JEM INDUSTRIES LIMITED ANNUAL REPORT 2004-2005 DIRECTOR'S REPORT To, Members of JEM Industries Ltd. Your Directors have pleasure in presenting the THIRTY-NINTH ANNUAL REPORT and audited accounts for the year ended 31st March, 2005. 1. FINANCIAL RESULTS: Rs. in Lacs 2004-05 2003-04 Profit before Interest and Depreciation 38.07 25.94 Less : Interest and Bank Charges 14.70 17.61 Profit before Depreciation 23.37 8.33 Less : Depreciation 2.04 2.11 Profit before Taxation 21.33 6.22 Provision for Taxation: Current 1.60 - Deferred Tax 0.12 0.07 Balance of Profit brought from previous year 20.17 14.02 Balance of Profit carried to Balance Sheet 39.78 20.17 2. REVIEW OF PERFORMANCE: During the year under review, your Company has achieved Sales and other income of Rs.549.45 lacs (Rs. 501.46 lacs) and Profit from operation Rs.21.33 lacs (Rupees 6.22 lacs). There is an increase of 9.57% in turnover. Profit from operation was 3.88% (1.24%) of turnover. This is mainly on account of higher Sales of VHS range of motors and cost cutting measures taken. Several austerity measures have been taken by the management for reducing costs, improving quality, increasing productivity, controlling expenditure, productive use of available resources, with the specific aim of improving performance of your Company. 3. FINANCE: Your Directors are of the opinion that for withstanding challenges of competitive market and for attaining higher growth rate, the earnings for the year need to be ploughed back. Keeping this as well as long-term interest of the Shareholders in views, your Directors have decided to skip dividend for the year under review. 4. DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 217(2AA) OF THE COMPANIES ACT, 1956: The Directors confirm that: (i) In the preparation of the annual accounts, the applicable accounting standards have been followed by the Company; (ii) Such Accounting Policies have been selected and consistently applied and judgments and estimates made 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, 2005 and of the profit of the Company for the year ended on that date; (iii) Proper and sufficient care has been taken for the 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. (iv) Annual accounts have been prepared on a going-concern basis. 5. DIRECTOR: Ms. K R Patel retires by rotation and being eligible offers herself for re- appointment. 6. COMPLIANCE CERTIFICATE: Compliance certificate issued by J.J. Gandhi & Co., practicing Company Secretary, Vadodara pursuant to the provisions of Section 383A of the Companies Act, 1956 is attached to this Director's Report. 7. AUDITORS: The retiring Auditors, M/s. Amin Parikh & Co., Chartered Accountants are eligible for re-appointment and have indicated their willingness to act as such, in terms of Section 224A of the Companies Act, 1956, their appointment needs to be confirmed and their remuneration has to be fixed. 8. ENERGY TECHNOLOGY AND FOREIGN EXCHANGE: Information required as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in Board of Directors) Rules, 1988 has been given in the Annexure-A, which form a part of this report. 9. ACKNOWLEDGEMENTS: Your Directors place on record their appreciation for the excellent support the company has received from its Suppliers, Customers, Bankers and Employees during the year under review. Registered Office On behalf of the Board of Directors Mogar-388 340 Dist: Anand (Gujarat) Date: 29 June, 2005 Rahul N. Amin Director Annexure 'A' to Directors Report: Particulars under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988. (A) CONSERVATION OF ENERGY: 1. Energy Conservation measures taken: Some of the activities undertaken: i) Regular preventive maintenance of electric drives. ii) Optimum utilization of furnaces and ovens. iii) Reduction of contract demand. 2. Additional investments and proposals, if any, being implemented for reduction of consumption of energy. No major investment were made, 3. Impact of the measures at (1) & (2) for reduction of energy consumption and consequent impact on the cost of production of goods. There is no significant impact on the cost of production of goods manufactured by the Company as energy consumption is low. 4. Total energy consumption and energy consumption per unit of production as per prescribed Form-A. Not relevant. The company is not covered under the list of specified industries. (B) TECHNOLOGY ABSORPTION: FORM-B (a) Research & Development (R&D): 1. Specific areas in which R & D was carried out: i) The existing designs are reviewed and redesigned to save on stamping, copper etc. as a cost reduction measure for 20 ratings. ii) Design of motors with alternate make stamping initiated for 180 and 200 frame ratings as an alternate source of supply. iii) CVD motor in 35HP/2P rating designed as an extension of range from the present limit of 25 HP. iv) Motors & unibuilt pumps technical manual are being developed and are in the process of finalization. v) Sewage motor in dry submersible design prototype made and tested and performance found satisfactory. vi) Special specifications of customers calling for new design / construction. 3. Future plans of R&D: i) Unibuilt pumps efficiency up gradation activity undertaken for critical models to meet new IS 9079-2000 standard as well as BEE requirement. ii) Reduction of raw material costs & packing cost as a continuous exercise. 4 b) Technology adaptation, Absorption & Innovation: Efforts in brief made towards technology adaptation, absorption and innovation. i) Commenced manufacturing of CVD 25013,125 HP vertical hollow shaft motor. ii) Unibuilt pumps and motors fitted with shielded construction type bearings (ZZ), for cost savings as well to enhance product performance. iii) Plastic Terminal Box for motors and unibuilt pumps implemented, for better aesthetics & cost savings. iv) 132 Frame size, Aluminium die-cast rotor implemented to reduce rejection of rotor & to improve the performance. 4) EXPENDITURE ON R&D: i) Capital - ii) Recurring Rs.0.33 iii) Total R & D Rs.0.33 iv) Total R&D expenditure as a percentage of total turnover 0.06% C) FOREIGN EXCHANGE EARNING & OUTGO: Exports NIL Foreign Exchange earned NIL Foreign Exchange used NIL COMPLIANCE CERTIFICATE: (as per rule 3 of the Companies (Compliance Certificate) Rules, 2001) Registration No. of the Company: 04-1396 Nominal Capital Rs. 2,00,00,000/- To, The Members, JEM Industries Ltd., Mogar 388 340, Dist. Anand. We have examined the registers, records, books and papers of JEM Industries Limited (the Company) as required to be maintained under the Companies Act, 1956, (The Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year beginning from 1st April, 2004 and ending on 31st March, 2005. In our opinion and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the aforesaid financial year: 1. The Company has kept and maintained all registers as stated in Annexure `A' to this certificate, as per the provisions and the rules made thereunder and all entries therein have been duly recorded. 