Management Discussion & Analysis

GLOBAL OUTLOOK:

In 2015, global economic activity remained subdued with modest growth in advanced economies while there was decline in emerging and developing economies which still account for over 70% of the global growth. The key transitions which influenced the economic outlook are: gradual slowdown in China and rebalancing of its economic activity from investment and manufacturing towards consumption and services; fall in prices for energy and other commodities; tightening in the US monetary policy in view of a robust US economy as several other major advanced economies continue to ease their monetary policies.

In technology sector the major factors which dominated the technology spending for 2015 are:

• Cloud infrastructure centrally coordinated applications and devices connecting everything to the internet and thus leading to rapid data creation.

• With Big Data the focus was more on how to relevantly use the vast amount of data stored and add more value to the business. Advanced analytics is leading to this learning process where applications embedded with analytics can deliver insights and recommendations and not just process data.

• The advancement in artificial intelligence is paving the way for smart machines enabling systems to be more responsive of their surroundings rather than just being reactive.

•  In 3D printing the price points became for affordable which enabled scale and growth in industrial usage and penetration in consumer use cases. With further improvement in quality its expansion is likely to be biggest in industrial and biomedical applications.

INDUSTRY GROWTH ESTIMATES:

• The worldwide IT spending is forecasted to decline by 0.5% from $3.5 trillion in 2015 to $3.49 trillion in 2016. The decline is mainly happening in devices and communication services spending.

•  The spending in IT services is expected to increase from $910 billion in 2015 to $929 billion in 2016, a growth of 2.1%.

• Global enterprise software spending is expected to grow by 4.2% to $321 billion from $308 billion in 2015.

Companies are tightening their IT spends but at the same time they don't want to be irrelevant in today's digital world and their investments in IT to support digitization is increasing.

FY17 Outlook for Indian IT-BPM Industry

• Export revenues is expected to reach $119 billion -$121 billion in constant currency terms, a growth of 10%-12%.

• Domestic revenues (excluding hardware and e-Commerce) is expected to grow by 11%-13% to Rs.1,560 billion- Rs.1,590 billion.

(Data Source: Gartner, NASSCOM)

INDUSTRY TRENDS

In manufacturing we focus largely on Industrial, Hi-Tech and Life Sciences sub-verticals.

In industrial manufacturing, the concept of connected factory has been evolving over the last few years. However, in the next phase of IoT, technology companies are moving beyond real-time data monitoring to connected information platforms which can leverage this data along with analytics to provide more intelligent products. In robotics, a new concept "cobotics" is catching up pace in US and other mature economies. Here robots are being employed by manufacturers to work alongside workers and not replace them. The key factor for this trend is that manufacturers believe that robots cannot address all productivity issues and in some ways it hinders innovation because only people can develop ideas to improve processes and products. This concept brings together the best of operators and machines to make the assembly process safer, easier and faster. With new technology advancements manufacturers are now able to provide real-time information and guidance at the point of use. Some companies are using these new tools and technologies to provide hands-free training, enable faster responses to maintenance requests, track inventory, increase safety and provide real-time view of manufacturing operations. These benefits could also be sold as add-on services to the equipment, thus creating additional revenue stream for industrial manufacturing firms. 3D printing is being used by manufacturers to create parts for product prototypes to reduce the design to manufacturing time cycle and save costs. Based on a research, two thirds of industrial manufacturers had utilized 3D printing by 2014. The global 3D printing market was worth around $2.5 billion in 2013, which is expected to soar to $16.2 billion by 2018. In the next phase, this technology could be applied to product development and prototyping process, to drive innovation and reduce time to market. It could be used to manufacture components or sub-assemblies of finished products.

In Hi-Tech manufacturing, connectivity is the key driver from vehicles to turbines to smartphones. Companies leveraging it to create a sustainable customer relationship with highly customized products and offerings are best positioned to gain the edge. Advanced analytics is helping companies to reshape their manufacturing operations through increased efficiencies, improved worker safety and optimized operations. The real-time analysis of supply chain and operations data also help hi-tech manufacturers to optimize their inventory. Crowdsourcing, rapid prototyping, 3D printing and Over-The-Air (OTA) updates are the new reality of hi-tech manufacturing. These are being used not only by manufacturing giants but also by smaller and niche manufacturers to breakthrough into the mainstream market. Small and medium size manufacturers are expected to pursue the technology trends more aggressively during this year, as they do not want to be left behind their global competitors in the new digital marketspace. This will include steps like modernizing plant floor equipment and moving to state-of-the-art operational systems, including cloud-based ERP systems, to better manage information. With internet connectivity, cybersecurity is posing a major threat and customers are looking for protection of their connected products. This requires manufacturers to build security in their product design, production, sourcing and distribution. In the area of robotics, hi-tech manufacturers are now using robots beyond assembly lines in the product distribution process. With manufacturing-retail convergence, these companies are prioritizing their user experience which starts with expedited delivery. Companies are creating a synchronized ecosystem from the earliest design phases of the product, all the way through the ongoing services.

