MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. Industry structure and developments:

Overview

The Company is a public limited company incorporated and domiciled in India and has its registered office at Bangalore, Karnataka, India. The Company has its primary listings on BSE Limited and Ahmedabad Stock Exchange Limited. The Company has been steadily expanding its customer base, infrastructure, service lines and industries. The growth momentum of the Company continues to attract top talent and win new customers and strengthen existing customer relationships.

According to the IMF, global economic growth remains moderate, with uneven prospects across the main countries and regions. In its World Economic Outlook issued in April 2015, IMF has forecast the global growth to reach 3.5% in 2015, up from 3.4% recorded in 2014. Growth is projected to be stronger in 2015 relative to 2014 in advanced economies, but weaker in emerging markets, reflecting more subdued prospects for some large emerging market economies and oil exporters.

Enterprises are increasingly outsourcing their technology and IT services requirements to global IT services providers who can deliver high quality service on a global scale and at competitive costs. According to Gartner report Forecast: Enterprise IT Spending by Vertical Industry Market, Worldwide, 2013-2019, 1Q15 Update, worldwide IT Services spending in 2014 was $948 billion, a growth of 1.8% over the brvious year. Global IT service providers offer a range of end to end software development, IT business solutions, research and development services, business process services, consulting and related support functions.

Over the past two decades, India has risen to become the leading destination for global IT services sourcing, business process services and research and development services. Global IT services providers, based in India, have a proven track record for providing business and technology solutions, offering a large, high quality and English-speaking talent pool and a friendly regulatory environment. These factors have facilitated the emergence of India as a global sourcing hub.

The industry has been expanding its service offerings constantly and adding capabilities, evolving business models and providing high customer satisfaction. India remains an excellent business delivery model for the IT-BPM industry and has become the epicenter of the global technology industry. It has been growing in size, scale, maturity and domain expertise serving global customers.

The last year can be characterized as the year of rapid transition and transformation leading the industry to expanding into newer verticals and geographies, attracting new customers and transforming companies from being technology partners to strategic business partners.

The financial statements are brpared in accordance with the Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis, except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as brscribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied, except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Starcom Information Technology: Poised For Growth

During the financial year 2014 - 2015, Starcom Information Technology Limited (SITL) has made several operating initiatives with the underlying objective of creating a global business. Powered by a strong business strategy and an aggressive management team, SITL has created a robust pipeline to support sustained business expansion and value enhancement in the coming years in the areas of business intelligence, enterprise analytics and engineering services. In the year 2015-2016, the Company is envisaging new opportunities to achieve profitable growths.

2. Opportunities and Threats: Opportunities:

Recovery and growth of economy as well as significant technology changes are brsenting several opportunities to Starcom Information Technology Limited.

India has continued to retain its first mover advantage and maintained its leadership position. It remains a high potential market worldwide, offering multiple opportunities for unmet needs. With the second largest population in the world, India also brsents a large end user market. It continues to remain an excellent delivery centre for the IT-BPM industry. Currency movements and increased operational efficiency have ensured that India's position as the most cost competitive market has only become stronger over the past years.

Starcom Information Technology Limited sees opportunities of growth on the back of reviving global economies, better offshore IT spends in most industry verticals, on-going renewal cycles of IT Services spends being the new imperative across industries. The demand for "value for money" services, positive outlook on discretionary spends, acceptance of new business models and platforms, a stronger balance-sheet size post-merger, cross selling opportunities to a wider client base and availability of qualified and skilled workforce etc. also augur well for Starcom.

Improving fortunes of IT industry is increasing the demand for IT professionals and large scale recruitment.

Threats:

The global IT services industry is highly competitive with competition arising from Indian IT companies and MNC IT services Companies having sizable brsence in low cost geographies, deep pockets, strong client relationships, In house and captive services companies etc. The stiff competition can lead to brssure on pricing, vendor consolidation and hence can impact Company growth and profitability.

IT being a manpower driven services industry will be associated with supply side risks on availability of talented pool of people, domain and technology experts. Also attracting talented people and attrition remains a risk.

