MANAGEMENT DISCUSSION AND ANALYSIS

I. Industry Structure and Developments:

The level of a country's development is reflected by its infrastructure and the desperate need for infrastructure development has increased the demand of the construction industry in India. Infrastructure is a major sector that propels overall development of the Indian economy. Construction is the second largest economic activity after agriculture. India's focus on infrastructure over the last decade made the country the second fastest growing economy in the world. India has an extensive road network of 4.86 Million kms, which is the second largest in the world.

Indian economy is expected to grow marginally higher at 7.5% during the year compared with 7.2% in 2014 and interest rate cuts will buttress private sector spending. Considering the enhanced focus on this sector by the Indian Government, policy makers expect that 10% of India's GDP is based on construction activity and they project USD 1,000 Billion investments for infrastructure sector in 12th five year plan (2012-17) with 100,000 kms of national highway by the end of 2017. Road infrastructure is a government's key priority sector has received strong budgetary support over the years. The Indian Government is taking every possible initiative to boost the infrastructure sector and undertaken a number of measures to ease access to funding for the sector. The Reserve Bank of India (RBI) has notified 100 per cent foreign direct investment (FDI) under automatic route in the construction development sector.

II. Opportunities and Strengths:

The construction/infrastructure sector is likely to get major boost from the Government's focus on development of infrastructure in India. Many steps have been taken to improve funding avenues to the infrastructure sector. There are huge opportunities for the industry in the future. Your Company is having opportunities and strengths with an order book position of Rs. 6,838.35 Crore and participating in various Tenders and RFPs valued at Rs. 22,731.66 Crore in various projects in India.

III. Segment-wise performance:

1. Transportation Division:

a) Your Company has completed 1459 lane Kms of 4 BOT (Toll) projects. And 1760 lane Kms of Toll & Annuity Projects and 143 lane Kms of Item rate Projects are under progress.

b) Your Company has been awarded the following new EPC Works from NHAI:

i. Nagapattinam - Thanjavur Section of NH-67 for a total Design Length of 78.533 Kms in the state of Tamil Nadu for an estimated value Rs. 397 Crore.

ii. Patna -Koliwar Section of NH-30 for a total length of 33.250 kms the state of Bihar for an estimated value of Rs. 598 Crore.

c) Your Company has also been awarded an Item rate work of BPCL -Site grading works including Earth work, Roads, Drains, Compound wall, Piling Works for propylene derivative petrochemical Project (PDPP) of M/s. BPCL-Kochi Refinery in the state of Kerala for an estimated value of Rs. 157 Crore.

2. Irrigation Projects:

Your Company executed many Irrigation projects such as Canals, dams, Tunnels, Spillways, lift irrigation Projects amounting more than Rs. 1000 Crore in PAN India. Now various Irrigation Projects amounting to Rs. 2072 Crore are under progress in the State of Andhra Pradesh, Gujarat, Maharastra, Madhaya Pradesh, Uttar Pradesh and Telangana.

3. Energy Projects:

Designing, engineering, development, construction, installation, testing and commissioning of coal fired thermal power project (Simhapuri Energy Limited) in two phases, viz 300 MW (consisting of 2 units of 150 MW each) in the first phase and 300 MW (comprising of two units of 150 MW each) in the second phase at villages Thamminapatnam and Mommidi at Krishnapatnam, in district Nellore, in the state of Andhra Pradesh has completed and become fully operational and generating power with full capacity.

4. Mining Division:

The work for removal of OB 416.46 Lakhs Cub. Mtrs. and Coal 159.39 Lakhs Metric Tons valued Rs.42,206 Lakh at Phularitand (BCCL) Project within the period of 7 years vide work order dated 07.02.2012 is under progress.

IV. Outlook:

The outlook for the Infrastructure sector appears positive since the country is looking forward with a strong mandate to stimulate economic growth. Government of India has significantly increased allocation of funds by Rs.70,000 Crore for investments in infrastructure in the Union Budget 2015-16. Your Company is giving major thrust in various infrastructure sectors to reap the benefit of growth in infrastructure sector.

V. Risks and Concerns:

Construction delays continue to be a concern factor which stems from number of factors outside the control of the project sponsors, which includes land acquisition, regulatory approvals, inflation, and litigation etc., which can delay the timely completion of the project and increase in cost of project. This can, in turn, lead to additional funding, additional cost of fund etc. Further the Indian industry, in general, the construction sector, in particular, is suffering from high interest costs. To stimulate much needed growth in the real economy, RBI and the commercial banks have to further cut their interest rates.

VI. Internal Control Systems and their adequacy:

Your Company has adequate system of Internal Control developed by our in-house Internal Audit team consisting of qualified and experienced accounting, costing and technical professionals to ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly, financial and other data are reliable for brparing financial information and other data and for maintaining accountability of assets.

VII. Discussion on financial performance with respect to operational performance:

During the year under review, your Company has achieved a gross income of Rs. 1,16,496.07 lakhs as against Rs. 89,779.64 lakhs in the brvious year. The Company has earned a net profit of Rs. 4,934.04 lakhs as against Rs. 3,171.68 lakhs in the brvious year after providing for debrciation of Rs.3,777.85 lakhs as against Rs. 4,701.86 lakhs in the brvious year.

VIII. Material developments in Human Resources / Industrial Relations:

Your Company has recruited competent Professionals at all levels of management for all verticals of the Company like Roads, Irrigation, Power, Mining, Building & Property Division as a part of corporate restructuring process and strengthening its Business Verticals to meet the pace of growth of your Company. The industrial relation is very cordial.