MANAGEMENT DISCUSSION AND ANALYSIS

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India is brsented in a separate section forming part of the Annual Report. The industry structure, development, performance, opportunities, threats, outlook, risk and concerns, internal control systems and their adequacy, financial performance with respect to operational performance and material developments in human resource and industrial relations have been discussed in the paragraphs to follow.

Tea Division

Global tea production (excluding China) during the calendar year 2014 was lower as compared to the brvious year, mainly due to crop loss in India, though it was partly compensated by higher crop in Kenya. All India tea production was 1,184 million kgs. in 2014 against 1,200 million kgs. in 2013.

During the year under review, this Division reported a productionof 9.60 million kgs, which is marginally lower than the production of 10.00 million kgs, as reported in the brvious year. Adverse weather conditions during the early part of the year have affected the production.

Average tea prices at auction centers in North India witnessed an increase of Rs. 2 per kg compared to brvious year. Price realization for bulk tea was higher by around Rs. 4 per kg compared to brvious year, reflecting the acceptance of your Company's products in the market.

The Directors are pleased to inform you that exports by the Division, during the year were higher when compared with the brvious year. However, exports by India were lower when compared with the brvious year. This Division has diversified into newer potential markets and has also strengthened its brsence in the existing markets and is confident of achieving higher exports in the coming year.

During the year under review, the performance of the packet tea segment was stable and the Division is hopeful for improved performance in the coming year.

Fresh wage agreements have been signed for both Assam and Bengal Gardens, which have come into effect retrospectively, which has increased the cost and adversely affected the profitability. Apart from the above, profitability of the Division was also impacted by rising costs of other inputs like coal, electricity, agro-chemicals, etc.

During the current year, production till date, has been higher as compared to the brvious year. Hence, prices at tea auction centers have been showing signs of sluggishness. There will be increase in cost due to wage agreement and inputs in the coming year. This division expects to perform better, as compared to the brvious year due to emphasis on quality, better export and packet sales.

Engineering (MICCO) Division

This Division is mainly involved in the EPC contracts in the Steel Sector. During the year under review, Steel Sector was adversely affected due to economic slowdown in the country and had very poor demand across the globe, resulting in delay in the expansion/modernization in the industry. Due to recessionary condition and financial stress in the industry there was delay in project execution. In addition, new orders were hard to come by.

However, two brstigious orders of Blast Furnace Upgradation / Relining at JSW, Bellary and Tata Steel Ltd., Jamshedpur were bagged by the Division. Few new orders are expected to be bagged by your Division in the near future. This Division has achieved a unique fit of commissioning of Blast Furnace No. 1 at Vizag Steel Plant, subsequent to Category-I Capital repair of the said furnace.

The Division is facing increased competition due to entry of many domestic and international players but with the available experience and expertise, your Directors are confident of countering the competitors. Your Division is also focusing on the new ventures to have an edge over its competitors.

This Division has been continuously making efforts to make entry into new trajectory in collaboration with the national and international players, which will help the Division to have a diversified portfolio and to procure new orders, leading to sustainable growth in the future.

Your Directors are of the view that the business scenario for Steel Industry is expected to change favourably due to government initiatives, which will also benefit the Company.

Textile Division

The production of this Division during the year under review was reported at 18,642 M.T. The overall performance of the Mills, located at Champdany, West Bengal and Akbarpur, Punjab were adversely affected due to unfavourable market conditions resulting primary from high fluctuations in raw material prices. As reported during the last year, the change in the cotton policy by the Chinese Government(effective from 1st April,2014) has resulted in a sharp decline in raw cotton prices in International Market resulting in poor demand for cotton yarn. The Cot look a index, a bench mark index for prices of raw cotton, was down by 25% in the first half. Decrease in exports of cotton yarn in the first half, has significantly increased the inventory and has pulled down yarn prices to unrealistic level. The problem for the Indian Spinning Mill were former compounded, as cotton prices in India did not correct much, because of lower physical inventory in the country, which resulted in both operational as well as inventory losses. The prices of synthetic fiber also witnessed a steep fall since December, 2014, as a result of sharp decrease in the prices of crude oil.

The cotton crop in the current cotton year is estimated to be 380 lakhs bales. On arrival of new crop, the prices in India decreased sharply in second half and the gap with the International cotton prices was reduced, to a certain extent. The decrease was so sharp that the prices for some time went below the minimum support price, which compelled Cotton Corporation of India to intervene and provide stability to the falling prices.

