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Jog Engineering Ltd.

BSE: 507942 Sector: Infrastructure
NSE: VMJOGENGG ISIN Code: INE941A01017
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Jog Engineering Ltd. (VMJOGENGG) - Director Report

Company director report

To:

The Members of Jog Engineering Limited

The Directors submit the 36thAnnual Report along with Audited Accounts ofthe Company for the financial year from 01/04/2015 to 31/03/2016.

1. Financial Results:

Particulars Year Ended on 31/03/2016 Year Ended on 31/03/2015
Total Income 0.23 6.27
Gross Profit / (Loss) (61.07) (70.32)
Add / (Less) Depreciation (00.04) (00.11)
Add / (Less) Cost of Finance (640.00) (639.34)
Total Profit / (Loss) Before Tax (701.11) (709.76)
Add / (Less) Exceptional Item - (106.60)
Add / (Less) Extra-Ordinary Item - -
Add / (Less) Provision for Tax: Current /differed / Fringe Benefit (Prior period adjustment) - -
Net Profit / (Loss) (701.11) (816.37)
Add Balance B/F from Previous Year (6351.63) (5535.25)
Add Prior Period Adjustments - -
Balance Carried Over to Balance Sheet (7052.74) (6351.63)

2. Performance: The Company incurred losses during the year and continued to experiencefinancial crunch due to non-receipt of large dues for last several years from itsGovernment semi-Government clients for various projects. The Company has initiatedrecovery proceedings for such recoveries in Courts of Law as also in Arbitral fora. TheCompany 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 financialyear 2015-2016.

4. Management Discussion & Analysis Report:

a. Performance Opportunities Risk & Outlook: As a policy decision the Managementhas decided not to deal in Infrastructure Projects in India as these depend on theGovernment/s. The Company has found it to be unsustainable to deal with Governments /Government bodies. The Company is exploring possibilities of Property DevelopmentProjects. The Company continues to face liquidity crunch due to long pendency of varioussubjudice matters which renders such exploration somewhat difficult. The Management isconfident about the outcome of various litigations.

b. Internal Control Systems: The Company has appropriate internal control proceduresrelating to its operations commensurate with the size of the Company and nature of itsbusiness. With growth in business these will be strengthened to meet the enhanced demandsof work.

c. Human Resources: Employee relations have been cordial and their morale has beenhigh.

d. Conservation of Energy: The present operations of the Company do not provide anyscope for Conservation of Energy. During the year there were no earnings or outgo ofForeign Exchange.

5. Particulars of Employees: There were no employees covered by the provisions ofSection 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 theCorporate Governance requirement of Listing Agreement. New Directors will be inductedonce better times arrive.

7. Directors' Responsibility Statement: Pursuant to Section 217 (2AA) of the CompaniesAct the Board of Directors confirms that:

(a) In preparation of the annual accounts the applicable accounting standards havebeen followed except Accounting Standards 2 & 7 in respect of which the Company hascertain reasons as explained hereinafter. There has been no material departure;

(b) The selected accounting policies were applied consistently and the directors madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31/03/2015 and of the loss of the Company forthe year ended on that date;

(c) Proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 1956 for safeguarding theassets 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 andaccounts of the subsidiary Company Mahakali Flyover Company Limited (MFCL) and thenecessary statements are annexed. The Members are aware that the Andheri Flyover Projectof MFCL has been illegally handed over by Arcil to one Hiranandani. Arcil’s mala fideaction is under challenge in Hon’ble Debt Recovery Appellate Tribunal.

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 dated14/06/2010 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 thecompany viz. Mrs.Sonia M. Jog has decided to sell off certain assets owned by theirprivate companies to meet with this and other liabilities of the Company. These effortshave not yet borne any fruit but the Management is hopeful that the efforts will fructifyin the current year enabling the Company to repay of Fixed Deposits during the currentyear. The Company shall in due course apply to the CLB for an extension to the presentdate. 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 briefManagement Discussion and Analysis Compliance Report on Corporate Governance as well asthe Auditors’ Certificate regarding compliance of conditions of Corporate Governanceis annexed to this report.

11. Auditors: The Auditors M/s. S. H. Amdekar & Co. Chartered Accountants holdoffice until conclusion of the ensuing Annual General Meeting. Being eligible they offerthemselves for reappointment.

12. Auditors' Report: The Board of Directors responds to the Auditors' Report andAnnexure to Auditor’s Report as follows:

(a) Note No. d) 1. of report on other Legal and regulatory Requirements of Annexure toAuditor’s Report: Note 22 of Financial Statement: Recognition of certain claims asrevenue: Rs. 595.18 Lac: These are receivables from Government related entities Clientsfor various projects. The Company based on its past experience has booked certainamounts as receivables from these Clients for these projects. Accounting Standards 7 doesnot recognize such amounts as receivable but the Company needs to book these asreceivables as withdrawal i.e. writing off of such receivables can afford an opportunityto the counter-parties to plead to the detriment of the Company’s interests to theCourts to draw an adverse inference about the claims which may have an adverse impact onthe cases. Hence the Company maintains that such receivables booked by it in a fair andtransparent manner ought to be retained in the interests of the Company. The Company isfully confidence about recovery the related dg due process of law.

