MANAGEMENT DISCUSSION AND ANALYSIS

(Forming part of Directors' Report)

a) Indian Economy:

The year 2013-14 had witnessed a variety and cluster of gloomy economic conditions rather a sort of pebbles all at a time triggered by high inflation, high interest rates, debrssed demand supply dynamics, lower industrial and agricultural output, global cues etc., result of all led to a lowered GDP and pushed the Country back to pavilion.

However, a ray of hope glittered in the eyes and hearts of people of India with the advent of single party to rule the nation with absolute and decisive mandate from electorate. The new Government is facing the heart burning challenges before it. Major among them are containing the inflation, revival of sluggish economic conditions, fiscal consolidation, boosting up agriculture and industrial output, striking balance between demand-supply dynamics, rationalizing interest rates, balancing uneven chemistry among various other economic variables.

Further, a host of factors such as initial deficient rainfall in many part of the country, increasing crude oil price, and inheritance of sluggish economy have made the task more complicated and troublesome for the Government.

Budget for the year 2014-15 evinced a mix of responses. Somehow, the Government hopes to bring the economy on track with estimated GDP growth at 5.4% to 5.9% for the year 2014-15. It is expected that new Government may allocate more funds / outlays on sectors like infrastructure, agriculture, rail, ports, gas pipelines and waterways etc.,

Financing is made easier with the relaxation of CRR / SLR norms for Banks and while granting autonomy to banks is indeed a welcoming measure. Further the new Government has taken initiatives to attract long term finance from wide range of domestic and foreign Investors for financing Infrastructure projects so as to reduce excessive dependence on so called traditional domestic banking for funds.

Rise of GDP of emerging markets / Nations:

The economic rebalancing should eventually reach a tipping point as emerging markets continue to expand their global reach and influence.

PWC analysis reveals that the GDP of seven emerging markets (Chaina, India, Brazil, Russia, Indonesia, Mexico and Turkey) (ESeven) in the year 2009 was USD 20.9 trillion and which is expected to grow to USD 138.2 trillion by the year, 2050.

Global / Infrastructure Industry:

Global Infrastructure spending has begun to rebound from the global financial crisis and is expected to grow significantly over the coming decade.

A study and research by oxford Economies reveals that worldwide infrastructure spending will grow from USD 4 trillion per year in 2012 to more than USD 9 trillion per year by 2025. Overall close to USD 78 trillion is expected to be spent globally between 2014 and 2025.

PWC study on Real estate landscape by 2020 reveals that Global mega trends expected to change the real estate landscape considerably in the next six years and beyond. While many trends such as huge expansion of cities, many fold increase in urban population etc are already evident, there will be natural tendency to underestimate how much the real estate landscape would have changed by 2020.

b) Industry Trends vis-a-vis Operations:

An overall negative Outlook was maintained for infrastructure projects in 2014 due to the continued weak credit profiles of companies. Some of the macro-economic variables a like pick up in GDP growth rate, abatement of inflationary brssures and the expected drop in interest rates may turn favourable during the year 2014-15. This may result in cash flows of infrastructure projects experiencing some improvement though the 'lag' effect would imply that benefits are unlikely to accrue immediately, the India rating agency said. Despite the slow down in economy for the year 2013-14 combined with poor market conditions and Debt crisis, the company could sustain its operations and achieve abrciable growth. Further planned and diversified investment mainly in the areas of infrastructure helped the company to achieve improved and better performance in comparision to brvious year 2012-13.

c) Operational performance:

During the year under review, the company has posted a turnover of Rs.3192.54 lakhs registering a growth of 400% over with brvious year 2012-13. The four-fold increase in revenues has been result of multiple growth initiatives, business recasting and dedicated efforts of all the teams responsible for the development of business. The company was able to earn a net profit of Rs.10.38 lakhs for the year against net profit of Rs.9.20/- lacs during the brvious year 2012-13. The paltry growth in Net Profits disproportionate to the growth in revenues is due to the reasons of high cost of operations, initial bottlenecks and other growth oriented plan expenditure etc,.. The reasons are also explained in Directors report under the item review of performance. Your Directors reports that the company was focused on business growth initiatives and other related matters and therefore the focus was not towards making profits for the year but for the future growth of the Company, performance of the company is expected to improve during the years to come with initiatives and endeavors being made in the direction of improving the working efficiency of the company.

