MANAGEMENT DISCUSSION AND ANALYSIS

The year that was

FY 2014-15 witnessed a turnaround of sorts in the country's overall economic condition. The markets observed a steady growth. The market sentiments were cautiously optimistic. Your Company achieved a moderate success during the year and managed to maintain its market share in the Crushing and Screening business. During FY 2014-15, the Company continued buyback of the Equity shares initiated during FY 2013-14, utilizing the cash surplus arising out of the closing business transfer agreement in line with the management's overall objective of maximization of shareholder's wealth.

Your Company, while focusing on the Crushing and screening equipment business, has initiated the process of diversification. The diversification process takes cognizance of the company's core strength in engineering, R & D & manufacturing. The highlights of FY 2014-15, in brief are as follows.

Crushing & Screening Business

Internal Development of new design Jaw Crushers

In order to improve the customer satisfaction, the R&D team developed two sizes of Jaw Crushers and this new design of Jaw Crushers have been performing in the field without any quality issues for the past 6 months. Henceforth, Indian market will be catered to with the indigenously developed design of Jaw Crushers. Coal crushing

This year your company made a foray into the coal crushing market segment and is confident that crushing plant with Roll crusher supplied will perform well. This will open up a new segment of high potential business, given the increased production of coal by Government agencies. Technology Transfer Agreement

The technology transfer agreement between Apollo FBC Crushing Equipments Limited, our wholly owned subsidiary and fBC Agregados e Mineragao do Brasil, a leading manufacturer of crushing plants/ cone crushers in Brazil, was concluded. The agreement is for manufacturing of the entire range of crushing equipment including Cone crushers. With the addition of Cone crushers as secondary crushers, GAIL will now be in a position to cater to the entire market segment with a complete menu. The cone crushers have export potential as well. fBC Agregados e Mineragao do Brasil have exbrssed their willingness to source Cone & Jaw crushers from India for the Brazil market. License Agreement

Your company has entered into a license agreement to manufacture bucket crushers with UEDA Industries Co. Ltd., Japan who are a leading player in this segment. This product which will be introduced in India in 2015-16, has a high potential with the Indian infrastructure segment poised for rapid growth in the coming years. Breakthrough with Border Road Organization (BRO)

After carrying out successful field trials at Border Road Organization (BRO), company has won an order for 10 units of Crushing Plant of 20 TPH from BRO. With the planned increased activity of BRO in border road infrastructure, this initial order will pave the way for more orders in the future. Investments:

The company has further invested approx. Rs. 18 Crores in Credo Mineral Industries Ltd. (CMIL) by subscribing to the right issue taking the total investment to Rs. 30 Crores. CMIL is engaged in mining and processing of Bauxite. The company has made 15% of equity investment through its subsidiary in Apollo Screens Pvt. Ltd. Apollo Screens is engaged in the manufacturing of various types of screens used in water, oil and other industrial applications. Apollo Screens has started the commercial production and the products have been well accepted by the customers. The Joint Venture company Ammann Apollo India Pvt. Ltd. (AAIPL) continues to be leader in the road construction equipment market. The sales has grown in the mid-teens in 2014 compared to brvious year. New products introduced by AAIPL are being well accepted in the market. AAIPL will continue to grow with major thrust by government in road construction.

Diversification

Manufacture and supply of Tanks and vessels for Chemical Process Plant

Your company has entered this new field of Chemical Process Equipment with the supply of Process Tanks and Pressure Vessels to Gujarat Credo Minerals Industries Limited for their Zeolite Plant at Kutch. Mobile Bridge Inspection Unit

Mobile Bridge Inspection Units are not manufactured in India and are currently imported. Your company has purchased the Technology for this import substitute equipment from CRRI/CSIR, a brmier Technical Agency of Government of India. Bridge Inspection with such Equipment, is a new concept in India and with recent tenders it is clear that this will be a standard requirement in future. There is a possibility of good scope for this equipment in the future. The manufacturing activities for the first prototype have commenced and the equipment shall be available for field trials in 2015-16.

Your company is also looking at other areas of diversification - special purpose machines for other sectors.

The management has and will always continue to strive in protecting the interests of all the stakeholders thereby justifying the trust and confidence reposed on them by the stakeholders. The management has always adopted an unbiased attitude in all its actions and has consistently followed the practice of transparency. The management firmly believes in profit sharing and has made sincere efforts to fulfill the expectations of the stakeholders.

The Company's financial results can be summed up as under:

1. Total Income of the Company is Rs. 6,746.33 Lacs. (4,754.43)

2. Profit Before exceptional items & Tax of the Company is Rs. 34.35 Lacs.

3. Profit/Loss after Tax is Rs. (258.27) Lacs.

4. Earning per Share is Rs. (1.70) Basic and Rs. (1.68) Diluted.

The sale during the FY 2014-15 has increased only marginally as compared to FY 2013-14. The main reason is the overall moderate performance of the mining and manufacturing sector due to a variety of reasons. Delays in regulatory approvals, problems in land acquisition and rehabilitation, environmental clearances and time overrun in the implementation of projects were the reasons for lower external and internal demand.

