MANAGEMENT DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS

The report contains forward-looking statements, identified by words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates' and so on. All statements that address expectations or projections about the future, but not limited to the Company's strategy for growth, market position, expenditures, and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realized. The Company's actual results, performance or achievements could thus differ from those projected in any forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The IMF in its annual assessment of the Indian economy states that the Indian economy is reviving, helped by positive policy actions that have improved confidence and by lower global oil prices. The report further states that to continue on this trend, India needs to revitalize the investment cycle and accelerate structural reforms.

The Indian economy is the bright spot in the global landscape, becoming one of the fastest-growing big emerging market economies in the world. While the country is well placed to cope with external shocks, there are possible risks on the horizon, both external and domestic such as spillovers from weak global growth and potential global financial market volatility that could prove disruptive.

India's economic profile recently got a lift as the country improved the way it measures economic output. The revised national accounts series incorporates numerous conceptual and methodological improvements that make them more consistent with international best practices. Based on this revised GDP, the IMF forecasts growth will strengthen to 7.2 percent in 2014-15 and rise to 7.5 percent in 2015-16, driven by stronger investment following improvements to the business climate.

Inflation has fallen by half to around 5 percent, after hovering around 10 percent for several years. The government has made strong efforts to put its public finances on solid footing, with the central government's fiscal deficit falling to 4.1 percent of GDP in 2014-15, helped by lower oil prices. By creating space for higher infrastructure spending, fiscal reforms can have a major impact on economic growth. Falling energy prices have significantly improved India's overall fiscal landscape, and augur well for growth in domestic consumption.

Within the next 15 years, India will have the largest, and among the youngest, workforces in the world, and will need to create jobs for the roughly one hundred million young Indians who will enter the job market in the coming decade. Raising India's growth rate and ensuring it begins to generate sufficient jobs requires deeper structural reforms.

Nonetheless, the country needs to implement reforms to address bottlenecks in the energy and mining; as also increasing investment to help close India's major infrastructure gaps.

Since May 2014, the government has taken several strong measures to revive both growth cycle and investor sentiment. In the initial round of its major policy initiatives, the Central government has allowed the FDI in railways and defence sectors followed by labour reforms, complete deregulation of diesel prices and easing of FDI rules in construction. Moving ahead on its reforms agenda, the government has also inched closer to its aim of rolling out the Goods and Service tax (GST) from April 2016. Several other initiatives of the government, including efforts to revive stalled projects, re-schedulement of brmium payouts for road ventures and relaxation of environmental clearances have also alleviated some sector-specific concerns.

India's economy is poised to return to its high-growth path, thanks to lower fiscal and current account deficits, falling inflation, benign commodity prices, and structural reforms to boost investments. Monetary policy is also likely to be supportive with the Reserve Bank of India (RBI) having moved to flexible inflation targeting.

To get the economy fully back on track, the Central government will have to keep up the pace of efforts for the improvement of investor sentiment, climate for doing business by removing bottlenecks, employment generation and containing inflation.

The construction industry is an integral part of the economy, contributing at about 8 per cent of GDP and is also the second largest employer after agriculture, employing about 41 million people. Infrastructure sector plays a very significant role in economic development. Construction sector is viewed as a service industry. It generates substantial employment and provides growth impetus to other manufacturing sectors like cement, bitumen, iron and steel, chemicals, bricks, paints, tiles, construction equipment etc. The growth of this sector is necessary to create employment opportunities, mobilize resources and generate revenues.

OPPORTUNITIES AND THREATS

It is imperative that India needs to invest significantly in Infrastructure to support the growth aspirations of the entire nation. In order to keep pace with the expected trade growth, the demand for the provision of power, transportation and logistics will also grow commensurately. The Government of India has significantly increased allocation of funds for investments in infrastructure in the Union Budget of 2015-16. Public investment is needed to re-invigorate the sector and steps are required to revitalize the public-private partnership model of investment. Buoyancy in orders is likely in FY15-16 led by greater impetus on infra investments and government action to revive stalled projects and ensure fast-track approvals for new ones. The urban infra, road and water segments are likely to dominate order flow.

