VALECHA ENGINEERING LIMITED
Board of Directors Management Team V. P. Valecha — Chairman J. K. Valecha — Managing Director
J. K. Valecha — Managing Director R. H. Valecha — Whole-time Director R. H. Valecha — Whole-time Director D. H. Valecha — Whole-time Director D. H. Valecha — Whole-time Director U. H. Valecha — Whole-time Director U. H. Valecha — Whole-time Director A. B. Gogate — Whole-time Director A. B. Gogate — Whole-time Director
Anil Harish S. B. Watve — Sr. Vice President (Projects) G. Ramachandran P. H. Valecha — Senior Executive I. Syam Prasad Reddy Arvind Thakkar K. S. Shetty — Vice President (Accounts & Finance) C. K. Chhatre — General Manager (Tendering, Business Company Secretary Development and Contracts.) Kavita Valecha Sharma
Auditors: M/s. D. M. Jani & Co. Chartered Accountants
Consortium Bankers: State Bank of India Canara Bank UTI Bank Ltd. Contents Notice...... 2 Solicitors: M/s. Luthra & Luthra Directors’ Report...... 12 M/s. Kirit Damania & Co. Report on Corporate Governance...... 15 Auditors’ Report...... 23 Registrars and Transfer Agents: TSR Darashaw Limited Balance Sheet...... 26 6-10 Haji Moosa Patrawala Ind. Estate 20, Dr. E. Moses Road, Profit & Loss Account...... 27 Mahalaxmi, Schedules to Balance Sheet...... 28 Mumbai-400 011. Tel. : 66568484 Schedules to Profit & Loss Account...... 32 Fax : 66568494 Cash Flow Statement...... 34 Registered Office: Notes on Accounts...... 36 “Valecha Chambers”, 7th Floor, Balance Sheet Abstract and Plot No. B-6, Andheri New Link Road, Company’s General Business Profile...... 43 Andheri (West), Mumbai-400 053. Tel. : 2673 3625, 2673 3238 Statement Pursuant to Section 212...... 44 Fax : 2673 3945 E-mail: [email protected] Consolidated Financial Statements...... 45 website: www.valechaeng.com VALECHA ENGINEERING LIMITED Engineers & Contractors
NOTICE is hereby authorised to do all such acts, deeds and things as may be considered necessary to give effect to the aforesaid Notice is hereby given that the Thirtieth Annual General Meeting resolution.” of the members of VALECHA ENGINEERING LIMITED will be held on Monday, the 3rd September, 2007 at 4.00 p. m. at 8. To consider and, if thought fit, to pass, with or without M. C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, modification(s), the following resolution as an Ordinary 18/20, Kaikhushru Dubhash Marg, Mumbai - 400 001, to transact Resolution: the following business: “RESOLVED THAT pursuant to the provisions of Sections ORDINARY BUSINESS: 198, 269, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956 (the “Act’’) or any 1. To receive, consider and adopt the Audited Balance Sheet re-enactments thereof, read with schedule XIII to the Act as at 31st March, 2007, and the Audited Profit & Loss and all guidelines for managerial remuneration issued by the Account for the Financial year ended on that date together central government from time to time, and the Articles of with the Reports of the Directors’ and Auditors’ thereon. Association of the Company, and subject to such approvals/ 2. To declare a dividend on equity shares. consents/sanctions/permissions as may be necessary, the 3. To appoint a Director in the place of Mr. Dinesh H. Valecha consent of the Company be and is hereby accorded to who retires by rotation and being eligible, offers himself for the re-appointment of Mr. Ramchand H. Valecha as the re-appointment. Whole-time Director, for a period of two years w.e.f. 1st July, 2007, upon terms and conditions as set out in the 4. To appoint a Director in the place of Mr. Umesh H. Valecha Explanatory Statement annexed hereto, with the authority who retires by rotation and being eligible, offers himself for to the Board of Directors of the Company (the “Board”) re-appointment. and the Remuneration Committee (the “Committee”) 5. To appoint a Director in the place of Mr. Arvind B. Gogate to alter and vary the terms and conditions of the said who retires by rotation and being eligible, offers himself for re-appointment and/or agreement from time to time and in re-appointment. such manner as may be agreed to by the Board/Committee 6. To appoint Auditors and to fix their remuneration. and Mr. Ramchand H. Valecha, but so as not to exceed the limits specified in Schedule XIII to the Act orany SPECIAL BUSINESS: amendment thereto or re-enactments thereof, with effect 7. To consider and, if thought fit, to pass, with or without from such dates as may be decided by them. modification(s), the following resolution as an Ordinary RESOLVED FURTHER that in the event of absence or Resolution: inadequacy of profit in any financial year, the remuneration “RESOLVED THAT pursuant to the provisions of Sections payable to Mr. Ramchand H. Valecha shall be governed by 198, 269, 309, 310, 316 and other applicable provisions, Schedule XIII of the Act or any modification(s) thereto. if any, of the Companies Act, 1956 (the “Act”) or any RESOLVED FURTHER that the Board/Committee be and re-enactments thereof, read with schedule XIII to the Act is hereby authorised to do all such acts, deeds and things as and all guidelines for managerial remuneration issued by the may be considered necessary to give effect to the aforesaid central government from time to time, and the Articles of resolution.” Association of the Company, and subject to such approvals/ consents/sanctions/permissions as may be necessary, the 9. To consider and, if thought fit, to pass, with or without consent of the Company be and is hereby accorded to the modification(s), the following resolution as an Ordinary re-appointment of Mr. Jagdish K. Valecha as Managing Resolution: Director, for a period of two years w.e.f. 11th June, 2007, “RESOLVED THAT pursuant to the provisions of Sections upon terms and conditions as set out in the Explanatory 198, 269, 309, 310 and other applicable provisions, if Statement annexed hereto, with the authority to the Board of any, of the Companies Act, 1956 (the “Act”) or any Directors of the Company (‘the Board’) and the Remuneration re-enactments thereof, read with schedule XIII to the Act Committee (‘the Committee’) to alter and vary the terms and all guidelines for managerial remuneration issued by the and conditions of the said re-appointment and/or agreement Central Government from time to time, and the Articles of from time to time and in such manner as may be agreed Association of the Company, and subject to such approvals/ to by the Board/Committee and Mr. Jagdish K. Valecha, consents/sanctions/permissions as may be necessary, the but so as not to exceed the limits specified in Schedule consent of the Company be and is hereby accorded to the re- XIII to the Act or any amendment thereto or re-enactments appointment of Mr. Dinesh H. Valecha as the Whole-time thereof, with effect from such dates as may be decided Director, for a period of two years w.e.f. 1st August, 2007, by them. upon terms and conditions as set out in the Explanatory RESOLVED FURTHER that in the event of absence or Statement annexed hereto, with the authority to the Board inadequacy of profit in any financial year, the remuneration of Directors of the Company (the “Board”) and the payable to Mr. Jagdish K. Valecha shall be governed by Remuneration Committee (the “Committee”) to alter and Schedule XIII of the Act or any modification(s) thereto. vary the terms and conditions of the said re-appointment RESOLVED FURTHER that the Board/Committee be and and/or agreement from time to time and in such manner as
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
may be agreed to by the Board/Committee and Mr. Dinesh consents/sanctions/permissions as may be necessary, the H. Valecha, but so as not to exceed the limits specified consent of the Company be and is hereby accorded to the in Schedule XIII to the Act or any amendment thereto or re-appointment of Mr. Arvind B. Gogate as the Whole-time re-enactments thereof, with effect from such dates as may Director, for a period of two years w.e.f. 1st August, 2007, be decided by them. upon terms and conditions as set out in the Explanatory RESOLVED FURTHER that in the event of absence or Statement annexed hereto, with the authority to the Board inadequacy of profit in any financial year, the remuneration of Directors of the Company (the “Board”) and the payable to Mr. Dinesh H. Valecha shall be governed by Remuneration Committee (the “Committee”) to alter and Schedule XIII of the Act or any modification(s) thereto. vary the terms and conditions of the said re-appointment and/or agreement from time to time and in such manner as RESOLVED FURTHER that the Board/Committee be and may be agreed to by the Board/Committee and Mr. Arvind is hereby authorised to do all such acts, deeds and things as B. Gogate, but so as not to exceed the limits specified in may be considered necessary to give effect to the aforesaid Schedule XIII to the Act or any amendment thereto or resolution.” re-enactments thereof, with effect from such dates as may be decided by them. 10. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary RESOLVED FURTHER that in the event of absence or Resolution: inadequacy of profit in any financial year, the remuneration “RESOLVED THAT pursuant to the provisions of Sections payable to Mr. Arvind B. Gogate shall be governed by 198, 269, 309, 310 and other applicable provisions, Schedule XIII of the Act or any modification(s) thereto. if any, of the Companies Act, 1956 (the “Act”) or any re-enactments thereof, read with schedule XIII to the Act RESOLVED FURTHER that the Board/Committee be and and all guidelines for managerial remuneration issued by the is hereby authorised to do all such acts, deeds and things as central government from time to time, and the Articles of may be considered necessary to give effect to the aforesaid Association of the Company, and subject to such approvals/ resolution.” consents/sanctions/permissions as may be necessary, the consent of the Company be and is hereby accorded to the 12. To consider and, if thought fit, to pass with or without re-appointment of Mr. Umesh H. Valecha as the Whole- modification, the following resolution as a Special time Director, for a period of two years w.e.f. 1st July, 2007, Resolution : upon terms and conditions as set out in the Explanatory “RESOLVED that pursuant to the applicable provisions of Statement annexed hereto, with the authority to the Board the Companies Act, 1956 and Article 124, 125, 126 and 127 of Directors of the Company (the “Board”) and the of the Articles of Association of the Company and subject to Remuneration Committee (the “Committee”) to alter and the Guidelines issued by the Securities & Exchange Board vary the terms and conditions of the said re-appointment of India (SEBI) and such other approvals, permissions and/or agreement from time to time and in such manner as and sanctions as may be necessary and subject further to may be agreed to by the Board/Committee and Mr. Umesh such terms, conditions, alterations, modifications, changes H. Valecha, but so as not to exceed the limits specified and variations as may be specified while according such in Schedule XIII to the Act or any amendment thereto or approvals which the Board of Directors of the Company re-enactments thereof, with effect from such dates as may (hereinafter referred to as the “Board” which expression be decided by them. shall also include a Committee thereof) be and is hereby RESOLVED FURTHER that in the event of absence or authorised to accept, if it thinks fit, the Company be and inadequacy of profit in any financial year, the remuneration is hereby authorised to capitalise upto Rs. 4,23,94,500 out payable to Mr. Umesh H. Valecha shall be governed by of ‘Reserves and Surplus’ and transfer to the Share Capital Schedule XIII of the Act or any modification(s) thereto. Account towards the issue and allotment of 42,39,450 equity RESOLVED FURTHER that the Board/Committee be and shares of Rs. 10 each credited as fully paid-up bonus shares is hereby authorised to do all such acts, deeds and things as (the “Bonus Shares”), to (a) members of the Company whose may be considered necessary to give effect to the aforesaid names appear on the Register of Members of the Company Resolution.” on the Record Date to be determined by the Board (b) to such persons as become members of the Company on the 11. To consider and, if thought fit to pass with or without exercise of warrants issued and allotted on 18th April, 2007, modification(s), the following resolution as an Ordinary in the proportion of 1 (one) new fully paid-up equity share of Resolution : Rs. 10 each for every 2 (two) equity shares of Rs. 10 each “RESOLVED THAT pursuant to the provisions of Sections held as on the Record Date or the date of conversion of 198, 269, 309, 310 and other applicable provisions, if warrants as the case may be and that the Bonus Shares so any, of the Companies Act, 1956 (the “Act”) or any re- issued and allotted be treated for all purposes as an increase enactments thereof, read with schedule XIII to the Act and in the nominal amount of the equity share capital of the all guidelines for managerial remuneration issued by the Company held by each such member and not as income central government from time to time, and the Articles of and that the said equity shares be issued and allotted, inter- Association of the Company, and subject to such approvals/ alia, on the following terms and conditions:
