DIRECTORS' REPORT

Your Directors have pleasure in presenting the 25th Annual Report of the Company together with the Audited Financial Statements for the year ended March 31, 2015.

2. EXTRACT OF ANNUAL RETURN:

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report is annexed as ANNEXURE I to this report.

3. BOARD MEETINGS:

The Board met 19 (Nineteen) times during the financial year 2014-2015. The following are the dates of meeting convened in different Quarters of the financial year

4. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 134(3)(c) of the Companies Act, 2013, it is hereby confirmed:

i. That in the preparation of annual accounts for the financial year ended 31st March, 2015; the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

ii. That the Directors have selected Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company, at the end of the financial year and of the profit or loss of the Company for that period.

iii. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. That the Directors have prepared the annual accounts for the year ended 31st March 2015 on a "Going Concern" basis.

v. That the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.

vi. That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

5. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 and Clause 49 of the Listing Agreement that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6). Further, there has been no change in the circumstances which may affect their status as independent director during the year.

6. NOMINATION AND REMUNERATION POLICY:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy which lays down a framework in relation to selection, appointment and remuneration to Directors, Key Managerial Personnel and Senior Management and criteria for determining qualifications, positive attributives, and independence of a director of the Company. The Nomination and Remuneration Policy is stated in the Corporate Governance Report.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 186:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

8. RELATED PARTY TRANSACTIONS:

The transactions entered with the related parties by the Company for the year under review with respect to rendering of services were on arm's length basis and in the ordinary course of business. Hence Section 188(1) is not attracted to the Company. Thus disclosure in Form AOC-2 is not applicable to the Company. There are no material related party transactions during the year under review with the promoters, Directors or Key Managerial Personnel.

9. STATE OF THE COMPANY'S AFFAIRS:

Your Company is the flagship Company of Madhucon Group. The Company is a well-established Construction Company and a leading Contractor in executing projects, in various sectors -Transportation (National & State Highways, Roads, Railways & Ports), Irrigation & Water Resources, Buildings & Property Development, Mining (Coal & other Minerals), Energy (Generation, Transmission & Distribution) and other Infrastructure Projects.

Further information on the Company's Business and the developments, opportunities and outlook of the Company and the industry in which it operates are discussed in detail in the Management Discussion & Analysis, which is enclosed in ANNEXURE II.

10. RESERVES:

During the year, the Company has transferred an amount of Rs.493.40 Lakh to General Reserves.

11. DIVIDEND:

Your Directors are pleased to recommend an Equity Dividend of 10% on paid up equity capital for the year ended 31.03.2015, subject to approval of the members at this Annual General Meeting. Your Directors feel gratified that the Company has been declaring dividend continuously during the last 12 years since 2002-03.

12. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There are no material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relate and the date of this report.

13. INFORMATION AS PER SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014:

The information as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are set out in the ANNEXURE III and is attached to this report.

14. RISK MANAGEMENT:

Periodic assessments to identify the risk areas are carried out and management is briefed on the risks in advance to enable the Company to control risk through a properly defined plan. The risks are taken into account while preparing the annual business plan for the year. The Board is also periodically informed of the business risks and the actions taken to manage them.

15. CORPORATE SOCIAL RESPONSIBILTY (CSR) POLICY:

Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, CSR Committee of the Board of Directors was formed to recommend;

(a) The policy on Corporate Social Responsibility (CSR) and

(b) Implementation of the CSR Projects or Programs to be undertaken by the Company as per CSR Policy by the Board of Directors.

Annual Report on CSR in the prescribed format is enclosed in ANNEXURE IV.

16. FORMAL ANNUAL EVALUATION:

The Nomination and Remuneration Committee of the Board has laid down the criteria for performance evaluation of Board and its committees and does the evaluation process. The statement indicating the manner in which formal annual evaluation of the Board and its committees are given in the report on Corporate Governance as annexed herewith.

17. REPORT ON THE PERFORMANCE/ FINANCIAL POSITION OF THE SUBSIDIARIES/ASSOCIATES/JOINT VENTURES COMPANIES:

A separate statement containing the salient features of the financial statements of the subsidiary Companies/ Associate Companies/Joint Ventures is prepared in Form AOC-1 as per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules,

2014 and is attached in ANNEXURE V.

18. CONSOLIDATION OF ACCOUNTS:

In compliance with Clause 32 of the Listing Agreement entered into with the Stock Exchanges and in compliance with the provisions of the Companies Act, 2013 and the Accounting Standards AS-21 and AS-27 on consolidated financial statements, read with the Accounting Standard AS-23 on Accounting for Investments in Associates, Your Directors have pleasure in attaching the consolidated financial statements for the financial year ended March 31, 2015, duly audited by the Statutory Auditors which forms part of the Annual Report.

The Annual Accounts of the Subsidiary Companies and the related information will be made available to shareholders, who may be interested in obtaining the same at any point of time. The Annual Accounts of Subsidiary Companies will also be kept for inspection by any shareholder at the Registered Office of the Company and also at its Subsidiary Companies.

