The Directors have pleasure in presenting the 28^th Annual Report of the Company together with the Audited Financial Statements for the year ended March 31, 2018.

1) FINANCIAL SUMMARY

Rs. In Lakhs

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 13 (thirteen) times (including adjourned meeting) during the financial year 2017-2018. 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 31^st March, 2018; 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 31^st March 2018 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) ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company has structured and implemented framework for Internal Financial Controls (“IFC”) in terms of the explanation to Section 134(5) (e) of the Companies Act, 2013. The Board of Directors of the Company is of the opinion that the Company has sound IFC for the year 2017-2018.The Company is continuously monitoring and identified the gaps if any, and implements improved controls wherever the effect of such gaps would have a material effect on the Company's operations.

6) DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received Declarations of independence as stipulated under sec 149(7) of Companies act 2013 and regulation 25 of the listing regulations from Independent directors confirming that he /she is not disqualified from continuing as independent Director, the Same annexed to this report as ANNEXURE-XI.

7) 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.

8) 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.

9) 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.

10) STATE OF THE COMPANY'S AFFAIRS

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.

11) 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.

12) 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.

13) 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.

14) 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.

15) FORMAL ANNUAL EVALUATION

In compliance with the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the performance evaluation of the Board was carried out during the year under review.

16) 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 as Amended and is attached in ANNEXURE V.

17) CONSOLIDATION OF ACCOUNTS

In compliance with Regulation 33 of the SEBI (LODR) Regulations, 2015 and Listing Agreement entered into with the Stock Exchanges and in compliance with the provisions of the Companies Act, 2013 and the Ind AS 28 Investments in Associates & joint ventures and Ind AS 110 Consolidated Financial Statements, Your Directors have pleasure in attaching the consolidated financial statements for the financial year ended March 31, 2018, 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.

18) DETAILS OF DIRECTORS AND KEY MANANGERIAL PERSONNEL APPOINTED AND RESIGNED DURINGTHE YEAR

a) Change in Key Managerial Personnel during the year

Sri G V Vijay Raghav who was appointed as a Chief Financial Officer and Company Secretary resigned w.e.f. 19/05/2017. Sri. BH Sai Viswanath was appointed as the Company Secretary of the company w.e.f. 20/05/2017 and he resigned w.e.f. 11/08/2017. Smt. Niralee Rasesh Kotdawala was appointed as the Company Secretary of the Company w.e.f. 12/03/2018 and she resigned and was relieved of her services w.e.f. 17/05/2018.

b) Change in Directors during the year

The tenure of independent directors Smt. Ch. Lakshmi Kumari and Sri.Madhava Rao Potla expired during the year and hence they were re-appointed by the board w.e.f. 26/09/2017 and 28/09/2017 respectively. The board recommends to ratify their appointment in the ensuring 28^th Annual General Meeting.

The tenure of Sri. Mohammad Shafi, Whole Time Director also expired on 30/05/2018 and hence the board in its meeting dated May 28, 2018 re-appointed him as the Whole time Director of the company for a further period of 3 (three) years w.e.f. 30/05/2018. The board recommends to ratify his appointment in the ensuring 28^th Annual General Meeting.

The Board in its meeting held on 13/08/2018 appointed Sri Ramadas Kasaraneni as the Independent Director of the Company for a period of 3 (three) years w.e.f . 13/08/2018. The board recommends to ratify his appointment in the ensuring 28^th Annual General Meeting.

19) 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.

20) 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 2017-18, the Company received no complaints on sexual harassment.

21) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS

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.

22) DEPOSITS

The Company had not accepted or invited any Deposits and consequently no deposit has matured / become due for repayment as on 31^st March 2017.

23) COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises of the following members as on 31^st March 2018:

1. Smt. Ch. Lakshmi Kumari, Independent Director as Chairperson

2. Sri N. Seethaiah, Managing Director as Member

3. Sri Madhava Rao Potla, Independent Director as Member

24) COMPOSITION OF STAKEHOLDERS' RELATIONSHIP COMMITTEE

The Stakeholders' Relationship Committee comprises of the following members as on 31^st March 2018:

1. Smt. Ch. Lakshmi Kumari, Independent Director as Chairperson

2. Sri P Madhava Rao, Independent Director as Member

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

25) STATUTORY AUDITORS AND THEIR REPORT

P. Murali& Co., Chartered Accountants (FRN 007257S) were reappointed as Statutory Auditors of the Company for the Financial Year 2017-18 M/s. P. Murali & Co., Chartered Accountants (FRN 007257S) expressed their willingness to be reappointed for the financial year 2018-19 and to hold the office upto the conclusion of the next Annual General meeting, if they are reappointed 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.

26) COST AUDITORS

The Board of Directors, on recommendation of Audit Committee re-appointed 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 1^st April, 2018 and ending on 31^st March, 2019.

27) 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, Sri Suryanarayana Upadhyayula Practicing Company Secretary ( FCS 336 and CP No.2768) has been appointed as Secretarial Auditors of the Company for the financial year 2017-18 to carry out the Secretarial Audit and issue report there on. Secretarial Audit report as issued by Sri Suryanarayana Upadhyayula, Practicing Company Secretary is annexed to this Report as ANNEXURE VI

28) LISTING WITH STOCK EXCHANGES

The Company's securities have been listed with 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 Regulation 14 of Listing Regulations for the Financial Year 2017-2018.

29) 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.

30) CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

Pursuant to the provisions of schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, a separate section on Corporate Governance has been incorporated in the Annual Report for the information of the shareholders. Report attached as Annexure-VIII

31) APPRECIATIONS

Your Directors wish to place on record their appreciation for the continuous support received from the members, customers, suppliers, bankers, various statutory bodies of the Government of India and the Company's employees at all levels.

For and on behalf of the Board Of Madhucon Projects Limited,

Place: Hyderabad N. Seethaiah K. Srinivasa Rao

Date: 13/08/2018 Managing Director Whole-time Director

DIN-00784491 DIN-00022855