MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC OVERVIEW

World economy's growth percentage, in 2014, remained flat at 3.4% which was same as in 2013. While Advanced Economies grew from 1.4% in 2013 to 1.8% in 2014, Emerging Markets & Developing Economies recorded lower than expected growth of 5% in 2014 from 4.6% in 2013.Going forward, the world economy is estimated to grow by 3.5% and 3.8% in 2015 and 2016, respectively. (Source: World Economic Outlook by IMF)

Indian economy displayed signs of stable growth in FY 2014­15; post a consistent period of lower growth rates over the last 3-4 years. As per the new method of calculation on 2011-12 as base price, Indian economy recorded a growth of 7.3% in FY 2014-15 as against 6.9% in FY2013-14. India's economy's growth momentum was led by a number of reforms and industry development programmes by the government. The improved economic environment in India also enabled by a steep decline in crude oil prices, FDI inflows across many sectors, Fiscal Deficit was contained at 4.1% of the GDP.(Source; Ministry of Statistics & Programme Implementation and Budget of India, 2014-15)

INDUSTRY OVERVIEW

The Pump Industry holds a prominent position in Capital Engineering Goods segment, as pumps are needed by a wide spectrum of industries ranging from waste water to Oil & Gas, Food & Beverages, Paper, Construction, to Shipping and more. Its growth is directly linked to industrialization and infrastructure development.

The Pump Industry is growing in India at a healthy rate keeping pace with GDP growth. India is also gaining grounds in export markets. The Government's recent push for economic growth through key policy reforms across industry sectors is likely to help the economy to sustain and fuel the growth of pumps industry. However, the recent political deadlock is posing concerns of adverse impact of business sentiments and growth expectations. Specific initiatives such as Ganga revival plan would provide tremendous opportunities to engineering equipment manufacturers. Besides the initiative to setup 100 Smart Cities and Home for All by 2022 are expected to add to overall economic growth besides the real estate and construction sectors.Also spending in Defense sector especially for Naval & Coast guard new vessel program including up gradation of old fleet provides tremendous opportunities to engineering equipment manufacturers with Make in India policy being a front runner.

FINANCIAL POSITION

The Financial Statements of your Company have been brpared in compliance with the requirement of the Companies Act, 2013 and Generally Accepted Accounting Principles in India. There is no material departure from the brscribed accounting standards in the adoption of the accounting standards. The management of Roto accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates, provisions and judgments used therein, which have been made on prudent and rational basis, in order that the same reflect a true and fair view of the affairs of the Company.

Resources Allocation Fixed Assets

The Gross Fixed Assets as at 31st March, 2015 were Rs. 7671.40 lacs as compared to Rs. 4064.42 lacs on 31st March, 2014 indicating a net increase of 188.74%. The increase was mainly on account of completion of Greater Noida Project of the Company during the year under review.

Current Assets

Current assets as at 31st March, 2015 were 5657.94 lacs as compared to Rs. 6045.96 lacs as on 31st March, 2014, which were lower by Rs. 388.02 lacs than the brvious year. The net decrease was mainly due to decrease in short term loans and advances, which was mainly due to completion of the Greater Noida Project. The inventories increase by Rs. 441.01 lacs. Cash and cash equivalents were increased by Rs. 11.77 lacs. Trade receivables were lower by Rs. 167.10 lacs. Trade receivables outstanding for more than six months amounted to Rs. 188.30 lacs as compared to Rs. 97.66 lacs in the brvious year. The management has recognized Trade receivables of Rs. 11.90 lacs as bad debts and as not recoverable.

Non-current Liabilities

Non-current liabilities as at 31st March 2015 were Rs. 1544.68 lacs as compared to Rs. 1822.78 lacs as at 31st March, 2014. The net decrease in non-current liabilities was mainly due to repayment of FCNR and other term loans.

Current Liabilities

Current liabilities as at 31st March 2014 were Rs. 4786.94 lacs, which were higher by Rs. 1952.62 lacs than the brvious year. The increase in current liabilities was due to increase in utilization of working capital limits. The working capital limit utilization increased due to utilization of funds in the Greater Noida Project, availability of which had reduced utilization of working capital limits in the brvious year.

The management believes that your Company's liquidity and capital resources would be adequate to meet its expected working capital needs and other anticipated cash requirements.

FINANCIAL PERFORMANCE

The principal source of Roto Pumps' revenues is from the sale of pumps and its standard spares and retrofit spares. Your Company has a rich heritage in innovative technology in Pump manufacturing. Your Company offers combrhensive range of Progressive Cavity Pumps or PCP, with single screw and multiple screws, for various industrial applications. Your Company's revenue during the year 2014-15 has grown to Rs. 9434.59 lacs from Rs. 9020.32 lacs during 2013-14.

