will improve significantly in the upcoming year, the Economy survey raised concerns over growth pattern in exports, construction and mining activities. Investment activity, which is slowly picking up, needs to be established on a stronger footing.

The estimation made by International Monetary Fund (IMF) & Central Statistical office have made projection of growth to the extent of 7.5% during the financial year 2015-16. The IMF has forecasted that India will emerge as fastest growing largest economy in the world at the end of current financial year.

Thus economic prospects with satisfactory monsoon & pro investment measures announced by the Union Government is expected to result in a good growth & improvements in economic situation soon.

NTPC is implementing projects on fast track to add at least 10,000 MW power generatic capacity in next 2-3 years. These projects are growth engines for engineering & capital goods industries.

The company products have wide ranging applications in wide spectrum of industry sectors including Power generation, Coal and ore mining, Chemical and Fertilizer, Steel, Cement and harbour handling in port trust. Thus the company has multiple opportunities to grow with growth in one or the other sector of industry and is cushioned against fall in growth of one or the other sector of industry.

During the financial year 2014-15 the sales did not grow inspite of pending orders and readiness of material. The reasons include delay in implementation of projects and liquidity crunch in EPC companies. As the project implementation pace increases the sales will grow.

The company has been granted Certification for CE Marking, ISO 14001:2004 & OHSAS 18001:2007 which were reported last year as under process of certification.

The company continues with its efforts of modernization and quality improvements by making new investments in plant and machinery.

B. Industry structure and developments:

Your Company deals only in the one segment i.e. manufacturing and sale of the hi-tech products "Fluid Couplings" which are mainly used in various sector of industries including Thermal Power Plants, Steel, Metal, Cement, Paper, Chemical, Fertilizers, Coal and Ore-mining and Port handling facilities, etc. New projects in these sectors have important contribution towards growth and profitability of the Company.

C. Quality Management System:

The company continued to be certified under ISO:9001:2008 by British Standard Institution -BSI Management system for the Company's quality system. The Quality Management System in the Company is well defined and is well in place.

D. Internal Control System:

The Company has adequate internal control systems and procedures in place for effective and smooth conduct of business and to meet exigencies of operation and growth. The transactions are recorded and reported in conformity with generally accepted accounting practices. The internal control systems and procedures ensure reliability of financial reporting, compliance with the Company's policies and practices, governmental regulations and statutes. Internal Audit is conducted by independent firm of auditors. Internal Auditors regularly check the adequacy of the system, their observations are reviewed by the management and remedial measures, as necessary, are taken. Internal Auditors report directly to the Chairman of the Audit Committee to maintain its objectivity and independence.

E. Risk and Concerns:

Since your Company is catering the needs of almost all sector of Industries, if there is recession in any one sector, the other sector industry will continue to generate the revenue for the Company. Apart from the normal risk, demand-supply conditions, raw material prices, changes in government regulations, tax regimes, economic developments within the country and globally, no major risks are foreseen.

F. Human Resources:

We are committed to providing our employees with a work environment that is based on fairness, openness and mutual respect. Our on-ground work force and our employees together are the key to successes of our Company.

The Company emphasizes on the highest level of professional ethics, personal decorum, adherence to deadliness, compliance to standards and customer service.

The Company continues with its dedicated efforts to identify talent and has been recognized for its exemplary people-related parties in the Industry.

G. Health, Safety and environment measures:

Company is committed to meet the highest international standards of health, safety and environmental performance. It continues to accord highest priority to conducting safe operations while being responsible towards the environment and ecology.

The Company focused on safe operations in line with its commitments to improve its health, safety and environment performance. As a part of our drive to standardize our health, safety & environment management, company has certified under occupational health & safety management system (OHSAS 18001: 2007) for the manufacture of Fluid Couplings and Flexible Couplings and environment management system (ISO 14001 : 2004) by BSI.

Internal and external safety audits and inspections were carried out regularly. Emergency management plans have been developed to deal with any emergency within the factory brmises.

H. Cautionary statement:

Statement made in the management discussion and analysis report as regards the expectations or brdictions are forward looking statements within the meaning of applicable laws and Regulations. Actual performance may deviate from the explicit or implicit expectations.