Disa India Ltd Management Discussions.

ECONOMIC SCENARIO & OUTLOOK:

Indian Economy is still passing through, probably the longest slowdown in the last few decades. The change in industry sentiments was evident with a new majority government at the centre, however the real growth revival is yet to be seen. The slowdown which started from end Y2011, is still persisting and it continues to choke any significant growth sentiments.

INDUSTRY OUTLOOK & OPPORTUNITIES:

During the period October’2011-March’2015, the average YoY growth in the Index of Industrial Production (IIP) stood at:

- For Manufacturing: 0.9%

- For Capital Goods: -2.0%

Such marginal growth can be easily met by Manufacturing Industry through efficiency improvements alone, and capacity expansions are not required. This hits Capital Equipment Industry (like DISA INDIA LIMITED) hard.

During the same period, the Passenger Vehicles (Cars and Utility Vehicles) Market has stagnated at about the same level of 31 Lakhs vehicles annually. The Commercial Vehicles (Buses and Trucks) on the other hand have collapsed from 9.1 Lakhs/Year to 7.0 Lakhs/Year. The robust Tractors Market - which had been compensating to some extent earlier - also collapsed in FY2014-15, by about 9% compared to FY2013-14.

Your Company’s key focus segment of Foundry Industry is heavily dependent on the automotive and agricultural industry growth. The prolonged slowdown in these end segments, has led to high volume/ margin stress on our customers.

However, the continuing focus on new products & new markets has helped the Company offset the drop to a great extent. Actually almost one third of the turnover is now from the new products introduced over the last few years. This gives the confidence that a much wider product portfolio will bring positive growth, when the growth cycle in these end segments starts again. It is encouraging to see the sustained gradual recovery in the Commercial Vehicles volumes since the middle of Y2014, even though the total numbers are still significantly below the peak reached in end Y2011.

MARKET DEVELOPMENT:

The successful localization and introduction of the high end DISAMATIC & DISA MATCH Machines and also the whole new range of Shot Blasting solutions from the Wheelabrator Group, now gives the Company a much wider portfolio for the target market segments. The Company has seen some good success in bringing our Special Shot Blasting Solutions for the Construction Industry – with impressive customer list of Telcon, L&T Case, Volvo, Caterpillar, Komatsu & JCB.

While your Company continues its marketing push through Exhibitions, Seminars & Symposiums, we also arranged a very successful Customers’ Day in April’2015 at Tumkur Plant, to showcase some of the newest products.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company is committed to discharging its Corporate Social Responsibility as a good corporate citizen

The Directors are pleased to report that your Company has taken steps to comply with the requirements of the Companies Act, 2013 in this connection.

The Composition of CSR Committee, details of the amounts to be spent during the current financial period and the manner in which it was spent are given in Annexure A.

RISK MANAGEMENT:

The Company has formulated a Risk Management Policy and a mechanism to inform the Board Members about risk assessment and mitigation procedures. Also undertakes periodical review to ensure that executive management controls risks by means of a properly designed framework.

The Risk Management Committee is constituted with all the Directors on the Board as members of the Committee. Mr. Robert E Joyce Jr. is the Chairman of the Committee.

As an established practice, at each Meeting of the Board, the Directors are updated on risks identification and steps taken to mitigate the same. Risk Management Policy is hosted on the Company’s website; http://www.disagroup.com/pdf/DIL_Risk_Management_Policy.pdf

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy for vigil mechanism which is available on website of the Company and there were no cases reported during the last Period. http://www.disagroup.com/pdf/ DIL_Whistle_Blower_Policy.pdf

GROUP COMPANIES:

Persons constituting Group coming within the definition of "Group" as defined in the Competition Act, 2002 include the following:

