MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

The Indian economy in 2014-15 has emerged as one of the largest economies with a promising economic outlook on the back of controlled inflation, rise in domestic demand, increase in investments, decline in oil prices and reforms among others.The manufacturing sector is likely to benefit from lower interest rates. The share of investments in Gross Domestic Product has increased significantly and is expected to pick up. The GDP growth is expected to be around 7 to 7.40% for the year.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The role of technology has evolved from supporting Corporations to transforming them. The ability to design, develop, implement and maintain advanced technology platform and solution to address business and customer needs has become a competitive advantage and a priority for Corporations worldwide. Concurrently, the brvalence of multiple technology platforms and a greater emphasis on network security and redundancy have increased the complexity, costs and risks associated with these technology platforms have created a growing need for specialists with experience in leveraging technology to help drive business strategy. Inspired by Yuken - Japan, our value system comprises - service to customers; deep sense of responsibility; respect for human beings; quality and frugality in all we do.

Machine tools industry's average capacity utilization was 75% - 80% during the year 2014-15. Key problem areas in the industry are shortage of power and lack of demand in domestic and export demand. Implementation of the following measures may help the industry gain a quicker revival:

1. Lower interest rates and power rates,

2. Infrastructure development,

3. Improved power and raw material availability to the industry, and

4. Faster implementation of GST.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS OPPORTUNITIES:

The Company is one of the leading manufacturers and suppliers of power saving Oil Hydraulics with state of the art, technology, efficiency and reliability. We provide a combrhensive range of hydraulic products, services both within and outside India.

We believe in our competitive strengths which include leadership in solutions that enable our customers to optimize the efficiency of their business, commitment to superior quality, long standing client relationships and competitive pricing. Some of the key trends in the Industry that are favorable to the Company to exploit these emerging opportunities are:

i) Customers are more comfortable in continuing to partner with us in view of enhanced quality, reduced lead time and competitive prices and service.

ii) Customers are also demanding delivery excellence from distributed business units using uniform processes globally to deliver a high quality of service.

In order to leverage these opportunities, the Company has over the years, extended its geographic foot print for effectively marketing its offers.

THREATS:

Some of the key changes in the industry unfavorable to the Company are:

i) To cater to increasing customer demand with strong technology and domain knowledge, the Company will have to invest increasingly higher amounts in equipment and facilities.

ii) Our business may suffer if we fail to anticipate and develop new products in a fixed time schedule and enhance the existing products in order to keep pace with rapid changes in technology and in the industries on which we focus. A strong engineering base is needed to accomplish this.

iii) There is continuing concern on input cost increase, it may not be possible for the Company to pass on the cost increase through pricing.

iv) High inventory and receivables may hamper the process of financial planning.

v) Threat from Chinese Market.

RISK IDENTIFICATION & MITIGATION

The Company has in place a risk management framework which aims at identifying, assessing, minimizing and monitor­ing various risks across the Organization. Identification of risks is done through focused discussions at various manage­ment levels and at the Board Meeting.

Our internal risk control systems are tailored to the specific requirements of various departments in the Company. Pos­sible risks under different segments viz., operations, finance, compliance related matters are monitored from time to time and managed efficiently. The internal auditors perform internal audit functions periodically to ascertain the adequacy and effectiveness of the operations and also give suggestions to improve the processes and strengthen controls of the existing processes.

FINANCIAL STATEMENTS

The financial statements have been brpared in compliance with the requirements of the Companies Act, 2013, guide­lines issued by the Securities and Exchange Board of India (SEBI) and Generally Accepted Accounting Principles (GAAP) in India. Our Management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions and reasonably brsent our state of affairs, profits and cash flows for the year.

HUMAN RESOURCE MANAGEMENT

The Company continues to believe in the policy that people are its vital assets. The Company has in place policies which are aimed at encouraging innovation, recognizing talent and creating performance driven environment. The Company constantly endeavors to provide a platform for individual opportunities and growth of the people across the Board.

CAUTIONARY STATEMENT

Statements in this "Management Discussion and Analysis" describing the Company's situation may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Actual results might differ materially from that either exbrssed or implied.