Your Company recorded Profit after Tax of Rs. 741.51 lacs against Rs. 959.06 lacs in 2013-14. Profit After Tax has decreased mainly due to increase, employment expenses, finance costs, debrciation and other expenses. Finance cost increased due to FCNR term loan and increased utilization of working capital limites. Increase in debrciation has been due to capitalization of fixed assets on completion of Greater Noida Project. Employment expenses have increased due to regular annual increments and addition of employees. The Board of Directors of your Company has recommended adividend of 30% for 2014-15 which is same as that in the brvious year. The payment of dividend would involve total cash outflow of Rs. 111.60 lacs including tax on dividend.

Domestic Sales

Domestic sales during the year have been recorded at Rs. 3051.48 lacs against Rs. 3280.47 lacs in the brvious year. Decrease in domestic sales has been mainly in pumps sales which has been Rs. 1619.63 lacs against ^1850.19 lacs during the brvious year. Spares sales during the year under review have been almost stagnant at Rs. 1431.85 lacs against Rs. 1430.29 lacs during the brvious year. Lower sales of pumps have been mainly due to lack of Government spending on related infrastructure development and lesser new projects.

Domestic service revenue during the year was Rs. 19.14 lacs against Rs. 16.37 in the brvious year. Other operating revenue, which mainly comprises of sales of scarp and wastes during the year, has been Rs. 47.09 lacs against Rs. 39.84 lacs in the brvious year.

Export Sales

During the year under review, export sales were Rs. 6287.97 lacs as compared to Rs. 5621.96 lacs in the brvious year. Export sales have been dominating and raised its contribution to total sales from 63.15% in FY 2013-14 to 67.33% in FY 2014-15.

Export sales from Overseas Warehouse and Marketing Offices were Rs. 3663.71 lacs against Rs. 3830.13 lacs in the brvious year. Decrease in sales from Branches has mainly been in Spares sales, which stood at Rs. 2009.47 lacs against Rs. 2174.68 lacs in the brvious year. Pumps sales have been almost stagnant at Rs. 1654.24 lacs against Rs. 1655.44 Lacs during the brvious year. Lower spares sales have largely been in Australia and mainly due to downturn in mining sector of the country.

Direct export sales during the year have been Rs. 2624.26 lacs against Rs. 1791.83 lacs in the brvious year. Export service revenue during the year has been Rs. 22.62 lacs against Rs. 0.29 lacs in the brvious year.

OPERATIONAL HIGHLIGHTS

Commissioning of Roto 500 - Greater Noida Plant

Your Company's ambitious Greater Noida Project has been completed during the year under review. Your Company has created a state of the art world class manufacturing facility. The whole plant is made in RCC structure with provision for installation of light machinery on first floor and special provision for solar power installation on rooftop. Plant highlights are as under:

• Built on a land area of 20,000 sqmtr with covered area of 7272 sqmtr and ground coverage of 30%, leaving a big scope for future expansion;

• Over threefold increase in plant capacity with the addition of CNC turning centers and CNC Roto Peeling Machines;

• Enhanced manufacturing capabilities in machine shop for machining of large and long Rotors upto 5 mtrs length.

• Commissioned two nos. five axis Mazak CNC Machines capable of carrying multiple operations and manufacturing of intricate profile components;

• Ultra-modern testing facility conforming to International Tests Standards using Supervisory Control and Data Acquisition (SCADA) system with real time global web based data access;

• Power installation capacity upto 1000 KVA with power backup of 837 KVA;

• World class quality assurance equipment including Coordinate Measuring (CMM), Portable CMM and Rheometer;

• Multilevel storage facility for space optimization;

• Modern training facility to accommodate 100 persons;

• All work areas with Air Cooling facility;

• Eco-friendly plant with zero discharge, rain water harvesting and large green area;

The plant was inaugurated in the month of November, 2014 by Mr. Ravi Shankar Prasad, Honorable Union Minister for Communications and Information Technology. The inauguration ceremony was attended by the Customers from Overseas and India, Government Dignitaries and Business Associates.

Marketing Infrastructure expansion

German Subsidiary Company - Roto Pumpen GmbH

Your Company had setup a wholly owned subsidiary company in Germany in 2011 to carry on sales and marketing activities of the Company's products to cater to the market more effectively in Germany and German speaking nations. Initially the products would be supplied mainly from Warehouse and Marketing Office in Manchester, United Kingdom or directly from India depending on the availability of inventory and supply lead time.

During the year under review, the German subsidiary Company has started its business activities. In order to maintain a complete German outlook, the subsidiary has appointed Mr. Peter Lange Burchard as Country Manager. He is a German National and has a rich experience in the Pump Industry. He has worked with major pump manufacturing Companies in Germany. Response in the market has been quite encouraging and the subsidiary has executed a small but very important order to a major Company in the field of water management during the year under review.

