MANAGEMENT DISCUSSION AND ANALYSIS

ABOUT THE COMPANY:

Kavveri Telecom Products Limited is a leading telecom wireless subsystem products manufacturer, providing worldclass, hardware products and solutions for the Telecom, Defence & Aerospace segments.

Founded in 1991, Kaweri Telecom designs, develops, tests and manufactures a diverse range of wireless Telecom products, from concept to deployment. With over 500 R&D man-years of experience and over 20 years of high paced growth, Kaweri Telecom is uniquely positioned to offer an array of world-class products and solutions to meet product and sub-system requirements of Telecom manufacturers, Carriers, Defence and Space clients. The Company enjoys the status of being the largest Indian transnational manufacturer of Antennas & RF products with overseas offices, distributed R&D, and foreign acquisitions resulting in market access spanning four continents and is committed to meet the expectations of its share holding community, clients, business partners and employees.

DEVELOPMENTS AND EXPANSIONS:

TELECOM APPLICATION:

The growth of Cellular Industry is rapid with the brsent subscriber base of approximately 900 million. Company's RF products and Antennas are the requirements for the cellular industry to have their network roll out to increase the subscriber base and revenues by maximizing the existing capacity utilization of the operators.

To enable seamless connectivity to the targeted subscribers, TRAI has projected need of additional 330,000 cell sites.

This would provide strong thrust to the wireless telecom sub-system product manufacturing companies like Kavveri.

The advent of 4G should spur the requirement of Kavveri products more in India and abroad. Your Company's Infrastructure and products are already 4G ready. Having a positive forecast of the regulations to be introduced in the telecom industry, your company forecasts enormous opportunity in 4G with readily available infrastructure and products.

DEFENCE AND SPACE APPLICATION:

Your Company has been pursuing various opportunities in defense and space segments and it has worked on the prototypes of these products. Your Company has designed, developed and delivered some of these products to defense and space establishments.

Some of the prototypes have been approved by the defense and space industry and these are expected to generate huge revenues in the coming years. Your Company has received a very positive response from the Defense and Space segments and has been entrusted with the design developments of various RF products and Antennas for Defense and Space applications.

Your company is planning to foray into the international markets for defence & space and actively looking for opportunities of both organic and inorganic expansion in this segment.

IN BUILDING SOLUTION:

Your Company's subsidiary "Kavveri Telecom Infrastructure Limited" (KTIL) is providing coverage solutions to the wireless network carriers for a positive customer experience. KTIL is the collaborator with the mobile operators in the IBS sphere by enhancing the quality and coverage of the signal. Selling service quality has become an increasingly important step to brvent attrition of the installed customer base. KTIL acts as a Neutral Host Provider to multiple operators. Neutral Host Provider is an entity that designs, deploys and maintains systems on a common platform to benefit upto 8 no.s operators simultaneously via a single distribution backbone. It saves opex and capex for the operators.

Your company's unique solutions takes care of 2G, 3G, 4G, Mobile television, WiFi, BwA and CDMA and all the future Technology upgrades for another 10 years. Currently, KTIL has deployed its services in 125 buildings in India and the projected demand will increase this to 3000 buildings in next 5 years.

Your company's new acquisitions Quality communications Systems Inc and New England Communications systems Corp. will further open up new markets in the field of In building solutions in US markets and also an opportunity for Kaweri to bring US technology to India in the fields of Public Safety and Cellular Applications, Network Solutions, Mobile Data, Asset Tracking, Radio Systems, Video solutions, Wireless Infrastructure and Integrated Business Systems.

PRODUCT WISE PERFORMANCE:

ANTENNAS & RF PRODUCTS:

Your Company during the year has sold reasonable quantity of RF Products & Antennas for GSM, CDMA, 2G, 3G and LTE Carriers across the globe.

The Antennas supplied were Yagi Antenna, Omni Antenna, Patch Panel Antenna, Multi-port antennas and Base Station Antenna. Base Station antennas are the first critical component of wireless infrastructure. They capture wireless signals from the users' handsets, delivers the radio frequency (RF) signal from the base station radio back to the handset and sends signals to operators base stations The RF Products supplied during the year were TMA, TMB, filters, combiners, splitters, couplers etc. RF Products & Antennas are having reasonable margins. Your company has started supplying RF subsystems components for mission critical applications of defence and aerospace segments.

IN- BUILDING SOLUTIONS

Your Company during the year has been able to establish itself as a major player in in-building solutions with GSM, CDMA, 2G and 3G Carriers like Vodafone, Airtel, Idea, Reliance & Tata Tele Services. Your Company sees growing opportunities going forward in In-building solutions with reasonable margins.

