MANAGEMENT DISCUSSION AND ANALYSIS

This year happens to be yet another historic year for YOUR COMPANY. YOUR COMPANY has morphed itself into a new avatar armed with a new and savvy company name for easy marketability - It has been renamed as COSYN LIMITED. It has also reinvented itself to be able to compete in the global arena with primary focus of serving the SME segment companies across the world. COSYN aims to serve the needs of its clients in the domains of Cloud Solution services for Energy and Utilities, HR Management and GPS Based Vehicle tracking solutions.

YOUR COMPANY is already certified for ISO 9001. It has recently been certified for the brstigious ISO 20000-1 and ISO 27001 certifications for Software Development, IT BPO Services, Data management services and Infrastructure Management by JAS ANZ.

YOUR COMPANY has been planning the launch of Cloud Services and Products over the last few months and in line with the global forecast brdicting high-maturity of Small and Medium Business (SMB) segment companies being more open and positive about adopting Cloud Services or enabling their stand alone applications onto the Cloud. Currently only 1/3rd of the Small and Medium Enterprise (SME) businesses have adopted Cloud Computing in some form for their Business Applications. There is an expected upsurge in Cloud Solution adoption in US, Middle East and European countries over the next 2 years.

Global analyst corporations brdict a Compounded Annual Growth Rate (CAGR) for Cloud Services of almost 20% YoY which makes it an inevitable platform for delivering value to our clients and features in the list of 'Game Changers' technologies.

The cloud has changed the fundamental nature of computing and how business gets done and it will continue to do so through 2020. COSYN seeks to ride the business adoption wave and garner a fair share of the Cloud Services market through strategically selected and designed Cloud offerings for the SMB segment. COSYN will also adopt a CLOUD-FIRST and MOBILE-FIRST vision for its existing Cloud Centric products as well as the new ones in the making. Cloud Computing is simply the new way business is done and IT is provisioned.

To be competitive in this world of break-neck innovation and fast paced advancements against larger enterprises with unlimited IT budgets, SMBs must be armed with the right information to guide their business appropriately. For many SMBs -Cloud rebrsents the opportunity to exceed goals and change the competitive landscape.

3D PRINTING

COSYN is also evaluating 3D printing for all possible commercial applications and has been studying the domain closely. The term '3D Printing' (also called additive manufacturing) is used to refer to any of various processes used to make a three-dimensional object. In 3D printing, additive processes are used, in which successive layers of material are laid down under computer control. These objects can be of almost any shape or geometry, and are produced from a 3D model or other electronic data source. A 3D printer is a type of industrial robot. 3D Printing in the term's original sense refers to processes that sequentially deposit material onto a powder bed with inkjet printer heads. More recently the meaning of the term has expanded to encompass a wider variety of techniques such as extrusion and sintering based processes. Technical standards generally use the term additive manufacturing for this broader sense. COSYN's internal team is closely evaluating the business potential of this new technology both in India and abroad.

NEARABLES

Nearables (also called Nearable Technology) is another interesting and upcoming technology that holds much potential for disrupting various business scenarios. Nearables is a term used to describe the idea of smart objects - everyday items with small, wireless computing devices attached to them. Those devices can be equipped with a variety of sensors and work as transmitters to broadcast digital data, usually using Bluetooth Smart protocol. Those objects are able to provide mobile devices in range with information about their location, state and immediate surroundings. The word 'nearables' is a reference to wearable technology -electronic devices worn as part of clothing or jewellery. Nearables are a further development of the Internet of Things (also referred to as Internet of Everything). It's a vision of a wide, global network of interconnected devices, using the existing Internet infrastructure to provide advanced services beyond standard machine-to-machine communications. To create a nearable, one must attach an electronic device, working as both sensor and a transmitter, to an object. Since the only limitation is the size of the device, both items and living beings can act as nearables. The most often cited examples, however, include retail and home automation environment.

COSYN team has procured an early developer kit from ESTIMOTE Inc. and analyzing its code patterns and interaction capabilities. It is also working on its SDK - Software Development Kit for familiarizing itself on its abilities and shortfalls.

