MANAGEMENT DISCUSSION AND ANALYSIS REPORT

General review

Orient Refractories Limited (ORL) is a globally operating supplier of refractory products, systems and services for steel industries. ORL is a market leader in India and has global brsence. ORL is a global partner for over 500 customers in India and across the world.

As technology leader, ORL focusses on the development of solutions that are tailored to customers' trends. In 2013, after acquisition of 69.62% shares by RHI, AG, Austria, ORL is setting new standards through continuous and innovative processes. ORL is also working on optimizing the plant structure resulting in control over inventory and serving customers effectively and efficiently at low cost.

The Company also has a well-trained group of technical personnel at plant and customer sites to address all customers' technical and commercial needs as it has a large base of customers to whom it provides total refractory management services. The Company exports a fair share of its output to various overseas customers. The major export customers are based in Europe, Middle East and South East Asia.

Financial of segments

Financial of business segments are given in detail in notes to the financial statements of the annual report.

Business environment

Steel companies around the world have been operating in a very challenging environment. These trends affected the Indian steel market leading to margin combrssion and weaker growth prospects. Unfavorable business environment lead companies shed away from capital investment. Globally the steel industry is witnessing a slowdown in the steel demand due to reduced demand from Chinese economy. Further, with respect to India, the delay in execution of construction projects and lower demand of automobiles and consumer durables have led to a drop in the growth rate of steel sector in Indian economy. The brventing over capacity in the industries is leading to a constant brssure on the process of steel products. Further, steel companies in India are experiencing a rise in operating costs due to shortage of iron ore on the account of restriction in mining and hike in power rate. Eventually, the brssure of prices of steel products coupled with rising operating costs has led to decline operating margin.

Industry structure, developments, opportunities, threats, risks and concerns and future outlook

There was high expectation from new government on reforms and industrial growth. The economy, shown some sign of recovery but there was a gap in industrial expectation and actual growth. Business sentiments suggest a sort of let down in hope.

The new Government has taken positive steps in several areas including more in administrative procedures and policy legislations. Environmental and forest clearances are now quicker when compared to brvious decade. Its "MAKE IN INDIA" initiative has drawn curiosity from several investor networks. This is also backed by plan to establish investment corridors and smart cities, it is likely that overcoming 5 years this effort will mark a rise in investment. Rate reduction by RBI will also help in rise in investment in next 12 to 18 months' time. Your Company will also take the advantage of government reforms. Your directors are hopeful to sustain the same growth in the year 2015-16.

All these factors are monitored on continuous basis and necessary action will be taken as and when required. We are wholly dependent on steel industries growth, therefore your Directors keep a close watch on the various factors which affect the performance of our Company. With RHI AG flagship, the Directors are optimist to grow in Indian and export market in 2015-16.

Human resources

The Company believes in the strength of human resources and that it is the best form of business capital which needs to be explored and utilised to full potential. At the Company, constant efforts are made in developing human resources by providing necessary training and taking care of employee welfare. The Company endeavors to keep the employees' motivation level high by providing congenial work atmosphere and rewarding/remunerating adequately.

There are cordial relations between the management and the employees. The Company believes in enhancing the competencies of employees to create a high performing and innovative organization.

Cautionary statement

The Management Discussion and Analysis Report contains some forward looking statements based upon the information and data available with the Company, assumptions with regard to global economic conditions, the government policies etc. The Company cannot guarantee the accuracy of assumptions and perceived performance of the Company in future. Hence it is cautioned that the actual results may differ from those exbrssed or implied in this report.