Tecpro Systems Ltd Management Discussions

1) Industry Structure and Development

Indian democracy is worlds largest democracy and hence the Indian government has always been required to meet the aspirations of the immensely varied society and diverse population. After independence till now, India has come over acute backwardness and is now one of the worlds fastest growing economies. The efficacy of the politics of reforms adhered to by the government can be known by the performance of Indian economy in the last fiscal 2014-15.

Engineering sector forms the backbone of any economy as it is intensely linked with many other core sectors. The same is true in the case of the Indian engineering sector also. Design engineering is vital for application of engineering knowledge in industry or for the advancement of well-being of mankind. This goes to show that this industry has huge potential in years to come.

2) Opportunities and Threats

Design engineering is the main business activity of the company which requires highly skilled manpower and the increase in cost especially the cost of technical personnel required to carry on design engineering activities and competitive market may act as major threats which may have adverse bearing on performance of the Company. Further, the clientele of the Company is limited therefore the profitability of the Company is exposed to greater degree of risk.

3) Outlook

The Reserve Bank of India has said that the Indian economic growth is poised for a take-off amid signs of economic reforms, fiscal consolidation and projected improvement in investments. The prospect of the Company to a large extent is dependent on the macroeconomic determinants of the Indian industry. The Company caters to the design engineering needs of engineering and project execution companies. The work of the Company is dependent on the orders received from these companies. It is expected that in the years to come the company will bag some orders from companies in the infrastructure sectors using the design engineering services of the Company.

4) Segment wise or product wise performance

The global industrial sluggish performance since last three years affected adversely the Indian industrial performance and engineering industry. Consequently, the demand of the services offered by the Company has reduced materially and hence due to various micro and macro-economic reasons the Company could not undertake any business during the year. Further with the new government taking positive steps for the infrastructure sector your Company believes that it will be able to perform well in the financial year 2015-16.

The total income in the Financial Year ended March 31, 2015 was Rs. 273.98 crore and the loss incurred by the Company was Rs. 1080 crore as against total income of Rs. 862.98 crore and a loss of Rs. 567.92 crore in the previous year ended March 31,2014.

5) Risks and Concerns

The Company provides Design engineering services to the companies in the infrastructure sector. The economic slowdown in India has an adverse impact on the Infrastructure Sector of the Country. As your Company provides services to Infrastructure sector, it has also badely felt the impact of the slowdown. Since the Company provides services to Infrastructure Sector it will recover as soon as the Infrastructure Sector recovers from the economic slowdown in the coming years.

The Company has a well-defined Risk Management Policy in place. The Company on regular basis reviews its Risk Management Policy and takes proactive steps to safeguard and minimize any adversity related to the Market, Technology, People, Environment/Regulatory, Financial, Information Technology and Opportunity Risks.

6) Internal control systems and their adequacy

The Company has an adequate system of internal controls implemented by the management towards achieving efficiency in operations, optimum utilisation of resources and effective monitoring thereof and compliance with applicable laws. A qualified and independent Audit Committee of the Board of Directors time to time upgrades these systems in line with the best practices and standards on the internal control systems and procedures.

7) Human Resource Development

Your Company recognizes the importance of human capital and believes that the human capital is the key engine for its growth and competitiveness however the Company did not have any employee during the year since it did not have enough order book during the year.