MANAGEMENT DISCUSSION & ANALYSIS REPORT

Industry Structure & Developments:

The Infotech sector had a good year both from revenue and margin growth perspectives. Despite a sluggish start in the first quarter of the financial year, the company witnessed steady improvement over the quarters, as reflected in results. And we are confident that this momentum will continue during the current financial year (FY 2015-16). We will focus on operating levers such as utilization, sales efficiency and management overhead to improve operating margins in the current year. The face of IT is changing rapidly and there's no going back. As a direct result of current economic necessities and ongoing technological developments, the IT industry is undergoing a number of fundamental shifts. In order to remain relevant to their clients and customers, it is increasingly important for businesses to monitor these developments closely, adapting essential products and services to meet new marketplace demands. Information technology in India is an industry consisting of two major components: IT services and business process outsourcing (BPO). The sector has increased its contribution to India's GDP from 1.2% in 1998 to 9.5% in 2015. According to NASSCOM, the sector aggregated revenues of US$147 billion in 2015, where export revenue stood at US$99 billion and domestic at US$48 billion, growing by over 13%. India's Prime Minister Narendra Modi has started 'Digital India' project to give IT a secured position inside & outside India.

The global economy grew at 7.3% in 2014 as against 6.9% growth recorded in 2013. Global economic activity picked up in the second half of the year, with much of the impetus coming from the Advanced Economies, raising hopes for an improved performance in 2015. The US economy grew by 2.4% in 2014, with the continued recovery of private domestic demand partly offset by the impact of heavy fiscal consolidation. The performance of IT services companies is likely to improve in 2015-16, with nearly all players delivering around 11-13% growth. We expect growth to be broad-based, with contribution from all geographies, verticals and service lines. After nearly two years, we are seeing clients enter IT budgeting sessions on a positive note.

Telangana Scenario:

After four years of political uncertainty, which ended in the creation of Telangana, attention is now turning towards rebuilding brand Hyderabad.

State information technology minister K. Taraka Rama Rao is set to clear several IT companies' expansion plans, which had been put on the back burner all these years. Among the companies geared up for expanding their operations in and around Hyderabad are tech major such as Amazon, Google, Facebook, Microsoft, Cognizant, and Tata Consultancy Services. Telangana has a significant amount of Software export in India. While the majority of the Industry is concentrated in Hyderabad, other cities are also becoming significant IT destinations in the state. Since Hyderabad offers a stable political climate as well as an efficient and good IT infrastructure, it is safe to assume that it will become a core player in Asia in terms of being information technology hub. The conditions have made Hyderabad a prime destination for offshoring services, making it an alluring destination for many IT companies worldwide.

Hyderabad's IT exports exceeded $7 billion in 2014. There have been extensive investments in digital infrastructure. In Hyderabad, the central region of the business happens in HITEC City, in the Madhapur suburb. Development of HITEC City prompted several IT and ITES companies to set up operations in the city, and has led civic boosters to call their city "Cyberabad". While the emphasis is on the IT industry clustered in and around Hyderabad, the government also wants to take the sector to two-tier and three-tier cities such as Nizamabad, Karimnagar and Warangal. IT corridors in these cities along the lines of the one in Hyderabad will be established. Special incentives and tax rebates have been planned for start-ups and investors in these corridors.

It may therefore be safely concluded that the IT companies in Telangana are headed for a positive and futuristic growth owing to favorable times and favorable environment that it has successfully provided the companies from around the world.

Strengths and Threats:

Our Strengths:

We operate in a highly competent and dynamic environment. Our focus is adhering to standards, developing innovative solutions, providing quality goods and services, highly accurate and user friendly products with improved business techniques to our clients. Our industry has the ability to quickly respond to events across the nation and obtain data in areas that may be difficult to enter.

The industry as a whole has been investing in latest technologies that complement existing capabilities and meet future prospects.

Our Strategy:

As we all know that customers are the most important element of any business, they are the core and in order to prosper and grow in a competitive environment our strategy has always been revolving around our clients. Customer satisfaction, optimum utilization of resources, periodic quality checks, adapting environmental changes both in terms of macro and micro perspective flexibility and innovation are the utmost important strategies on which our company focus.