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(a) The new equity shares of Rs. 10 each to be issued entered into with the Bombay Stock Exchange Limited and allotted as Bonus Shares shall be subject to the and the National Stock Exchange of India Limited and Memorandum and Articles of Association of the subject to the rules, regulations/guidelines and circulars, if Company and shall rank pari-passu in all respects any, prescribed by the Reserve Bank of India (the “RBI”), including dividend and shall carry the same rights as the Securities and Exchange Board of India (“SEBI”) and/ the then existing equity shares of the Company and or any other relevant authority from time to time to the shall be entitled to participate in full in any dividend extent applicable and subject to such consents, sanctions, declared in respect of the Company’s financial year in permissions and such other approvals as may be necessary which the bonus shares are allotted. from the Government of India, the RBI, SEBI, the Stock (b) No Letter of Allotment shall be issued for the Bonus Exchanges and all other appropriate statutory, governmental; Shares and the share certificates in respect thereof and other authorities and departments in this regard and shall be delivered/despatched within the statutory subject to such conditions, alterations and modifications time limit or such extended period as may be as may be prescribed by any of them in granting such approved by appropriate authorities from the date approvals, consents, sanctions and permissions, which may of their allotment and in case of members who hold be agreed to by the Board of Directors (hereinafter referred equity shares (or opt to receive the bonus shares) to as “the Board” which term shall be deemed to include any in dematerialized form, the Bonus Shares shall Committee thereof for the time being exercising the powers be credited to the respective beneficiary accounts conferred on the Board by this Resolution) the Board be and of the members with their respective Depository is hereby authorized to create, offer, issue and allot, in the Participants. course of domestic and/or international offering(s) in one (c) If as a result of implementation of this resolution, any or more tranches to Foreign Investors, Foreign Institutional member becomes entitled to a fraction of a Bonus Investors, Non-Resident Indians, Corporate Bodies, Trusts, Share, the Company shall not issue any certificate Mutual Funds, Banks, Insurance Companies, Pension or coupon in respect of such fractional share but the Funds, Individuals and/or Trustees and/or stabilisation total number of such Bonus Shares representing such agents or otherwise, whether shareholders of the Company fractions shall be allotted by the Board to a nominee or not, through a domestic public issue and/or on a private to be selected by the Board who would hold these as placement basis, equity shares of nominal value of Rs. 10/- trustee for the members who would have been entitled each or and/or securities convertible into equity shares at to such fractions and such nominee as soon as possible the option of the Company and/or the holder of the security will sell the Bonus Shares allotted to him at the and/ or securities linked to equity shares, any instruments prevailing market rate(s) and the net sale proceeds after or securities representing either equity shares or convertible adjusting the cost and expenses in regard thereto will securities, equity shares underlying securities in the form of be distributed among such members who are entitled Global/American Depository Receipts, Foreign Currency to such fractions in the proportion of their respective Convertible Bonds and/or Fully/partially Convertible Bonds/ holding(s). Debentures/Loans and/or Depository Shares/Receipts or any other permitted instruments/ securities to be listed on such (d) Allotment of new equity shares as Bonus Shares and Stock Exchanges in India, where the existing equity shares distribution of net sale proceeds in respect of fractions are listed and/or such Stock Exchanges overseas, through a to the non-resident members shall be subject to receipt prospectus and/or offer letter and/or offering circular and/or of all necessary regulatory approvals. any other document as required provided however that the RESOLVED FURTHER THAT the Board be and is hereby total amount raised through the aforesaid Securities does authorised to do all such acts, deeds, matters and things not exceed Indian Rs. 200.00 Crores (Rupees Two hundred as may, in its sole and absolute discretion deem Crores) with a green shoe option to retain 15% over and necessary, expedient, usual or proper in order to give above Rs. 200.00 Crores (Rupees Two hundred Crores), at effect to the above resolution and to settle any question, such price, at a discount or premium to market price or doubt or difficulty that may arise with regard to the prices, in such manner as the Board may in its discretion issue and allotment of Bonus Shares as aforesaid or think fit, and where necessary in consultation with the lead any other matter incidental or consequential thereto.” managers and/or underwriters and/or stabilization agents 13. To consider and, if thought fit, to pass, with or without and/or advisors or otherwise, on such terms and conditions modification(s), the following resolution as a Special as the Board, may, in its absolute discretion decide and resolution: deem appropriate at the time of such issue. “RESOLVED THAT pursuant to the provisions of RESOLVED FURTHER THAT for the purpose of giving Section 81 and other applicable provisions, if any, of the effect to the resolution and any creation, issue, offer or Companies Act, 1956 (including any amendment(s) or re- allotment of equity shares/other securities as described enactment thereof), Issue of Foreign Currency Convertible herein, the Board be and is hereby authorized, to do Bonds and Ordinary Shares (Through Depository Receipt all such acts, deeds, matters and things as it may, in its Mechanism) Scheme, 1993 as amended from time to time absolute discretion, deem necessary or desirable for such and in accordance with the Memorandum and Articles of purpose, including without limitation, to finalise the exact Association of the Company and the listing agreements size of the issue, pricing, terms and conditions of the issue
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
and venue of listing of the aforesaid securities, including RESOLVED FURTHER THAT the Board be and is hereby amendments or modifications thereto as may be deemed authorized to delegate all or any of its powers herein fit by them, the appointment of the intermediaries and conferred to a Committee of the Board and/or the Chairman entering into arrangements for managing, underwriting, and/or the Managing Director along with the authority to marketing, listing, trading, acting as depository, custodian, these entities to further delegate all or any of such powers registrar, paying and conversion agent, trustee whether in to any one or more executives of the Company, in order to India or abroad, and to finalise the terms and conditions give effect to the aforesaid resolution.” (including payment of fees, commission, out of pocket expenses and their charges subject to requisite approvals) 14. To consider and, if thought fit, to pass, with or without of the appointments so made or arrangements entered into, modification(s), the following resolution as a Special as they may in their absolute discretions think fit and any Resolution: other matter including issue of any offer document(s) and signing of applications, filings, deeds, documents and “RESOLVED THAT in pursuant to the of provisions of writings and expenses relating thereto and approval of the Section 314 of the Companies Act, 1956 (the “Act”) read allotment of the shares and the issue of the master share with Director’s Relative (Office or Place of profit) rules, certificate, subject to the receipt of the offering proceeds 2003 and all other applicable provisions if, any of the Act and to settle all questions, difficulties or doubts, that may and subject to the approval of the Central Government arise in regard to such issue(s) or allotment(s) as it may, in if applicable, consent of the Company be and is hereby its absolute discretion deem fit; accorded to Mrs. Kavita Valecha Sharma a relative of Director of the Company to hold and continue to hold an RESOLVED FURTHER THAT in the case of issue of office or place of profit as the Company Secretary ofthe securities in the international markets as aforesaid, the company at an enhanced remuneration of not exceeding Company and/or any bank or depository authorized by the Rs. 50,000/- (Rupees Fifty Thousand only) per month Board may upon the issue of equity shares of the Company including allowances, perquisite and benefits as per the and the deposit thereof with such bank or depository, issue policies of the Company w.e.f. 1st April, 2007. Global/American Depository Receipts representing the RESOLVED FURTHER THAT the Board of Directors of underlying securities issued by the Company in negotiable, the Company be and are hereby authorised to do all such registered or bearer form with such features and attributes acts, matters, deeds and things in order to give effect to the as are prevalent in international capital markets for above resolution.” instruments of this nature and providing for the tradability or free transferability thereof as per international practices and regulations; By order of the Board
RESOLVED THAT the equity shares issued shall rank pari Mumbai KAVITA VALECHA SHARMA passu with the existing equity shares of the Company in all 30th July, 2007 Company Secretary respects, including in respect of dividend. Registered Office: “Valecha Chambers” 7th Floor, RESOLVED FURTHER THAT the Board be and is hereby Plot No. B-6, Andheri New Link Road, authorized to sign, execute and issue consolidated receipts for Andheri (West), Mumbai - 400 053. the Securities, finalise allotment of the Securities in respect of the subscriptions received, basis of allotment in case of over subscription, accept and appropriate the proceeds of the issue, notify the stock exchanges, obtain in-principle NOTES: and final approvals of the stock exchanges, execute the (A) A MEMBER ENTITLED TO ATTEND AND VOTE IS listing application, various agreements undertakings, deeds, ENTITLED TO APPOINT A PROXY TO ATTEND AND declarations, notices and all other documents, including VOTE INSTEAD OF HIMSELF/HERSELF AND THE any modifications thereof, and to do all such things, deeds PROXY NEED NOT BE A MEMBER OF THE COMPANY. and acts and to comply with all the formalities as may be The instrument of proxy in order to be effective should required in connection with and incidental to the aforesaid be completed and signed and must be deposited at the offering of the Securities and other post issue formalities Registered Office of the Company not less than 48 hours including with power on behalf of the Company to settle before the commencement of the meeting. any questions, difficulties or doubts that may arise in regard to any such issue or allotment as they may in their absolute (B) The Register of Members and Share Transfer Books of the discretion deem fit. Company will remain closed from Wednesday the 22nd August, 2007 to Monday, 3rd September, 2007 (both days inclusive). RESOLVED FURTHER THAT the Board be and is hereby authorized to file the requisite registration statements and (C) The explanatory statement as required under section 173 other documents with the Stock Exchanges in India and (2) of the Companies Act, 1956, in relation to the Special abroad for this purpose; Business of the meeting is annexed hereto.