In 2016, a key technological trend for life sciences industry is the expected growth in Electronic Health Record (EHR) investments, mainly integrations between EHR and Electronic Data Capture (EDC) systems. By evaluating certain criteria against patients, EHR systems can help sponsors determine trial feasibility and study protocols. Companies are also investing in mobility area to develop mobile applications that can help in their R&D process. It will help companies gather real-time data, assess a patient's condition and provide treatment for certain medical conditions, all via a mobile device. With growing social media and prospective subjects/patients sharing their concerns related to medical field in social platforms, life science companies are spending money to monitor this data and reach out to people proactively, thus creating a trust relationship with patients. These companies are also leveraging the technology route to match and recruit potential subjects for their clinical trials. In order to provide more personalized services to patients, companies are investing in portals that can offer patients and their caretakers all kinds of information at any point of time. These portals use analytics and other digital tools to communicate on a one-to-one basis. As per a survey approximately 50% of the brscribed medicine is not taken as directed, which can worsen the health conditions of patients and increase healthcare costs. Thus life science companies are now looking at technological solution to ensure medication adherence.

In 2016, the technology transformation in automotive industry will be driven by digitization, increasing automation and emerging business models. Connectivity and digitization are expected to be the first priority for auto companies in 2016, closely followed by focus on powertrains through electric mobility and hybrid vehicles. There is growth in mobility-on-demand services and customers require their mode of transport enabled with service oriented functionality which leads to efficient use of their travel time. With changes in consumer brferences, there is increasing demand for digital products and services in and around the vehicles which is leading to Auto Original Equipment

Manufacturers (OEMs) detaching themselves from their merely product and technology driven past. The automotive revenue pool is expected to increase significantly and diversify toward on-demand mobility services and data-driven services. This could create up to $1.5 trillion-or 30% more-in additional revenue potential in 2030, compared with about $5.2 trillion from traditional car sales and aftermarket products/services, up by 50% from about $3.5 Trillion in 2015. Through in-vehicle connectivity, OEMs are able to access a vast amount of data but its potential has not yet been fully captured. However the combination of vehicle and environment related data generated by the car itself and the customer related data generated by the driver will build the foundation of a future automotive business model. This also shifts the focus of OEMs from technical engineering to informational engineering, implementing information systems with NextGen business analytic tools.

In the area of powertrain technology hybrid electric vehicle is the number one investment priority from the view point of both consumers and OEMs. With tighter regulations, there is brssure on OEMs and currently they only have the choice of downsizing Internal Combustion Engine (ICE) to achieve the set goals on emissions. Autonomous cars are still a difficult sell in any market but the newer vehicles are assessed by consumers based on their innovative technology involving assisted driving and global connectivity. In a recent study, 56% of new car buyers said they would switch to a different brand if the one they were considering didn't offer the technology and features they wanted. Similarly, 48% of car buyers said they would walk away from a vehicle they liked, if the technology was difficult to use. Therefore there is a growing brsence of technology firms to develop the technology to "own" critical components of the networking, autonomous and communications capabilities of automobiles.

The Oil & Gas industry is currently undergoing a transformative phase. The significant drop in oil prices below $40 per barrel at the end of 2015, down more than 60% from their high in summer of 2014 reflects rampant supply and weak demand, amid concerns over slowing economic growth across the world mainly in China and the imbalance is expected to continue during 2016. The Oil & Gas producers are expected to reduce their capex by 30% in 2016 while already some $200 billion worth of projects have been postponed or cancelled. Therefore companies in this sector are looking for technological solutions to innovate, optimize processes, increase productivity and security and minimize costs and the major investment areas are mobility, Business Intelligence (BI) and analytics, cloud and application modernization.

