MANAGEMENT DISCUSSION & ANALYSIS REPORT

Your Directors take pleasure in brsenting the Management Discussion and Analysis Report for the year ended March 31, 2016.

1. OVERVIEW AND DEVELOPMENTS DURING THIS YEAR

The last year has been an eventful one for the whole world, during which technology underwent dramatic developments. The Internet and the accompanying solutions it has thrown up, have driven global change in the way people live, work, transact business and shop. E-retailers, which as a segment did not exist a few years ago, are today ruling the retail space. Newer delivery models are cropping up and the mobile is emerging as the largest market place for shopping. With networked connections of people, process and data exploding, it is expected that potential shopping formats may well increase to 800 and beyond. When one considers the market, the statistics are staggering and significant for your company. As of today, 15% of all online sales are books, making it a huge number.

This has directly impacted the publishing industry in many ways. People are buying more books online. Publishers are scrambling to digitize content and make it available to more people. For Your company this has meant being agile and responding quickly to the opportunity that the new publishing environment has created.

Responding to change

E-retail is an opportunity that had been outlined during the Financial year 2015-16. In order to capitalise on this opportunity, Your company has undertaken some disruptive strategic decisions that are paving the way for business growth in the online space in the coming years. Your company has invested in developing a customised business model that specifically caters to the newly emerging e-retail model. Re-inventing itself as a content aggregation and dissemination company, your company today is leading the way in e-retail solutions in India.

Your company manages the entire process for publishers, right from digitising content, to making it visible to customers on storefront, to tracking orders and fulfilling them. This new model brsents a tremendous opportunity.

In addition, Your company has entered a strategie alliance with the Ingram Content Group - which is one of the world's largest content aggregation and dissemination companies. This alliance will work in two ways. Your company will have access and thus make available to Indian readers the books residing on Ingram's content repository. In turn, Your company can make available Indian publishers' content to a larger global readership.

Your company has also tied up with e-retailers like Amazon, Flipkart, Snapdeal and Infibeam among others, so that customers' books are available on these sites. When an order is placed, Your company accesses the soft copy of the title from its content repository and produces it in the state-of-the-art one book factory and despatches it to the customer within the shortest possible time. This is the business model that has been implemented in the last year.

The solution includes offering the publisher a state-of-the-art technology content repository, to printing-on-demand-even a single book for the end customer - to disbursing the royalties back to the publisher.

Custom-built back-end solutions

At the back end too, Your company has made significant progress. A facility has been custom built for the e-retail segment with sophisticated machines that are configured to print, bind, collate and despatch the specifies quantities that online customers require. A particular focus in infrastructure has been on digital print-on-demand machines that give customers the advantage of printing small volumes for advance use, or in order to minimise obsolescence.

Publishers working with Your company, have access to a digital storefront, from where they can place repeat orders for books and e-books. The orders once approved are automatically scheduled for production. This minimises turnaround time.

Content aggregation to effective dissemination

Aggregating content from publishers in a centralised content repository is the starting point of the e-retail value chain. Content is a publisher's key asset. Their objective is to reach as many readers as possible and increase the return on content. Getting the content to as many readers as possible and providing all the in-between steps is the specialized niche in which Your company has built a stronghold.

Because of its strong relationship with publishers, your company aggregates their content. Through its various marketing channels that includes Rapples, schools, e-retail tie ups and Africa markets - Your company helps disseminate this content to a wider readership in newer markets. This strategy enables publishers to multiply the revenue they earn on each content asset and property they have.

Your company enters the chain even before in some cases, by partnering publishers in the creation and management of their content. This includes creation, digitisation, archiving, retrieval and versioning.

Rapples - entering a new phase

Rapples, Your company's education tablet solution is ready to enter the next phase. The required investments have been fully completed and have been expensed out. The company has publishers across India on board with their content; having deployed solutions in different boards to different schools and this current year, 2016-17 Your company is well on the path to breaking-even in this business and no further investments which are required.