The growth in the economy and IT industry is expected to lead to increase in attrition next year. This brssure on attrition as well as fast changing technology landscape will necessitate increased investment in its people and innovative approaches to retain and develop right talent.

3. Segment-wise Performance:

During the year under review, the Company has started operating in two segments viz

1. Test, Measurement & Embedded Solutions for Educational Sector

2. Statistical & Analytics Softwares

4. Outlook:

The future of the global technology industry will be shaped by economic forces especially in the advanced countries. As per the IMF global growth remains moderate, with uneven prospects across the main countries and regions. It is projected to be 3.5% in 2015 versus 3.4% growth of 2014. Relative to last year, the outlook for advanced economies is improving, while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. Factors like lower oil prices, exchange rate swings, and country/region specific factors have affected the global activity in 2014 and are still shaping the outlook.

As the global economy improves and consumer confidence increases, investing in new technologies, cloud computing, mobility and analytics, and innovation will provide tremendous opportunities. As per NASSCOM, the Indian IT-BPM industry is expected to reach digital revenues of US$ 300 billion by 2020. This opportunity accounts for 12-14% of the industry revenues. By FY 2016, NASSCOM expects the industry to add revenues of US$ 20 billion to the existing revenues of US$ 146 billion. Export revenues are projected to grow by 12-14% and reach US$ 110-112 billion. Domestic revenues are expected to grow at a rate of 15 -17% and is expected to reach US$ 55-57 billion during the year.

According to Gartner, one of the world's leading information technology research and advisory companies, worldwide IT spending is set to shrink to US$ 3.66 trillion in 2015, a 1.3% decrease from 2014 mainly due to the rising dollar. It expects spending on data centre systems, enterprise software markets and telecom services to increase as compared to 2014. IT services is projected to contract slightly. The Gartner Worldwide IT Spending Forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets.

The Company is well poised to exploit the emerging opportunities.

5. Risks and concerns:

• This section lists forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these statements as a result of certain factors. This section lists our outlook, risks and concerns :

• Our revenues and expenses are difficult to brdict and can vary significantly from period to period, which could cause our share price to decline.

• Our business will suffer if we fail to anticipate and develop new services and enhance existing services to keep pace with rapid changes in technology and in the industries on which we focus.

• In the event that the Government of India or the government of another country changes its tax policies in a manner that is adverse to us, our tax expense may materially increase, reducing our profitability.

• The economic environment, pricing brssures, and decreased employee utilization rates could negatively impact our revenues and operating results.

• Our success depends largely upon our highly-skilled technology professionals and our ability to hire, attract, motivate, retain and train these personnel.

6. Internal Control systems and their adequacy:

The Company maintains adequate internal control system, which provides, among other things, reasonable assurance of recording the transactions of its operations in all material aspects and of providing protection against significant misuse or loss of Company's assets.

The Company has an adequate system of internal controls implemented for achieving efficiency in operations, optimum utilization of resources with analysis of data to strengthen it to meet the changing requirements.

8. Material developments in Human Resources/ Industrial Relations front:

In any services enterprise, employees form the core of an organization. We recognize the vitality of this stakeholder. A significant portion of our management focus is invested in engaging with our employees.

The Company is committed to create an appropriate climate, opportunities and systems to facilitate identification, development and utilization of employees' full potential on a continuous basis.

We continually strive to provide our employees with competitive and innovative Compensation & Benefits. We are in the process of devising incentive programs linked to 'business segment performance' as well as 'individual performance' in order to strike the fair linkage between performance and compensation for each employee.

Cautionary Statement:

Certain statements made in the management discussion and analysis report relating to the Company's objectives, projections, outlook, expectations, estimates and others may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections and so on, whether exbrss or implied. Several factors could make a significant difference to the Company's operations. These include economic conditions affecting demand and supply, government regulations and taxation, natural calamities and so on over which the Company does not have any direct control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.

Note: The clause 49 of the Listing Agreement as applicable from 1st October 2014 is not mandatory to the Company in view of the SEBI Circular CIR/CFD/POLICY CELL/7/2014 dated 15th September 2014, as the paid-up capital of the Company is not exceeding Rs.10 crores and the net worth is not exceeding Rs.25 crores.