The primary activities of Oil & Gas companies like exploration, drilling, production and maintenance generates large amount of data and Big Data is gaining importance to track and manage this data. There is growing adoption of user-friendly brdictive modelling tools which are offered either independently or as embedded features of big data solutions. Companies are using it to optimize oil & gas operations. Data generated in real time can be collected and analyzed against historical databases to create patterns for equipment failure. There is an increase in demand for advanced analytics for applications like planning and forecasting of production data, data generated from wells, and sets of data produced during seismic acquisition. There is also an emergence in cloud based solutions with the objective to lower costs, minimize risks and increasing the agility in IT infrastructures. As per an industry report, digital technologies have the potential to increase production volumes by 4% and reduce costs by 13% by 2050 and it is expected that majority of the Oil & Gas companies will continue to invest at least the same amount or more in digital technologies over the next 3-5 years with focus on mobility, analytics and IoT. Wireless communications are also adding business value to Oil & Gas companies as it provides data access in any part of the plant and enables the operators to interact in real-time through all sorts of mobile devices without the need to install the expensive networking infrastructure. IT security is another area of investment for companies in this sector mainly to protect from the cyber-attacks and creating a solid, secure infrastructure that can take advantage of the technologies on the horizon.

The utilities industry is also transforming and bringing in technological uplift, mainly in three sectors: Grid, Operations and Consumer Services. Through smart grid technology, utilities have access to detailed data on generation and transmission systems. Intelligent thermostats, outlets, next-generation meters and even appliances are all offering up detailed usage data. By 2020, the number of installed smart meters in Europe will reach 240 million while North America will have 150 million smart meters in use. China is forecasted to install about 400 million smart meters by that date and Japan would deploy about 60 million. With so many smart meters, data is going to grow exponentially and utilities are leveraging data analytics to maximize their operational excellence, financial performance and enhance customer satisfaction. As per a research report global utility company expenditure on data analytics will grow from $700 million in 2012 to $3.8 billion in 2020, with gas, electricity and water suppliers in all regions of the world increasing their investment.

Utility companies are also exploring opportunities in digital space to understand how digital technology can help them improve operations and improve their topline, including development of new products and services. The key areas where digital revolution can impact the utility industry are improved customer relationship, efficient management of costs and operations and creation of new products, services and business models. Companies are also forming partnerships with technology vendors to deliver on the digital experience. Smart home with features such as security, entertainment and energy management is a prime example of the new service enabled by new technologies in sensing and communications. Digital technologies will also create opportunities in upstream operations, distribution networks, field operations. Technologies such as fleet telematics, ruggedized tablets and others, all help to improve efficiency and effectiveness. Another area where utilities are making technological investment is Portfolio Management software for distributed energy resources. As utilities need to manage the variability in sources and demand for electricity they would need a software to manage the grid to ensure quick responses and optimal grid performance. Utilities are also investing in brdictive analytics tools to analyze growing data volumes, identifying failing physical assets, to improve their customer connect. Short-term load forecasting is the central brdictive analytics application used to match supply with the demand for energy. The growing brvalence of Distributed Energy Resources (DERs) is increasing the need for data collection and forecasting that accounts for substation- feeder- or customer-level forecasting. For utilities, granular short-term load and DER forecasting can form a foundation for new data-driven services for customers and internal stakeholders.

(Data Source: Industry Reports) OUR STRATEGY

Our key strategy is to build a Technology Company that cares.

We have built an organization structure with sharpened focus on verticals and innovations that would enable us to be agile. We are increasing our competency in our related technologies so that we can be known as the best in any technology that we work. We are collaborating to bring the best solutions to our customers.

In Oracle domain with growing adoption of cloud, we are winning new cloud deals and building new solutions on the cloud platform. In India especially, with government programs such as Digital India and Start-up India embracing emerging latest technologies, we are seeing an unbrcedented demand for our cloud solutions along with Oracle India. We are recognized as a Tier I brferred partner by Oracle India and we have been invited to be part of Oracle's Partner Advisory Board. We are continually building capabilities in new age areas such as Oracle Cloud, Oracle Engineered Systems and Oracle Fusion Applications. As a thought leader in our chosen verticals, we continue to align our industry expertise with investments in Oracle specific Industry Accelerators. We are also developing rapid start implementation tools deployed on cloud, allowing customers to leverage these br-configured solutions leading to faster deployment, brdictable outcomes, and quicker Return on Investment (ROI). Our pricing model for cloud offerings is also different from our traditional service business. Our digital and cloud solutions offer a customized, end-to-end engagement for organizations that enable to reduce Total Cost of Ownership (TCO) and maximize ROI.