Domestic and Africa markets - a strategy of consolidation

In terms of Your company's traditional businesses in India and Africa, the global slowdown has thrown up challenges. The global economy has been undergoing tremendous volatility. An uncertain economie environment in African countries has impacted Your company's markets there. In India the traditional model of the educational book publishing Industry is facing challenges. Most educational publishers are trying to adapt to the new way of doing business. Customers are moving increasingly to digital platforms, demanding books in a shorter timeframe, at a lower cost!

In response to this, Your company is following a two pronged strategy. One, a strategy of consolidation in traditional businesses; and two, an increased focus and emphasis the e-retail business. The Rapples digital solution has already taken the company into the digital sphère.

The consolidation strategy entails a focus on working with the "Right" customers; on ensuring financial consolidation; on cash flows and collections; on reducing debt; and on improving financial ratios and a reduction of expenses. The company has made significant progress on this strategy so that it remains ready to move forward again once the economy stabilises and political situation in Africa is resolved.

In addition to existing relationships with publishers, Your company has built strong ties with some of the world's largest multinational companies - many of whom also have a strong brsence in India. With a focussed export business expansion approach, growth is expected in these multinational segments. The e-retail strategy will also impact this segment, since it brings into its purview publishers and customers from across the world.

2. ACHIEVEMENTS, CERTIFICATIONS AND AWARDS

Your company has successfully completed the following certifications.

1. IS0900l:2008 - Successful completion of recertification by Intertek India, the certifying body for the 5th time since year 2000 when it got certified for the first time.

2. ISOl400l:2004 - Successful completion of recertification for the 2nd cycle by Intertek India.

3. Forest Stewardship Council (FSC) - got recertified with FSC certification for the 2nd time which happens after every 5 years. Your company is one of the few printers in India who is certified. It focusses on sustainable resource management of paper manufacturing.

Achievements at Annual Chapter Convention on Quality Concepts (CCQC) by Quality Circle Forum of Concepts (QCFI).

Your company participated for the 4th consecutive year in QCFI's Annual Chapter Convention on Quality Concepts (CCQC) - 2014.

Our three teams from Binding, POD and Maintenance participated in the event and won 3 Gold trophies.

Along with Your company, there were other teams participating in this event such as Tata Steel Wire, Uttam Galva, Emami Biotech, CEAT, NTPC, RCF, Mazgaon Dock Ltd, IPCA Laboratories, Times of India, Kokio, Camlin, Parle Products, Reliance Infra, Reliance Transmission, Ruchi Soya, Mukand Ltd etc. A total of 295 teams had participated. Your company sent total 8 teams comprising of 40 operators for this event. The teams brsented projects on 5S, Kaizen, Cost Saving, Energy Conservation, Process Re-engineering and CFT. Your company won 5 Gold and 3 Silver trophies at the event.

The Tao of Green printing

Your company has won "Green Printing Company of the Year" award by Print week & ITC for 2nd consecutive year. This award focusses on usage of eco-friendly raw materials usage as well as disposai of wastage in a responsible manner.

Your company is imbibed in nature to use eco-friendly ways and methods in printing business. Since last 4 years, we are exbrssing the gratitude towards the Father of Printing Johannes Gutenberg on 24* February 2016 which is celebrated as Printer's day Worldwide to commemorate birth anniversary of Johannes Gutenberg.

3. RISKS AND CONCERN AND RISK MITIGATION

Your company's traditional market has always been Publishing solutions. Though this is stable, the normal risks of priees of raw material, foreign exchange fluctuation, fluctuating interest rates, political instability, Government policies, competitive forces, changing technology and obsolescence remain.

Your company has adopted the following strategies to minimise the risks involved in the business:

• Investment in a new model explained earlier that moves Your company into the new age digital space, while riding on its inherent strengths.

• A greater focus on building brdictability so that business and operations are better planned.