Your Company has formed a new subsidiary to meet this growing demand for In-building solutions. This subsidiary caters to Build, Operate, & Lease model projects which are a welcome relief to the operators as they give them a good value addition to their markets in addition to savings in Capex and Opex. This subsidiary is ready with solutions for 4G, mobile television, WiFi and BWA. The added subsidiaries in the US will further enhance the potential and opportunities for Kavveri in inbuilding solutions area.

OUTLOOK:

The products your company manufactures are all in high growth segments. The outlook for your company's products in wireless Telecom world-wide is very encouraging with the growing network roll out action plans of various operators to meet the demands of the subscribers. Telecommunication is the backbone of a flourishing economy. Your Company's entry into defense and space segments will allow it to tap the huge potential over a longer period. Your Company sees In-building solutions as huge growth opportunities for the next 3-4 years as IBS Infrastructure is mandatory for large building in many countries and will be soon in India.

OPPURTUNITIES AND THREATS:

Your Company has designed and developed various RF Products and Antennas for 3G, 4G & other Wireless technologies. Some of them are approved and some of them are in the process of approval. Your Company sees great opportunities for these products. Your Company is also tapping the opportunities for its products in defense and space applications. Also, your company is pursuing the opportunities for its products in the Canadian,Latin American European & US Markets.

CAPACITY EXPANSION:

Your company has shifted its manufacturing facility to Jigani, about 25 km away from Bangalore under one roof. This new facility, comprising of 3 floors built on the company's own land, is approximately 1,50,000 square foot in area the largest facility in India for RF Products. We started operations in this facility from the end of February 2009. We plan to dedicate one of the floors for contract manufacturing and are under discussions with some firms for the same.

We are also planning for tie-ups with partners for manufacturing in India and will also manufacture items for our overseas subsidiaries. We have also started a dedicated EOU in this facility.

Our infrastructure:

R&D INFRASTRUCTURE:

The infrastructure in terms of equipments and tools available with your R&D is as follows;

1. Network Analyzers upto 20GHz

2. Spectrum Analyzers upto 26.6GHz

3. Signal Generators

4. Oscilloscopes

5. PIM Analyzer 900

6. PIM Analyzer 1800

7. RF Communication test set

8. PIMAnalizer 1900

9. Anechoic chamber for antenna testing

10.Satimo Star Lab for Base Station antenna testing

11. Environmental Chamber

12. Vibration test table

13. Bump and shock table

14. Machine Shop

15. Wideband amplifiers

16.Painting shop

SOFTWARE TOOLS IN R&D:

1. Advanced design software (ADS) for 2D circuit and EM Simulation

2. CST Microwave studio for 3D EM simulation, Time domain

3. WIPL-D 3D EM simulation frequency domain

4. Auto CAD Inventor-Mechanical 3D design tool

5. Solidworks-Mechanical 2D design tool

6. AutoCAD - Mechanical 2D design tool

7. EDWIN 2000-PCB design tool

INFRASTRUCTURE AT THE MANUFACTURING PLANT AT JIGNAI:

1. Backup power of 180KVA

2. Sewage treatment plant

3. Microwave antenna reflector hydraulic brss

4. Cable cutting and stripping machine

5. Network analyzers

6. Antenna Tester

7. ROHS Soldering stations

8. Semi automatic assembly lines

9. Machine shop

10. Painting shop

11. Passive Intermodulation testing facility (PIM)

12. Near Field measuring test Set up

13. Environment test facility.

RISKS AND CONCERNS:

Our business faces risks. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events or circumstances described in the following risks actually occurs, our business, results of operations or financial conditions could suffer and the trading price of our shares could decline.

We rely upon a few customers for the majority of our revenues and the loss of any one of these customers or rescheduling of orders from any of these customers would have material adverse effect on our business, results of operations and financial condition.

Our success is tied to the growth of the wireless services communications market and our future revenue growth is dependent on the expected increase in the size of the market.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

KTPL has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against any loss and all the transactions are authorized, recorded and reported correctly.

The internal control system is designed to ensure that the financial and other records are reliable for brparing final statements and maintaining accountability of assets. The system is also supplemented by reviews undertaken by the management and the Audit Committee of the findings and recommendations of the internal audit.

MAJOR DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT:

Human Resources are the center of focus at KTPL. They are the driving force behind the accelerated growth of the Company. KTPL provides constant training and development to ensure both personnel and technical enhancement.

Several new initiatives in terms of new HR policies, benefits to employees, new recruitments have taken Kaweri into a higher growth path. The employer and employee relationship has been cordial and the directors wish to place on record their apbrciation for the contribution of all the employees towards the growth of the company.

Place: Bangalore

Date : 06-09-2015