There is also good momentum across E-Business Suite (EBS), Value Chain Execution (VCE), Value Chain Planning (VCP) and Fusion Middleware. In JD Edwards, the growth has been slower during this year. Amongst the new developments, there is a rise in discussions happening on various IoT initiatives coupled with tighter linkage to backend ERP systems and we are exploring opportunities in this space. There is also increase in demand for Customer Relationship Management (CRM) implementations, support and version upgrade, Infor M3 implementations and HADOOP services. We have been working towards development of industry focused solutions like Oracle Master Data Management (MDM) cloud solution to cater to medical devices industry's UDI compliance requirement while also building capabilities in new age offerings like Procurement & Spend Analytics Solution on Oracle Hyperion & PBCS and our SEANZ-OVI Certified solution for 'Endeca' Extensions on JDE which has been getting good traction in Australia with clear Go-to-Market strategy in place with Oracle. Our Real Time Service Excellence (RTSE) solution with IoT and our solutions on Integration of Oracle Cloud Services with JD Edwards IoT Orchestrator have also been gaining popularity among our customers.

Key recognitions:

• We got featured in Gartner's 2015 'Magic Quadrant for Oracle Application Management Services, Worldwide' in the 'niche players' quadrant. The report evaluated 17 providers' worldwide capabilities to provide Oracle Application Management Services (AMS).

• We also won awards in "Cloud integration and positioning" for success in empowering JD Edwards solutions and in the marketing category for effective promotions around JD Edwards and KPIT.

• We were also recognized as 'Visionary for MDM Cloud', by Oracle and for 'Innovation in Cloud' at Oracle OpenWorld.

In Infrastructure Management Services (IMS) we are working on introducing New Workspace & IT as a Service (ITaaS) offering where we would be modelling the services on the principle of "We Take Your Pain" to engage in end-to-end deals with the customers, additionally targeting the vendor management portfolio's for the customer's IT landscape. We are also forming partnerships in this direction. There is growth in end-to-end IT outsourcing opportunities and these are even extending to non-core IT services like surveillance and RFID management. There is traction around security with customers concerned for their application and infra security framework. We are working on delivering automation at platform layer with complete apps and infra orchestration offering to our customers and there is also focus on IT Service Management (ITSM) consulting, workspace transformation and digitization offering. We are also offering transformational solutions in cloud domain to customers with global brsence and heavy cloud footprint.

In extended Product Lifecycle Management (ePLM) we are leveraging our niche position by integrating strategic consulting, Extended PLM and Product Engineering Service offerings. There is a growing brference amongst customers for our IP led solutions such as iLink for integrating PLM with ERP systems and 'Legend' for handling large migrations involving heterogeneous Multi-CAD and Multi-PLM environments. Application Lifecycle Management (ALM) consulting is a key growth driver across global automotive sector and strategic accounts. We have integrated our PLM and ALM solutions coupled with process consulting to address customer concerns in embedded software development. There is growing interest in PLM consulting and iLink product in the medical devices industry driven by trends like M&A, system consolidation and stricter FDA regulations. We partner with ongoing cost reduction programs of our customers delivering significant benefits to them through our Enterprise Cost Management (ECM) solutions which offer cost management consulting, leveraging value engineering and should cost solutions.

PES SBU was a key growth driver during the year with major areas of traction across ADAS, Infotainment, AUTOSAR, Body & Chassis, Instrument & Clusters, functional safety and In-vehicle networks. We are investing in incubation of new practice offerings and initiated a new practice on Mechatronics, sensor optimization and IVHM in the SBU. Our investments in consulting areas such as ECM and advanced simulation areas in Mechanical Engineering have also started to generate results. We are also establishing product engineering centers in China and Brazil. In P&P SBU we achieved a major milestone as the Hon. Prime Minister of India Shri Narendra Modi flagged off the smart electric bus, an indigenous technology developed by KPIT. Two such buses have been brsented to the Indian Parliament for its members to experience green & intelligent technology. We have also shipped our first export assignment for hybrid solution after testing the hybrid technology on roads in India. In Intelligent Transportation Solutions (ITS) space we are exploring new geographies and we have done pilot implementations in South America, South East Asia and South Africa with encouraging response. Our smart metering solution for Automatic Meter Reading (AMR) is currently being deployed on a pilot basis with one of the largest utility company in India. We are also participating in Government of India's smart city mission and there is huge momentum in our focus areas of Smart Electric bus and ITS due to government initiatives of Smart Cities and Make in India. Amongst the other products, we see good growth potential in Electric Vehicles, Diagnostics, AUTOSAR and Infotainment.