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(D) The dividend declared at the meeting, will be made payable ANNEXURE TO THE NOTICE on or before 2nd October, 2007 as applicable, in respect of shares held in physical form to those members whose Explanatory Statement as required under Section 173(2) of names appear on the Register of Members of the Company the Companies Act, 1956. after giving effect to all valid share transfer lodged with the Company on or before the end of business hours on Item No. 7 Tuesday, the 21st August, 2007 and in respect of shares held The Board of Directors at its meeting held on 29th June, 2007 in the electronic form to those “Deemed Members” whose have re-appointed Mr. Jagdish K. Valecha as the Managing names appear in the statement of Beneficial Ownership Director of the company w.e.f. 11th June, 2007 for the period furnished by the National Securities Depository Limited of two years. and Central Depository Services (India) Limited as on The principal terms and conditions of the agreement appointing that date. Mr. Jagdish K. Valecha are as under: (E) Pursuant to Section 205A of the Companies Act, 1956, all 1. Period of appointment : Two years. unclaimed/unpaid dividends upto and including the financial 2. Remuneration (Effective from 11th June, 2007). year ended on 31st March, 1999 have been transferred to (a) Salary: Salary of Rs. 2,00,000/- (Rupees Two Lakhs the Investor Education and Protection Fund of Central only) per month w.e.f. 11th June, 2007 [with an increase Government. of Rs. 25,000/- (Rupees Twenty Five Thousands only) Pursuant to Section 205C of the Companies Act, 1956, the per month w.e.f. 11th June, 2008]. amount of dividend for the subsequent years remaining (b) Perquisites: unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account of the PART – A Company shall be transferred to Investors Education and (i) The expenditure incurred by the Company on gas, Protection Fund (the Fund) set up by the Government of electricity, and water shall be valued as per the India and no payment shall be made in respect of any such Income-Tax Rules, 1962. claims by the fund. (ii) The Company shall reimburse the Managing Members who have not yet encashed their dividend for Director medical expenses for self and family, the financial year ended 31st March, 2000 onwards are subject to a ceiling of one month’s salary in a year requested to make their claims to the Company accordingly, or two months salary in a block of two years. without any delay. It may be noted that the unclaimed (iii) The Company shall reimburse to the Managing dividend for the financial year ended 31st March, 2000 Director actual travelling expenses for proceeding is due for transfer, members are requested to make their on leave from Mumbai to any place in India or claims before 1st October, 2007. abroad and returning there from once in a year for It may also be noted that once the unclaimed dividend is self and family, subject to a ceiling of one month’s transferred to the credit of the said Fund, as above, no salary. claim shall lie in respect thereof. (iv) The Company shall arrange to insure the Managing Director against personal accident risk, subject to (F) Members are requested to notify immediately any change the condition that the premium payable by the in their address to the Company and details about their Company shall not exceed Rs. 1,000/- (Rupees Bank Account Number, Name of the Bank, Bank’s Branch One Thousand only) per month. [Family means name and address to enable the Company to draw dividend spouse, dependent children and dependent parents warrants payable accordingly. In respect of shares held in of the Managing Director.] electronic form, the instruction regarding change of address (v) Allowances in lieu of commission on profit, and bank account details should be given directly to the subject to the overall limit of 3% of net profit for Depository Participants and the Company cannot entertain the relevant year as stipulated in Section 198, 309 any such requested directly from the shareholders. and Schedule XIII of the Companies Act, 1956 (the “Act”). (G) Any member requiring further information as regards accounts at the meeting is requested to send queries in writing to the Company’s Registered Office so as to reach PART – B on or before 21st August, 2007 so that the information (i) Contribution to the Provident Fund, Superannuation required can be made available at the meeting. Fund or Annuity Fund if any, to the extent these either singly or together are not taxable under the (H) All documents referred to in the above Notice and Income-Tax Act, 1961. the accompanying explanatory statements are open for inspection at the Registered office of the Company on all (ii) Gratuity not exceeding half a month’s salary for working days between 11.00 a.m. to 1.00 p.m. upto the date each completed year of service subject to a ceiling of Annual General Meeting. of Rs. 3,50,000/- or such other ceiling as may
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
be prescribed by the Gratuity Act, 1972 or the (b) Perquisites: Company’s Gratuity Scheme. PART – A PART – C (i) The expenditure incurred by the Company on gas, Provision of the car/s and driver/s for use on Company’s electricity, and water shall be valued as per the business and telephone/s at residence including cell Income-Tax Rules, 1962. phones shall be valued as per Income-Tax Rules, 1962. The car used for private purposes shall be billed by the (ii) The Company shall reimburse the Whole-time Company to the Managing Director. Director medical expenses for self and family, subject to a ceiling of one month’s salary in a year 3. The terms and conditions of the said appointment/ or two months salary in a block of two years. re-appointment and/or agreement may be altered and varied from time to time by the Board as it may, in its (iii) The Company shall reimburse to the Whole-time discretion deem fit so as not to exceed the limits specified Director actual traveling expenses for proceeding in Schedule XIII to the Act, or any amendments made on leave from Mumbai to any place in India or hereafter in that regard. abroad and returning there from once in a year for self and family, subject to a ceiling of one month’s 4. The agreement may be terminated by either party giving the salary. other party three month’s notice. However the appointment may be terminated by less than three months’ notice by (iv) The Company shall arrange to insure the Whole- mutual consent between the parties. time Director against personal accident risk, 5. If at any time the Managing Director ceases to be a Director subject to the condition that the premium payable of the Company for any cause whatsoever, he shall cease to by the Company shall not exceed Rs. 1,000/- be the Managing Director. (Rupees One Thousand Only) per month. [Family means spouse, dependent children and dependent 6. The Managing Director shall not be entitled to sitting fees parents of the Whole-time Director.] for attending meetings of the Board of Directors of the Company or any committee or committees thereof. (v) Allowances in lieu of commission on profit, 7. The Managing Director shall be entitled to leave, on full subject to the overall limit of 3% of net profit for pay allowance, at the rate of one month for every eleven the relevant year as stipulated in Section 198, 309 months of service. Leave accumulated but not availed of and Schedule XIII of the Companies Act, 1956 shall not be allowed to be encashed. (the “Act”). Minimum remuneration: PART – B In the absence of inadequacy of profits in any financial year Contribution to the Provident Fund, Superannuation Mr. Jagdish K. Valecha, Managing Director may be paid Fund or Annuity Fund if any, to the extent these either remuneration by way of salary, perquisites and other allowances singly or together are not taxable under the Income- not exceeding the limits specified in Schedule XIII to the Act. Tax Act, 1961. This may be treated as an abstract under Section 302 of the Act, of the terms of the agreement with PART – C Mr. Jagdish K. Valecha. Provision of the car and driver for use on company’s None of the Directors except Mr. Jagdish K. Valecha is business and telephone at residence including cell concerned or interested in this resolution. phones shall be valued as per Income-Tax Rules, 1962. Your Directors recommend the resolution for your approval. The car used for private purposes shall be billed by the Item No. 8 company to the Whole-time Director. The Board of Directors at its meeting held on 29th June, 2007 3. The terms and conditions of the said appointment/ have re-appointed Mr. Ramchand H. Valecha as Whole-time re-appointment and/or agreement may be altered and Director of the Company w.e.f. 1st July, 2007 for a period of varied from time to time by the Board as it may, in its two years. discretion deem fit so as not to exceed the limits specified The principal terms and conditions of the agreement appointing in Schedule XIII to the Companies Act, 1956, or any Mr. Ramchand H. Valecha are as under: amendments made hereafter in that regard. 1. Period of appointment: Two years. 4. The agreement may be terminated by either party giving the 2. Remuneration (Effective from 1st July, 2007). other party three month’s notice. However the appointment may be terminated by less than three month’s notice by (a) Salary: Salary of Rs. 1,50,000/- (Rupees One Lakh mutual consent between the parties. Fifty Thousand only) per month w.e.f. 1st July, 2007 [with an increase of Rs. 25,000/- (Rupees 5. If at any time the Whole-time Director ceases to be a Twenty Five Thousand only) per month w.e.f. 1st July, Director of the company for any cause whatsoever, he 2008]. shall cease to be the Whole-Time Director.
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
6. The Whole-time Director shall not be entitled to by the Company shall not exceed Rs. 1,000/- sitting fees for attending meetings of the Board of (Rupees One Thousand Only) per month. [Family Directors of the Company or any committee or committees means spouse, dependent children and dependent thereof. parents of the Whole-time Director.] 7. The Whole-time Director shall be entitled to leave, on full (v) Allowances in lieu of commission on profit, pay allowance, at the rate of one month for every eleven subject to the overall limit of 3% of net profit for months of service. Leave accumulated but not availed of the relevant year as stipulated in Section 198, 309 shall not be allowed to be encashed. and Schedule XIII of the Act. Minimum remuneration: PART – B In the absence of inadequacy of profits in any financial year Mr. Ramchand H. Valecha Whole-time Director may be paid (i) Contribution to the Provident Fund, Superannuation remuneration by way of salary, perquisites and other allowances Fund or Annuity Fund if any, to the extent these not exceeding the limits specified in Schedule XIII to the Act. either singly or together are not taxable under the Income-Tax Act, 1961. This may be treated as an abstract under Section 302 of the Act, of the terms of the agreement with (ii) Gratuity not exceeding half a month’s salary for Mr. Ramchand H. Valecha. each completed year of service subject to a ceiling None of the Directors except Mr. Ramchand H. Valecha is of Rs. 3,50,000/- or such other ceiling as may be concerned or interested in this resolution. prescribed by the Gratuity Act, 1972 or Company’s Gratuity Scheme. Your Directors recommend the resolution for your approval. PART – C Item No. 9 The Board of Directors at its meeting held on 29th June, 2007 Provision of the car and driver for use on Company’s have re-appointed Mr. Dinesh H. Valecha as Whole-time business and telephone at residence including cell Director of the Company w.e.f. 1st August, 2007 for a period phones shall be valued as per Income-Tax Rules, 1962. of two years. The car used for private purposes shall be billed by the Company to the Whole-time Director. The Principal terms and conditions of the agreement appointing Mr. Dinesh H. Valecha are as under: 3. The terms and conditions of the said appointment/ re-appointment and/or agreement may be altered and 1. Period of appointment: Two years. varied from time to time by the Board as it may, in its 2. Remuneration (Effective from 1st August, 2007). discretion deem fit so as not to exceed the limits specified in Schedule XIII to the Act, or any amendments made (a) Salary: Salary of Rs. 1,50,000/- (Rupees One Lakh hereafter in that regard. Fifty Thousand only) per month w.e.f. 1st August, 2007 [with an increase of Rs. 25,000/- (Rupees Twenty 4. The agreement may be terminated by either party giving the Five Thousand only) per month w.e.f. 1st August, other party three month’s notice. However the appointment 2008]. may be terminated by less than three months’ notice by mutual consent between the parties. (b) Perquisites: 5. If at any time the Whole-time Director ceases to be a PART – A Director of the Company for any cause whatsoever, he (i) The expenditure incurred by the Company on gas, shall cease to be the Whole-time Director. electricity, and water shall be valued as per the 6. The Whole-time Director shall not be entitled to sitting Income-Tax Rules, 1962. fees for attending meetings of the Board of Directors of (ii) The Company shall reimburse the Whole-time the Company or any committee or committees thereof. Director medical expenses for self and family, 7. The Whole-time Director shall be entitled to leave, on full subject to a ceiling of one month’s salary in a year pay allowance, at the rate of one month for every eleven or two months salary in a block of two years. months of service. Leave accumulated but not availed of (iii) The Company shall reimburse to the Whole-time shall not be allowed to be encashed. Director actual travelling expenses for proceeding on leave from Mumbai to any place in India or Minimum remuneration: abroad and returning there from once in a year for In the absence of inadequacy of profits in any financial self and family, subject to a ceiling of one month’s year Mr. Dinesh H. Valecha, Whole-time Director may be paid salary. remuneration by way of salary, perquisites and other allowances not exceeding the limits specified in Schedule XIII to the Act. (iv) The Company shall arrange to insure the Whole- time Director against personal accident risk, This may be treated as an abstract under Section 302 of the Act, subject to the condition that the premium payable of the terms of the agreement with Mr. Dinesh H. Valecha.
