Sylph Education Solutions Ltd Management Discussions.

INDUSTRY AND MARKET

Infrastructure spending is a key driver for growth of the Indian economy and has a catalytic effect on other sectors and industries, thereby forming the foundation for economic growth and overall development of the country. The Government of India has put infrastructure on the forefront of their policy initiatives with projects like the Sagarmala Project to promote port connectivity by setting up new ports as well as modernization of existing port infrastructure, Bharatmala Project to augment road network and efficient freight management through national highways, etc. among other schemes. The banking sector, which has gone through a turmoil over the last few years is also warming up to funding infrastructure sector again thereby providing the much needed financial support for sustained infrastructure development.

The Government of India has allocated 5.97 lakh crores towards infrastructure sector in 2018-2019, up from 4.94 lakh crore from the prior year. The Railways comprise an estimated investment of 1.48 lakh crores targeted towards capacity creation by building 18000 km of double, third and fourth line and 5000 km of gauge conversion outlay. About 600 major railway stations are being taken up for modernization. The BharatmalaPariyojana has been approved to provide seamless connectivity of interior and backward areas as well as border zones through 35000 km in phase 1 of roads with an outlay of 5.35 lakh crores thereby increasing road and highway infrastructure expenditure.

Urban infrastructure has received a boost with the initiation of schemes to develop 100 smart cities under the Smart Cities Mission across the country. The Government of India has selected 99 smart cities with an outlay of 2.04 lakh crore and work on the same is underway. The AMRUT programme has increased focus on water supply connectivity to all households in 500 cities across the country. UDAN initiative of the Government has gained momentum which envisions connecting 56 unserved airports and 31 unserved helipads across the country to increase air traffic connectivity across small towns. Further, under the PradhanMantriAwasYojana, affordable housing infrastructure has received a much needed boost and has started to attract private sector participation towards building affordable houses for the low and middle income families to help address the need for quality housing.

One lakh gram panchayats have been connected with high speed optical fiber networks under the BHARATNET project to provide internet broadband access to over 20 crore rural and Indians in over 2.5 lakh villages.

BUSINESS STRATEGY AND MATERIAL EVENTS

Your Company has been struggling over the last few years due to long overdue debtors causing cash flow constraints. Several of these debtors have pending litigations taking considerable time to reach finality.

As a result, your companys outstanding dues had become long overdue and the bankers, namely Indian Overseas Bank and State Bank of India had called up the loans and initiated recovery proceedings. Your management team took it upon themselves as their topmost priority to resolve and reach a settlement with the Bankers so that once the cash flow crises are abated, the company could take up new projects and move towards a path of healthy recover.

In March 2018, your Company reached a restructuring of its debt with respect to Indian Overseas Bank and a settlement of debt with respect to State Bank of India with Alchemist Asset Reconstruction Company (Trust -VII) who had in turn taken over the debts of SBI and IOB. Subsequently, the

company has paid off the settlement amount of SBI and has received a "No Dues" certificate to this effect from Alchemist Asset Reconstruction Company Trust -VII. The restructuring terms with respect to Indian Overseas Banks portion of debt requires the company to make periodic quarterly payments with the total restructured amount payable by 31.03.2024.

With the bank matters resolved, your company can now focus on taking up new businesses and your management has started discussions with clients to take on new projects. Meanwhile, the litigations pending before various adjudicating authorities are also progressing and expected to conclude in the near future thereby generating cash flows to both service its restructured debt obligations as well as to take on new projects and augment the business activities.

Pursuant to letter F.No. 03/73/2017-CL-11 dated 09/06/2017 of the Ministry of Corporate Affairs on suspect shell companies and letter no. SEBI/HO/ISD/ISD/OW/P/2017/18183dated 07/08/2017 of SEBI, trading restrictions were imposed on the securities of your companies. Your companys management made representations before BSE and NSE and addressed their queries to establish that your company was not a shell company in any way but was suffering from low levels of business activities due to bank, liquidity and litigation related problems. After hearing the company, trading restrictions on non-promoter shareholders have been eased. Further, Forensic Auditor engaged by NSE have done a detailed audit of the companys books of accounts and its business plans and your Companys Management has provided all relevant information in order to prove that your Company is a genuine business and your Management hopes that the regulators shall remove its name from the list of suspected shell companies.

Your company is also focusing on the hotel at Jhargram which is in need of minor up gradation and repair works. The equipment fleet of the company has also aged and your companys management is in the process of assessing the remaining useful life of the machinery under its fold to determine which equipment would undergo thorough repair to bring it to usable state and which, financially would be prudent to either sell/dispose. Once repaired, the equipment fleet may be engaged on hire/ rental basis while not in use and awaiting new projects to deploy them on.

