DIRECTORS' REPORT

TO THE MEMBERS,

Your Directors have pleasure in presenting the Twenty First Directors' Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2015.

Review of Operations:

In FY'15, your Company reported consolidated revenues of 111.50 crore, an increase of 53% from 72.67 crores in FY'14. However, EBIDTA stood at Rs. (12.53) crore, a decrease of 1% from Rs.(12.64) crore in the previous year. Net profit after tax, minority interest and prior period items was at Rs. (24.70) crores, a decline of 103 % from Rs. (12.16) crores. The EPS for FY'15 stood at (3.53) as compared to (1.74) for FY'14.

Due to lackluster demand scenario, continued high borrowing costs and volatile market conditions, your company could achieve a turnover of Rs. 58.12 crores only against Rs. 87.47 crores for the previous year (on standalone basis), a decline of 33.56%. The net loss after tax is Rs. (23.60) crores against a loss of Rs. (2.02) crores for the previous year. The increase in net loss is mainly due to increase in finance and depreciation components.

However, your Company's Balance Sheet as at 31st March, 2015 reflects a healthy position with a net worth of Rs. 636.39 crores. Net debt was Rs. 203.45 crores as on 31st March, 2015. The debt to equity ratio was at 0.32.

Your Company's development business primarily focuses on the development and sale of residential real estate which include houses, villas and apartments of varying sizes and integrated townships, with a focus on the mid income, high end and luxury residential developments.

Future Outlook

Your Company continues to implement its strategy to concentrate on its core business & geographies and to develop a right product mix well suited for the market.

Although FY2014-15 was a difficult year for the real estate sector, the long-term potential for the sector remains intact and it continues to be an important catalyst to the nation's overall economic growth.

Hyderabad's superior infrastructure, affordability and cosmopolitan ethos still make Hyderabad the choice of many home buyers. The Govt. of Telangana is aiming to rebuild brand 'Hyderabad' by concentrating on the information technology sector. Among the companies geared up for expanding their operations in and around Hyderabad are tech major such as Amazon, Google, Facebook, Microsoft, Cognizant and TATA Consultancy Services (TCS).

Yours company expects demand from the mid income residential segment to remain strong as we believe there is significant demand in this category across the country and state as well. Increasing disposable incomes, rapid urbanization and strong demographics are some of the trends favoring the mid-income residential market.

Dividend

Considering the market conditions, company's performance during the year under review, reduced liquidity position in the market as a whole and with a view to conserve the resources for the smooth operations of the company in future, your Directors have not recommended any dividend for the year under review.

Fixed Deposits

The Company has not accepted / renewed any public deposits during the year under review. The company has repaid all the deposits before 31.3.2015 but however an amount of f 1,79,839/- (including interest) is still unclaimed by the depositors.

The company, if necessary, will start accepting deposits after complying with the provisions of Sec. 73 & 74 of Companies Act, 2013 and Companies (Acceptance of Deposits) rules, 2014.

Share Capital

There is no change in the capital structure of the company during the year under review.

Directors & Key Management Personnel

Board of Directors, in compliance with Sec. 149, 161 of the Companies Act, 2013 read with Clause 49 of the Listing Agreement and on the recommendations of the Nomination and Remuneration Committee, appointed Mrs. V. Padma (DIN-07145633) as Additional Director (in the capacity of Independent Director) on 31.3.2015.

Mrs. V. Padma will be holding the office of Director till the date of ensuing Annual General Meeting of the Company. The Company has received notice under Section 160(1) of the Act from a member proposing her candidature for appointment as Director. Mrs. V. Padma possess the required skills, experience and knowledge in the fields of management, administration, business strategy.

Pursuant to the provisions of Sec. 152 of the Companies Act, 2013 and Article 86 of the Articles of Association of the Company, Mr. Sumit Sen (DIN-01028417) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Further the term of Mr. Sumit Sen as Whole Time Director expired on 31.1.2015. The Board at its meeting held on 28.1.2015, subject to the approval of shareholders, re-appointed him as Whole Time Director for a period of 2 years, effective from 1.2.2015 on the recommendations of the Nomination and Remuneration Committee. Your Board of Directors recommend for his re-appointment.

The term of Mr. D. Vijay Sen Reddy, Managing Director, expired on 13.2.2015.The Board of Directors, on the recommendations of the Nomination and Remuneration Committee, re-appointed Mr. D. Vijay Sen Reddy (DIN-00291185) as Managing Director of the company at the board meeting on 28.1.2015, subject to the approval of shareholders, for a period of 2 years effective from 1.2.2015. Your Board of Directors recommend for his re-appointment.

Brief profile of the aforesaid Directors, is provided seperately in the Report on Corporate Governance.

Mr. P. Bhaskara Rao is the Group Chief Financial Officer and Mrs. Madhavi Latha is the Company Secretary of the Company.