Key recognitions:

• We won 'Technology Innovation of the year (suppliers)' Award for 'Revolo XL- Electric hybrid solution for public transport buses' at the IATIA 2015.

• Our On-Bus Intelligent Transport System (ITS) was recognized at The European IDTechEx Energy Harvesting & IoT Awards 2015.

• 130 buses fitted with KPIT's OnBus ITS solution were used for the South Asian Games 2016, held in Guwahati. These buses were used to transport 2600+ athletes on a daily basis. The buses were also monitored using KPIT's Command Centre Application. Mr. Ratul Baruah, Joint Commissioner at Guwahati Municipal Corporation - acknowledged KPIT's solution for providing safe transportation to all the athletes.

The key growth areas for SAP SBU have been SuccesFactors, S4/HANA, C4C, Hybris and CPQ. We have an early mover advantage in these areas with established success stories.

With these new technologies, we are helping companies transform their business in today's digital world. Besides, we have also won deals in traditional ERP implementations and upgrade opportunities. During this year we have also been able to successfully cross-sell to some of our JDE customers, who are either moving to SAP or co-existing with SAP. We have also identified existing SAP customer accounts where there are opportunities to cross-sell IMS, ePLM, Digital transformation and AMS offerings. We have also announced the brstigious launch of Enterprise Data Warehouse, featuring near real-time analytics from SAP HANA for a leading utility company in North America. In SAP there is also good growth potential related to M&A integration activities mainly in manufacturing sub-verticals as customers see value in our M&A solutions and accelerators.

Key recognitions:

• Our CRM implementation solution powered by SAP HANA for Consul Neowatt Power Solutions Pvt. Ltd., India's No. 1 Power Electronics company won the SAP ACE Award 2015 in the customer excellence service category.

• We received accreditation for a global partner quality program by SAP AG. The certificate was awarded by the SAP Partner Service Delivery organization for demonstration of our clear quality standards and processes and in recognition of quality, risk and project management framework improvements in alignment with quality principles from SAP.

• We were recognized by an industry analyst as the market leader in SAP HANA and earned very positive customer references delivering complex engagements in both Hybris and HANA.

• We have been named as a Worldwide Leader for SAP® Business Suite Powered by SAP HANA® in Manufacturing 2016 Vendor Assessment by major industry analyst IDC.

• We were the only technology partner, and one of six recipients, to receive the Wheel of Excellence Award from a $5 billion networking and communications Company. The award was conferred for innovation, industry expertise and delivery excellence for enabling customer service transformation program.

• We were amongst one of the first companies to implement ECC Suite on HANA, now SAP S/4HANA. The implementation was done for a large medical devices manufacturer and has been recognized by SAP, IDC and others as the largest and most complex deals globally for implementing Suite on HANA.

In Digital Transformation (DT) SBU we are focused on cloud, social, Big Data & Analytics and IoT/Machine to Machine Communication (M2M). There is an increased momentum in mobile application development due to digital transformation and we have been offering varied mobility solutions to customers. During the year, we have also made investments in modern application development methods like continuous build automation, DevOps, Cloud, social coding and micro services which integrates IT applications with IoT and hardware devices for digital manufacturing or smart factory. Some of the other areas of traction are integrated fleet management, asset tracking and digital inventory, supply chain optimization, Big Data and Realtime streaming analytics. We have developed products in areas of fleet management, asset management, supply chain management, energy management and workforce analytics and are currently analyzing the monetization strategy for these products. We have developed solutions like KPIT Real time Vehicle Analytics, KPIT Social Network Analytics platform and KPIT Data Management platform by leveraging the capabilities of Big Data.

The year gone by was a period of transformation for the organization as we were stabilizing the new organization structure, transforming our internal processes and taking effective measures to bring in improvement in our profitability, brdictability and people processes. For next year also the transformation phase would continue as our prime focus area would be to drive growth by offering products, solutions and services which meet the changing technology requirements of our customers in the focused verticals. We are making the necessary investments in technology and people development which would help us to move faster on the growth path.