The sector continues to face rising material and labour costs. High inflation have dampened private sector investments in capital expenditure. These along with high interest rates have led to drops in margins. Working capital cycle has been elongated mainly due to stretched receivables, which has affected the cash flow position of companies in the sector.

OPERATIONS REVIEW & SEGMENT WISE

PERFORMANCE

The Company is engaged in the business of infrastructure development such as highways, roads, bridges, civil construction work for irrigation and water supply projects and power plants. The Company is focused on strengthening its brsence across the brsent operating verticals, venture in to niche areas, capitalize on new opportunities and invest in growth with prudence.

RPP is pursuing strategic objectives of continuously growing the order book and executing them efficiently, by adopting best practices that enables it to achieve quality, cost optimization and timely completion of projects.

Emphasis continued on continuous improvements in project execution efficiencies, which has resulted in notable gains in terms of operating margins and employee productivity. All of these have played their part in the company improving its performance in a highly competitive environment.

SUBSIDIARIES

In line with the Company's strategy to expand in to new geographies, the company operates the following subsidiaries:

R.P.P Infra Projects (Lanka) Limited, Sri Lanka

R.P.P Infra Projects (Lanka) Limited is a Wholly Owned Subsidiary of your Company based in Sri Lanka. The Company has not taken up any project during the year under review and the operating revenues were Nil during the period. The Company recorded a net loss of Rs.0.65 Crore for the year ended 31st March 2015.

R.P.P Infra Overseas PLC, Mauritius

R.P.P Infra Overseas PLC is a Wholly Owned subsidiary of your Company based in Mauritius. The principal activity of the Company is to provide infrastructure project related consultancy services. The Company has recorded revenues of Rs.2.80 Crore for the year ended 31st March 2015 with a Net Profit of Rs.1.17 Crore.

R.P.P Infra Projects Gabon SA, Gabon, is a wholly owned subsidiary of RPP Infra Overseas PLC, Mauritius and a Step down subsidiary of the Company. It was incorporated to execute the mass housing project awarded by the Republic of Gabon, a West African country in 2011. But due to change in political situation, increase in the work specifications without an appropriate compensation for the change in work, the Company withdrew from the project and the contract has been terminated. The Company is looking at new opportunities in this geography.

The Company had no revenues during the year ended 31st March 2015 and had a Net loss of Rs.1.19 Crore.

R.P.P Energy Systems Private Limited, India

R.P.P Energy Systems Private Limited, a wholly owned subsidiary of your Company was incorporated mainly to embark into the power segment viz. to procure, sell, supply electricity power from various sources including bio-fuels such as bio-mass, bio-gas etc., and from coal and thermal energy. The other objects of the Company to generate and sell power from all sources including non-conventional sources such as solar system, wind farms, wind mills etc. The operation of this subsidiary has not been commenced during the period under review. The Directors are initiating steps to commence the business.

The Company had no revenues during the year ended 31st March 2015 and had a very insignificant Net Loss for the year.

Sanskar Dealcom Private Limited, India

Sanskar Dealcom Private Limited, a wholly owned subsidiary of your Company and its main activities include being distributors, agents, traders, merchants, contractors, brokers and otherwise deal in merchandise and articles of all kinds including clearing agents, freight contractors, forwarding agents, licensing agents, general brokers and to carry any kind of commercial business.

The Company had no revenues during the year ended 31st March 2015 and had a very insignificant Net Loss for the year.

Greatful Mercantile Private Limited, India

Greatful Mercantile Private Limited, a wholly owned subsidiary of your Company and its main activities include being distributors, agents, traders, merchants, contractors, brokers and otherwise deal in merchandise and articles of all kinds including clearing agents, freight contractors, forwarding agents, licensing agents, general brokers and to carry any kind of commercial business.

The Company had no revenues during the year ended 31st March 2015 and had a very insignificant Net Loss for the year.

Lunkar Finance Private Limited

Lunkar Finance Private Limited is a wholly owned subsidiary of Greatful Mercantile Private Limited and a Step down subsidiary of the Company. Lunkar Finance Private Limited is a non-deposit taking NBFC which is involved in Investment activities.