Changes in Directors

Mr. D. Chakradhar Reddy, Independent Director has resigned to his office during the year under review. Declarations by Independent Director:

All Independent Directors have submitted declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Clause 49 of the Listing Agreement.

Board Meetings:

During the year 2014-15, 09 (Nine) meetings were held by the Board of Directors including the separate meeting of independent directors which was held on 31.3.2015.

The details of board meetings and the attendance of Directors at such meetings are provided in the Corporate Governance Report.

Audit Committee

The Composition of the Audit Committee is provided in the Corporate Governance Report and forms part of this report. All the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

The Corporate Governance Report, as stipulated under Clause 49 of the Listing Agreement forms part of this Report. The requisite certificate from the Practicing Company Secretary, Mr. P. Konda Reddy confirming compliance with the conditions of corporate governance as stipulated under the aforesaid clause is attached to Corporate Governance Report.

Transfer to the Investor Education & Protection Fund (IEPF)

During the year under review, dividend unclaimed for more than 7 years amounting to 3,94,159/- (Rupees Three Lacs Ninety four thousand One Hundred and Fifty Nine only) pertaining to the financial year 2006-07, was transferred to the Investor Education and Protection Fund.

Industrial relations

Yours directors are happy to report that the industrial relations have been cordial at all levels throughout the year. Your directors record their appreciation for all the efforts, support and co-operation of all employees being extended from time to time.

Policy to prevent Sexual Harassment at the work-place

The Company is committed to creating and maintaining an atmosphere in which employees can work together, without fear of sexual harassment, exploitation or intimidation. Every employee is made aware that the company is strongly opposed to sexual harassment and that such behavior is prohibited both by law and by the Company. To redress complaints of sexual harassment, an Internal Complaints Committee has been formed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made there under. Ms. D. Nayanika Reddy is the Chairperson of the Internal Complaints Committee.

During the year ended March 31, 2015, the ICC received nil complaints pertaining to sexual harassment. Listing at Stock Exchanges

The equity shares of your Company are listed on NSE and BSE (the stock exchanges). The listing fees for the year 2015-16 have been paid to the stock exchanges.

CEO & CFO certification as per Cl. 49 of the Listing Agreement

As required by Clause 49 of the Listing Agreement, the CEO and CFO certification on the Financial Statements and the Internal Control Systems for financial reporting has been obtained from Mr. D. Vijay Sen Reddy -Managing Director & Chief Executive Officer and Mr. P. Bhaskara Rao - Chief Financial Officer and the same was reviewed by the Board of Directors and is annexed to the Corporate Governance Report.

Internal Audit & Controls

The company has appointed Mr. M. Shanker, B.Com. and MBA-Finance, as Internal Auditor of the company and takes his suggestions and recommendations to improve and strengthen the internal control systems. His scope of work includes review of operational efficiency, effectiveness of systems & processes, compliances and assessing the internal control strengths in all areas.

The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations including those relating to strengthening of the Company's risk management policies and systems.

Management Discussion & Analysis Report

The Management Discussion and Analysis Report as required under Clause 49 of the Listing Agreement with the stock exchanges forms part of this Report.

Subsidiary Companies & Consolidated Financial Statements

As on 31st March, 2015, the Company has 3 subsidiary companies in terms of the Act. A separate section containing a report on performance and financial position of each of subsidiaries, associates and joint ventures in Form AOC-1, is included in the consolidated financial statements of the Company.

The Company shall provide a copy of the annual accounts of its subsidiary companies to the members of the Company on their request. The annual accounts of its subsidiary companies will also be kept open for inspection at the registered office of the Company during business hours.

The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with applicable accounting standards, issued by the Institute of Chartered Accountants of India and forms part of this Annual Report. In terms of Section 136 of the Companies Act, 2013 ('the Act'), financial statements of the subsidiary companies are not required to be sent to the members of the Company.

Significant and material orders passed by the Regulators or Courts or Tribunals:

There are no significant material orders passed by the regulators/courts/tribunals which would impact the going concern status of your Company and its future operations.

Statutory Auditor & his Report:

Auditor:

Mr. S.V. Rangan, Chartered Accountant (M. No. 022037) was appointed as the Statutory Auditor of the Company to hold office from the conclusion of 20th Annual General Meeting till the conclusion of the 23rd Annual General Meeting to be held in 2017, subject to ratification by the shareholders at every Annual General Meeting. Accordingly, your Board recommends for the ratification of appointment of Mr. S.V. Rangan as the Statutory Auditor of the Company for the financial year 2015-2016.

Certificate from the Auditor has been received to the effect that his re-appointment, if made, would be within the limits prescribed under Section 141(3)(g) of the Act and he is not disqualified for re-appointment.

Auditors' Report

(i)Emphasis of Matter given for Note 37(a) of the Standalone Financial Statements -is self explanatory and do not call for any further comments.

(ii)Emphasis of Matter given for Note 37(b) of the Standalone Financial Statements - is self explanatory and do not call for any further comments.

