Innovation Software Exports Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

Global economy continues to be sluggish. Subdued growth in the developed Markets has impacted the developing market and growth in these markets has slowed down considerably. Political instability has significantly affected the growth in the domestic market. Despite a lower economic growth, the demand in the domestic Software Services sector is likely to be good and increasingly broad based.

BUSINESS PLAN AND STRATEGIES ~

Company continues to support its plans to revitalize software development segment and provide services to the large houses that provide technology and other R&D services globally. It has plans to support projects like "E learning on net", "I - tuition" which are gaining grounds. Company will continue its effort in trading activity of Hardware.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY ~

The system of internal control has been established to provide reasonable assurance of safeguarding assets, maintenance of proper accounting records in compliance with applicable Laws and Regulations to ensure reliability of financial statements and reports. The Statutory Auditors and the Audit Committee review all financial statements and ensure adequacy of internal control systems.

RISK MANAGEMENT

Risk evaluation and management is an ongoing process in the company.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company is constantly working to create a congenial work environment and motivating employees at all levels and shall always place all necessary emphasis on continuous development of its human resource.

CAUTIONERY STATEMENT

Statements in the Management discussion and analysis describing the companys objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting demand/supply and prices conditions in the domestic and overseas markets in which the company operates/ going to operate, changes in government regulations, tax laws and other statutes and other incidental factors.

For Innovation Software Exports Limited

Sd/

Rita Thapa

Managing Director