TECPRO SYSTEMS LIMITED ANNUAL REPORT 2011-2012 CHAIRMAN'S REPORT Dear Shareholders, It is a pleasure to write to you once again. India is on a growth trajectory with a big need to develop its industrial, urban and rural infrastructure for the sustainable development of the country. With huge investments envisaged in infrastructure projects for power, steel, cement, iron ore and aluminum industries, world-class airports and ports, railways and communication networks, robust demand for material handling equipment is anticipated in the next few years. Although the Indian infrastructure sector is currently facing various challenges like rising interest rates, inflation and sluggish order inflows, it continues to be a key driver of the nation's economic progress. The current slowdown is temporary as infrastructure growth is pivotal in order to achieve the 7%+ GDP growth targeted by the Government. The slow pace of reforms and rising interest costs have hampered the capital expenditure plans across various industries. However, several recent policy initiatives have been introduced by the government in order to overcome these hurdles and spur investments in infrastructure. Despite the current slowdown, we remain confident that the capital expenditure cycle is deferred but not derailed as investments in infrastructure projects are vital for the strong economic growth envisaged by the government. Power constitutes 30% of the total infrastructure investment in the country. Increase in peak demand will support the need for timely execution of power projects, thus providing a strong base for growth of Boiler, Turbine, Generator (BTG) and Balance of Plant (BoP) service providers in the country. The Power Ministry has pitched for capacity addition target of about 76,000 MW in the XII Plan. This presents opportunities worth ~Rs. 1.4 trillion for BoP services across the country. Tariff hikes from State Electricity Boards and release of the tenders for BTG and BoP orders in the forthcoming fiscal will set the pace for recovery. Also the initiatives taken by the Government towards overall infrastructure development, both in urban and rural areas, in all segments like roads, housing, dams, mining, water etc. will give a boost to the Steel and Cement industry, resulting in more capital expenditure in the infrastructure sector. This coupled with moderating inflation and interest rates will help revive the capital goods industry and fasten the pace of order inflows. We strongly believe that your Company will be at the forefront to capitalize on this opportunity once these promising signs are experienced. Tecpro intends to maintain its competitive edge by enhancing its manufacturing capability and expanding its service portfolio. In the last fiscal, Tecpro completed the acquisition of Ambika Projects (India) Private Limited in the water & waste water treatment space enabling Tecpro to increase its share of in-house scope of services in the BoP segment. The Company also acquired a Pune based company, Eversun Energy Private Limited, engaged in the business of EPC of solar power projects, with an intent to make a foray into Renewable Energy (Solar) Segment adding another vertical to its existing business segments in power sector. Our collaboration with Nanjing Triumph Kaineng Environment and Energy Company Limited (NTK) of China for Waste Heat Recovery (WHR) power projects is scaling up well. We have already won projects worth Rs. 3.2 billion in WHR. Having already demonstrated our capabilities in the cement sector, we are looking to extend our offerings in Waste Heat Recovery to the steel sector. We have a good bid pipeline across all our offerings and are confident that many of these bids will be converted into orders shortly. Besides the coal and ash handling segment, which is the Company's established business and where we continue to win orders regularly, we are expecting good enquires in the BoP segment this year. Further, in addition to the indigenous market, we are expecting a few orders internationally through our subsidiary in Singapore. We are confident that the inherent strength of our business model will help us in navigating the ongoing sluggish pace of economy and bagging new orders. We will keep our focus on growth and liquidity management, an integral part of any working capital intensive industry. I would like to thank you, our shareholders, for your confidence in Tecpro. On behalf of my competent and committed colleagues, I assure you of our total dedication and tireless efforts, in a though environment, towards the objective of maximizing returns for all stakeholders and we will do our utmost to continue our profitable growth trajectory. Yours sincerely, Sd/- Ajay Kumar Bishnoi Chairman & Managing Director