DIRECTORS' REPORT To: The Members of Jog Engineering Limited, 1. The Directors submit the 35th Annual Report along with Audited Accounts of the Company for the financial year from 01/04/2014 to 31/03/2015. 2. Performance: The Company incurred losses during the year and continued to experience financial crunch due to non-receipt of large dues for last several years from its Government, semi-Government clients for various projects. The Company has initiated recovery proceedings for such recoveries in Courts of Law as also in Arbitral fora. The Company is hopeful to recover its dues. At Present Company has no projects in hand. 3. Dividend: The Board has not recommended any Dividend on shares for the financial year 2014-2015. 4. Management Discussion & Analysis Report: a. Performance. Opportunities. Risk & Outlook: As a policy decision, the Management has decided not to deal in Infrastructure Projects in India as these depend on the Government/s. The Company has found it to be unsustainable to deal with Governments / Government bodies. The Company is exploring possibilities of Property Development Projects. The Company continues to face liquidity crunch due to long pendency of various subjudice matters, which renders such exploration somewhat difficult. The Management is confident about the outcome of various litigation. b. Internal Control Systems: The Company has appropriate internal control procedures relating to its operations, commensurate with the size of the Company and nature of its business. With growth in business, these will be strengthened to meet the enhanced demands of work. c. Human Resources: Employee relations have been cordial and their morale has been high. d. Conservation of Energy: The present operations of the Company do not provide any scope for Conservation of Energy. During the year, there were no earnings or outgo of Foreign Exchange. 5. Particulars of Employees: There were no employees covered by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the relevant rules. 6. Directors: There are 3 Directors and this composition does not meet with the Corporate Governance requirement of Listing Agreement. New Directors will be inducted, once better times arrive. 7. Directors' Responsibility Statement: Pursuant to Section 217 (2AA) of the Companies Act, the Board of Directors confirms that: (a) In preparation of the annual accounts, the applicable accounting standards have been followed except Accounting Standards 2 & 7, in respect of which, the Company has certain reasons as explained hereinafter. There has been no material departure; (b) The selected accounting policies were applied consistently and the directors 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 31 /03/2015 and of the loss of the Company for the year ended on that date; (c) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) The annual accounts have been prepared on a going concern basis. 8. Subsidiary Company: Pursuant to Section 212 of the Companies Act, the reports and accounts of the subsidiary Company Mahakali Flyover Company Limited (MFCL) and the necessary statements are annexed. The Members are aware that the Andheri Flyover Project of MFCL has been illegal handed over by Aral to one Hiranandani. Arcil's mala fide action is under challenge in Hon'ble Mumbai High Court, Mumbai at present. 9. Fixed Deposits: The Company had applied to the Hon'ble Company Law Board (CLB) for extension to the date for repayment of overdue deposits. Vide its order dated 14/0672010, CLB has allowed the Company-time upto 31/03/2011 to repay all Fixed Deposits. However, the Company could not meet with this date and therefore, the promoters of the company viz. Mrs. Sonia M. Jog has decided to sell off certain assets owned by her and their private companies to meet with this and other liabilities of the Company. These efforts have not yet borne any fruit but the Management is hopeful that the efforts will fructify in the current year, enabling the Company to repay of Fixed Deposits, during the current year. The Company shall, in due course, apply to the CLB for an extension to the present date. As on date, the outstanding fixed deposits amount to Rs. 106 Lac (previous year Rs. 106 Lac). 10. Corporate Governance: Pursuant to the provisions of the Listing Agreement, a brief Management Discussion and Analysis, Compliance Report on Corporate Governance as well as the Auditors' Certificate regarding compliance of conditions of Corporate Governance is annexed to this report. 11. Auditors: The Auditors M/s. S. H. Amdekar & Co., Chartered Accountants, hold office until conclusion of the ensuing Annual General Meeting. Being eligible, they offer themselves for reappointment. 12. Auditors' Report: The Board of Directors responds to the Auditors' Report and Annexure to Auditor's Report as follows: (a) Note No. d) 1. of report on other Legal and regulatory Requirements of Annexure to Auditor's Report: Note 22 of Financial Statement: Recognition of certain claims as revenue: Rs. 595.18 Lac: These are receivables from Government related entities Clients for various projects. The Company, based on its past experience, has booked certain amounts as receivables from these Clients for these projects. Accounting Standards 7 does not recognize such amounts as receivable but the Company needs to book these as receivables as withdrawal i.e. writing off of such receivables can afford an opportunity to the counter-parties to plead, to the detriment of the Company's interests, to the Courts to draw an adverse inference about the claims, which may have an adverse impact on the cases. Hence, the Company maintains that such receivables booked by it in a fair and transparent manner ought to be retained in the Interests of the Company. The Company is fully confidence about recovery the related dues by following due process of law. (b) Note No. d) 2. of report on other Legal and regulatory Requirements of Auditor's Report and Note 2 (a) Annexure to Auditor's Report: Valuation of Inventory: The Auditor has remarked that accounting for certain inventory is against the prescription of Accounting Standard 2. At a site of the Company, the present illegal occupant of the site disallowed an