Our Country is classified as Newly Industrialized Country, one of the G-20 major economies, a member of BRICS and a developing economy with approximately 7% average growth rate for the last two decades. Mining is still as one of the stressed sector. In FY 2014-15, your company experienced steady and consistent growth in sales in line with the market growth. Your Company is always alive to the market conditions and with a combination of R & D, dedicated efforts and manufacturing expertise managed to obtain maximum mileage in a difficult environment. Taking cognizance of this difficult period, in the year under review, the Company relied on market money as well as on the internal accruals.

The detailed Management discussion and analysis report, industry wise, economy wise, product wise and in general is as follows:-

Industry Structure:

India continues to be one of the most promising of BRIC Countries. International companies are looking at India for growth. But for the trying economic conditions in many parts of the globe, the industry would have witnessed a far higher level of investments. Large global Corporations have plans to invest billions of dollars in several mega projects in India over the next few years which augur well for the growth in demand.

The Crushing & Screening market segment in India is a part of Mining Sector and is experiencing challenging environment. Passing of the Mines and Minerals (Development and Regulation) (MMDR) Amendment Ordinance, 2015 is a significant step in revival of the hitherto stagnant mining sector in the country.

Your company through a combination of in house R & D, technology tie-up and excellent manufacturing practices, is confident of improving its market share in this segment.

MAIN FOCUS AREAS AND APPLICATIONS:

The Company's major source of business is from mining and manufacturing sector and the growth of the company is therefore directly proportional to the growth in the mining and manufacturing segment. The Crushing & Screening equipment business has a wider market application and is not restricted to road construction alone.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS:

Opportunities:­- The Global Economy is showing signs of revival since the onset of financial crisis. According to Union Budget, mining issues are to be resolved on priority. This can be relied upon looking at the steady Government. India still has healthier macroeconomic position.

- Customers are looking for quality Crushing and Screening equipment at affordable prices and your company is in a position to fit in this segment.

- Reduction in export duties on iron ore may impact positively on mining sector.

- Expansion of products: Cone crushers, coal crushers and bucket crushers.

Threats, Risks and Concerns:­- Global Financial market is volatile. With slow international trade environment, the Indian economy is estimated to remain challenged. This may result in caution in the entry of foreign players and investment in India as a whole and mining segment in particular.

- Competition will be severe as there are quite a few local players catering to the price sensitive customers with low prices. This will lead to price brssures and the Company may not be in a position to realize higher prices for its products and services.

- This combined with higher input costs will exert brssure on the margins.

Outlook:

The Company sees a moderate outlook in the coming years for Crushing and Screening business on its own. The addition of new products with proven technology will improve the top and bottom line of the company. With the existing cash balances, the Company can mobilize the funds and venture in diversified business activities, outside of mining equipment business. With favorable Government policies, the overall market looks positive. The Government committing itself to infrastructure in general and construction in particular, the demands for the Company's products are likely to see a good growth in the coming years. Internal Control Systems and their Adequacies:

The Company maintains effective and adequate internal control systems. The Internal Control is formed as such to avoid unnecessary losses and to ensure proper record of transactions, reliable financial reporting, safeguarding of assets and adherence to management policies. The Internal Control system is adequately equipped so as to suggest proper changes that are required in the system to improve performance and eliminate waste.

An Independent firm of Chartered Accountants regularly carries out the internal audit of the Company. Internal audit of the Company is carried out at periodic intervals. The Officers responsible for their functions regularly submit their comments on report and share the steps they have taken to rectify the defects.

Your Company continues to be an ISO 9001 certified Company by TUV India Private Limited (TUV NORD) recognized for the production, quality control and standards.

Human Resources:

Your Company is technology-driven and has its own HR policy, which focuses on qualitative & transparent recruitment, training & development, performance appraisal, employee welfare etc. The Company believes that the development of employees is the prime responsibility of an organization and its employees are key contributors to the success of its business. The Company believes that its human resources are the key to maintain its leading position in the industry. The Company provides competitive compensation packages combined with a good working culture and environment to attract and retain talented personnel.

The Company seeks to establish and maintain an environment that supports its business processes and ensures that employee performance is evaluated against the achievement of objectives, which are in line with its long-term goals. All employees are provided with KRAs and an opportunity to discuss their performance, plan their development and make self-appraisals.

Comments on Financial Performance with respect to Operational Performance:

During the Financial year under review, the Net Turnover of the Company has marginally increased to Rs. 6,746.33 lacs as compared to Rs. 4,754.43 lacs in the brvious financial year. Though the profits of the Company have decreased as compared to the brvious financial year due to absence of extraordinary profit on slump sale, the overall sales are on growth path. The profit before exceptional items and tax is Rs. 34.35 lacs. The Profit/Loss after Tax is negative Rs. 258.27 lacs in the current year due to short term capital gain on sale of Bonds as per IT Rules. The Company's manufacturing business was on break-even point and therefore there was no profit in current year. Due to competitive brssures and stagnant market size, the Company could not improve on the price realization as expected. As far as investment activities are concerned, major chunk is invested in the debt fund where there was no gain and inadequate price realizations.

Cautionary Statement:

Statements in the Management Discussion & Analysis describing the Company's objectives, projections, estimates, expectations, brdictions etc. may be "Forward statement" within the meaning of applicable laws and regulations. Actual results, performance or achievements may vary with those exbrssed or implied, depending upon the economic conditions, Government policies and other incidental/ unforeseeable factors. Important factors that could influence the Company's operations include input availability and prices, demand and pricing of finished goods in the Company's principal markets, changes in Government regulations, tax laws, economic developments within the Country and other incidental factors.