(b) Note No. d) 2. of report on other Legal and regulatory Requirements ofAuditor’s Report and Note 2 (a) Annexure to Auditor’s Report: Valuation ofInventory: The Auditor has remarked that accounting for certain inventory is against theprescription of Accounting Standard 2.

At a site of the Company the present illegal occupant of the site disallowed an accessto the Company’s inventory. The Company has initiated criminal proceedings againstthe party in this regard. The Company has full confidence about being able to get back itsinventory by following due process of law. Pursuant to termination of another contractstocks at the Mankhurd (Rs. 251.20 Lac) have been taken over by the SPPL a Company fullyowned by the GoM and valuation thereof was as at the time of such taking over. In terms ofthe Contract Conditions SPPL has to give credit to the Company in the final accounts. Thematter in respect of termination & its after-effects including settlement of accountsis subjudice in the Hon’ble Bombay High Court and the Company is confident ofrecovering this value in full and hence has allowed this value in the accounts. Howevernot considering these inventories in the books of accounts can afford an opportunity tothe counter-parties to plead to the detriment of the Company’s interests to theCourt to draw an adverse inference about the Company’s cases. Hence it is prudentnecessary and legal to maintain this inventory in the books of accounts as done.

(c) Note No. a) i) of Opinion in Auditor’s Report: Note 2.01 of FinancialStatement: Non-provision for interest on post-maturity period of Fixed Deposits: Theorders received by the Company from the CLB about repayment of fixed deposits do notspecify any interest to paid on the deposits repaid / being repaid in delay for periodsfrom the date of maturity upto the date of actual repayment. The Company has thereforenot provided for such interest in its books of accounts.

(d) Note No. a) ii) of Opinion and d) 3 of Report on other Legal & Regulatoryrequirements of Auditor’s Report: Note 13 of Financial Statement: Diminution in valueof investment: The Company considers that the Andheri Flyover Project has been illegallyhanded over by ARCIL to HCPL and by following due process of Law the Company’ssubsidiary MFCL is bound to get it back. Once this project is back with MFCL on thebasis of the present commercial property prices in Mumbai MFCL shall not only wipe offits minor losses but shall also earn decent profits. The Company therefore doesn’tconsider that the value of its investment in its subsidiary to have diminished at all andhence 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 amountsof:

i) Rs. 1336.81 Lac from clients from various cases that are subjudice against theseClients in the Hon’ble Bombay High Court. The Company is fully confident of itssuccess and recovery of these amounts from these subjudice matters.

ii) Rs. 3991.30 Lac from subsidiary MFCL on whose behalf in fact the Company isrunning the legal matter the Hon’ble DRAT. The Company is in fact confident ofwinning back the Andheri Project and earning back from MFCL this book debt and alsodividends.

The scepticism about the recoverability of these amounts possibly out of time delaysin 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 ofthese 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 before31/03/2017. The rate of interest when charged was higher than the Company’sborrowing rates. Later when the recovery became difficult charge of interest wasstopped. 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 toa subsidiary which itself is facing problems due to illegal actions of Arcil is beyondconsideration as the property owned by MFCL though at present subjudice has a marketvalue equalling several times the investment and the Company as a Holding Company isbound to be the majority beneficiary out of this property.

iii) M&P Associates: (Rs. 40 Lac): The firm has assured that a flat admeasuring 900square feet will be given possession on or before 30/06/2017 or else by that date Rs. 125Lac shall be refunded. As a matter of trade practice no developer company pays anyinterest on any amounts it receives towards deposits for booking of properties. In anycase even if the property does not come its way the Company will recoup Rs. 125 Lacagainst an investment of Rs. 40 Lac whereby interest consideration is taken care of. Onthe other hand if the company receives the property of 900 square feet in Prabhadevi itspresent 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 cases that are subjudiceagainst these Clients in the Hon’ble Bombay High Court. The Company is fullyconfident 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 notewhich is quite self-explanatory and hence to avoid duplication the same are not beingreiterated here.

(i) Note 5 of Annexure to Auditor’s Report: Please see note (9) above. With theabove and various notes in the Financial Statements which include the Directors’response to various issues pointed out by the Auditors all such issues standsatisfactorily responded to.

13. Cases under Sexual Harassment of women at workplace(preventionprohibition &redressal)(Act 2013): The Company was not required to constitute any committee under theact and during the year under review no complaints were reported.

14. Acknowledgement: The Board places on record its appreciation of the devotedservices rendered by its employees. The Company is also grateful to its ShareholdersBanker Suppliers and Fixed Depositors for their support.

Sonia M. Jog M. K. Shirude P. P. Sheth
Director Executive Director Director
Pune 31st August 2016