MANAGEMENT DISCUSSION & ANALYSIS

1. Industry, Structure and Development

In a year when the global macro-economic landscape remained weak with continued slowdown in major market economies, Indian economy stood out as a heaven of stability and growth. India's economic growth is helped by Government's focus on low inflation, fiscal consolidation and impetus on infrastructure. The GDP for the FY 2015-16 is estimated to be 7.6% compared to 7.2% in FY 2014-15. However, sectors such as steel, power, mining and port, in which the Company operates, remained sluggish. Industrial sector achieved growth of only 2.6% during April to February, 2016 over corresponding period of last year. The growth of mining, manufacturing and electricity has been 2.4%, 2.3% and 5.1%, respectively during April to February, 2016 over corresponding period of brvious year. The market remained highly competitive. The overall performance of the  sectors suggest that caution needs to be exercised against unrealistic expectations of marked improvement in the short term.

However, going forward, measures such as 'Make In India', Liberalization of FDI, public investment programmes to strengthen infrastructure, combrhensive reforms in key sectors such as power and ports coupled with other fiscal measures and initiatives are likely to boost growth in sectors like port, power, steel and mining. Consequentially, the overall economic growth will drive demand for your company's products.

2. Opportunities & Threats

a. Opportunities in key sectors such as power and ports.

b. Opportunities in operation and maintenance and spares business

c. Opportunity to increase share of product business despite threat of low order books due to lack of major investment in core sector

d. Opportunities in auto application business both within and outside India.

e. Emergence of new players and MNCs with extended range of products with better technology

f. Shortage of orders due to economic slowdown

g. Delay in PG test leading to delay in retention payment and site closure.

3. Financial Performance

On standalone basis ,total income of your Company during the year was Rs. 57,000.87 lakhs (Previous year Rs.55,857.65 lakhs). Loss before tax for the year was Rs.467.36 lakhs (Previous year loss before tax was Rs.8,735.12 lakhs). Tax for both FY'15-16&FY'14-15wasNil.

On consolidated basis, total income of your Company during the year was Rs.113,182.90 lakhs, (Previous year Rs. 113,218.79 lakhs). Loss before tax for the year was Rs.2,815.73 lakhs (Previous year Loss before tax was Rs. 5,445.65 lakhs). Loss after tax& minority interest for the year was Rs. 3,634.49 lakhs (Previous year loss after tax &minority interest was Rs.6,498.34lakhs).

4. Segment-wise Performance Standalone:

The Projects and Services segment has posted a revenue of Rs.43,224.51 lakhs (Previous Year Rs. 44,056.35 lakhs) and the Products and Services segment has posted a revenue of Rs. 25,599.33 lakhs (Previous Year Rs. 26,355.61 lakhs), including intersegment revenue of Rs. 14,502.25 lakhs (Previous year Rs.15,683.06 lakhs).

The Projects and Services segment posted a segmental loss ofRs.2,289.42 lakhs (Previous Year loss ofRs.9,589.98 lakhs). The Products and Services segment has recorded a profit of Rs. 3,469.31 lakhs (Previous Year profit ofRs.3,350.33 lakhs). The loss after deducting interest and other unallocable expenditure/ income from the segmental results has been Rs. 467.36 lakhs (Previous Year loss of Rs. 8,735.12 lakhs).

Consolidated:

The Projects and Services segment has posted a revenue of Rs. 43,224.51 lakhs (Previous Year Rs 44,056.35 lakhs) and the Products and Services segment has posted a revenue of Rs. 83,524.58 lakhs (Previous Year Rs. 84,218.23 lakhs), including intersegment revenue of Rs. 14,502.25 lakhs (Previous year Rs.15,683.06 lakhs).

The Projects and Services segment posted a segmental loss of Rs.2,289.42 lakhs (Previous Year loss of Rs. 9,589.98 lakhs). The Products and Services segment has recorded a Profit of Rs.4,655.28 lakhs (Previous Year profit of Rs.5,881.29 lakhs).The loss of the  Company after deducting interest and other unallowable expenditure/ income from the segmental results, has been Rs. 3,424.87 lakhs (Previous Year loss of Rs. 6,304.75 lakhs).