The Company had no revenues during the year ended 31st  March 2015 and had a very insignificant net loss for the year.

Order Book Position

The Company has received sizeable orders during the year. The order book position as on 31st March 2015 is Rs.857 Crore.  in Vilathikulam Taluk of Thoothukudi District to Feed Sayalkudi Tank and other Tanks in Kamuthi and Kadaladi Taluks of Ramanathapuram District for Tamil Nadu Public Works Department

• Providing CWSS to 212 rural Habitation in Andhanallur, Manikandam and Manapparai Unions in Trichy District for TWAD Board

• Providing CWSS to 158 habitation in Gudimangalam and Udumalaipettai union in Tiruppur District for TWAD Board

• WSIS to Tindivanam municipality in Vilipuram District for TWAD Board INFRASTRUCTURE:

• Road and Drain improvement works in City Municipal Council, Gadag, Karnataka

POWER SECTOR

• Rural electrification work at Baghpat District ,Meerut, Uttar Pradesh

• Rural Electrification Works in Shahjahanpur District of Uttar Pradesh on Turnkey Basis under Government of India Scheme of RGGVY

OTHER PROJECTS

• Construction of Sea Wall/ Shore Protection Work at Mus,

Car Nicobar (800 Mtrs) Phase I

• Implementation of Phase II Eco restoration in 300 acres of Adyar Estuary and Creek for Chennai Rivers Restoration Trust

We are constantly re-engineering our activities, putting up stronger efforts at revising our over heads and costing and minimizing expenditure. We have initiated various steps to grow our business and have focused on efficient and timely project execution.

FINANCIAL PERFORMANCE

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 and Generally Accepted Accounting Principles (GAAP) in India. The management of RPP 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, in order that the financial statements reflect in a true and fair manner the form and substance of transactions and reasonably brsent the state of affairs on the Balance Sheet and profit of the Company for the year ended on that date. RPP delivered superior financial performance with improvements across key parameters.

The revenue from operations achieved for the year was Rs.263 crore as against Rs.233 crore in the brvious year which is an increase of 13% on y-o-y basis. RPP's core business is engineering and construction and it executes its works on the basis of contracts. Considering the adverse economic and financial environment, the Company has successfully executed projects and has performed well in revenue terms. This underscores the Company's position of strength in its various businesses and its strength to harness opportunities offered by the growing Indian economy.

The consumption of materials and other direct costs increased by 17 % to Rs.211 crore as against Rs.181 Crore in the brvious year. Employee cost was Rs.5.33 Crore for the year as against Rs.6.13 Crore in the brvious year.

The EBIDTA for the year was Rs.39.28 crore as compared to Rs.38.02 crore in the brvious year. The EBIDTA margin decreased from 15.90% in FY13-14 to 14.68% in FY14-15.

Finance cost was higher at Rs.16.67 Crore as against Rs.15.72 Crore in the brvious year.

Debrciation (including depletion and amortization) was lower at Rs.7.25 Crore, as against Rs.7.42 Crore in the brvious year.

Effective 1 April 2014, the Company has changed the method of providing debrciation from written down value to straight line method. In management's view this change results in more appropriate brsentation and gives a systematic basis of debrciation charge, rebrsentative of pattern of usage and economic benefits of the assets and provide greater consistency with the debrciation charge. Accordingly, excess debrciation charged for earlier years upto 31st March, 2014 aggregating Rs.14.92 crore has been written back and recognized as an exceptional item in the Statement of Profit and Loss in the brvious year ended 31st March, 2015.

The Company has sold the Wind Electric generator, which is anon-core business, and the loss on sale of Rs.8.60 crore has been accounted under exceptional item.

Profit after tax was Rs.17.27crore as against Rs.11.69 Crore for the brvious year.

The total secured and unsecured loans by way of working capital cash credit, term loans and hire purchase loans for fixed assets at the end of the year under review were Rs.105.54 crore as compared to Rs.91.85 crore as on 31st March 2014. The net increase is Rs.13.69 crore.