The company is engaged in the business of infrastructure, which as per Accounting Standard 17 is considered the only reportable business.

c) Future out look:

Reorganization of the Board

As a first step towards growth of the company, the Board of directors of your company has been reorganized by appointing professionals with relevant experience and exposure in the field of construction, Finance and Administration. Also some of the Directors have resigned from the board due to personal reasons. The details of Directors who have resigned and who have been appointed are given elsewhere in the Directors Report under item Directors in this Annual Report.

Appointment of Key Executives:

Recently Mr. V B Raju a qualified Member of the Institute of Company Secretaries of India with about 35 years of experience in the fields of Finance, Legal, Projects, Administration has been taken as whole time Director of the Company to head the Finance and corporate planning division.

During the year, Company has appointed 4 senior executives at the level of Vice Presidents, who have rich experience in the construction industry and 6 supervisory level persons with relevant qualifications and experience have been appointed.

Re-designing of Business Model:

Till the last year 2012-13 the company was into business of small earth works, services, maintenance works etc,. During the year under review the business has been recast to include major Road Works, construction of Civil Works for mounting / establishing, electronic machine, LED lights on roads, streets, Government works, PWD works, construction of guest houses for Government, commercial and Residential Apartments, development of gated communities etc,.

Acquisition of strengths / skill sets:

1. Company has attained its objective of equipping with all skill sets needed for completion / execution of projects on hand through the appointment of Mr. Venkateswar Rao and Mr. Venkatesh Muppaneni two Directors on the Board of Directors. These two persons would have executed number of construction projects in Andhra Pradesh and they have requisite knowledge and experience in the field of construction. They have brought with them rich exposure in the field alongwith contacts and business.

2. Take over of Business / Companies:

Your Company plans to acquire further strengths for multiple growth, business and financial leverages through take over of the business or companies in the construction industry.

As part of this strategy, the company is in advanced stage of acquiring 100% stake in the following companies:

i) Shiv Swathi Constructions Pvt. Ltd.

ii) CTIL Infra Pvt. Ltd

The two companies have got adequate strengths resources such as huge teams with rich experience, scalable execution abilities, huge orders on hand, Administerial abilities, etc., Thus, the take over of these companies will definitely add up multiple strengths and bring in business and financial leverages in a bid to attain desired growth in the years to come.

3. Recruitment of management trainees drawn from Universities / Colleges and train them to suit our requirements and to add additional strengths and qualities.

4. Mergers and Acquisitions:

In order to face new challenges of execution of projects, sourcing business streams etc., the company is planning to acquire needful of the hour from time to time through mergers and acquisitions with one or more suitable companies of large size in volumes of business and teams.

Joint Ventures:

1. The Company has entered into joint venture with Kolkatta based company for development of 6,00,000 SFT space into Residential / Commercial complex at Kolkatta. The project would be definitely a feather in the net of business fold of the company and is expected to bring in landscapes growth.

2. The company is in advance stage of entering into joint Venture with owners of land at Guntur (proposed area of Andhra Pradesh new Capital) for development of residential apartments and commercial spaces. The

Project is to develop around 2,00,000 sft of space into both residential and commercial spaces and is expected to be completed in 24 to 30 months.

3. The Company has got Rs.100 Crores business through its proposed subsidiary CTIL Infra Ltd for establishing LED Street lights, Road lights in cities, towns etc,. The Project is expected to bring new business strengths and forms different business segment altogether for the company.

Financial Resources:

1. For funding the working capital required for execution of the projects on hand, the company plans to mobilize required funds through Issue of 1,00,00,000 equity share warrants of Rs.10/- each at a brmium of Rs.40/- per warrant aggregates to Rs.50 Crores. To this extent, special Resolution for approval by shareholders is recommended by your Board of Directors in the Notice here to this Annual Report.

2. In order to part finance the projects on hand, the company plans to raise the funds to the tune of Rs.25 Crores through the Issue of Non Convertible Debentures. To this extent, company has taken effective steps for completion of the Issue.

3. As part of Sourcing funds / Funds mobilization programme, the company plans to obtain working capital facilities from the Banks. For this purpose, the company approached for Banks and is awaiting response from them. The Company is trying sincerely to get the working capital facilities from Banks.

d) Internal Control System and its adequacy

The system of internal control has been established to provide reasonable assurance of safeguarding assets and maintenance of proper Accounting Records and its accuracy. The business risks and its control procedures are reviewed frequently. Systems audit is also conducted regularly to review the systems with respect to Security and its Adequacy. Reports are brpared and circulated to Senior Management and action taken to strengthen controls where necessary.

e) Risk Management

Risk evolution and management is an ongoing process in the company

f) Human resources and Industrial relations

Your company continues to have cordial relations with its employees.