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
None of the Directors except Mr. Dinesh H. Valecha is concerned prescribed by the Gratuity Act or Company’s or interested in this resolution. Gratuity Scheme. Your Directors recommend the resolution for your approval. PART – C Provision of the car and driver for use on Company’s Item No. 10 business and telephone at residence including The Board of Directors at its meeting held on 29th June, 2007 cell phones shall be valued as per Income-Tax have re-appointed Mr. Umesh H. Valecha as Whole-time Rules, 1962. The car used for private purposes Director of the Company w.e.f. 1st July, 2007 for a period of shall be billed by the Company to the Whole-time two years. Director. The Principal terms and conditions of the agreement appointing 3. The terms and conditions of the said appointment/ Mr. Umesh H. Valecha are as under: re-appointment and/or agreement may be altered and varied from time to time by the Board as it may, in its 1. Period of appointment: Two years. discretion deem fit so as not to exceed the limits specified 2. Remuneration (Effective from 1st July, 2007). in Schedule XIII to the Act, or any amendments made hereafter in that regard. (a) Salary: Salary of Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand only) per month w.e.f. 1st July, 2007 4. The agreement may be terminated by either party giving the [with an increase of Rs. 25,000/- (Rupees Twenty Five other party three month’s notice. However the appointment Only) per month w.e.f. 1st July, 2008]. may be terminated by less than three month’s notice by mutual consent between the parties. (b) Perquisites: 5. If at any time the Whole-time Director ceases to be a PART – A Director of the Company for any cause whatsoever, he shall cease to be the Whole-time Director. (i) The expenditure incurred by the Company on gas, electricity, and water shall be valued as per the 6. The Whole-time Director shall not be entitled to sitting Income-Tax Rules, 1962. fees for attending meetings of the Board of Directors of (ii) The Company shall reimburse the Whole-time the Company or any committee or committees thereof. Director medical expenses for self and family, 7. The Whole-time Director shall be entitled to leave, on full subject to a ceiling of one month’s salary in a year pay allowance, at the rate of one month for every eleven or two months salary in a block of two years. months of service. Leave accumulated but not availed of (iii) The Company shall reimburse to the Whole-time shall not be allowed to be encashed. Director actual travelling expenses for proceeding on leave from Mumbai to any place in India or Minimum remuneration: abroad and returning there from once in a year for In the absence of inadequacy of profits in any financial year self and family, subject to a ceiling of one month’s Mr. Umesh H. Valecha,Whole-time Director may be paid salary. remuneration by way of salary, perquisites and other allowances (iv) The Company shall arrange to insure the Whole- not exceeding the limits specified in Schedule XIII to the Act. time Director against personal accident risk, This may be treated as an abstract under Section subject to the condition that the premium payable 302 of the Act, of the terms of the agreement with by the Company shall not exceed Rs. 1,000/- Mr. Umesh H. Valecha. (Rupees One Thousand only) per month. [Family means spouse, dependent children and dependent None of the Directors except Mr. Umesh H. Valecha is concerned parents of the Whole-time Director.] or interested in this resolution. (v) Allowances in lieu of commission on profit, Your Directors recommend the resolution for your approval. subject to the overall limit of 3% of net profit for the relevant year as stipulated in Section 198, 309 and Schedule XIII of the Act. Item No. 11 The Board of Directors at its meeting held on 29th June, 2007 PART – B have re-appointed Mr. Arvind B. Gogate as Whole-time Director (i) Contribution to the Provident Fund, Superannuation of the company w.e.f. 1st August, 2007 for a period of two Fund or Annuity Fund if any, to the extent these years. either singly or together are not taxable under the The Principal terms and conditions of the agreement appointing Income-Tax Act, 1961. Mr. Arind B. Gogate are as under: (ii) Gratuity not exceeding half a month’s salary for 1. Period of appointment: two years. each completed year of service subject to a ceiling of Rs. 3,50,000/- or such other ceiling as may be 2. Remuneration (Effective from 1st August, 2007).
Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(a) Salary: Salary of Rs. 1,50,000/- (Rupees One Lakh 4. The agreement may be terminated by either party giving the Fifty Thousand only) per month w.e.f. 1st August, 2007 other party three month’s notice. However the appointment [with an increase of Rs. 25,000/- (Rupees Twenty Five may be terminated by less than three month’s notice by Thousand only) per month w.e.f. 1st August, 2008]. mutual consent between the parties. (b) Perquisites: 5. If at any time the Whole-time Director ceases to be a PART – A Director of the Company for any cause whatsoever, he shall cease to be the Whole-time Director. (i) The expenditure incurred by the Company on gas, electricity, and water shall be valued as per the 6. The Whole-time Director shall not be entitled to sitting Income-Tax Rules, 1962. fees for attending meetings of the Board of Directors of (ii) The Company shall reimburse the Whole-time the Company or any committee or committees thereof. Director medical expenses for self and family, 7. The Whole-time Director shall be entitled to leave, on full subject to a ceiling of one month’s salary in a year pay allowance, at the rate of one month for every eleven or two months salary in a block of two years. months of service. Leave accumulated but not availed of (iii) The Company shall reimburse to the Whole-time shall not be allowed to be encashed. Director actual travelling expenses for proceeding on leave from Mumbai to any place in India Minimum remuneration: or abroad and returning there from once in a year In the absence of inadequacy of profits in any financial year for self and family, subject to a ceiling of one Mr. Arvind B. Gogate, Whole-time Director may be paid month’s salary. remuneration by way of salary, perquisites and other allowances (iv) The Company shall arrange to insure the Whole- not exceeding the limits specified in Schedule XIII to the Act. time Director against personal accident risk, subject to the condition that the premium payable This may be treated as an abstract under Section by the Company shall not exceed Rs. 1,000/- 302 of the Act, of the terms of the agreement with (Rupees One Thousand Only) per month. [Family Mr. Arvind B. Gogate. means spouse, dependent children and dependent None of the Directors except Mr. Arvind B. Gogate is concerned parents of the Whole-time Director.] or interested in this resolution. (v) Allowances in lieu of commission on profit, Your Directors recommend the resolution for your approval. subject to the overall limit of 3% of net profit for the relevant year as stipulated in Section 198, 309 and Schedule XIII of the Companies Act, 1956. Item No. 12 With the continued support and trust of the shareholders Valecha PART – B Engineering Limited has come a long way in achieving the key (i) Contribution to the Provident Fund, Superannuation objective of building assets for the people. With a view to share Fund or Annuity Fund if any, to the extent these the surplus generated out of operations of the Company and either singly or together are not taxable under the to reward the shareholders for their continued and consistent Income-Tax Act, 1961. support and the faith shown by them in the Company, the Board of Directors at their meeting held on 30th July, 2007 (ii) Gratuity not exceeding half a month’s salary for recommended a Bonus issue of 1 (one) share for every 2 (two) each completed year of service subject to a ceiling equity shares held, subject to the approval of the members. of Rs. 3,50,000/- or such other ceiling as may be prescribed by the Gratuity Act, 1972 or the The bonus shares will be allotted to (a) holders of the existing Company’s Gratuity Scheme. issued equity shares of the Company on the Record Date to be fixed by the Board of Directors (b) such persons as become PART – C members of the Company on the exercise of warrants issued and Provision of the car and driver for use on Company’s allotted on 18th April, 2007, in the same proportion and terms business and telephone at residence including cell and conditions as those on which it is issued to the existing phones shall be valued as per Income-Tax Rules, 1962. shareholders of the Company. The car used for private purposes shall be billed by the Company to the Whole-time Director. The Company has issued 5,30,000 number of warrants, which are outstanding as on date. Each warrant entitles the holder to 3. The terms and conditions of the said appointment/ one equity share of the Company on conversion. In accordance re-appointment and/or agreement may be altered and with the terms and conditions of the warrants issues and as varied from time to time by the Board as it may, in its contemplated by the SEBI (Disclosure and Investor Protection) discretion deem fit so as not to exceed the limits specified Guidelines, 2000, the Company is required to make a provision in Schedule XIII to the Act, or any amendments made for issue of bonus shares to the warrant holders on conversion hereafter in that regard. of the warrants into equity shares of the Company.
10 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
Hence, your Directors recommend the resolution for your Further, the Listing Agreements executed by the Company approval. None of the Directors of the Company is concerned with the Stock Exchanges where the shares of the Company or interested in this resolution, except to the extent of their are presently listed, provides, inter alia, that the Company in shareholding. the first instance should offer all shares to be issued bythe Company for subscription pro-rata to the equity shareholders Item No. 13 unless the shareholders in General Meeting decide otherwise. The Board of Directors of the Company, at its meeting held Accordingly, the required consent of the shareholders is being on 30th July, 2007 has for the purpose of future Expansion plan/ sought pursuant to the provisions of Section 81 and all other programme and for future capital expenditure of the Company, applicable provisions of the Companies Act, 1956, Listing decided to raise funds up to Indian Rs. 200.00 Crores (Rupees Agreement and other applicable provisions. Two hundred crores) with a green shoe option to retain 15% over and above Rs. 200.00 Crores, by way of issuing of any securities Your Directors believe that such issue is in the interest of including Equity Shares/GDRs/ADRs/FCCBs/Warrants/Bonds the Company and therefore recommend the passing of or any other financial instruments to any category of Investors the Resolution at Item No. 13 of the Notice as a Special including Foreign Investors or Institutional Investors by way Resolution. of Public Issue, Preferential Allotment or any kind of private placement or wholly/partly by way of borrowings/Debts. None of the Directors of the Company is, in any way, concerned or interested in this resolution save and except that the Directors The detailed terms and conditions for the offer of securities will may be deemed to be concerned or interested in the resolution be determined in consultation with the advisors, lead managers, to the extent of securities that may be offered to them and/or to underwriters, advocates and such other agencies and such other the Companies/institutions of which they are Directors and/or authority or authorities as may be required to be consulted by Members. the Company considering the prevailing market conditions and other relevant factors and all other terms and conditions as may Item No. 14 be decided by the Board. Members are aware that Mrs. Kavita Valecha Sharma has been The pricing of the international issue will be free market rendering valuable services to the Company since appointment. pricing and may be at a premium or discount to market price Therefore, the Special Resolution relates to the enhancement in accordance with international practice. Since the pricing of of the salary of Mrs. Kavita Valecha Sharma who is in the the offering cannot be decided except at a later stage, it is not employment of the Company as the Company Secretary of possible to state the price or the exact number of securities/ the Company and is the daughter of Mr. Vasudev P. Valecha, shares/Depository Receipts to be issued. For reasons aforesaid, Chairman of the Company. As per the requirements of Section an enabling resolution is being passed to give adequate flexibility of 314, any enhancement in the remuneration of the person and discretion to the Board to finalise the terms. The financial holding office or Place of profit shall be approved by a special securities, FCCBs, Depository Receipts or any other instrument issued pursuant to the international offering may be listed on resolution.The revised remuneration will be not exceeding any of the Overseas Exchange as per the prevailing guidelines Rs. 50,000/- (Rupees Fifty Thousand only) per month including for the issue. allowances, perquisite and benefits as per the policies of the Company w.e.f. 1st April, 2007. The Special Resolution seeks to give the Board, powers to issue Securities/FCCBs/Depository Receipts in such tranche or The Board of Directors recommend the approval of the tranches, at such time or times, at such price or prices and to members. None of the Directors except Mr. Vasudev P Valecha such person(s) including institutions and/or incorporated bodies is interested in this resolution. and/or individuals or otherwise as the Board may at its absolute discretion deem fit. Section 81 of the Companies Act, 1956 provides inter alia that the Company in the first instance should offer all Securities By order of the Board convertible into Equity Shares including Foreign Currency Convertible Bonds or other financial instruments to be issued Mumbai KAVITA VALECHA SHARMA by the Company to the existing Equity Shareholders unless 30th July, 2007 Company Secretary decided otherwise in a General Meeting by a Special Resolution and accordingly consent of the shareholders is being sought Registered Office: pursuant to provisions of the said Section 81 to issue and allot “Valecha Chambers” 7th Floor, the said securities, to the members or other persons/investors as Plot No. B-6, Andheri New Link Road, may be decided by the Board of Directors. Andheri (West), Mumbai - 400 053.