5. Outlook Power Sector:

Government's mission UDAY launched for the financial turnaround of distribution companies (DISCOMs) by improving their operational efficiencies and rationalizing costs would help the power companies collect their dues and improve profitability. Further RBI's accommodative monetary stance and lower interest rates are likely to reduce cost of capital and facilitate capital investment by power companies. Government's focus to ramp up coal output to improve availability at plants and reduce their reliance on imports are strong signals of commitment to improve& support the sector. The aforesaid measures are expected to improve the power sector performance and growth and consequentially the market size for the company's products and projects.

However the sector shall remain stagnant in the short term and the demand from power sector is not expected to improve significantly due to muted demand and the resultant low plant load.

Steel Sector:

Government's initiatives such as Pradhan Mantri Awas Yojna, 100smart cities, Atal Mission For Rejuvenation And Urban Transformation (AMRUT), Make in India campaign and National Infrastructure Investment Fund to support India's investment cycle, are expected to boost growth in construction and capital goods sector which in turn will increase consumption of steel. Further benign Inflation and cheaper cost of capital is likely to increase demand in construction and capital goods sector. Increase in demand for steel coupled with price recovery should enable steel companies to revive expansion plans.

Port Sector:

Government's initiatives like" Sagarmala"&"Inland waterways" for promoting port led direct and indirect development and reducing transportation costs would entail expansion and modernization of ports. Outlay for these initiatives will provide necessary boost to the port sector.

Government also plans to tablea Model PPP Bill for port sector based on impact of externalities and changes in business environment thereby re-vitalizing the private sector interest in port sector.

Mining Sector:

The recent amendment to Mines and Minerals (Development and Regulation) Act, 1957 for speedy licensing and permits and promoting mining activities, reallocation ofcaptive coal blocks are expected to drive growth in the mining sector in future.

6. Risks and Concerns

Your Company does not perceive any major risk other than the normal risks inherent in contracting and tender driven businesses in which it operates.

Delay in clearance for delivery and payment by customers due to brvailing economic conditions are a major concern and continues to affect cash flow and margins.

To comply with the requirements of the  listing regulations ,your Company has laid down procedures for identification of the  risks and steps are taken to mitigate the same.

7. StatutoryCompliance

After obtaining confirmation from the various units of the Company on compliance to all statutory requirements, a declaration regarding compliance with the provisions of the  various statutes is made jointly by the Managing Director and Company Secretariat each Board Meeting. The Company Secretary/Compliance Officer ensures compliance with the SEBI regulations and provisions of the Listing Agreement and acts as the Compliance Officer for brvention of insider trading and ensures compliance with the Tata Guidelines on Insider Trading.

8. Internal Control System

The internal control systems and procedure are continuously monitored to enhance its effectiveness and to be commensurate with the scale and nature of its operations. M/s Pricewater house Coopers (PwC) continue as the Company's outsourced- Internal auditors, directly reporting to the Audit Committee. During the year, the Audit Committee of the  Board regularly met to discharge its functions as required pursuant to the Listing Regulations. The Audit Committee reviews compliance to the Revenue Recognition and Provisioning Policy of the Company. Internal audit activities are undertaken as per the Annual Audit Plan brpared by the internal auditors based on the risk profile of the  business. The annual audit plan is approved by the Audit Committee, which reviews compliance with the plan.

The Audit Committee regularly meets with the statutory auditors to ascertain their views on the adequacy of internal controls and their observations on the financial reports.

9. Developments in Human Resources/Industrial Relations front

Human Resource continues to be a key focus area. Total manpower as on April 1, 2016was 746. Capability building continued to be a top priority.

The industrial relations in your Company continues to be healthy and cordial. The Workers' Union actively supported all important initiatives of the  Company.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimate, expectations may be "forward-looking statements" within the meaning o 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 economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.