The capital expenditure for the year ended March 31, 2015 was Rs.0.43 crore. Assets of the value of Rs.18.92 crore were sold during the year.

Gross working capital as at March, 31 2015 was Rs.321.84 Crore, comprising mainly customer receivables of Rs.170 Crore and Unbilled revenue of H93 crore. Unbilled revenue rebrsents amounts to be billed to the Contractee clients in respect of revenue earned under the percentage completion method, followed by the Company, as reduced by that portion of such revenue already billed and receivable from those clients. Net working capital as at March 31, 2015 was H79.61 Crore as against Rs.77.71 crore for the year ended March 31, 2014. The Construction infrastructure industry is by its nature working capital intensive and net investments in current assets amount to a significant proportion of total income.

Return on Capital employed was at 26.67% and return on equity was at 12.76%

Cash accruals from the operations were higher at Rs.20.14 crore as compared to the brvious year. Apart from deployment of cash for capital expenditure, the company has repaid long term loans of H2.25 Crore and raised the working capital loans by Rs.6.57 Crore during the year. Consequently, there was net cash inflow of Rs.2.49 crore.

As on March 31, 2015, RPP's total debt was at Rs.105.54 Crore. RPP's gross debt to equity ratio, including long-term and short- term debt, as on March 31, 2015 was at 0.82. Group Results

Highlights of RPP's consolidated performance for the year are as follows:

• Revenue from operations increased by around 11% to Rs.265.94 Crore

• EBITDA was Rs.39.64 Crore

• Profit Before Tax was Rs.21.11 Crore

• Net Profit increased to Rs.16.58 Crore

BUSINESS OUTLOOK

Industry experts expect a pickup in India's construction sector in FY 2015-16, after holding a more conservative outlook in FY 2014-15. Growth will be underpinned by positive reform momentum, improving funding environment with the Reserve Bank of India continuing to ease monetary policies and continued focus by the government to develop the country's infrastructure which will help to accelerate infrastructure projects. It is estimated that FY2015-16 will register a pickup in construction activity and forecasts indicate the sector to grow by 6.0%, up from 4.3% in FY2014-15 in real terms. According to the Ministry of Statistics and Programme Implementation (MOSPI), the construction sector grew by 1.4% year-on-year (y-o-y) in real terms for Q4 of FY2014-15, rebrsenting a slowdown in growth over the past two quarters.

Beyond FY2015-16, experts believe that as various reforms begin to gain traction and attract greater private investment, the construction sector is forecast to grow by an annual average of 6.6% between FY2016-17 and FY2019-20 in real terms. Forecasts suggest a strengthening of growth in the country's construction sector, as positive growth drivers gradually gain traction. Infrastructure is also a key focus of the government as outlined in the FY2015-16 budget. The improving funding conditions and various other measures the government is taking to boost funding for construction companies would reignite credit growth amid a benign inflationary environment.

The construction industry in India is the second largest employer and contributes more than 10% of India's GDP. 50% of the demand for construction activity in India is for infrastructure, and the rest comes from industrial activities, residential and commercial development etc. The Indian construction industry is valued at over USD 126 Billion (117 Billion Euro).

The rapid growth of Indian cities opens huge opportunities for the construction industry. India has the second largest urban population in the world, and it contributes significantly to India's GDP (accounting for 62 - 63% in 2009-10 and project to reach 70 - 75% by 2030). Between the census of 2001 and2011, 91 million people moved into India's urban centers -a growth of around 32%. Recent estimates suggest that by 2030 nearly 590 Million people will live in Indian cities. While the population keeps swelling, the infrastructure is struggling to even meet the demands of the existing urban population. There is need for re-generation of urban areas in existing cities and the creation of new, inclusive Smart Cities to meet the demands of increasing population and migration from rural to urban areas. Future cities of India will require smart real estate and urban infrastructure. Over the next 20 years investments of USD 650 Billion are estimated in urban infrastructure.

The Government of India is in the process of launching a new urban development mission. This will help develop 500 cities, which include cities with a population of more than 100,000 and some cities of religious and tourist importance. These cities will be supported and encouraged to harness private capital and expertise through Public Private Partnerships (PPPs), to holster their infrastructure and services in the next 10 years.