Annual Report 2006-2007 11 VALECHA ENGINEERING LIMITED Engineers & Contractors
DIRECTORS REPORT 3. Bonus Issue : With a view to reward its shareholders for their continued To The Members, support and trust, the Board of Directors at their meeting held on 30th July, 2007 recommended a Bonus issue of The Directors present their Thirtieth Annual Report and the 1 share for every 2 shares held, subject to the approval of Audited Statement of Accounts for the year ended 31st March, the share holders. 2007. 4. Operations : (Rs. in lacs) During the year under review, the turnover has increased 1. Financial Results : 2006-2007 2005-2006 to Rs. 24780.96 lacs from Rs. 15137.57 lacs in 2005-2006 representing an increase of 63.70%. The Profit Before Tax Net Sales/Income From Operations 24780.96 15137.57 (PBT) with exceptional income has increased by 11.73% Other Income 365.49 345.74 from Rs. 2954.16 lacs in the previous year to Rs. 3300.57 25146.45 15483.31 lacs for the year 2006-2007. The PBT without exceptional income has increased by 55.89% from Rs. 955.64 lacs Less: Total Expenditure 23009.21 14042.35 in the previous year to Rs. 1489.76 lacs for the year Gross Profit Before Interest 2006-2007. The Profit After Tax (PAT) with exceptional Depreciation, Taxes and income is Rs. 2775.05 lacs for the year 2006-2007 as exceptional income 2137.24 1440.96 compared to PAT of Rs. 2680.75 lacs for the previous Less: Interest 149.26 197.62 year representing an increase of 3.52%. The PAT without exceptional income was is Rs. 964.24 lacs for the year Profit Before Depreciation, 2006-2007 as compared to PAT of Rs. 682.23 lacs for the Tax and Exceptional Income 1987.98 1243.34 previous year representing an increase by 41.34%. Less: Depreciation 498.22 287.70 5. Fixed Deposits : Profit Before Exceptional Income & Taxation 1489.76 955.64 The Company has accepted Rs. 240.19 lacs Fixed Deposits by way of invitation to the public. There were no deposits, Add: Exceptional Income 1810.81 1998.52 which were claimed and remained unpaid by the Company Profit Before Taxation 3300.57 2954.16 as on 31st March, 2007. Provision For Taxation 6. Outlook and Review : Minimum Alternate Tax (MAT) 368.00 2200.00 With the present boom in the infrastructure industry, Less: Mat Credit Entitlement 80.60 0.00 immense opportunities have emerged in the road and Net Minimum Alternate Tax (MAT) 287.40 220.00 highway construction sector. In order to tap the potential of Deferred tax 232.89 49.23 this sector huge investments are needed. The spectrum of Fringe Benefit Tax 5.23 4.18 activities in the sector is so large that there is room for many players. This is attracting a large number of national and Profit After Tax 2775.05 2680.75 international companies to focus on this sector. Hence, the Paid-Up Equity Share Capital 729.79 692.39 government is laying thrust on public-private partnership. Reserves 14366.67 10980.16 Your Company has a good order book position of above (Excluding Revaluation Reserves) Rs. 800 crores which includes Jammu & Kashmir Road Project, MPRDC Road Project, Jaipur Air-Port Project and E.P.S. With Extraordinary Item Piling Projects bagged during the year. — Basic 39.90 55.06 — Diluted 33.82 47.19 Water management and water projects hold the key to future of many urban development projects. Without Extraordinary Item Your Company’s availability in doing Tunnels or Water — Basic 13.86 14.01 management projects will see work flowing in the coming — Diluted 11.75 12.01 months ahead where margin are relatively better. 2. Dividend : The Company’s competence in ground engineering has The Directors recommend payment of dividend of 10% made it qualify in Joint Venture for Bangalore Metro Rail being Re. 1.00 per share (Previous Year Rs. 3.00 per share) projects. We would be building Metros in both Budgeted for the year ended 31st March, 2007 on fully paid Equity and BOT basis in the coming years. Shares, if approved by the members at the Thirtieth Annual The Company from being pan India presence in major General Meeting to be held on 3rd September, 2007. infrastructure projects has embarked in the middle east in
12 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
the name of “Valecha-Gulf ”. The Company has just started On 18th April, 2007 the Company has also allotted 6,51,000 its operation of ground engineering for building structures shares of Rs. 10/- each on conversion of 6,51,000 warrants and Villa Projects. allotted to promoters and other entities on preferential basis. The company has allotted 5,30,000 warrants on preferential Your Company is also focusing on Real Estates by basis to promoters and other entities pursuant to the acquiring 22 acres of land Bank in Pune. The Development resolution passed at EGM held on 7th March, 2007. of which is envisaged in 2008-2009. We are also looking at Joint Venture route to do Real Estates Development. The In the Extra Ordinary General Meeting of the members Company is proposing to Invest around 100.00 Crores in of the Company held on 7th March, 2007, the company Real Estates area building IT Park/Township. was authorized to issue upto 5,00,000 equity shares to the benefit of Koon Holdings Limited. The due diligence and 7. Directors : other regulatory process for the same is going on and based Retirement by Rotation : on legal advise, we shall proceed to either from a Joint In accordance with the requirement of the Companies Act, Venture or invest in Koon Holdings Limited. 1956, Mr. Dinesh H. Valecha, Mr. Umesh H. Valecha and 10. Subsidiary : Mr. Arvind B. Gogate, Directors of the Company are due for retirement by rotation and are eligible for reappointment. Valecha Infrastructure Limited : Mr. Jagdish K. Valecha, is re-appointed by the The Central Government in exercise of the power conferred Board of Directors as Managing Director with effect from by Section 212 (8) of the Companies Act, 1956 has accorded 11th June, 2007 for a period of two years and Mr. Ramchand its approval for exemption from attaching the accounts of H. Valecha, Mr. Umesh H. Valecha, Mr. Dinesh H. Valecha subsidiaries to the Balance sheet of the company. and Mr. Arvind B. Gogate have been reappointed as The Company shall provide copies of the Annual report and Whole Time Directors by the Board for a period of 2 years other documents of its subsidiary companies as required w.e.f. 1st July, 2007, 1st July 2007, 1st August, 2007 and under Section 212 of the Act to the members on their 1st August 2007, respectively, subject to the approval of request, free of cost. the members at the Annual General Meeting. Mr. Shailesh V. Haribhakti was appointed as an Alternate Director to For the year under review, no business was transacted in Mr. Arvind Thakkar w.e.f. 1st November, 2006 and has this Company. resigned w.e.f. 7th May, 2007. The Board wishes to record 11. Conservation Of Energy, Technology Absorption, And its sincere appreciation for the valuable advice and guidance Foreign Exchange Earnings And Outgo : given by Mr. Shailesh V. Haribhakti during his association Information pursuant to the Companies (disclosure of with the Company. particulars in the Report of the Board of Directors) Rules, The information on the particulars of Directors seeking 1988. appointment/re-appointment as required under Clause 49 A. Conservation of Energy : of the Listing Agreement has been given under Corporate Governance Report. At all the sites of the Company the consumption of power is regularly monitored and necessary measures 8. Auditors : are taken to regulate the consumption. M/s. D. M. Jani & Co., the Auditors of the company will B. Technology absorption : retire at the conclusion of the forthcoming Annual General During the year under review, there is no expenditure Meeting and are eligible for re-appointment. They have on Technology Absorption and on Research and given their consent to be re-appointed for the current year. Development. Members are requested to consider re-appointing them as Auditors. C. Foreign Exchange Earnings & Outgo : (Rs. in lacs) The observation made in the Auditors Report are self-explanatory and therefore, do not call for any further Current Period Previous Year comments under Section 217 (3) of the Companies Act, Foreign Exchange Outgo 5,314.68 1,080.36 1956. Foreign Exchange Earned 2,667.69 2,274.45 9. Capital : During the year the Company has allotted 3,74,000 shares 12. Particulars of Employees : of Rs.10/- each on conversion of 3,74,000 warrants allotted As required, pursuant to the provision of Section 217 (2A) to promoters and other entities on preferential basis. of the Companies Act, 1956 read with the Companies
Annual Report 2006-2007 13 VALECHA ENGINEERING LIMITED Engineers & Contractors
(Particulars of Employees) Rules, 1975 as amended, there has been taken for the maintenance of adequate accounting is no employee drawing salary in excess of the limits records in accordance with the provisions of the Companies prescribed by the said Act. Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities 13. Corporate Governance : and the annual accounts have been prepared on a going Pursuant to Clause 49 of the Listing Agreement with the concern basis. Stock Exchange, Reports on Management Discussion and Analysis and on Corporate Governance alongwith a 15. Acknowledgements : certificate of compliance from the Auditors are attached The Board wishes to place on record its appreciation to all hereto and form part of this Report. employees of the company for their continued contribution to the performance of the company and convey their 14. Director’s Responsibility Statement : grateful thanks to Shareholders, Customers and Bankers Pursuant to Section 217 (2AA) of the Companies Act, for their continued support. 1956 the Directors confirm; that in the preparation of the annual accounts, the applicable accounting standards have been followed. Appropriate accounting policies have For and on Behalf of the Board been selected and applied consistently, and have made judgements and estimates that are reasonable and prudent V. P. VALECHA so as to give a true and fair view of the state of affairs Chairman of the Company as at 31st March, 2007 and of the profit Place : Mumbai of the Company for that period. Proper and sufficient care Date : 30th July, 2007
14 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors ANNEXURE
REPORT ON CORPORATE GOVERNANCE 1. Company’s Philosophy on code of Governance : Your Company firmly believes in the principle of Corporate Governance & aims to achieve a balance between shareholders interest and corporate goals by adopting best practices by injecting transparency, responsibility and accountability at all levels. Valecha Engineering Limited has been following principles of good Corporate Governance over the years making management accountable to the shareholders for effective management of the Company with adequate concern for ethics and values and will endeavour to improve on these aspects on ongoing basis. 2. Board of Directors : The Board of the Company consists of ten (10) Directors of which five (5) are Executive Directors and five (5) are Non-Executive Directors and out of ten (10) Directors four (4) are Independent Directors and six (6) are Non-Independent Directors. During the year 2006-2007, the Board met seven times, with at least one (1) meeting in every quarter and with a gap of less than three (3) months between two (2) meetings on the following dates, namely, 23rd June, 2006, 19th July, 2006, 31st July, 2006, 31st October, 2006, 30th January, 2007, 6th February, 2007 and 27th February, 2007. None of the Directors on the Board is a member of more than ten (10) Committees and Chairman of more than five (5) Committees across all the Companies in which he is a Director. The following table gives details of Directors, attendance of Directors at the Board meetings and the last Annual General Meeting, number of memberships held by Directors in the Board/committees of various other companies:
Attendance Number of other Directorship and Committee particulars Membership/Chairmanship Name Category Board Last Other Committee Committee Meeting AGM Directorship Member- Chairman- (Including Pvt. Ltd. ship ship Companies) Mr. V. P. Valecha Non-executive & Non-independent 7 Attended 3 — — Mr. J. K. Valecha Executive & Non-independent 6 Attended 3 — — Mr. R. H. Valecha Executive & Non-independent 7 Attended 1 — — Mr. D. H. Valecha Executive & Non-independent 2 Attended 3 — — Mr. U. H. Valecha Executive & Non-independent 5 Attended 4 — — Mr. A. B. Gogate Executive & Non-Independent 4 Attended — — — Mr. G. Ramachandran Non-executive & Independent 5 Attended 12 — — Mr. Anil Harish Non-executive & Independent 4 Attended 29 5 3 Mr. I. Syam Prasad Reddy Non-executive & Independent Nil Not Attended 19 — — Mr. Arvind Thakkar* Non-executive & Independent Nil Not Attended — — — Mr. Shailesh Haribhakti** Non-executive & Independent 1 Not Applicable 22 — 1 * Appointed as Director w.e.f. 1st August, 2006. ** Appointed as an Alternate Director to Mr. Arvind Thakkar w.e.f. 1st November, 2006 and has resigned w.e.f. 7th May, 2007.