In addition to the focus on the new technologies, COSYN will continue its existing businesses and seeks to add additional revenue from the new initiatives of the Government of India. A brief summary of the business opportunity and our go to market strategy has been described below:

1. Energy Efficiency Services Limited (EESL) - Distribution of Energy Efficient devices and Electrical Items across India

2. Smart Grid Solutions

3. Distribution Franchisees

4. Aadhaar Enabled services

5. Meter to Cash for Utilities

EESL (Energy Efficiency Services Limited) - Distribution of Energy Efficient devices and Electrical Items across India

The overall size of energy efficiency market is estimated to be Rs. 74,000 Crores. Till now, only 5% of this market has been tapped through Energy Service Companies (ESCOs) mode mainly in the areas of lighting and some industrial applications and the large-scale implementation of energy efficiency is constrained by a number of important regulatory, institutional and financing barriers. The concept of performance contracting implemented by ESCOs is being increasingly considered as a mechanism to overcome some of the barriers hindering and discouraging the large-scale implementation of energy efficiency projects. However, despite the fact that the potential for application of performance contracting in both the public and private sectors in developing nations is enormous, the growth of the ESCO industry has been particularly slow in the country. In order to develop a viable ESCO industry, Ministry of Power has set up Energy Efficiency Services Limited (EESL), a Joint Venture of NTPC Limited, PFC, REC and POWERGRID to facilitate implementation of energy efficiency projects. EESL will work as ESCO, as Consultancy Organization for CDM, Energy Efficiency, etc.; as a Resource Centre for capacity building of Utilities, Financial Institutions, etc. EESL will also lead the market-related actions of the National Mission for Enhances Energy Efficiency (NMEEE). It is registered under the companies Act, 1956 on 10th December 2009 and the commencement of business certificate is obtained on 11th February 2010. It will be the first such company exclusively for implementation of energy efficiency in South Asia and amongst a very few such instances in the world.

COSYN is targeting the various tenders being called for under hiring of agencies to carry out large-scale Distribution, Storage, and Inventory Management of LED Bulbs & Data Base Preparation etc. as per scope of work for DELP (Domestic Efficient Lighting Program) work. The Domestic Efficient Lighting Program (DELP) is being implemented by EESL at AP to provide energy efficient 9W LED lighting in place of the conventional 60W incandescent lamps (ICLs) for grid connected consumers in 9 districts of AP. Under the program, quality LEDs would be distributed to grid-connected residential households in exchange of an incandescent bulb (ICL) per LED. LEDs shall be adequately stamped OR unique identification number may be given, to forbid them to enter into market for re-sale. Approximately 1,29,72,000 LED Bulbs may be distributed in these 9 districts alone.

This business opportunity will scale to distribution of LED bulbs across all Indian states and then scale up to include other Energy Efficient devices like Fans, ACs etc. The total target is to distribute 20 Crore LED bulbs across India by 2016.

SMART CITIES AND SMART GRID SOLUTIONS in INDIA

Although the idea of smart cities is an evolving concept of recent years, Government of India has embarked on an ambitious program of developing 100 Smart Cities on fast track. While cities in the developed nations with reliable physical infrastructure (electricity, water, transport etc) and minimal population growth in urban areas have the main focus of smart cities development in asset optimization, operations monitoring, data communications and analytics with the main objective of transition to a low carbon economy, developing countries where cities have inadequate physical infrastructure need to focus on building modern physical infrastructure that are scalable, intelligent and interoperable to build smarter cities.

COSYN specializes in the Geographical Information Systems (GIS), Meter Data Management System (MDMS), Asset Management (AM) and Consumer Information Systems (CIS) elements in the Smart Grid structure and is strategically placed to partner Smart Grid implementation programs in India and abroad.

COSYN has expertise in multiple computing platforms shown in the table above.