Joint Venture Company in Singapore - Roto Overseas Pte Ltd

During the year under review, your Company has setup a joint venture Company in Singapore with Mr. Ed Lemke, Managing Director of Ecochem Pumps Pty ltd., South Africa with a share capital of 800,000 Singapore Dollar. Your Company holds 60% stake amounting to 234.24 lacs in the joint venture company. The Joint Venture Company has acquired a strategic stake of 51% in Ecochem Pumps Pty Ltd. a South African Company. Ecochem Pumps is engaged in the sales and marketing of pumps and has a well-established marketing network with access to the customers having application of Company's products. South African market of Company's products is mainly dominated by a single manufacturer. Ecochem Pumps would provide an excellent marketing network for your Company's products in southern African market. Your Company has made sales of Rs. 110.20 lacs to Ecochem Pumps Pty Ltd during FY 2014­-15.

US Subsidiary Company - Roto Pumps Americas, Inc

Your Company has setup a wholly owned subsidiary Company in Unites States. The subsidiary has set a wholly owned subsidiary company in the name & style of Roto Pumps North America, Inc. to carry on sales and marketing activities of the Company's products to cater to the US Market more effectively. The subsidiary company would also maintain a Warehouse facility to carry inventories. The subsidiary company has appointed Mr. Steven T Klein as the General Manager of the Subsidiary Company. He is an US National and has a rich experience in the Pump Industry. The Company has started its business activities during the current year.

Besides these, certain steps have been taken up to strengthen the International distribution network.

HEALTH, SAFETY AND ENVIRONMENT

Your Company always gives priority to health and safety of its employees in particular and brserving the environment. Your Company has been certified to the Occupational Health & Safety Management System Standards OHSAS 18001: 2007 and Environment Management System ISO 14001:2004 most recently in the month August 2015.

OPPORTUNITIES AND THREATS Opportunities

Export markets continue to remain in focus & provide tremendous opportunities of growth. With the startup of German & US subsidiaries, specific market penetration and expansion plans are going to be pursued in these 2 major markets. Association with Ecochem provides strategic entry to Southern Africa market.

Oil & Gas, Marine & Defense being traditionally not so strong industries, provide a big platform of growth for the company as well wherein the company has made significant inroads in recent years. Indian market with high growth expectations will also provide significant opportunities of growth especially in Infrastructure projects where the Capital expenditure is expected to increase. Commissioning of state-of-the-art manufacturing facility at Greater Noidawould provide an edge in terms of overall capability enhancement & manufacturing capacities.

THREATS

There is a significant brsence of local players in the domestic market, who are trying to take away the market for simple & easy applications in its main product line. They offer lower prices and flexible commercial terms to win over the customers. Further, the Indian market is becoming more and more attractive to global players. Two such major players have setup their base in India and are competing aggressively in identified segments. Their brsence is felt significantly as some definite amount of business has been lost in the year under review. In order to grow and sustain, your Company would have to lower the prices, which may impact the margins. However, the company is working on Value Engineering &Cost reduction initiatives to lower the impact on margins.

RISK AND CONCERNS

There is going to be continued brssure on margins due to increase in input costs & Interest rates on the one hand and lower prices due to competition on the other. Entry of more Overseas Manufacturers and cheap Imports backed by favorable commercial terms from China pose a definite risk to the Domestic industry. On the other hand, majority of revenue of your Company comes from Export, exchange rate fluctuations are a major concern.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls implemented by the management towards achieving higher efficiency in all areas of operations. These controls have been designed to provide a reasonable assurance with regard to maintenance of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting. The Company has also planned for adoption of high end ERP software in the later part of the current financial year to strengthen its controls and processes. This would also allow integration of multiple locations on one platform and improve efficiency as well.

The Audit Committee of the Board of Directors regularly reviews the adequacy of internal controls and takes necessary corrective actions wherever required.

HUMAN RESOURCES & INDUSTRIAL RELATIONS

We believe that in order to sustain growth in the domestic as well as in global markets under competitive conditions, the Human Capital of the Company should have high level of motivation and knowledge. The Company continues to focus and invest in human resources development to provide an open work culture and rewarding career opportunities to all its employees. During the year, your Company's HR division successfully recruited 47 people in response to various business needs.Manpower strength as on 31.03.2015 was 385 as compared to 377 people in the brvious year.

The overall employee relations were peaceful and harmonious throughout the year. The Company continued to create conducive work environment with opportunities for growth and learning, by implementing robust and combrhensive HR policies.

FUTURE OUTLOOK

The Company's strength is its in-house technology and committed manpower. By Commissioning of state of art manufacturing plants the Company would provide an edge in service to its customers. However, time ahead looks challenging particularly in Overseas Markets. Greece crisis and Chinese action on its economy would have adverse impact on Global business environment. Other emerging economies including South Africa are also not looking encouraging. Silver lining is the positive indications in US and few European Countries and stability in U. K. economy. Your Company is strategically located in these Economies which would provide ample growth opportunities to your Company.

Domestic market with high growth being derived also provides opportunities. The company would continue to grow and the year ahead looks overall positive.

CAUTIONARY STATEMENT

Statements in the Management Discussion Analysis describing the Company's objectives, expectations or brdictions may be forward looking within the meaning of applicable securities law and regulations. Actual results may differ from those exbrssed in the statement. Important factors that could influence the Company's operations include changes in Government regulations, tax laws, economic development within and outside the Country and such other factors.