MANAGEMENT DISCUSSION & ANALYSIS REPORT

This report contains statements that the Company's beliefs may be considered to be "Forward Looking Statements" that describe our objective, plans or goals. All these forward looking statements are subject to certain risks and uncertainties, including, but not limited to, government action, local & global, political or economic developments, changes in legislation, technology risks, risk inherent in the Company's growth strategy, dependence on certain suppliers and other factors that could cause our actual results to differ materially from those contemplated by the relevant forward looking statements.

These forward looking statements included in this report are made only as on the date of this report and we undertake no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances.

Industry Structure And Development

The Social Exbrssions Industry is still unorganized in India. There are number of small players whose operations are restricted in their respective regions. Besides them, there are very few serious players having nationwide brsence. Greeting Cards are more of a fashion than culture in India and the Industry is driven by retailers and distributors rather than consumers.

The Company, which pioneered the concept in the Indian market, is the leader with more than 50% share of the organized sector.

Technology in the form of e-greeting, SMS and applications like facebook, Whatsapp had its toll on the growth of the greeting card business in general. However, this segment has the potential to bounce back.

The Company has developed into a gifting solution destination for the consumers and has enhanced its reach to come near to the Customers, with opening of retail outlets in various cities in India. As on 31.03.2015 the Company is having 237 company owned and operated retail outlets and is planning to open more stores.

This business is based on sentiments both at micro and macro level.

Opportunities And Threats

Your Company has decided to reorient its business strategy by shifting its focus on other verticals such as online platform and alternate selling channel for its Stationery Products. Having said that your Company will continue to consolidate its Pan-India footprint. The Company is now more focused towards sales optimization by creating value proposition for consumer.

As realty sector continues to be under stress and organized retailing is mushrooming in different parts of the country; your Company's constant endeavor is to tap most of the locations for deeper penetration. Additionally, your Company will continue to explore overseas markets that offer vast opportunities.

Your Company understands that different stores and areas have different needs, and a one-size-fits-all promotional strategy doesn't work. Your Company has initiated in-store promotion activity at various stores and has observed positive feedback and increasing footfalls.

Your Company has decided to revamped its E-commerce platform, "archiesonline.com by making it more user friendly and in line with the existing Indian e-commerce websites to attract more customers. Company has also tied up with various e-retailers and marketing affiliates to increase product visibility in the virtual space like Flipkart, Snapdeal, E-lndia Store, Groupon India, Saffron Art Pvt. Ltd., Gift A love.com Phoolwala.com My flower tree, Shopclues, Indian Gifts Portal, Fern N Petals & Bookaflower.com

Your Company had also entered into the alternate selling channel for its stationery products .There is a significant scope and opportunities available in the segment. Looking at the market size and Your Company's network, we believe the segment has potential for taking Your Company to next level. Hitherto, the channel for selling stationery products was limited to gifts stores and galleries.

Your Company understands that the business model that would run in future is by creating customer satisfaction and value creation for ensuring profitability and sustainability. Your Company is constantly endeavor is to serve the consumer better, faster and at less cost in ever changing environment. While we are hopeful that we will be able to shape our future, yet we are alive to the threats that we face and are geared to overcome them. Technological changes like SMS, what's app, text messaging service pose a threat to our core product i.e. greeting cards. Observing the changing dynamics Your Company has already initiated various measures by focusing on other verticals to combat these developments.

Risks and Concerns

Macro-economic factors like a downturn in the economy, exchange rate fluctuation and, natural calamities are likely to affect the business industry at large and we are not untouched. Change in Government's fiscal policy also has a bearing on our performance. Large brvalence of unorganized players is another area of concern. High rental and shrinking store size is emerging as areas of concern. Change in fashion trends and consumer brference adversely affects the turnover of the Company. Intensifying competition in gifting segment also pose a probable risk to the Company.

Product Wise Performance

The Turnover of the gift segment was Rs. 12172.28 lacs during the year under review as compared to Rs. 12343.93 lacs last year, down by 1.39%. The Gifts segment contributed about 62.31 % of the total turnover during the current year as compared to 62.98% in the brvious year.

The Greeting Cards sale was Rs. 4207.05 lacs during the year under review as compared to Rs. 4553.80 lacs last year, down by 7.61 %. The contribution of greeting cards sales to the total turnover now stands at 21.53% as compared to 23.23% in the brvious year.

The stationery items sale was Rs 3051.73 Lacs during the year under review as compared to Rs 2599.86 Lacs during the Last Year up by 17.38%. The contribution of Stationery items sales to the total turnover stands about 15.62% as compared to 13.26% in the brvious year.

Outlook

The Greeting Cards business during the year was again under brssure. But the company is working on various strategies to counter the negative effects. With tie up with American Greeting & Hallmark we are quite confident that greeting cards business should show positive signs in the coming years.

The turnover of the gift segment has been higher than the Greeting card segment. But during the year under review the Gift segment was down by 1.39%.

The stationary segment has been continuously doing well and in the current year it has grown by 17.38%. We are hopeful that this segment is going to perform better.

The company's efforts to open company owned / managed stores will continue in the upcoming shopping malls and High Streets across the country on selective basis. Your company has opened 2 Hallmark stores and 20 Archies Gallery Stors during the year and the total no of Archies and Hallmark Stores opened by your Company in PAN India as on 31.03.2015 is 237.

The main concentration is on the core business of greeting cards, gifts and retail, and every effort of the Company is aimed at maximizing the profitability of the company by introducing new products and ideas which gel with the company's core business.

Internal Control Systems and their Adequacy

The Company has adequate Internal Control systems for business processes including components, packing material, trading goods, plants and machinery, equipments and other assets and with regard to the sale of goods. The internal control system is supplemented by an extensive internal audit, which is conducted by independent firm of Chartered Accountants. Internal audits are undertaken on a continuous basis covering various areas across the chain like manufacturing, operation, sales and distribution, marketing and value finance etc in all the branches of the Company. The Management and Audit Committee regularly review reports of the internal auditors, and corrective action initiated to strengthen the controls and enhance the effectiveness of the existing systems.

Financial performance with respect to operating performance

The Company recorded a turnover of Rs. 19568.80 Lacs for the financial year 2014-15 as compared to Rs. 19629.55 Lacs in the brvious year down by 0.31 %. The sale of gifts Segment was down by around by 1.39%, Greeting Cards segment sale was down by 7.61 % and Stationery segment were up by 17.38%.

Inventory as on 31st March 2015 stands atRs. 4,900.76 Lacs, as against Rs. 3,986.03 Lacs during brvious year. Debtors as on 31st March 2015 stand at Rs. 2179.11 Lacs as against Rs. 2112.10 Lacs during the brvious year.

Human Resources / Industrial Relations

Industrial relations at Archies have always been cordial. This is because all employees, managers and workmen have always lived in the value of teamwork and belongingness, alike. Last year was no different. The industrial Relations continued to be cordial and amicable. All the employees of the Company continue to work as one cohesive Team devoted to a common goal of sbrading happiness and prosperity. As at March 31,2015 the total employee strength of the Company stands at 1398.