India with a federal democratic structure need the cooperation and coordination of federal government, state governments and urban local bodies to build smart cities. Ministry of Urban Development (MoUD) has been made the nodal agency for driving the smart cities program by Government of India.

Smart Grid facilitates efficient and reliable end-to-end intelligent two-way delivery system from source to sink through integration of renewable energy sources, smart transmission and distribution. In this way Smart Grid technology shall bring efficiency and sustainability in meeting the growing electricity demand with reliability and best of the quality.

McKinsey estimates that the Smart Grid business opportunity across the world will be around USD 15 to 31 Billion between 2014 -15. Smart Grid also enables real time monitoring and control of power system as well as helps in reduction of AT&C losses, demand response and demand side management, power quality management, outage management, smart home energy system etc. Smart Grid will act as a backbone infrastructure to enable new business models like smart city, electric vehicles, smart communities apart from more resilient and efficient energy system and tariff structures.

The electric power utility industry in India has been undergoing significant transformation of its operating landscape, driven primarily by rising energy demands of a fast growing economy, market operations and regulatory mandates.

ELECTRICITY DISTRIBUTION FRANCHISEES

Distribution Franchisee (or Distribution Power Franchisee or Power Distribution Franchisee or Power Franchisee or DF) is an emerging Public Private Partnereship (PPP) model in Indian Distribution power sector. While it is not complete privatization, it is a step to leverage best corporate practices, cut down high utility losses (National Average ATC of 35+%), realize brdictable cash flows directly from end-consumers and hence offers an attractive big market.

With modernization of Utility infrastructure (IT automation, Measurements and Monitoring) under Government of India's R-APDRP program, the scale-up of Distribution Franchisee business stands at market inflection point. Further integration of the existing Distribution Franchisee model with Distributed Generation (DGBDF - Distributed Generation Based Distribution Franchisee) and consumer demand management would be advent of India into Smart Distribution or smart grid.

Power Distribution Franchisee - evolving PPP model has picked traction since 2009 after successful demonstration by Torrent Power Ltd. at Bhiwandi, Maharashtra, which got operational in 2007.

The licensee (state utility) appoints a private company on the basis of rationale bidding for distribution of electricity in a specified area for specified years of contract. This Distribution Franchisee model stands midway between licensee and full PPP model and is considered as one of the major energy reforms in power distribution sector that has the potential to turnaround the sector and take electricity to rural areas as well.

Out of the variants available, 'Input based Distribution Franchisee' model has recently seen an increase, currently with five cities across India, out of which distribution in three cities was handed over to private companies in 2011. Three new cities in MP have recently been franchised and undergoing handover, further boosting up the DF model. Input based Distribution Franchisee, by far, has been mostly used operating model in urban areas.

Investments in this space are driven by the emerging nature of the 'Input based Distribution Franchisee' model which promises high returns, has low entry barriers, maintains proximity to end-consumers, involves high Capex with brdictable cash flows and easy financial leverage when operating efficiently.

COSYN with its long standing domain expertise in the Electricity Domain is a leading contender for partnerships in bidding for the upcoming Electricity Distribution Franchisees across India. The Central government which was satisfied with the performance of power distribution franchisees (DFs) and private licensees in states of Gujarat, Maharashtra, Uttar Pradesh, Odisha and Delhi, is planning to direct state-run discoms to go in for this model. It has drawn up a list of 200 cities where the franchisee model is to be implemented. COSYN also seeks to deploy its Combined Billing Expertise (Water, Electricity and Sewerage) for the various Discoms in India.

Aadhaar Enabled services: UIDAI

Developing on its vision of "Empowering residents of India with a unique identity and a digital platform to authenticate anytime, anywhere", the Unique Identification Authority of India (UIDAI) unveiled three new Aadhaar-Enabled Services and announced the establishment of first set of permanent enrolment centres (Aadhaar Kendras). The services that were launched include Authentication services using Iris, Authentication service using One Time Pin and eKYC (Electronic- Know Your Customer) service. UIDAI Registrars may choose to charge a convenience fee not exceeding Rs.10 for printing e-Aadhaar letter and Rs.15 for update requests. Aadhaar Enabled Service Delivery is currently or will soon be linked to various government schemes such as MNREGA wage payments, PDS distribution, payment of social security benefits such as old-age payments, distribution of LPG subsidy etc. Currently 89.75 Crore residents have enrolled themselves for the UIDAI Aadhaar number.