(iii)Explanation for point no.(a) of Consolidated Audit Report - in respect of note 35(c) of CFS. Secretarial Auditor

The Board has appointed Mr. P. Konda Reddy, Practicing Company Secretary, to conduct Secretarial Audit for the FY 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is an Annexure to this Report. The said report does not contain any qualification, reservation and adverse remarks.

Establishment of Vigil Mechanism:

The Company has established a vigil mechanism in the form of Whistle Blower Policy in line with Listing Agreement, to deal with instances of unethical and / or improper conduct, actual or suspected fraud, violation of company's code of conduct and suitable steps to investigate and correct the same. The details of the Whistle Blower Policy are furnished in the Corporate Governance Report and the same is posted on the website of the Company.

Extract of Annual Return

The extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Act is given as Annexure to this Report.

Particulars of Loans, Guarantees and Investments:

The details of loans given, investments made, guarantees given and securities provided under Section 186 of the Companies Act have been provided in the notes to the standalone financial statements.

Particulars of Contracts or Arrangements with Related Parties

All contracts or arrangements with related parties, entered into or modified during the financial year, were on arm's length basis and in the ordinary course of business. All such contracts or arrangements have been approved by the Audit Committee.

During the year, the Company had certain material transactions referred to in Section 188 of the Companies Act, 2013 with related parties. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act in Form AOC-2 is applicable and given as annexure to this Report. Attention of Members is drawn to the disclosure of transactions with related parties set out in Notes to Accounts - Note No. 34B forming part of the Standalone financial statements.

The company has formulated a policy on related party transactions in line with Listing Agreement. The policy intends to ensure that proper reporting; approval and disclosure processes are in place for all transactions between the Company and related parties.

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 which have occurred between March 31, 2015 and the date of this Report.

Risk management:

The company has a risk management policy and framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives, and enhance the company's competitive advantage. This framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

Your company has a Risk Management Committee and further details are set out in the Corporate Governance Report forming part of Directors' Report.

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is appended as Annexure to this Report.

Particulars of Employees:

The percentage of increase in remuneration of each director, Chief Financial Officer, and Company Secretary during the financial year 2014-15, ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2014-15 and the comparison of remuneration of each KMP against the performance of the company are as under:

During the period under review, no employee of the company is employed throughout the year and in receipt of f 60 lacs or more, or employed for part of the year and in receipt of f 5 laks or more a month, under Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Nomination & Remuneration Committee:

Your company has a Nomination and Remuneration Committee and further details are set out in the corporate governance report forming part of the Directors' Report.

The board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Key Management Personnel and Senior Management including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Companies Act, 2013.

Board Evaluation

Your Company conducted a formal Board Effectiveness Review as part of its efforts to evaluate, identify improvements and thus enhance the effectiveness of the Board of Directors (Board), its Committees, and individual directors. This was in line with the requirements mentioned in the Companies Act and the Listing Agreement.

The Corporate HR team of the company worked directly with the Chairman and the Nomination and Remuneration Committee of the Board, to design and execute this process which was adopted by the Board.

Corporate Social Responsibility:

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility) Rules, 2013 the company has constituted a Corporate Social Responsibility Committee and the details forms part of the Corporate Governance Report.

Human Resources:

Your Company recognizes "Human Resource" as its main asset. Your Company HR policy aims at enhancing individual capabilities for future readiness, driving greater employee engagement and strengthening employee relations further.

Considering the present market conditions, your Company has downsized its human resources and retaining only that are directly relevant to its growth at this stage. To attract and retain people, your Company provides a judicious combination of attractive career, personal growth and a lucrative compensation structure. Your Company places great importance on nurturing and retaining the best skills in the industry.

Code of Conduct & Declaration by MD & CEO:

Your Company has laid down a Code of Conduct for all Board members, Senior Management and Independent Directors of the company in line with the provisions of clause 49 of the Listing Agreement and Schedule V to Companies Act, 2013. The Code of Conduct has been posted on the website of the Company.

A declaration by the Managing Director & CEO stating that all the Board Members and senior management personnel have affirmed their compliance with the Code of Conduct for the financial year ended March 31, 2015, is annexed to the Corporate Governance Report.

Directors' Responsibility Statement

In terms of provisions of Section 134(5) of the Act, your Directors confirm that:

(i)in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii)the Directors had selected such 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 as at 31st March, 2015 and the profit and loss of the Company for that period;

(iii)the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv)the Directors had prepared the annual accounts on a going concern basis;

(v)the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi)the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgements

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the vendors and stakeholders including financial institutions, banks, Central and State Government authorities, customers and other business associates, who have extended their valuable and sustained support and encouragement during the year under review. It will be the Company's endeavour to build and nurture these strong links with its stakeholders.

Your Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. The hard work and unstinting efforts of the employees have enabled the Company to sustain and further consolidate its position in the industry.

On behalf of the Board

Sd/-D. Vijay Sen Reddy

Chairman & Managing Director

Place : Hyderabad

Date :14th August, 2015