Details of Directors seeking appointment/reappointment at the 30th Annual General Meeting: (Pursuant to Clause 49 of the Listing Agreement). 1. Name : Mr. J. K. Valecha Age : 47 years Qualifications : B.Com. Expertise/Occupation : Over 24 years of experience in execution of Civil Construction Work. Other Directorship : Valecha Infrastructure Limited, F2 Fun & Fitness (India) Pvt. Ltd. and First Fitness (India) Pvt. Ltd. Committee Member/Chairmanship : Nil
Annual Report 2006-2007 15 VALECHA ENGINEERING LIMITED Engineers & Contractors
2. Name : Mr. R. H. Valecha Age : 68 years Qualifications : B.A. Expertise/Occupation : Over 49 years of experience in execution of Civil Construction Work Other Directorship : Juhu Beach Real Estate Private Limited Committee Member/Chairmanship : Nil
3. Name : Mr. Dinesh H. Valecha Age : 37 years Qualifications : B.E. (Electronics) D.B.M. Expertise/Occupation : Over 14 years of experience in execution of Civil Construction Work Other Directorship : Valecha Infrastructure Limited, Valecha Investments Private Limited and Gopaldas Vasudev Constructions Private Limited. Committee Member/Chairmanship : Nil
4. Name : Mr. Umesh H. Valecha Age : 30 years Qualifications : B.E. (Civil) Expertise/Occupation : Over 8 years of experience in execution of Civil Construction Work Other Directorship : Valecha Investments Private Limited, Juhu Beach Real Estates Private Limited, F2 fun-N-Fitness (India) Pvt. Ltd. and first Fitness (India) Pvt. Ltd. Committee Member/Chairmanship : Nil
5. Name : Mr. Arvind Balakrishna Gogate Age : 54 years Qualifications : B. Tech (Civil) from IIT, Mumbai Expertise/Occupation : Over 29 years of experience in execution of Civil Construction Work Other Directorship : Nil Member Share Transfer & Investor Grievance Committee of Valecha Engineering Committee Member/Chairmanship : Limited
3. Audit Committee : Composition : 1. Mr. G. Ramachandran — Chairman 2. Mr. Anil Harish — Member 3. Mr. V. P. Valecha — Member The Audit Committee met Four Times during the year 2006-2007 and the attendance of the members of the meeting was as follows: Name of Directors Category No. of Meetings Attended Mr. G. Ramachandran Non-executive & Independent 4 Mr. V. P. Valecha Non-executive & Non-independent 4 Mr. Anil Harish Non-executive & Independent 3
16 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
The terms of reference of the Audit Committee includes various matters in conformity with the statutory guidelines, which includes the following : To review the nature and scope of internal and external audit, the adequacy of internal control system and the financial reporting process to ensure the correctness and credibility of financial statements, to review quarterly & annual financial statements before submission to the Board, changes in accounting policies and practices, major judgmental areas, significant adjustments resulting from the audit, to ensure proper accounting policies and compliance with the Accounting Standards and stock exchange requirements regarding financial statements and reviewing over all the financial and risk management policies and other related areas of the Company.
4. Remuneration Committee : The remuneration committee comprises of three (3) Directors, Mr. G. Ramachandran, (Non-executive & Independent) Chairman, Mr. V. P. Valecha (Non-executive & Non-independent) Member and Mr. Anil Harish (Non-executive & Independent) Member. The remuneration Committee reviews the Company’s policies on specific remuneration packages and overall remuneration structure of the Executive Directors. The remuneration policy of the Company is directed towards rewarding performance based on review of achievements on a periodic basis. The remuneration, if any, of Non-executive Directors is decided by the Board of Directors. During the year one meeting was held on 27th February, 2007. Remuneration of Directors for 2006-2007 : (Rupees in Lacs) Sr. Name of Directors Salary Benefits Sitting Fees Commission Total No. 1. Mr. J. K. Valecha 16.33 2.19 — — 18.52 2. Mr. R. H. Valecha 17.70 0.42 — — 18.12 3. Mr. V. P. Valecha — — 0.35 4.00 4.35 4. Mr. G. Ramachandran — — 0.25 2.00 2.25 5. Mr. Anil Harish — — 0.20 2.00 2.20 6. Mr. Dinesh Valecha 9.80 1.39 — — 11.19 7. Mr. Umesh Valecha 20.90 0.57 — — 21.47 8. Mr. Arvind Gogate 20.40 0.29 — — 20.69 9. Mr. Syam Prasad Reddy — — — 1.00 1.00 10. Mr. Arvind Thakkar* — — — — — 11. Mr. Shailesh Haribhakti** — — 0.05 — 0.05 Total 85.13 4.86 0.85 9.00 99.84 * Appointed on 1st August, 2006 ** Appointed on 1st November, 2006 and has resigned on 7th May, 2007 5. Share Transfer and Investor Grievance Committee : The Share Transfer and Investor Grievance Committee consist of 3 Directors Mr. V. P. Valecha (Non-executive & Non-independent), Mr. A. B. Gogate (Executive & Independent) and Mr. G. Ramachandran (Non-executive & Independent). Mr. V. P. Valecha, the chairman of the Committee is a Non-executive Director. The Committee deals with all the matters relating to share holder amd investor complaints. In addition, it deals with approval of transfer/transmission of shares, issue of duplicate certificates and issuance of certificates after split/consolidation/renewal thereof and other related matters. The Committee held 23 meetings during the year 2006-2007. As of 31st March, 2007 there were no unresolved investors complaints pending and no shares pending for transfer. Ms. Kavita Valecha Sharma – Company Secretary is the Compliance Officer. Shareholders Complaints (Since 01.04.2006 to 31.03.2007) : No. of complaints received No. of complaints resolved to the from shareholders satisfaction of the shareholders No. of complaints pending 40 40 — No. of complaints through SEBI 1 1 — 6. Subsidiary Companies : The subsidiary company Valecha Infrastructure Limited is not covered under the term “material non listed Indian Subsidiary Company”.
Annual Report 2006-2007 17 VALECHA ENGINEERING LIMITED Engineers & Contractors
7. Code of Conduct : The Board has laid down the Code of Conduct for all Board members and Senior Managerial Personnel of the Company. All the Directors & Senior Management Personnel have affirmed compliance with the Code of Conduct. A declaration to this effect duly signed by Managing Director of the Company is attached herewith and forms part of Corporate Governance Report. 8. General Body Meetings : The last three Annual General Meeting of the Company were held at M. C. Ghia Hall, Bhogilal Hargovindas Building, 18/20, Kaikhushru Dubhas Marg, Mumbai-400 001, as per details below : Date Time Details of Special Resolution Relevant Section 24th Aug., 2006 4.00 p.m. i. Issue of GDR/ADR/FCCBs 81, 81 (1A) ii. Increase of FIIs limit upto 49% — iii. Amendment in Articles of Association 31 iv. Commission to Non-executive Director 309 15th Sept., 2005 4.00 p.m. No special resolution — 13th Sept., 2004 4.00 p.m. Delisting of shares from OTC Exchange of India — Extra Ordinary General Meeting held on Wednesday the 7th March, 2007 at 4.00 p.m. at M.C. Ghia Hall, Bhogilal Hargovindas Building, 18/20, Kaikhushru Dubhash Marg, Mumbai-400 001. No Special Resolutions were passed through postal ballot last year. No special Resolution is proposed to be passed through postal ballot at the ensuing Annual General Meeting. 9. Disclosures : 1. There are no transactions of material nature that have been entered into by the Company with the Promoters, Directors or the management, their subsidiaries or relatives etc., that may have potential conflict with the interest of the Company. Transactions with related parties are disclosed in notes to Accounts forming part of the Balance Sheet in the Annual Report. 2. There was no non-compliance during the last three years by the company on any matter related to capital market. Consequently, there were no penalties imposed nor strictures passed on the Company by Stock Exchanges, SEBI or any statutory authority. 3. The Company has followed the guidelines of accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparation of its Financial Statements. 4. The Director’s Report includes details of Management Discussion and Analysis including Risks & Concerns. 5. The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement. The Company has also complied with the non mandatory requirements relating to constitution of the Remuneration Committee. 10. Means of Communication : (i) The approved financial results are forwarded to the Stock Exchange and are published in the leading English and Regional newspapers. (ii) Pursuant to Clauses 51 of the Listing Agreement, all data related to quarterly financial results, shareholding pattern etc. are submitted on the Electronic Data Information Filing and Retrieval (EDIFAR) (website www.sebiedifar.nic.in) maintained by the National Informatics Centre (NIC) online as and when they are submitted to the Stock Exchanges. The Company’s financial results and official news releases are displayed on the Company’s Website www.valechaeng.com (iii) Management Discussion and Analysis forms part of the Annual Report, which is posted to the shareholders of the Company. 11. Secretarial Audit : A qualified practicing Company Secretary carried out a secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of dematerialized shares held with NSDL and CDSL. 12. General Shareholder information : * AGM : Date : Monday, 3rd September, 2007 Time : 4.00 p.m Venue : M. C. Ghia Hall, Bhogilal Hargovindas Building, 18/20, Kaikhushru Dubhash Marg, Mumbai - 400 001.