SWOT ANALYSIS Strengths

Over the years, your Company had undertaken development of various diverse construction projects like development of roads and minor bridges, Power Sector projects, construction of buildings and real estate, design and construction of turnkey industrial infrastructure projects, etc. and your Management possesses necessary project management expertise for the same. Your company also possesses necessary plant and machinery for the construction activities.

Weaknesses

The biggest challenge faced by your Company over the past few years has been access to free cash flows which are locked up in project disputes and which had been exacerbated by the disputes with bankers, namely IOB and SBI which had called up their loans. The equipment fleet has also aged requiring thorough overhaul and thus deployment of additional cash flows. Several equipment is also tied up in litigation with clients. With the disputes with the bankers being amicably resolved and litigations progressing well with some awards already in your Companys favour (though under appeal), your companys management feels that over the coming financial year, with a concerted effort, your Company may be able to overcome these shortcomings to get back on the path of growth.

Opportunities

Your Companys management feels that with cash flow problems being slowly alleviated and the thrust of the Government in Infrastructure Spending, there are tremendous growth opportunities. Your management has already started discussions with old clients for taking on new projects by leveraging existing credentials and project management capabilities in order to capitalize on new opportunities. Threats

On a sector specific level, the company faces threat of systematic slowdown and sudden changes in the Banking Sector policies, as in the past, which would impact cash flow and liquidity for infrastructure sector projects. Risks of sudden policy changes, sudden price rises for key inputs, roll back of existing incentives and economic slowdown or weakness remain as a large sector specific threats. However, the push of the government and the latest prodding by the Reserve Bank of India to increase lending to Infrastructure sector, this threat in the near term seems to be somewhat mitigated.

Company specific threat would include overturning of litigation awards as well as orders in favour of clients establishing their counter claims against the company in pending litigations and appeals, adverse orders in relation to appeals pending tax authorities, continued liquidity shortfall and any adverse impacts of unplanned deviations from approved restructuring plans with respect to loan of IOB resulting in fresh litigations.

The Company specific threats are of higher concern and your companys management has kept keen focus on the slightest developments in relation to the same. Highly skilled and knowledgeable legal professionals are engaged to take care of pending litigation and your Companys management is on track to ensure the restructuring plan is implemented as agreed with Alchemist Asset Reconstruction Company with respect to the IOB portion of debt. Additional efforts are put in place to generate cash flows to buffer against adverse conditions resulting from any threat materializing in the future. DISCUSSION ON FINANCIAL PERFORMANCE Revenue

For the financial year ended 31st March, 2018, your Companys Income from operations stood at 17.20 Lacs as against 35.23 Lacs in the previous year. Low levels of income from operations is a result of liquidity concerns as accounts with bankers were classified as non-performing in earlier years and your Company was not able to taken on new projects due to unavailability of financial resources to execute them.

Expenditure

Your Companys total expenditure comprising of contract & site expenses, employee benefit cost, depreciation, material consumed including other expenses was 148.40 Lacs for year ended 31st March, 2018 as comparing to 525.91 Lacs in the previous year. The level of expenditure is commensurate with the reduced level of operations as well as austerity with respect to overhead expenses.

Interest

Interest expenses stood at 15.55 Lacs and previous year figure was (40.28) Lacs.

Profit before Tax (PBT)

PBT was (111.93) Lacs for the current year from (406.60) Lacs in the previous year. PBT loss resulted from low levels of total income as the company did not undertake any new projects pending resolution with bankers with respect to the called up loans.

Profit after tax (PAT)

Your companys profit after tax was (98.55) Lacs for the year ended March 31, 2018 from (400.79) Lacs as compared to the previous year.

EPS

The earnings per share for the current year stood at (0.28) as compared to (1.16) per equity share in the previous year.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company are prepared in accordance with the relevant Indian Accounting Standards issued by the Institute of Chartered Accountants of India and forms an integral part of this Report.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiaries/ Associate Companies/Joint Ventures is given in Form AOC-1 and forms an integral part of this Report.

The results of the company are consolidated with subsidiaries, step down subsidiaries and associates & JV. These companies operate into Two segments (i) broadly in Construction of roads, bridges and infrastructure development, Housing Development, Renewable Energy Power projects and (ii) Hotel.

HUMAN RESOURCES

Given the reduced level of operations and income, your company has actively reduced its manpower to limit costs and keep it at a bare minimum pending new opportunities for business growth. However, your company has kept intact its spirit of inclusion and transparency. Your company also engages in necessary and training and education of its employees to keep them up to speed and keep honing their skills.

CAUTIONARY STATEMENT

Statements in this Directors Report and Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include raw material availability and its prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, Tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed with Board Report.