Threats:

Every year in order to maintain a growth and meeting customer expectations, our company goes through periodic checks. We have set different parameters for our company and periodically we will go through these checks in order to find out the threats which our company undergoes. We not only point out those threats, we also make sure that appropriate measure are taken in order to reduce our threats. One of the more significant threats to the IT industry is Indian economy's unresolved economic condition and its impact on domestic and global environment. Some other threats which our company faces are - dynamic business environment, changing customer needs, cost constraints, fluent changes in rupee dollar rates and increasing competition.

Outlook and Future Plans:

As per the Budget 2015, IT Industry has huge opportunity in current and prospective projects, such as in metro train project, technology and digitization of internet and mobile technology. We however, are looking forward into the fine prints and have strategy ready as to how to best collaborate with such projects to turn our plans into reality. It is the opportunity in the smart cities space that is generating the maximum excitement amongst the IT industry. We were expecting smart cities to be a crucial part of the new government's development and nation building plans.

A growing ecosystem of early stage funding, incubation and peer learning is creating innovative start-ups, building technology solutions and products for India and the global market. Our initiatives like creating a strong and healthy ecosystem for startup, innovation clusters and centers of excellence will encourage customers to invest in our company and build the next generation of Global companies from India. Increase in global technology spending and opportunities created through adoption of disruptive technologies are expected to propel growth in near future.

Risks and Concerns:

In any business, risks and prospects are inseparable. As a responsible management, the Company's principal endeavour is to maximize returns. The Company continues to take all steps necessary to minimise its expenses through detailed studies and interaction with experts.

In the normal course of business, the Company is exposed to certain financial risks, principally interest rate risk, liquidity risk and credit risk, risks associated with the economy, regulations, competition, etc. The Risk Management framework of the Company ensures in risk mitigation areas and functions of the Company, and has in place, the procedures to inform the Board Members about the risk assessment and minimization process. These processes are periodically reviewed to ensure that the management of the Company controls risks through a defined framework.

Every year in order to maintain a growth and meeting customer expectations, our company goes through periodic checks. We have set different parameters for our company and periodically we will go through these checks in order to find out the threats which our company undergoes. We not only point out those threats, we also make sure that appropriate measure are taken in order to reduce our threats. One of the more significant threats to the IT industry is Indian economy's unresolved economic condition and its impact on domestic and global environment. Some other threats which our company faces are - dynamic business environment, changing customer needs, cost constraintsfrequent changes in rupee dollar rates and increasing competition.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:

The Company has adequate internal control system, commensurate with the size of its operations. Adequate records and documents are maintained as required by laws. All efforts are being made to make the internal control systems more effective. We do understand the importance of Integrity compliance in an organization and to make sure that each and every employee of our company is meeting the set standards, we undertake surprise and periodic checks of all the processes. Our company makes sure that all the compliances are maintained properly in written form and is well communicated to all the people working in our company. Our processes works in a full transparent manner to avoid any type of frauds and errors within the organization. All the related issues are properly taken care by our Audit Committee, which is formed as per The Companies Act, 2013 and the committee, ensures that all the government policies, rules and regulations are followed by the company in a stringent manner. Internal control takes care right from the utmost utilization of company's resources to transparent accounting and other processes to restricting unauthorized access to the assets of the company.

SHARE CAPITAL:

The Share Capital of your Company is Rs. 5,05,00,000 divided into 50,50,000 Equity shares of 10/- each. During the year underreview, there was no further issue of shares.

SECURED LOANS:

Secured Loans of the Company are NIL.

FIXED ASSETS:

Fixed assets of the Company amount to Rs. 221.57 Lacs.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

Our company has a meager but skilled and well trained set of human resource working with us in order to meet business perspectives. We have completely defined procedure when it comes to hiring an employees based on projects on hand, so that our requirement exactly meets with the candidate qualification and skills. As information technology requirements are very dynamic with the changing business environment, we provide continuous and appropriate training to our personnel so that their knowledge and skills are never obsolete.

The Company also has good relations with other companies in the similar stream of business and it shall be useful in understanding the market behavior and phenomenon in depth and to stay updated with competitors both in growth and adoption of new technologies for cost effective operation.

CAUTIONARY STATEMENT:

Statement in this Management's Discussion and Analysis detailing the Company's objectives, projections, estimates, estimates, expectations or brdictions are "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 global and Indian demand-supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.

FOR SENTHIL INFOTEK LIMITED

Sd/- Chellamani Pitchandi

Managing Director DIN:01256061

Dated: 26.08.2015

Place: 157, Dhanalakshmi Society, Mahendra Hills, East Marredpally, Secunderabad, Telangana- 500026.