18 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
* Financial Calendar : April to March * Book Closure : 22nd August, 2007 to 3rd September, 2007 * Dividend Payment date : On or before 2nd October, 2007 * Listing on Stock Exchanges : Bombay Stock Exchange Limited and National Stock Exchange Limited. * The listing fees for the financial year 2007-2008 of the stock exchange has been paid. Listing on Stock Exchanges : Name of Stock Exchange Stock Code No. Code on Screen The Stock Exchange, Mumbai (BSE) 532389 VALECHA ENGI The National stock Exchange of India Ltd., (NSE) — VALECHAENG
* Market Price data : Monthly high and low of quotations Bombay Stock Exchange (BSE) and the National Stock Exchange of India Limited (NSE) BSE NSE Month Highest Lowest Highest Lowest (Rs.) (Rs.) (Rs.) (Rs.) April, 2006 390.70 339.05 — — May, 2006 369.30 276.80 — — June, 2006 294.55 193.65 — — July, 2006 213.60 127.60 — — August, 2006 185.35 138.55 — — September, 2006 184.15 166.95 183.90 166.15 October, 2006 227.30 181.95 227.35 181.85 November, 2006 218.80 198.50 218.75 198.95 December, 2006 208.20 182.15 209.00 181.80 January, 2007 222.05 197.50 221.50 197.40 February, 2007 275.95 233.40 275.25 231.85 March, 2007 227.00 199.00 226.55 199.90
Annual Report 2006-2007 19 VALECHA ENGINEERING LIMITED Engineers & Contractors
* Registrar and Transfer Agents : TSR Darashaw Limited 6-10 Haji Moosa Patrawala Ind. Estate 20, Dr. E. Moses Road, Mahalaxmi, Mumbai-400 011. Tel. : 66568484 Fax : 66568494 * Share Transfer System : The Company’s Shares are traded in compulsory demat mode and are transferable through depository system. All the physical transfers received are processed by the registrar and transfer agents and approved by Share Transfers Committee, which meets at regular intervals. * Distribution of Share holding: As on 31st March, 2007. Distribution of Holdings Shareholding of Shareholders Share Amount Nominal Value Rs. Rs. No. % To Total Rs. % To Total 1 5,000 8247 91.66 91,34,350 12.52 5,001 10,000 381 4.24 30,53,480 4.18 10,001 20,000 182 2.02 27,45,080 3.76 20,001 30,000 40 0.45 10,24,800 1.40 30,001 40,000 20 0.22 7,62,690 1.05 40,001 50,000 31 0.35 14,16,450 1.94 50,001 100,000 38 0.42 28,25,860 3.87 Above 1,00,000 58 0.64 5,20,16,290 71.28 TOTAL 8997 100 7,29,79,000 100.00
Share Holding Pattern Sr. Category No. of Shares % 1. Promoters (including persons acting in concert) 3126885 42.85 2. NRI’s 145194 1.99 3. Bodies Corporate 1393214 19.09 4. Financial Institution/Mutual Fund/FII 390295 5.35 5. Others: Shares held by Custodians issued against GDR 324000 4.44 Indian Public 1918312 26.28 TOTAL 7297900 100.00 * Dematerialization of Shares : As on 31st March, 2007, 96.83% of the Company’s total shares representing 70,66,319 shares were held in dematerialised form. As on date (30.07.07) 97.12% of the Company’s total shares representing 77,19,969 shares were held in dematerialised form. * Outstanding GDRs/ADRs/Warrants : Out of the allotted 20,48,900 Preferential Warrants with an option to subscribed to equity shares on a future date, in respect of 14,48,900 warrants the Company has received the entire issue price for which equity shares have been allotted with the nominal value of Rs. 10/- each with a premium of Rs. 189.55/- per share. The listing permission from the Stock Exchanges is pending for 6,51,000 shares. The Share are available in Demat form with: 1. Central Depository Services (India) Limited : ISIN-INE624C01015 2. National Securities Depository Limited : ISIN-INE624C01015 * Plant Location : The Company has various sites.
20 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
* Address for correspondence: (1) Company : (2) Registrar : VALECHA ENGINEERING LIMITED TSR Darashaw Limited “Valecha Chambers”, 7th Floor, 6-10 Haji Moosa Patrawala Ind. Estate Andheri New Link Road, 20, Dr. E. Moses Road, Andheri (West), Mumbai-400 053. Mahalaxmi, Mumbai-400 011. Tel : 022 - 2673 3625 to 29 Tel. : 66568484 Fax : 022 - 2673 3945 Fax : 66568494 E-mail : [email protected]
12. DECLARATION UNDER CODE OF CONDUCT As required under Clause 49 (ID) of the Listing Agreement, it is hereby affirmed that all the Board members and Senior Management Personnel have complied with Code of Conduct of the Company. The Code of the Conduct has been posted on the web-site of the Company. Jagdish K. Valecha Managing Director Date : 30.07.2007 Place : Mumbai
Auditors’ Certificate on Clause 49 Compliance of Listing Agreement
To, The Members of Valecha Engineering Limited
We have examined the Compliance of conditions of Corporate Governance by Valecha Engineering Limited, for the year ended on 31st March, 2007, as stipulated in the Clause 49 of the Listing Agreement of the said Company with the Stock Exchange. The compliance of condition of Corporate Governance is the responsibility of the management. Our examination was limited to procedure and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanation given to us we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
For M/s. D. M. JANI & CO. Chartered Accountants
DILIP M. JANI Proprietor Membership No. 17259
Mumbai Date : 30th July, 2007
Annual Report 2006-2007 21 VALECHA ENGINEERING LIMITED Engineers & Contractors MANAGEMENT DISCUSSION AND ANALYSIS REPORT
(a) Industry Structure and Developments : The Government’s decision to focus on infrastructure as a priority sector and the policy initiatives announced has permitted entry of Private and Foreign investments in the core areas of construction. It is therefore necessary to explore the scope for building infrastructures through Public-Private partnerships. It has been estimated that about 51% of the total investment under the NHDP will come in from the private sector. Further, about a third of the total investment expected in the state roads will come in from the private sector. This will create immense opportunities in the infrastructure sector. (b) Opportunities and Threats/Risks and concerns : The quality of our infrastructure at present simply will not allow the economy to reach the level of competitiveness needed to achieve 8% growth in an open economy. For growth to be maintained at this level, it is necessary that requisite infrastructure is put in place as there is a fear that infrastructural constraints will hold back this level of economic growth. However, the investment requirement for meeting the infrastructure deficit is such that it cannot possibly be met by relying on public sector alone. It is therefore necessary to explore the scope for building infrastructures through Public Private partnerships. The prime Minister has established a committee on infrastructure, under his chairmanship, to systematically review policy issues in each of the infrastructure sectors, and to determine an agenda for policy change and also to monitor implementation. Among the decisions taken by this Committee was the endorsement of an ambitious National Highway Development Programme, involving a total investment of Rs. 2,20,000 crore upto 2012. Most of these investments are expected to be realized through partnerships with private sector. Stiff competition leading to price-cuts and low operating margins, sustained increase in prices of certain materials used in constructions such as steel, cement, building materials and petroleum products, adapting to technological changes and having suitable manpower, disparities and any changes in indirect tax structure in respect of VAT/Service tax etc. are the key issues/ concerns to post major threats in the growth of Construction Industry. (c) Segment wise performance & outcome : The Company is in the business of construction and infrastructure development of roads, dams, bridges, highways etc. & hence operates in a single Business segment. (d) Outlook : The government’s focus on implementing infrastructure projects on BOT basis has created great opportunities for private sector. However, it needs to take pre-emptive measures to ensure that the interest of private players and momentum in the growth are sustained. The overall outlook of Construction Industry seems positive in view of the present economic environment. However, the sustained growth will mainly depend upon future policy measures and commitment of financial outlays by the Government, the inflow of foreign investment as well as private capital investment. (e) Internal Control Systems and their Adequacy : The Company has appropriate and adequate internal control systems for its business processes at all sites with regard to efficiency of operations, accurate and prompt financial reporting, compliance with applicable laws and regulations etc. The Company continues to regularly evaluate and strengthen its Internal Control Systems to be commensurate with its size and growth. (f) Discussion on financial performance with respect to Operational Performance : During the year under review, the turnover has increased to Rs. 24,780.96 lacs from Rs. 15,137.57 lacs in 2005-2006 representing an increase of 63.70%. The Profit Before Tax (PBT) with exceptional income has increased by 11.73% from Rs. 2,954.16 lacs in the previous year to Rs. 3,300.57 lacs for the year 2006-2007. The PBT without exceptional income has increased by 55.89% from Rs. 955.64 lacs to the previous year to Rs. 1,489.76 lacs for the year 2006-2007. The Profit After Tax (PAT) with exceptional income is Rs. 2,775.05 lacs for the year 2006-2007 as compared to PAT of Rs. 2,680.75 lacs for the previous year representing an increase of 3.52%. The PAT without exceptional income was is Rs. 964.24 lacs for the year 2006-2007 as compared to PAT of Rs. 682.23 lacs for the previous year representing an increase by 41.34%. (g) Human Resources/Industrial Relations : Your Company continues to lay thrust on human resource development and the industrial relations at various project location remained harmonious and cordial. Over the years your Company’ s Human Resource policies are directed towards attaining, motivating, rewarding and retaining talent at all levels in the organisation. Human Resource is recognised as most valuable asset of the company that play vital role in attaining success for the organisation. (h) Cautionary Statement : Statement in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations may be interpreted as “forward-looking statements”, but are stated as required under the applicable securities laws and regulations. Actual results could differ from those expressed or implied for many reasons including economic policy and conditions, market developments and changes in government regulations, tax laws and other statues and other incidental factors.