S.No. Name of the Company

1. Naciron Holdings A/S (Denmark)

2. Naciron A/S (Denmark)

3. Norican Holdings ApS (Denmark)

4. Norican Group ApS (Denmark)

5. DISA Holding A/S (Denmark)

6. DISA Holding II A/S (Denmark)

7. DISA Management Services ApS (Denmark)

8. DISA Industries A/S (Denmark)

9. DISA Holding AG (Switzerland)

10. DISA Industrie AG (Switzerland)

11. Wheelabrator Group Holding GmbH (Germany)

12. Wheelabrator Group GmbH (Germany)

13. Wheelabrator OFT GmbH (Germany)

14. Wheelabrator Berger Stiftung GmbH (Germany)

15. DISA Industrienlagen GmbH (Germany)

16. WGH UK Holdings Ltd. (UK)

17. WGH UK Limited (UK)

18. Wheelabrator Technologies (UK) Ltd (UK)

19. Wheelabrator Group Limited (UK)

20. Surface Preparation (Gibraltar) Ltd

21. Wheelabrator Group SLU (Spain)

22. Wheelabrator Group NV (Belgium)

23. Wheelabrator Group SAS (France)

24. Matrasur Composites SAS (France)

25. Walter Trowal SARL (France)

26. Wheelabrator Schlick Sp. z o.o. (Poland)

27. Wheelabrator Czech s.r.o. (Czech Republic)

28. WGH Holding Corp. (BVI)

29. DISA Holding LLC (Michigan USA)

30. DISA Industries, Inc. (Illinois, USA)

31. WG Global LLC (Delaware, USA)

32. Wheelabrator Group, Inc. (Delaware, USA)

33. Castalloy, Inc. (Delaware, USA)

34. Wheelabrator Group (Canada) Ltd (Canada)

35. WG Plus de Mexico S de RL de CV (Mexico)

36. WG Plus Servicios S de R, L de CV (Mexico)

37. DISA K K (Japan)

38. Wheelabrator Group Limited (Hong Kong Branch)

39. DISA Machinery Limited (China)

40. DISA Trading (Shanghai) Co Limited (China)

41. DISA Technologies Private Limited (India)

DIRECTORS AND KMP:

In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Robert E Joyce Jr, Director, retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment.

During the period Mr. Mohan Subramaniam has been appointed as Chief Financial Officer of the Company w.e.f. 8th May, 2014 and Mr. Ankit Surana has been appointed as Company Secretary w.e.f. 24th April 2015.

Nomination and Remuneration Committee has been formed and policy on appointment and remuneration of Directors and KMP is available on website of the Company. http://www.disagroup.com/pdf/ DIL_Remuneration_Policy_of_DISA_India_Ltd.pdf

INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

During the period Mr. Jan Johansen, Non-Executive Independent Director resigned from the office of Director w.e.f. 22nd December, 2014, due to personal reasons and pre-occupation with other commitments. Mr. Shyamal Kumar Sinha was appointed as Independent Director of the Company w.e.f. from 23rd March, 2015.

More details on terms of appointment of Independent Directors and details of familiarization efforts can be viewed on the website of the Company at:

http://www.disagroup.com/pdf/

Terms_of_appt_of_Indp_Directors_March%202015.pdf

http://www.disagroup.com/pdf/

Familiarisation_program_for_Independent_Directors.pdf

MEETINGS OF THE BOARD OF DIRECTORS:

The Meetings of the Board are held at regular intervals with a time gap of not more than 120 days between two consecutive Meetings. Additional Meetings of the Board of Directors are held when necessary. During the period under review six Board Meetings and five Audit Committee Meetings were held.

The Agenda of the Meeting is circulated to the Directors in advance. Minutes of the Meetings of the Board of Directors are circulated amongst the Members of the Board for their perusal.

Nomination and Remuneration Committee has formulated a policy relating to the remuneration of the Directors, KMPs and other employees and it has been disclosed in Corporate Governance Report Annexure D.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has established an annual performance evaluation of its own performance and the Individual Directors performance.The manner of evaluation has been explained in the Corporate Governance Report.

DIRECTORS’ RESPONSIBILITY STATEMENT:

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement:-

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period and of the profit and loss of the Company for that period;

(c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The Directors have prepared the annual accounts on a going concern basis; and

(e) The Directors, have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) is defined every year by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit monitors and evaluates the efficacy and adequacy of internal control system in the Company and its compliance with Accounting procedures, financial reporting and policies at all locations of the Company. Based on the report of Internal Audit, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have any Subsidiary, Joint Venture or Associate Company.

DEPOSITS:

The Company has neither accepted nor renewed any deposits during the period under review.

RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the financial period were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is on the Company’s website and the details of all related party transactions are disclosed in the financials, refer Notes forming part of the Financial Statements Sl.No.23.3.

None of the Directors has any pecuniary relationships or transactions vis--vis the Company. http://www.disagroup.com/pdf/ DIL_RPT_Policy.pdf

MATERIAL CHANGES & COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:

There are no material changes and commitments between the end of the Financial Period and the Date of the Report, which affect the financial position of the Company.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:

The Company has not given any loan or guarantees covered under the provisions of Section 186 of the Companies Act, 2013.

AUDITORS:

The Auditors, Messrs Deloitte Haskins & Sells, Chartered Accountants, Bangalore, retire at the ensuing Annual General Meeting. The Company has received a certificate under Section 141 of the Companies Act, 2013 from them stating that their appointment would be within the limits specified therein.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its activity is required to be audited. Your Directors have, on the recommendation of the Audit Committee, appointed Messrs Rao, Murthy & Associates, Bangalore, to audit the cost accounts of the Company for the financial period ended 31st March, 2015.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read withthe Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Vijayakrishna KT, Bangalore, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed in Annexure B.

EXPLANATION BY BOARD ON ADVERSE COMMENTS BY AUDITORS:

There were no adverse comments by Auditors of the Company and hence no explanations provided.

Referring to the Secretarial Audit Report, the Company had initiated action on recruitment of Company Secretary well in advance and since the process of recruitment took longer time, the appointment was made effective from 24th April, 2015.