FINANCIAL PERFORMANCE:

REVENUES:

Our $ revenue for the year stood at $ 490.31 million against $ 489 million in FY15, a Y-o-Y growth of 0.27%. Our overall services business grew by 5% (7.5% in constant currency terms) as compared to last year while there was a decline in our products & platform business. Our Rs. revenue grew by 7.84% Y-o-Y to Rs. 32,242.91 million as compared to Rs. 29,899.17 million in FY15.

During this year Europe was the leading growth geography for us growing at 26.5% Y-o-Y followed by US which grew by 10.2%. The revenues in our APAC geography declined by 17.1% during the year mainly impacted by the inconsistent growth in our products & platform business. In APAC we saw strong growth during last year driven by the traction in our ITS product however this year despite the purchase orders for the product we could not deliver due to lack of government funding which created the gap in revenues.

Amongst the SBUs, PES SBU was the key growth driver followed by SAP and IES SBU. PES SBU continues to be our largest growth segment and this year we saw significant traction in the business as it grew by 33.5% on a Y-o-Y basis. There was also strong Y-o-Y growth of 14.8% in our SAP business while in IES the growth was modest at 6% as we faced some brssure in energy vertical and a few of our JDE customers. As mentioned above we faced certain challenges in our products & platform business during the year which led to a Y-o-Y decline of 42% in the revenues. The revenues for DT SBU declined by 11.2% on a Y-o-Y basis.

The above numbers have been derived by restating the revenue numbers in USD at an exchange rate of Rs. 65.76/$.

PROFITABILITY:

Our PAT for the year stood at Rs. 2,815 million, a Y-o-Y growth of 18.8% from Rs. 2,369.87 million in FY15. Our EBITDA margin for the year improved by 230bps from 10.85% in FY15 to 13.15%. Profitability improvement was the top most priority for this year and we are happy that we have delivered well on the same despite flattish revenue for the year. We gave wage hikes in the range of 8% for offshore employees and 2% for onsite employees. The improvement in profitability can be attributed to major factors like: qualitative revenue growth, improved people metrics and a better realization rate for the year. The average realized rate for the year was Rs. 65.76/$ against Rs. 61.14/$ in FY15. In terms of actions we took a lot of steps to improve our people productivity with measures like tighter control on hires, adding more freshers, utilization improvement, better span of control at middle level, improving operational efficiency and delivery excellence. All these factors together contributed to the growth in EBITDA margin.

The other income figure for the year was Rs. 247.7 million against Rs. 351.79 million in FY15. The exchange gain amount included in other income for the year was Rs.114.2 million against Rs. 242.4 million in FY15. During the year we have made provision for a decline in the carrying amount of an investment for Rs. 112.98 million. The tax expense for FY15 includes credit of Rs. 245.9 million on account of revised tax return of earlier years filed in the US jurisdiction following completion of extensive documentation requirements and Rs. 72.4 million for other matters in India pertaining to earlier years. During this year our R&D unit received the approval from the central government for the purpose of section 35 (2AB) of the Income Tax Act. This approval is for the period starting April 01, 2014 till March 31, 2017. Based on this approval we were able to claim tax benefit on the weighted deduction u/s 35 (2AB) of the Income Tax Act, 1961 amounting to Rs. 98.51 million pertaining to earlier years which has been considered during this year. Due to these one-time credits the tax provision for the year stood at Rs. 829.67 million against Rs. 114.80 million in FY15.

LIQUIDITY:

The cash balance as at March 31, 2016 stood at Rs. 3,964 million while total debt was Rs.2,505 million comprising of Rs. 2,007 million of term loan and Rs. 498 million of working capital loan. Thus the net cash balance as at March 31, 2016 stood at Rs. 1,459 million. Our capex for the year was Rs. 1,245.78 million. With continuous rigor on managing our DSO we were able to bring it down to 75.

Internal control systems and their adequacy

The CEO & CFO certification provided elsewhere in this Annual Report discusses the adequacy of internal control systems and procedures in place.

The above mentioned headcount does not include interns on stipend.

Risk and Concerns

A separate report on Enterprise Risk Management is provided elsewhere in this Annual Report.

Cautionary Statement

Certain statements under 'Management Discussion & Analysis' describing the Company's objectives, projections, expectations may be forward looking statement within the applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could differ materially from those exbrssed or implied, since the Company's operations are influenced by external and internal factors beyond the Company's 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.