MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL

OPERTAIONS

Business Review

We are brsently engaged in assembling TFO twisting machines and selling under the Brand Name "Prerna". We are also engaged in sourcing of all types of machinery and equipment. The Company also manufactures velvet fabrics and continues to outsource some of the textile division products.

Analysis on results of Financial Operations

Sales

Our total sales increased to Rs. 2633.25 lacs in fiscal 2015 from Rs. 1323.60 lacs in fiscal 2014. The primary reason for this increase was on account of increase in income from products outsourced by our company. During the year under review, the Textile Division achieved a turnover of Rs. 2378.16 lacs as compared to Rs. 996.37 lacs in the brvious year. During the year under review, Engineering Division achieved a turnover of Rs. 236.08 lacs as compared to Rs. 333.65 lacs in the brvious year. The Company also received income from sale of services amounting to Rs. 21.34 lacs in the fiscal 2015 as against Rs. 0.35 lacs in fiscal 2014.

Other Income

Other Income increased to Rs. 116.67 lacs in fiscal 2015 from Rs. 89.00 lacs in fiscal 2014. The increase in other income was mainly due to increase in amount of profit from sale of securities to Rs. 25.65 lacs in fiscal 2015 from Rs. 0.23 lacs in fiscal 2014. The increase in other income was also due to increase in amount of interest on deposit to Rs. 60.12 lacs in fiscal 2015 from Rs. 42.58 lacs in fiscal 2014.

Raw Materials Consumed

The consumption of raw materials decreased to Rs. 215.87 lacs in fiscal 2015 from Rs. 283.02 lacs in fiscal 2014. As a percentage of income from products manufactured by our Company, our material consumption was 60.92 % during fiscal 2015 as against 66.49 % during fiscal 2014.

Purchase of traded goods

Purchases of traded goods increased/ decreased to Rs. 2306.78 in fiscal 2015 from Rs. 743.77 in fiscal 2014. As a percentage of income from products traded by our Company, our purchases of traded goods were 102.07 % during fiscal 2015 as against 82.24% during fiscal 2014.

Other Manufacturing Expenses

Other manufacturing expenses increased to Rs. 80.12 lacs in fiscal 2015 from Rs. 66.60 lacs in fiscal 2014. The increase was mainly on account of increase in labour & processing charges which increased to Rs. 51.69 lacs in fiscal 2015 from Rs. 44.71 lacs in fiscal 2014.

Employee Cost

The employee cost increased to Rs. 90.08 lacs in the fiscal 2015 from Rs. 85.93 lacs in the fiscal 2014. Administrative, Selling and Distribution Expenses

Our administrative, selling and distribution expenses decreased to Rs. 139.90 lacs in the fiscal 2015 from Rs. 149.63 lacs in the fiscal 2014. The decrease was mainly because of decrease in travelling & conveyance, sales promotion and professional fees.

Interest and Financial Charges

During the year under review our interest and financial charges increased to Rs. 8.81 lacs from Rs. 4.19 lacs. The increase was due to use of overdraft facility during fiscal 2015.

Debrciation

During the year under review debrciation increased to Rs. 32.22 lacs from Rs. 21.30 lacs. The increase in debrciation was mainly due to acquisition of assets during fiscal 2015 as well as due to calculation of debrciation as per Schedule II of the Companies Act, 2013.

Profit before tax

Profits before tax decreased to Rs. (7.47) lacs in fiscal 2015 from Rs. 18.35 lacs in fiscal 2014. The decrease was mainly on account of expenses incurred in the textile division.

Market Opportunities

In today's cost conscious globalised economy, there are a lot of small, mid-sized & even large companies who are unable to afford the latest technology brand new machines due to their very high cost. The high cost machinery makes costing of the final product uncompetitive in the market. These companies are constantly in the lookout for used machines in good condition at a reasonable cost. On the other hand, along with the growth in the economy, there is huge growth in distressed assets and distressed companies in India and oversees which provides for supply base for a wide spectrum of machinery and equipments across all industrial sectors. To add further, because of the booming infrastructure sector and steady growth in the construction business, lot of equipments viz. forklifts, seizure, lifts, dumper, escavators, cranes etc. are available all over the world at reasonable cost ready to be picked up. We can source all these at a reasonable cost for oil rigging companies, offshore companies, ports and construction companies. There is a demand for all types of latest technology machinery at a reasonable cost. As the Indian economy growing at a faster pace and moving towards globalization, there is a continuous brssure to look for equipments that as good as new but at a reasonable cost. We are ready to benefit from the emerging business opportunity due to our ready platform like database of prospective customers, contacts with agents all over the world, registered with auctioneer companies all over the world, vast business contacts and relationships, across various business sectors, extensive manufacturing and engineering experience, we are competent to repair, recondition, refurbish machinery, supply spare parts not readily available and have a competent execution team of professionals.

Outlook on Threats, Risks and Concerns

We can track whatever our global competitors can do in terms of locating machinery, equipments as well as prospective customers. However, we enjoy several advantages over global competitors such as economical specialized manpower costs, customers. However we enjoy several advantages over global competitors such as economical specialized manpower costs, infrastructure and logistics cost, warehousing cost. We can also offer after sales maintenance and long term service contract and supply critical spare parts. Domestic used machinery suppliers restrict themselves to only one industry or on product group. Domestic competitors can supply machineries available in India and do not have network or reach to access oversees equipments. In order to insulate ourselves completely from any future ad-hoc Government Policy Changes, we have completely outsourced TFO's manufacturing activity to a competent set of vendors trained and developed by us. We get TFO's manufactured against firm orders only. This outsourcing also enables us to focus completely on emerging and rapidly growing machinery and equipments sourcing activity.

Internal Control Systems and their adequacy

The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorised, recorded and reported correctly. The Company has a well established framework of internal controls in all areas of its operations, including suitable monitoring procedures and competent and qualified personnel. Internal control improvements are continuous process and are always being upgraded to strengthen the process and to make the same commensurate with the size and nature of the business. The Company conducts its business with integrity and high standard of ethical behaviour and in compliance with the laws and regulations that govern its business.

Human Resource Development

Your Company believes that skill development is a vital component for Human Resource Development. The Company continues to lay emphasis in nurturing and strengthening the overall development of the Human Resources and has always been recognizing the manpower as vital tool in Company's growth. The Human resource of the Company is characterized by its loyalty and long-term association.