DIRECTORS' REPORT

To the Members,

Your Directors take pleasure in presenting the 45th Annual Report of the Company together with the Audited Accounts and Auditors' Report for the financial year ended on 31st March, 2015.

OPERATIONS

The operations of the Company have improved with the income going up to Rs.73.45 lakhs as compared to Rs.59.18 lakhs during the previous year. The Company made a net loss of Rs.14.32 lakhs after providing for depreciation of Rs.5.58 lakhs.

DEPOSITS/LOANS, ADVANCES, GUARANTEES OR INVESTMENTS:

Your Company has not accepted any deposits from the public during the year under review.

PARTICULARS OF EMPLOYEES:

The information required under Section 197(12)of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 forms part of this Report.

None of the employees whether employed throughout the year or part of the year were in receipt of remuneration exceeding the limits specified in the Act.

FOREIGN EXCHANGE EARNINGS AND OUTGO :

Nil

CONSERVATION OF ENERGY

Steps to optimize energy consumption in various manufacturing operations is being continuously taken; however, the Company's operations are not energy intensive

RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION

Specific areas in which R & D carried out by the Company Design of Fluid Energy Mill and Classifiers.

INDUSTRIAL RELATIONS

Your Company continues to enjoy the support from the workforce. Industrial relations were cordial during the year under review.

BOARD OF DIRECTORS

During the year under review, Dr. B. Neeta Kumari resigned as Director of the Company on 30th September, 2014. She was appointed as Additional Director of the Company with effect from 30th March, 2015.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION :

The Governance policies laid down by the Board of Directors of your Company include -

1) Policy on appointment and removal of Directors, key management personnel and senior management.

2) Policy on remuneration to Directors, key management personnel and senior management and other employees.

Board of Directors met 5 times i.e. on 27.5.2014, 4.8.2014, 16.9.2014, 12.11.2014 and 6.2.2015 during the year.

SUBSIDIARY COMPANIES :

Company does not have a subsidiary Company.

STATUTORY AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, (Regn. No.000513S) Auditors of your Company, who hold office upto the conclusion of forthcoming Annual General Meeting of the Company pursuant to provisions of Section 139(2) of Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, M/s. Brahmayya & Company are eligible for appointment as auditors.

Your Company has received a written confirmation from M/s. Brahmayya & Company, Chartered Accountants, to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the appointment of M/s. Brahmayya & Company, Chartered Accountants, as auditors of the Company from the conclusion of ensuing Annual General Meeting to the conclusion of next Annual General Meeting.

SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204of the Companies Act, 2013 in the options (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company had appointed Mr. Sharad Kumar Gupta, Practicing Company Secretary, Hyderabad, to undertake secretarial audit of the Company. The secretarial audit report is provided as Annexure-I. The Secretarial Audit Report says that the Company does not have a full time Company Secretary and the Managing Director is the Compliance Officer of the Company, who is not a qualified Company Secretary.

We hereby state that the Company is facing severe financial crisis and cash crunch and is not in a position to appoint a full time Company Secretary. Managing Director is looking into the statutory matters and is being assisted by a practicing company secretary.

ANTI-SEXUAL HARASSMENT POLICY:

Your Company laid down Anti-Sexual Harassment policy. The Company has zero tolerance on sexual harassment at work place during the year under review. There were no cases filed pursuant to sexual harassment of women at work place (Prevention, Prohibition & Redressal).

AUDIT COMMITTEE

Pursuant to the provisions of the Companies Act, 2013 and provisions of the Listing Agreement, the Company has constituted an Audit Committee. The composition, scope and powers of Audit Committee together with details meetings held during the year under review forms part of Corporate Governance Report.

EXTRACT OF THE ANNUAL RETURN:

Pursuant to the provisions of 134(3)(a) of Companies Act, 2013, the extract of the Annual Return in Form MGT-9 is attached as Annexure-II.

MANAGERIAL REMUNERATION:

Disclosures of ratio of Remuneration of each Director to the median employees remuneration and other details as required pursuant to section 197(12) of Companies Act, 2013 read with Rule 5(1) of Companies (Appointment of Managerial Personnel) Rules 2014 as provided in Annexure-III. The details of the remuneration paid to the Directors including Managing Director of the Company are given in the form MGT-9 forming part of the Directors Report.

PARTICULARS OF CONTRACTS OR SHARES WITH RELATED PARTIES:

All transactions entered into with related parties as defined under section 2(76) of Companies Act, 2013 in clause 49 (vii) of Listing Agreement during the financial year were in the ordinary course of business and on an arms-length pricing basis and do not contradict the provisions of Section 188 of the Companies Act, 2013. There was no materially significant transactions with related parties in the financial year which were in conflict of the interest of the Company and requiring compliance of the provisions of the required clause 49 of the Listing Agreement.

Suitable disclosure as required by Accounting Standards (AS-18) has been made in notes forming part of the financial statements. The Company has formulated a policy on materiality of related party transactions and dealing with related party transactions.

The particulars of related party transactions in prescribed form AOC-2 is attached as Annexure-IV.

CORPORATE GOVERNANCE:

The Company's policies have always been in accordance with the Code of Corporate Governance and hence the mandatory regulations now placed are being complied with. The Company's continued endeavor is to maintain a high level of accountability and transparency to its stakeholders.

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

A detailed analysis of your Company's perfomance is discussed in the management discussions and analysis report which forms part of this Annual Report.

EMPLOYEES STOCK OPTION PLAN:

Details as required under Rule 12 Sub-section 9 of the Companies (Share Capital & Debentures) Rules 2014 and as required to be provided under Securities Exchange Board of India guidelines on March 31, 2015: The Company does not have an Employee Stock Option Scheme.

DIRECTORS'RESPONSIBILITY STATEMENT

The Audited Accounts for the year under review in conformity with the requirements of the Companies Act, 2013 and the Accounting Standards. The financial statements reflect fairly the form and substances of transactions carried out and reasonably present the Company's financial condition and results of operations. Your Directors confirm that: i) in the preparation of the annual accounts, the applicable accounting standards have

been followed along with proper explanations relating to material departures, if any;

ii) that the accounting policies selected have been applied consistently and judgments and estimates that are made 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.

iii) that proper and sufficient care has been taken 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 Annual Accounts of the Company have been prepared on 'going concern'

basis.

v) they 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 proper systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively.

ACKNOWLEDGEMENT

The Board of Directors would like to thank Business Partners, Bankers, Investors and Auditors for their continued support and association. We would also like to place on record our appreciation of the collective contribution made by all the employees during the last year.

By order of the Board of Directors of

INCON ENGINEERS LIMITED

SREEDHAR CHOWDHURY

Managing Director

Place: Hyderabad

Date : 27.05.2015