Appointment of Director/Key Managerial Person subsequent to the financial year end:

On the recommendations of the Nomination and Remuneration Committee and subject to concurrence and approval of shareholders in the ensuing Annual General Meeting, Sri Mohammad Shafi (DIN- 07178265) has been appointed as an Additional Director and Whole-time Director of the Company by your Board at its meeting held on 30.05.2015 for a period of 3 (Three) years on a monthly remuneration of Rs.2,00,000/- (Rupees Two Lakhs only) inclusive of all perquisites.

20. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Your Company has adequate system of Internal Financial Control developed by our in-house Internal Audit team consisting of qualified and experienced accounting, costing and technical professionals. The Internal Audit Team suggests various means of cost reduction and cost control measures in all resources used in the Company. The Internal Financial Control Systems and the Reports of Internal Audit will be reviewed by the Audit Committee in consultation with the Internal Auditors and Statutory Auditors and experts in the field thereafter by Board of Directors.

21. VIGIL MECHANISM:

The Company has established Vigil Mechanism for Directors / Employees to report their genuine concerns or grievances. The Audit Committee of the Company oversees the vigil Mechanism through the Committee. It provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. It also provides for direct access to the Chairman of the Audit Committee. In case of repeated frivolous complaints, the suitable action will be initiated by the Chairman of the Audit Committee.

22. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act 2013 Internal Complaints Committee (ICC) has been set us to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary trainees) are covered under this policy.

During the financial year 2014-15, the Company received no complaints on sexual harassment.

23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There are no significant and material orders passed by the Regulators/ Courts/Tribunals that would impact the going concern status of the Company and its future operations.

24. DEPOSITS:

The Company had not accepted or invited any Deposits and consequently no deposit has matured / become due for re-payment as on 31st March 2015

25. COMPOSITION OF AUDIT COMMITTEE:

The Audit Committee was re-constituted on 14.11.2014 and comprised of the following directors as on 31st March 2015:

1. Sri Kandimalla KVN Prasad, Independent Director as Chairman

2. Smt. Ch. Lakshmi Kumari, Woman Independent Director as Member

3. Sri N. Seethaiah, Managing Director as Member

26. COMPOSITION OF STAKEHOLDERS' RELATIONSHIP COMMITTEE:

The Stakeholders' Relationship Committee was constituted on 14.11.2014 comprised of the following directors as on 31st March 2015:

1. Sri Kandimalla KVN Prasad, Independent Director as Chairman

2. Sri P Madhava Rao, Independent Director as Member

3. Sri K Srinivasa Rao, Whole-time Director as Member

27. STATUTORY AUDITORS AND THEIR REPORT:

M/s Kota & Company, Statutory Auditors (FRN-011982S) of the Company, expressed their willingness to be appointed for the financial year 2015-2016 and to hold office up to the conclusion of the next Annual General Meeting, if they are appointed at this Annual General Meeting. They have furnished a certificate to the effect that their proposed appointment, if made, will be in accordance with the limits specified under 141(1)(g) of the Companies Act, 2013.

28. COST AUDITORS:

The Board of Directors, on recommendation of Audit Committee subject to the approval of the Central Government, re-appointed M/s BVR & Associates, Cost Accountants (Registration No. 000453) as the Cost Auditors of the Company to conduct audit of cost records made and maintained by the Company pertaining to Works Contracts Construction of Roads, etc. for financial year commencing on 1st April, 2015 and ending on 31st March, 2016.

29. SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Rakhi Agarwal & Associates has been appointed as Secretarial Auditors of the Company for the financial year 2014-15 to carry out the Secretarial Audit and issue report there on. Secretarial Audit report as issued by Ms. Rakhi Agarwal & Associates, Practicing Company Secretaries is annexed to this

Report as ANNEXURE VI

30. LISTING WITH STOCK EXCHANGES:

The Company's securities have been listed Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Luxembourg Stock Exchange. Listing fee has been paid to Stock Exchanges within the prescribed time limit as set in the clause 38(a) of Listing Agreement for the Financial Year 2015-2016.

31. PARTICULARS OF EMPLOYEES:

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,  2014.

The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are enclosed

in ANNEXURE VII and forms part of this Report.

32. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement. A report on Corporate Governance is included as a part of this Annual

Report as ANNEXURE VIII.

Certificate from the Statutory Auditors of the Company confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

33. ACKNOWLEDGEMENTS:

Your Directors express their appreciation for the support and co-operation of the Bankers, Central and State Government Authorities including National Highway Authorities of India (NHAI), Irrigation & CAD Department, Central Government, Government of various States, Clients, Consultants, Employees, Suppliers etc., for their continued support and encouragement from time to time.

For and on behalf of the Board

N. Seethaiah

Managing Director DIN-00784491

P. Madhava Rao

Independent Director

DIN-00385838

 Place: Hyderabad

Date: 14.08.2015