Integra India Group Company Ltd Merged Management Discussions

INTEGRA INDIA GROUP COMPANY LIMITED (FORMERLY KNOWN AS HINDUSTAN CONTROL LIMITED) ANNUAL REPORT 2010 MANAGEMENT DISCUSSION AND ANALYSIS 1) Introduction: INTEGRA Holding AG, Switzerland has established its presence in India through INTEGRA India Group Co. Ltd. (INTEGRA India) in 1987. The company was formed as a joint Venture with ABB under the name of Integra Hindustan Control Ltd. These strong roots between Switzerland and India are poised for a high trajectory growth offered by Indian Market. In 2008 INTEGRA has taken over the shares from ABB and started repositioning your company for newgrowth. INTEGRA India has an established presence in Railway Signalling in Metal- to-Metal technology and it also has a strong contract manufacturing capability through its association with ABB. Moreover, in line with its newly defined vision to be INTEGRA Groups strategic pillar for sustainable growth in India your company has not only taken forward its cooperation with its existing partners Gorba and Moser Baer but has also entered into new cooperation agreements with INTEGRA Biosciences Group, Aquametro, Fogmaker and TEQ. 2) Business Environment: The global business environment has remained full of insecurities in the last year. Even though there have been strong signs of recovery, the sustainability of the actions taken by our global leaders remain questioned largely. The US monetary policies to curb the local economy have been impacting business on a global scale, leading to rising interest rates in emerging markets such as India and curtailing investment financed by borrowing. In the Indian context, a slowdown in the release of funds by Railways has had a major impact has also had an impact on the business of your company. However, the market share of our diversified businesses is low and thus a huge potential for growing in each of our business exists. Nevertheless, the continuous focus on infrastructure improvement by the Indian Government and investments in public transport will continue to provide additional growth opportunities with our new partner companies. 3) Company: Your company has a diversified set of activities. Due the slowdown in railway sectors the past year has not met expectations. Whereas costs have been increased substantially to match the expected growth, order intake and revenue could not hold pace. A large part of expenses however was investment into business enablers expected to pay-off during 2011. Measures have been taken to strongly control the performance and we expect an improved business again in 2011. 3.1) Railway Signalling The Railway Signalling business has had less Orders and Revenue as compared to 2009-10. Based on market forecasts, the business is expected to pick up again in 2011. 3.2) Contract Manufacturing After Contract Manufacturing for ABB Relays has been marginally affected by the slow-down in the MV Switchgear Market in the beginning of the year, it has picked up again during the last quarter. Despite the slowdown in volume our delivery performance was excellent and we have been able to perform with a delivery record in December. 3.3) PIS (Passenger Information System) The Joint Venture with Gorba AG, Switzerland in the form of Gorba INTEGRA Systems Pvt. Ltd. (GISPL) has invested into strengthening its position in the market. Your company as a manufacturing partner has manufactured destination boards and has also provided services for installation and commissioning of these destination boards. The continued need for city bus transportation and feeder buses to metros ensures immense potential of this business. 3.4) TSS (Time Solution System) Based on the license agreement with our Technology partner Moser Baer signed during the last year, we have completed the technology transfer and are ready to execute first expected orders. With the increased investments into up gradation of airports, railway stations, new metros and power plants we see a good potential in this business. 3.5) INTEGRA Biosciences During the year we have signed a Distribution Agreement with INTEGRA Biosciences Group for the sale of INTEGRA laboratory tools in the Indian market. Their innovative liquid handling and cell culture solutions are highly attractive for the booming Bioscience, Pharma and Generics markets. We have already started appointing distributors in all major hubs and received first orders. We anticipate high performance from this business in the following years. 4) Outlook: In the coming year we are planning to revive our railway business by taking on signalling projects to strengthen and leverage our position as supplier of railway solutions. We are also optimizing our processes to improve our offering and to increase our attractiveness as contract manufacturer. We see a large potential in the growth of urban infrastructure and aim at positioning ourselves as an integrated solution provider to rail and automotive sectors. To leverage the existing PIS business with additional and integrated solutions we have started partnerships with TEQ for multiplexing, Fogmaker for fire extinguisher and Aquametro for diesel fuel meters. There is large requirement for these systems and we expect the same to contribute to our growth in the next year. In addition, we also expect great success with the INTEGRA Biosciences line of products. For and on behalf of the Board of Directors, Halol, Panchmahals K N Shenoy 27th January, 2011. Chairman