An investment of USD 1,000 Billion has been projected for the infrastructure sector by 2017, 40% of which is to be funded by the private sector. 45% of infrastructure investment will be funneled into construction activity and 20% set to modernize the construction industry.

The medium and long term prospects for the Indian building and construction industry are very promising; the potential for infrastructure investments for the next 15 years is still huge as the dynamic growth in the Indian population stimulates the need for infrastructure improvements. All those factors create a positive effect on the domestic construction industry.

Growth Strategies

Your company primarily focuses on ensuring cost competitiveness, timely execution of projects within cost estimates, managing volatility, control over working capital, achieving operational efficiency, and improved supply chain management.

The focus is on expanding customer base, strengthening business development efforts, better account management, cost leadership and foraying in to new business segments and geographies.

RISKS AND CONCERNS

Mitigation of risks is the all en-compassing requirement. Broadly speaking, Construction Projects face the following type of risks:

Completion risk: This is the risk that the project may not be completed on time, or at all, due to various reasons such as cost overruns, technology failure, force majeure etc

Resource risk: This risk includes the non-availability of raw materials for the project operation. It also includes the risk that the raw material prices might move adversely.

Operating risk: This is a risk that the project costs would escalate. It also includes the risk that the project will have operational problems.

Casualty risk: This is the risk of physical damage to the project equipment. It also includes liabilities to third parties on account of accidents at the project site.

Site risk: This is the risk that the project site might have legal encumbrances. It also includes the risk that the site has technical problems.

The Company has taken a number of initiatives such as deployment of risk mitigation strategies, superior execution of projects and astute cost management to deal with an overall environment dominated by high interest rates, sluggish demand, liquidity issues and higher input costs for the second year running. The Company has adopted a pragmatic approach to navigate through the turbulent times and had cut down on overhead expenses and optimally stretched its available resources, making it lean yet effective in order to improve its operational efficiencies.

RISK MANAGEMENT POLICY

Risk Management is an integral part of the business process. The risk management process, inter alia provides for reviewof the risk assessment and mitigation procedure and timely report to the management and review of the identified risks at periodical interval to assess the progress of control measures. The Audit committee of the Board reviews the risk management efforts periodically.

The company follows the following risk management framework:

• Risk identification

This function involves br-emptive strategies to identify potential risks and evolve a framework for mitigation

• Risk assessment and analysis

Risk assessment is the objective evaluation of the quantitative and qualitative value of risk related to the uncertainties of a specific situation

• Proactive risk governance measures

This requires the organization to ascertain action plans to address identified issues and forestall potential damage

• Combrhensive risk reporting

Record the causes and mitigation measures for future reference

The reporting systems ensure brcise monitoring for quick decision making and smooth running of the operations. Prompt attention is drawn to any risk related function which is then closely monitored to enable appropriate decision making to avoid problems/ regain stability within the shortest possible time.

INTERNAL CONTROLS AND THEIR ADEQUACY

Your Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. It has documented procedures covering

all financial, operating and management functions. These controls have been designed to provide a reasonable assurance with regard to maintaining proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with best practices in these areas as well. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels.

The Audit committee of the Board reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the company, recommendations made for corrective action and the internal audit reports. The committee reviews with the statutory auditors and the management, key issues, significant processes and accounting policies. The company continues its efforts in strengthening internal controls to enable better management and controls over all processes.

HUMAN RESOURCE DEVELOPMENT AND  INDUSTRIAL RELATIONS

Our continued success will depend in part on our ability to retain and attract key personnel with relevant skills, expertise and experience. We are aware of the challenge in attracting and retaining the best of talents in the industry. Presently, our company has over 121 employees at various levels under its direct employment. We have in place a well-drawn out HR Policy and a working environment encouraging innovation, cost reduction and a time bound completion of projects along with measures targeted to emerge as a merit driven organization in these challenging times. The management has been paying special attention to various aspects like employee training, welfare and safety thereby strengthening the human resources.