access to the Company's inventory. The Company has Initiated criminal proceedings against the party in this regard. The Company has full confidence about being able to get back its inventory by following due process of law. Pursuant to termination of another contract, stocks at the Mankhurd (Rs. 251.20 Lac) have been taken over by the SPPL, a Company fully owned by the GoM and valuation thereof was as at the time of such taking over. In terms of the Contract Conditions, SPPL has to give credit to the Company in the final accounts. The matter in respect of termination & Its after-effects, including settlement of accounts is subjudice in the Hon'ble Bombay High Court and the Company is confident of recovering this value in full and hence has allowed this value in the accounts. However, not considering these inventories in the books of accounts can afford an opportunity to the counter-parties to plead, to the detriment of the Company's interests, to the Court to draw an adverse inference about the Company's cases. Hence, it is prudent, necessary and legal to maintain this inventory in the books of accounts, as done. (c) Note No. a) n of Opinion in Auditor's Report: Note 2.01 of Financial Statement: Non-provision for interest on post-maturitv period of Fixed Deposits: The orders received by the Company from the CLB about repayment of fixed deposits do not specify any interest to paid on the deposits repaid / being repaid in delay for periods from the date of maturity upto the date of actual repayment. The Company has, therefore, not provided for such interest in its books of accounts. (d) Note No. a) ii) of Opinion and d)3 of Report on other Legal & Regulatory reguirements of Auditor's Report: Note 13 of Financial Statement: Diminution in value of investment: The Company considers that the Andheri Flyover Project has been illegally handed over by ARCIL to HCPL and by following due process of Law, the Company's subsidiary, MFCL, is bound to get it back. Once this project is back with MFCL, on the basis of the present commercial property prices in Mumbai, MFCL shall not only wipe off its minor losses but shal also earn decent profits. The Company, therefore, doesn't consider that the value of its investment in its subsidiary to have diminished at all and hence, no provision on this account is considered necessary. (e) Note No. b) i) of Opinion in Auditor's Report: Note 15 of Financial Statement: Debtors: The Management has full confidence of being able to recover the entire amounts of: i) Rs. 1,336.81 Lac from clients from various cases that are subjudice against these Clients in the Hon'ble Bombay High Court. The Company is fully confident of its success and recovery of these amounts from these subjudice matters. ii) Rs. 3,991.30 Lac from subsidiary, MFCL, on whose behalf, in fact, the Company is running the legal matter in the Hon'ble Bombay High Court. The Company is in fact confident of winning back the Andheri Project and earning back from MFCL this book debt and also dividends. The scepticism about the recoverability of these amounts, possibly out of time delays in recoveries, however, cannot be helped due to the long legal pendencies in our country. The Management, although fully confident of end results, can not assure the time frame of these sub-judice matters. (f) Note No. b) ii) of Opinion in Auditor's Report: Notes No. 3 (a). i). ii). iii) of Annexure to Auditor's Report & Note 14 of Financial Statement: Loans & Advances: i) Mr. P..P. Sheth (Rs. 121.45 Lac) has assured that he shall repay entire dues before 31/03/2016. During the year under consideration, Mr. P. P. Sheth has repaid Rs. 1.0 Lac. The rate of interest, when charged was higher than the Company's borrowing rates. Later, when the recovery became difficult, charge of interest was stopped. When the Principal is recovered, the issue of interest may again be taken up. ii) MFCL (Rs. 550.00 Lac): As at (12) (e) (ii) above. The issue of charging interest to a subsidiary, which itself is facing problems due to illegal actions of Arcil is beyond consideration, as the property owned by MFCL, though at present subjudice, has a market value equalling several times the investment and the Company, as a Holding Company is bound to be the majority beneficiary out of this property. iii) M&P Associates: (Rs. 40 Lac): The firm has assured that a flat admeasuring 900 square feet will be given possession on or before 30/06/2014 or else, by that date Rs. 125 Lac shall be refunded. As a matter of trade practice, no developer company pays.any interest on any amounts it receives towards deposits for booking of properties. In any case, even if the property does not come its way, the Company will recoup Rs. 125 Lac against an investment of Rs. 40 Lac, whereby interest consideration is taken care of. On the other hand, if the company receives the property of 900 square feet in Prabhadevi, its present market value will be well over Rs. 200 Lac. To the extent as above, the Management feels confident of these recoveries. (g) Note No. b) iii) of Opinion in Auditor's Report: Deposits: Rs. 366.13 Lac: Deposits with clients: Rs. 366.13 Lac from clients from various casesthat are subjudice against these Clients in the Hon'ble Bombay High Court. The Company is fully confident of its success and recovery of these amounts from these subjudice matters. (h) Note No. c) of Opinion in Auditor's Report: Note 3 of Financial Statement: Going Concern Assumption: The Management has expressed its views fully in the said note, which is quite self-explanatory and hence, to avoid duplication, the same are not being reiterated here. (i) Note 5 of Annexure to Auditor's Report: Please see note (9) above. With the above and various notes in the Financial Statements, which include the Directors' response to various issues pointed out by the Auditors, all such issues stand satisfactorily responded to. 13. Acknowledgement: The Board places on record its appreciation of the devoted services rendered by its employees. The Company is also grateful to its Shareholders, Banker, Suppliers and Fixed Depositors for their support. Sonia M. Jog Director M. K. Shirude Executive Director P. P. Sheth Director Pune, 31st August 2015 |