Cotton Corporation of India has procured a huge volume of cotton (approx 25% of the year's crop) resulting in physical shortage of cotton in the market, in the current year. The shortage of physical cotton in market and increase in international prices has pushed up the prices, during the current financial year. The prices of other synthetic fiber have also increased in line with the crude oil prices. However, the spinning mills have not been able to pass on the increase in raw material prices, due to poor demand, both in domestic and export market.

The withdrawal of various export incentives in the current year has further adversely affected the competitiveness of Indian spinners in export market. In order to overcome the steep fluctuations in the prices of raw material, which is expected to continue, the Division has started manufacturing value added dyed yarns, which will insulate the Division to some extent from the fluctuations and improve the working in the current year.

The Directors expect that me performance of this Division in the coming year to be stable.

Chemical (Waldies) Division

This Division is engaged in the manufacture of Lead Oxides and PVC Stabilisers used in the manufacture of Battery, Paints and other products.

During the year under review, the industry witnessed competition from local manufacturers from the unorganized  sector. However, your Division has an edge over its competitors  due to better quality of products. Production was reported at  3,587 M.T. as against 3,547 M.T. in the brvious year. The total  revenue earned was higher, when compared with the brvious  year.

This Division has ISO-9001 Certification in Quality Management  System and provides total customer satisfaction in terms of  quality and service. It also enjoys ISO-14001 certification for its Environment Management System & OHSAS-18001 certification for its Occupational Health & Safety Management System.  Continuous effort are being made for bringing in improvement in the operation of this Division and for developing new markets on pan India Basis. The outlook of the Division in the coming year is  stable.

Trading Division

During the year under review, the turnover of this Division was lower compared to brvious year primarily due to the ongoing slowdown in the real estate sector. Large manufacturers are  directly entering into the market resulting in severe competition.

Some of the Branches of the Division, which were not sustainable, have been closed down during the year under review. Your Directors will closely monitor the feasibility and  viability of continuation of this Division in the coming years.

Property Division

This Division has reported revenue of Rs. 711.99 lakhs, which is marginally higher than the reported revenue of Rs.671.90 lakhs, in the brvious year. The increase in revenue is due to renewal of tenancy at increased rates for few existing tenants. As reported in the brvious year, the Division has completed a major portion  of repair and renovation of 'Gillander House', during the year under review. Combrhensive fire safety policy is rigorously implemented with installation of fire safety equipments and  conducting of fire safety drills at regular intervals.

The property market has not shown any significant sign of recovery due to recessionary economic condition. It has also been observed that huge property banks with all modern amenities are lying ideal and this division will face severe competition in the coming years. However, your Division's main property being centrally located and with recent repairs and renovation, your Directors are hopeful that the Division will do reasonably well by filling up vacant areas. Further steps to improve the quality of services will be taken up soon. The Directors expect that the performance of this Division in the  coming year to be stable.

Internal financial control systems and their adequacy

Your Directors wish to inform you that the Company has proper  and adequate system of internal controls. Internal Audits are conducted by Independent professional firms of Chartered Accountants and reports thereon are reviewed and discussed  with the operational heads and CFO and then discussed with MD & CEO, before placing it with the Audit Committee and corrective  actions, are taken. Procedures have been laid down by the  Company to safeguard and protect all assets and ensure that the transactions are authorized, recorded and reported correctly.

The Company has policies and procedures in place for ensuring  the orderly and efficient conduct of its business, including adherence to Company's policies, the brvention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely brparation of reliable  financial information.

The Enterprise Resource Planning (ERP) system has been implemented in the Company, which provides reasonable  assurance regarding the reliability of financial reporting and the  brparation of financial statements for external purposes in  accordance with generally accepted accounting principles.

The controls which are in place are given below in brief:

a) Maker & Checker concept for all the transactions.

b) All the banking payments are signed jointly by any two  authorised officials of the Company.

c) All the authorised officers have been given specified  authority within which they are required to function.

d) Any deviations, have prior approval of the authorised officers.

e) Internal Auditors have been appointed for all the Divisions  to verify and report on the effectiveness of the system.

Human Resource and Industrial Relations

The Company has laid down the processes for attracting, retaining and recognizing talent as it acknowledges the importance of good Human Resource. Company has cordial relations with employees and there is mutual respect and admiration for each other. The Directors wish to record their apbrciation for the co-operation received from all employees.

Industrial relation was generally good.

Caution Statement

Management Discussion and Analysis Report contains forward-looking statements, which are based on certain assumptions and expectations of future events. The Company's actual results and performance may differ from those projected due to unforeseen  circumstances viz., political, economic, etc., over which the  Company does not have any control. The Company assumes no

responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments,  information or events. Readers are advised to apply their own  diligence and independent judgment.