• A continuous focus on innovation - in product, technology and process, so that efficiencies are continually enhanced.

• Strategie investments in technology that will enhance both efficiencies and keep Your company at the cutting edge.

• A reduction of wastage by deploying IT Systems and processes that are customised to the industry.

• Greater focus on raw material negotiations, the benefits of which are passed onto the customer.

4. FUTURE STRATEGY AND VISION

The company will continue its focus on content aggregation and effective dissemination for publishers and will continue to be the gateway to increased business for publishers.

The company also has put into place the strategies and requirements that will enable it to grow with the opportunities brsented by the rapidly growing e-retail Industry.

5. INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS AND ITS ADEQUACY

Your company has put in place adequacy internal financial controls with reference to the financial statements.

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the company's policies, the safeguarding of its assets, the brvention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely brparation of reliable financial disclosures.

6. HUMAN RESOURCES MANAGEMENT

The Human Resources Management (HRM) function has driven changes in the way human resources are managed and developed, striking a balance between business needs and individual aspirations. HRM has now become business partner and is taking key decisions not just with respect to human resource but businesses as a whole. It focuses on improving the way of life work culture, employee engagement, productivity, effectiveness and efficiency.

Your company initiated multiple actions to keep the workforce engaged. The HR Department is continuously looking at expanding opportunities for growth. The broader the employees' experience, education and background, the more diverse their opinions and insights, the deeper the company's collective understanding grows. The resuit is a collaborative environment that respects individual needs and promutes ongoing development.

7. DISCUSSION ON FINANCIAL PERFORMANCE (CONSOLIDATED) WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year, the company has focussed on the strategie objective of investing in the new digital initiative; Rapples and the e-retail segment were expenses have been charged to Profit and Loss Account, although the segments are not fully commercially operational. The company has balanced it with a focus on decreasing debt through collections and mitigating potential risks on financial terms.

Revenue

Sales/Income from operation reduced by 5.16% from Rs.395.07 Crore in 2015 to Rs.374.70 Crore in 2016.

Expenditures

Cost of Materials

Cost of materials was at Rs.212.07 Crore in 2015 as against Rs.206.46 Crore in 2016. Cost of materials as a percentage to sales has increased to 55.10% in 2016 from 53.68% in 2015.

Employee Emoluments

Salaries, wages and other employee benefits were Rs.43.94 Crore in 2016 as against Rs.45.34 Crore in 2015. As a percentage of sales it has increased to 11.73% in 2016 from 11.48% in 2015.

Operating and Other Expenses

Operating and other expenses amounted to Rs.l09.8l Crore in 2016 as against Rs.93.47 Crore in 2015. The expenses as a percentage to sales has increased from 23.66% in 2015 to 29.31% in 2016.

Operating Profit (PBDIT)

PBDIT has reduced to 7% of sales in 2016 as against 14% of sales in 2015.

Interest and Finance Charges

Financial expenses has increased to Rs.15.91 Crore in 2016 from Rs.ll.86 Crore in 2015.

Debrciation

The debrciation charged to revenue has increased to Rs.19.32 Crore in 2016 as against Rs.18.65 Crore in 2015.

Profit before Tax (PBT)

The company has incurred a loss of Rs.7-99 Crore for the year 2015-16 as against the brvious year's PBT of Rs.26.26 Crore.

Profit after Tax (PAT)

The company has incurred a loss of Rs.7-99 Crore for the year 2015-16 as against the brvious year's PAT of Rs.19.75 Crore.

As always, Your company looks forward to do well in the year ahead and is optimistic of its abilities to address the set of opportunities and challenges that the coming year will brsent.

It may please be noted that the statements in the Management Discussion and Analysis Report describing the company's objectives and brdictions may be forward looking within the meaning of applicable rules and regulations. Actual results may differ materially from those either exbrssed or implied in the statement depending on circumstances.