MANAGEMENT DISCUSSION & ANALYSIS REPORT

GLOBAL ECONOMY OVERVIEW:

The Indian GDP grew* at 7.3 % in FY15 as against 6.9 % in FY14. Industry growth increased to 5.9% and services sector growth also increased to 10.6% in FY2014-15. Agricultural sector growth slipped to 1.1 % mainly on account of erratic monsoon. Private consumption recorded a growth of 7.1 %. Declining oil prices, weakening food inflation, improved job prospects, and a stable currency helped to lift the con­sumer confidence. The growth in capital formation was increased from 3.0% in 2013-14 to 4.1% in FY15.

Overall, the macroeconomic situation in India improved during 2014-15. Also, in view of the Government's commitment to reforms, the economic outlook for FY16 looks positive and a GDP growth of over 8% is expected in FY16 as per the projections of the Government.

INDIA'S INFRASTRUCTURE SECTOR:

The infrastructure and construction sector remained stressed in FY15 and struggled to deal with structural issues and macro economic factors. Issues such as delays in land acquisition, delays in approvals, delays in payments, delays in settlement of claims, long working capital cycle etc., affected the progress of the projects and Companies. Most Companies have been struggling with liquidity crunch and with their highly leveraged balance sheets. In FY15, the tone of companies across the sector was to deleverage their bal­ance sheets and regain financial strength. Several Companies raised funds through asset monetization, stake sale in subsidiaries, rights issues and Qualified Institutional Placements.

Despite the tough ride in FY15, the sector is likely to gradually emerge out of the difficult phase partly on account of the gradual economic recovery expected in FY16 and partly because of the initiatives taken by the new Government.

The Reserve Bank of India (RBI) also introduced initiatives to ease funding availability to infrastructure projects such as providing incentives to banks in the form of exemption from CRR/SLR for long term bonds raised to lend to infrastructure sector, flexibility in refinancing norms for infrastructure projects by way of 5/25 structure etc. The progressive cut in repo rates by RBI was also welcomed by the industry.

In Union Budget FY 16, the Government allocated higher funds towards public sector infrastructure projects. The planned allocation for the Ministry of Road and Highways has increased significantly to Rs. 429 bn for the FY 16 from Rs. 289 bn in FY 14-15. The capital outlay for railways has been increased by Rs. 101 bn to Rs. 1000 bn. The budget also proposes to set-up 5 Ultra Mega Power Projects (UMPPs) totaling 20 GW in the plug-and-play mode wherein all clearances and linkages will be obtained before the award of project. It has also proposed some large infrastructure projects like building 100 smart cities and Sardar Patel Ur­ban Housing Mission, which will provide long term infrastructure opportunities. In the railways sector, the focus is on faster execution of Dedicated Freight Corridor (DFC), which is an important on-going project. It also proposes to introduce Public Contract Dispute Resolution Act, which would aim at quicker resolution of litigations / disputes in infrastructure projects. Also, the Government has proposed the lowering of the corporate tax rate over the next four years.

OPPORTUNITIES & THREATS:

The risk be it external or internal, is inherent in every business. Economic slow down impact most seg­ments of the economy. The main concerns are slow down in growth in the economy, demand constrains for the products arising from the brvailing environment, natural calamities, low disposable income and charge in the priority of consumers and fierce completion leading to higher spend on trade activities and promotional support necessitating allocation of more resources.

Formalised process of identifying and assessing business risk; specific action and monitoring mechanisms were put in place to manage these business risk.

In order to mitigate the risk, your Company has closely monitored various aspects like cost of the construc­tion, material, time of completion of project etc. and whenever it has realized to take immediate action, it has given effect to. Focus on financial discipline including effective management of net working capital has helped to overcome the above risk and concerns to some extent.

SEGMENT ANALYSIS AND REVIEW:

The Activity of the Company is to provide service of construction. Therefore the Company operates in a single business / geographical segment as envisaged in Accounting Standard (AS-17) issued by the ICAI. Hence, segment wise performance is not furnished.

FUTURE OUTLOOK:

The Government of India is taking various steps to boost the infrastructure development in the country. Looking at the huge potential for growth in the infrastructure sector, your company sees a good outlook for the coming years and the Company will benefit from the same.

RISK & CONCERN:

The Company is exposed to external business risk, internal risk and financial risk. External business risks arise out of variations in place of construction material etc. Internal risks basically cover operational effi­ciency and ability to withstand competition. Financial risks are basically in the nature of interest rate varia­tions.

FINANCIAL PERFORMACE:

An Overview of the financial performance is given in the Director's Report. The Audit Committee consti­tuted by the Board of Directors periodically reviews the financial performance and reporting systems.

HUMAN RESOURCES:

The Company continued to have cordial and harmonious relations with its employees.

Company's major thrust is on training and development aimed at transmission of information and knowl­edge through in house, in the job and external training input resulting into skill development and compe­tency building of employees.

The Board would like to exbrss its sincere apbrciation and gratitude on behalf of all the stakeholders of the Company, who benefit from the hard work of the employees.

CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis Report detailing the Company's objective, projec­tions about the future, estimates, expectations or brdictions including, but not limited to, statements about the Company's strategy for growth, market position and expenditures may be "forward- looking statements" within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand / supply and price conditions in the domestic markets in which the Company operates, Changes in the Government regula­tions, tax laws and other statutes or other incidental factors.