2. The Company has duly filed the forms and returns as stated in Annexure 'B' to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities (wherever applicable) at the time stated in the above annexure. 3. The Company, being a public Limited Company, the applicability of section 3(1)(iii) does not arise. 4. The Board of Directors duly met 6 times on 29th June,2004, 10th July, 2004, 27th July, 2004, 3rd Sept., 2004, 28th October, 2004 and 28th January, 2005 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose. 5. The Company closed its Register of Members from 22nd Sept., 2004 to 29th Sept., 2004 (both days inclusive) and necessary compliance of section 154 of the Act has been made. 6. The Annual General Meeting for the financial year ended on 31st March, 2004 was held on 29th Sept., 2004 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. 7. One Extra Ordinary General Meeting was held during the financial year on 3rd Dec., 2004 for approving scheme of amalgamation of JEM Industries Ltd. and Jyoti Pumps and Electricals Ltd. with JSL Industries Ltd. after giving due notice to the members of the Company and the resolutions passed thereat where duly recorded in the Minutes Book maintained for the purpose. 8. The Company has not advanced any loan to its directors and/or persons or firms or Companies referred in the section 295 of the Act. 9. The company has duly complied with the provisions of section 297 of the Act in respect of contracts specified in that section. 10. The Company has made necessary entries in the register maintained under section 301 of the Act. 11. As there were no instances falling within the purview of section 314 of the Act the Company has not obtained any approvals from the Board of Directors, members or Central Government. 12. The Company has not issued any duplicate share certificates during the financial year. 13. i) The Company has delivered all the certificates on lodgment thereof for transfer/transmission or any other Purpose in accordance with the provisions of the Act. ii) The Company has not deposited any amount in a separate Bank Account as no dividend was declared during the financial year. iii) The Company was not required to post warrants to any members of the Company as no dividend was declared during the financial year. iv) The Company was not required to transfer the amounts in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to Investors Education and Protection Fund. v) The Company has duly complied with the requirements of section 217 of the Act. 14. The Board of directors of the Company is duly constituted. There was no appointment of additional directors, alternate directors and directors to fill casual vacancies during the financial year. 15. The Company has not appointed any Managing Director/Whole-time Director/Manager during the financial year. 16. The Company has not appointed any sole-selling agent during the financial year. 17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and/or such authorities prescribed under the various provisions of the Act, during the financial year. However, for securing approval of scheme of amalgamation of JEM Industries Ltd. and Jyoti Pumps and Electricals Ltd. with JSL Industries Ltd. the Company has submitted petition to the High Court of Gujarat, with a copy to Official Liquidator, Regional Director and the Registrar. 18. The Directors have disclosed their interest in other firms/Companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has not issued any shares, Debentures or other securities during the financial year. 20. The Company has not bought back any shares during the financial year. 21. The Company does not have any redeemable preference shares or debentures and hence the question of redemption does not arise at all. 22. There were no transactions necessitating the Company to keep in abeyance right to dividend, right shares and bonus shares pending registration of transfer of shares. 23. The Company has not invited/accepted any deposits including unsecured loan falling within the purview of sections 58A during the financial year. 24. The borrowings made by the Company during the financial year do not attract the provision of section 293(1)(d)of the Act. 25. The Company has not made any additional loans and investments, (also not given guarantees or provided securities) to other bodies corporate, as per section 372A of the Act, during the financial year and consequently no entries have been made in the register kept for the purpose. 26. The Company has not altered the provisions of the Memorandum with respect to situation of the Company's Registered Office from one state to another during the financial year. 27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny. 28. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the year under scrutiny. 29. The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the year under scrutiny. 30. The Company has not altered its Articales of Association during the financial year. 31. As per the information given by the management, no prosecution has been initiated against or show cause notices received by the Company and no fines or penalties or any other punishment was imposed on the Company during the financial year, for the offences under the act. 32. The Company has not received any money as security from its employees during the financial year. 33. The Company has not constituted for its employees. Provident Fund scheme of its own, as per the meaning of section 418 of the Act. For J.J. Gandhi & Co. Company Secretaries Place: Vadodara (J.J. Gandhi) Date : 29 June, 2005 Proprietor ANNEXURE-`A' Registers maintained by the Company: 1. Register of Members u/s 150 2. Register of Director, Managing Director, manager and Secretary u/s 303 3. Register of Transfers 4. Register of Directors shareholding u/s 307 5. Register of Contracts u/s 301 6. Register of contracts, companies and firms in which directors etc. are interested u/s 301(3) 7. Minutes of Meeting of Board of Directors 8. Minutes of General Meeting 9. Register of Loans Investments ANNEXURE-`B' Forms and Returns as filed by the Company with the Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ending on 31st March, 2005: Form Filed For Date of Filed with No. under Document normal/ Sec. additional filing fees on 1. Balance Sheet 220(1) Balance Sheets and its 31-03-2004 13-10-2004 attachment 2. Compliance 383A Compliance Certificate 29-06-2004 13-10-2004 Certificate 3. Schedule V 159 Annual Return 29-09-2004 17-11-2004