Micropayments using Aadhaar Authentication

In the last twenty years India has undergone a transformation of its economic and regulatory structures. Policy reforms in this period have led to the increasing maturity of our markets, as well as healthy regulation. The emphasis on de-licensing, entrebrneurship, the use of technology and decentralisation of governance to the state and local level have in particular, shifted India from a restrictive, limited access society to a more empowered, open access economy, where people are able to access resources and services more easily and effectively.

But despite these efforts, access to finance has remained scarce in rural India, and for the poorest residents in the country. Today, the proportion of rural residents who lack access to bank accounts remains at 40%, and this rises to over three-fifths of the population in the east and north-east parts of India. To mitigate the lack of financial access in India, the regulator has focused on improving the reach of financial services in new and innovative ways — through no-frills accounts, the liberalization of banking and ATM policies, and branchless banking with business correspondents (BC's), which enables local intermediaries such as self-help groups and kirana stores to provide banking services. Related efforts have also included the promotion of core-banking solutions in Regional Rural Banks; and the incorporation of the National Payment Corporation of India (NPCI) to provide a national infrastructure for payments and settlements in the country.

Advancements in technology such as core banking, ATMs, and mobile connectivity have also had enormous impact on banking. Mobile phones in particular brsent an enormous opportunity in sbrading financial services across India. These technologies have reduced the need for banks to be physically close to their customers, and banks have been consequently able to experiment with providing services through internet as well as mobile banking. These options, in addition to ATMs, have made banking accessible and affordable for many urban non-poor residents across the country. The Aadhaar and the accompanying authentication mechanism coupled with rudimentary technology application can provide the desired micropayment solution. This can bring low-cost access to financial services to everyone, a short distance from their homes. COSYN with its vast Aadhaar data collection and implementation expertise is well suited to morph itself for the next round of Aadhaar enabled services to be delivered to the residents in India through Micropayments, Authentication services and Aadhaar enabled service delivery in Civil Supplies/Ration Card and Election card integration projects.

Meter to Cash for Utilities (Power, Water and Gas)

In the existing Metering billing system, the Energy bill of the consumer is calculated and printed on the spot using a handheld computer or mobile phone - immediately after the meter reading is taken. In Meter Reading and Bill Distribution (MBRD) System, there is gap of around 3-5 days from the date of meter reading to bill delivery. This gap is eliminated in using Spot Billing. Using advanced state of the art GPS and GPRS/Edge/3G/4G technologies data is also immediately sent to the server which enables immediate access to billing progress and revenue billed. One visit to consumer brmises is all that is required as compared to two visits. This improves the consumer satisfaction and also improves the revenue realization cycle. Most of the current

Utility DISCOMs (Distribution Companies) are expected to migrate to the Spot Billing system using GPS and GPRS to overcome the shortcomings of the other Metering billing processes and also improve reliability and accuracy of metering.

COSYN has been the pioneer in implementation of Spot Billing services in the country and has been at the forefront in introduction of new technologies. Its in-house developed Android based GPS+GPRS/3G Spot billing and collection software and app is well suited for offering reliable and diverse field based metering requirements for Electricity, Water, Sewerage consumers. It is also the first company in India to develop the Android application for combined billing of Water, Electricity and Sewerage consumers in a single bill. COSYN estimates the Spot billing market to grow to INR 500 Crores per annum over the next two years and is gearing up to garner a substantial share of this market. It is also developing its own Web-Enabled Total Revenue Management (TRM) software which is used by Discoms for Revenue accounting, reconciliation and computation purposes on a monthly basis. The Web based TRM software can be deployed in the cloud or on the DISCOMs servers as per the requirement.