Watson Software Ltd Management Discussions.

WATSON SOFTWARE LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS: OVERVIEW: The year under review was one of the difficult years of the company. The company is looking for profitable ventures as its main area of functioning release paper, label stock and bopp tape. FINANCIAL HIGHLIGHTS: CURRENT YEAR PREVIOUS YEAR 31.03.2007 31.03.2006 PAT (38000) (16046) EBID (38000) (16046) PROFIT/LOSS AFTER 0 0 EXTRA ORDINARY ITEM EPS (0.00) (0.00) DEBT INDUSTRY STRUCTURE AND DEVELOPMENT: The economy is passing through a recessionary phase. The whole industry suffered and number of companies reported huge losses. This is mainly because of changes in technology, which has rendered old equipments out of market. Your directors are working on a plan to add new and latest equipments to successfully compete in the market. OPPORTUNITIES AND THREATS: Growth in the paper industry is a foregone conclusion. Due to various developments in the Indian economy, as Asia is the fastest growing region in the world for the paper sector. Besides, the company is making efforts in making inroads in the software sector. The same is likely to be crystallized in near future. FUTURE BUSINESS OUTLOOK: In this information age the knowledge is power. Timely and accurate information is sought by a number of companies. A large number of companies are looking for diversification plans as their existing activities are no more profitable. The company plans to venture into such activities which may the fill up the demand and supply gap in the software sector. INTERNAL CONTROL SYSTEMS: The level of activities of the company at present is quite low, Keeping in view the scale of operation, size of the company, the company has adequate internal control procedure commensurate with the nature of its business and size of its operations. RISKS AND CONCERNS: The business of the company largely depends on the improvement of government policies, investment decisions, inflation, and timely payments by the customers. The company will endeavour its best to capitalize on its strengths and improve upon its weak areas. HUMAN RESOURCES DEVELOPMENT: Rather than recruiting permanent employees, the company will prefer to out source various services based on assignments in hands. This will minimize the risk and keep the overheads at reasonable level. FOR AND ON BEHALF OF THE BOARD Mrs. Neela S. Mody CHAIRMAN Place: Mumbai Date : 11.07.2007