22 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
REPORT OF THE AUDITOR TO THE MEMBERS (iii) The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in We have audited the attached Balance Sheet of VALECHA agreement with the books of account; ENGINEERING LIMITED, as at 31st March, 2007, the Profit and Loss Account and also Cash Flow Statement for year ended (iv) In our opinion, the Balance Sheet, Profit and Loss on that date annexed thereto. These financial statements are the account and cash flow statement dealt with by this responsibility of the Company’s management. Our responsibility report comply with the mandatory Accounting is to express an opinion on these financial statements based on Standards referred to in sub-section (3C) of Section our audit. 211 of the Companies Act, 1956; 1. We conducted our audit in accordance with the Auditing (v) In our opinion and based on information and explanations Standards generally accepted in India. Those standards given to us, none of the Director is disqualified as on require that we plan and perform the audit to obtain 31st March, 2007 from being appointed as Director in reasonable assurance about whether the financial terms of clause (g) of sub-section (1) of section 274 of statements are free of material misstatement. An audit the Companies Act, 1956; includes, examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An (vi) In our opinion and to the best of our information audit also includes assessing the accounting principles used and according to the explanations given to us, the and significant estimates made by management, as well as said accounts give the information required by the evaluating the overall financial statement presentation. We Companies Act, 1956, in the manner so required believe that our audit provides a reasonable basis for our and give a true and fair view in conformity with the opinion. accounting principles generally accepted in India; 2. As required by the Companies (Audit Report) Order, 2003 (a) in the case of the Balance Sheet, of the state of issued by the Central Government of India in terms of affairs of the Company as at 31st March, 2007; sub-section 4(A) of section 227 of the Companies Act, 1956, we enclose in the Annexure hereto a statement on the (b) in the case of Profit and Loss Account, of the matters specified in paragraphs 4 and 5 of the said Order. Profit for the year ended on that date; and 3. Further to our comments in the Annexure referred to in (c) In the case of the Cash Flow Statement, of the paragraph 2 above, we report that: cash flows for the year ended on that date. (i) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; For D. M. JANI & CO. Chartered Accountants (ii) In our opinion, proper books of account as required by law have been kept by the Company, so far as DILIP M. JANI appears from our examination of those books, proper Proprietor Membership No. 17259 information/explanations adequate for the purposes of our audit have been received from the Project Sites not Place : Mumbai visited by us; Date : 29th June, 2007
Annual Report 2006-2007 23 VALECHA ENGINEERING LIMITED Engineers & Contractors
ANNEXURE TO THE AUDITOR’S REPORT principal amounts as stipulated and have been regular in the payment of interest. ANNEXURE REFERRED TO IN ITEM NO. 2 OF THE REPORT OF THE AUDITOR TO THE MEMBERS OF (d) There is no overdue amount of loans taken from or VALECHA ENGINEERING LIMITED ON THE ACCOUNTS granted to companies, firms or other parties listed FOR THE YEAR ENDED 31st MARCH, 2007. in the register maintained under section 301 of the Companies Act, 1956. We report that : 4. In our opinion and according to the information and 1. (a) The Company has maintained proper records showing explanation given to us, there are adequate internal control full particulars, including quantitative details and procedures commensurate with the size of the company situation of its fixed assets. and the nature of its business with regard to purchases of (b) All the assets have not been physically verified by Inventory and Fixed Assets and also for the Sale of goods the Management during the year but there is a regular and services. During the course of our audit, we have not program of verification which, in our opinion, is observed any continuing failure to correct major weaknesses reasonable having regard to the size of the company in internal control systems. and the nature of its assets. No material discrepancies were noticed on such verification. 5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that (c) In our opinion, the company has not disposed off a need to be entered into the register maintained under substantial part of its fixed assets during the year section 301 of the Companies Act, 1956 have been so and the going concern status of the company is not entered. affected. (b) In our opinion and according to the information and 2. (a) The inventory has been physically verified during the explanations given to us, the transactions made in year by the management. In our opinion, the frequency pursuance of contracts or arrangements entered in the of verification is reasonable register maintained under section 301 of the Companies (b) The procedure of physical verification of inventories Act, 1956 and exceeding the value of rupees five lakhs followed by the management are reasonable and in respect of any party during the year have been adequate in relation to the size of the company and the made at prices which are reasonable having regard to nature of its business. prevailing market prices at the relevant time. (c) The company is maintaining proper records of 6. In our opinion and according to the information and inventory. No material discrepancies have been noticed explanations given to us, the company has complied with on physical verification of stocks as compared to book the provisions of sections 58A and 58AA of the Companies records. Act, 1956 and the Companies (Acceptance of Deposits) 3. (a) The Company has taken loan from Two companies Rules, 1975 with regard to the deposits accepted from the covered in the register maintained under section 301 public, no order has been passed by the Company Law of the Companies Act, 1956. The maximum amount Board or National Company Law Tribunal or Reserve Bank of India or Any Other Tribunal on the Company in respect involved during the year was Rs. 3099.25 lacs and the of the above said Deposits. year end balance of loans taken from such parties was Rs. 278.81 lacs. There are Three companies covered 7. In our opinion, the Company has an internal audit system in the register maintained under section 301 of the commensurate with the size and nature of its business. Companies Act, 1956 to whom the company has granted 8. The Central Government has not prescribed the maintenance loans. The maximum amount involved during the year of cost records under Section 209(1)(d) of the Companies was Rs. 5908.74 lacs and the year-end balance of loans Act, 1956 for the products of the Company. granted to such parties was Rs. 5178.43 lakhs. 9. (a) According to the information and explanations given (b) In our opinion, the rate of interest and other terms to us and the records of the Company examined by and conditions on which loans have been taken from/ us in our opinion, the Company is generally regular granted to companies, firms or other parties listed in depositing the undisputed statutory dues including in the register maintained under section 301 of the Provident Fund, Employees State Insurance, Income Companies Act, 1956 are not, prima facie, prejudicial Tax, Sales Tax, Wealth Tax, Custom Duty, Service Tax, to the interest of the company. Fringe Benefit Tax, Cess and other material statutory dues as applicable with the appropriate authorities. (c) The company is regular in repaying the principal amounts as stipulated and has been regular in the (b) According to the information and explanations given payment of interest. The parties have repaid the to us & the records of the Company examined by us,
24 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
there are no dues of Income Tax, Wealth Tax, Sales 17. According to the information and explanations given Tax, Custom Duty, Service Tax, Cess and Fringe to us and on an overall examination of the balance Benefit Tax which have not been deposited on account sheet of the Company, we report that no funds raised of any dispute. on short-term basis have been used for long-term investment. 10. The Company has no accumulated losses as at 31st March, 2007 and it has not incurred any cash losses in the financial 18. According to the information and explanation given to us, year ended on that date or in the immediately preceding the company has made preferential allotment of shares to financial year. parties and companies covered in the register maintained under section 301 of the Act. In our opinion the price at 11. In our opinion and according to the information and which shares have been issued is not prejudicial to the explanations give to us, the company has not defaulted in interest of the company. repayment of dues to a financial institutions and Banks. 19. According to the information and explanations given to 12. The company has not granted any loans and advances on us, during the period the Company has not issued any the basis of security by way of pledge of shares, debentures debentures. and other securities. 20. The Company has not raised any money by public issues 13. The provisions of any special statute applicable to chit during the year. fund/nidhi/mutual benefit fund/societies are not applicable to the Company. 21. On the basis of our examination and according to the information and explanations given to us, no fraud on or 14. In our opinion, the company is not dealing in or trading by the company has been noticed or reported during the in shares, securities, debentures and other investments. course of our audit. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order 2003 are not applicable to the Company. For D. M. JANI & CO. Chartered Accountants 15. In our opinion, and according to the information and explanations given to us, the Company has not given any DILIP M. JANI guarantee for loans taken by others from Banks or financial Proprietor institutions during the year. Membership No. 17259 16. In our opinion, the term loans have been applied for the Place : Mumbai purpose for which they were raised. Date : 29th June, 2007
Annual Report 2006-2007 25 VALECHA ENGINEERING LIMITED Engineers & Contractors BALANCE SHEET AS AT 31st MARCH, 2007
(Amount in Rs.)
SCHEDULE As at 31st March, 2007 As at 31st March, 2006
I. SOURCES OF FUNDS : 1. Shareholders’ Funds : (a) Share Capital A 7,29,79,000 6,92,39,000 (b) Reserves & Surplus B 1,44,81,83,340 1,11,02,44,460 1,52,11,62,340 1,17,94,83,460 2. Loan Funds : (a) Secured Loans C 1,06,71,82,032 40,78,56,135 (b) Unsecured Loans D 6,67,85,075 1,13,39,67,107 5,28,82,875 46,07,39,010
3. Deferred Tax Liability : 10,14,88,327 7,81,99,500 Total 2,75,66,17,774 1,71,84,21,970
II. APPLICATION OF FUNDS : 1. Fixed Assets : E (a) Gross Block 1,32,58,59,905 65,31,22,326 (b) Less : Depreciation 16,09,79,423 14,00,94,168 (c) Net Block 1,16,48,80,482 51,30,28,158 (d) Capital Work-in-Progress 18,26,68,730 — 2. Investments F 7,02,38,506 8,15,22,506 3. Current Assets, G Loans & Advances : (a) Inventories 20,66,78,147 4,15,07,625 (b) Work-in-Progress 10,39,01,630 17,81,177 (c) Sundry Debtors 66,83,77,740 46,30,56,241 (d) Cash & Bank Balances 25,53,47,319 49,99,17,826 (e) Loans & Advances 1,07,45,43,984 55,78,89,511 2,30,88,48,820 1,56,41,52,380 Less : Current Liabilities and Provisions H (a) Current Liabilities 96,14,80,586 41,65,96,143 (b) Provisions 85,38,178 2,36,84,931 97,00,18,764 44,02,81,074 NET CURRENT ASSETS 1,33,88,30,056 1,12,38,71,306
Total 2,75,66,17,774 1,71,84,21,970 Notes to the Accounts I
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
26 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2007
(Amount in Rs.)
SCHEDULE As at 31st March, 2007 As at 31st March, 2006
INCOME Receipts from Operations 2,47,76,67,119 1,51,24,05,495 Wind Farm Income 4,28,517 13,51,256 Other Income J 3,65,49,014 3,45,73,865 Total 2,51,46,44,650 1,54,83,30,616
EXPENDITURE Construction Expenses K 2,18,78,09,786 1,34,35,18,063 Wind farm Expenses 2,70,360 3,48,440 Employees Remuneration & Welfare Expenses L 6,62,61,403 2,91,04,750 Administrative & Other Expenses M 4,65,79,327 3,12,62,656 Financial Cost N 1,49,26,136 1,97,62,126 Depreciation/Amortisation 5,05,33,891 2,94,82,583 Less : Amount withdrawn from Revaluation Reserve 7,12,116 4,98,21,775 7,12,116 2,87,70,467
Total 2,36,56,68,787 1,45,27,66,502 Profit Before Exceptional Income & Taxation 14,89,75,863 9,55,64,114 Add : Exceptional Income 18,10,81,106 19,98,51,480 [Ref: Note No. 1(G)(c) of Sch. I] Profit Before Taxation 33,00,56,969 29,54,15,594 Provision For Taxation: Minimum Alternate Tax (MAT) 3,68,00,000 2,20,00,000 Less : Mat Credit Entitlement 80,60,000 — Net Minimum Alternate Tax (MAT) 2,87,40,000 2,20,00,000 Deferred Tax 2,32,88,827 49,23,393 Fringe Benefit Tax 5,23,359 5,25,52,186 4,18,000 2,73,41,393 PROFIT AFTER TAX 27,75,04,783 26,80,74,201 Add : Balance Brought Forward From Last Year 34,67,47,630 11,14,42,150 Prior Year Adjustment for Taxes & Depreciation (12,07,309) 1,09,16,210 Profit for Appropriation 62,30,45,104 39,04,32,561
APPROPRIATIONS Proposed Dividend 72,97,900 2,07,71,700 Tax on Dividend 12,40,278 29,13,231 Transfer to General Reserves 2,00,00,000 2,00,00,000 Balance carried to Balance-Sheet 59,45,06,926 34,67,47,630 62,30,45,104 39,04,32,561 Notes to the Accounts I
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
Annual Report 2006-2007 27 VALECHA ENGINEERING LIMITED Engineers & Contractors SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31st MARCH, 2007
(Amount in Rs.)
As at 31.03.2007 As at 31.03.2006
SCHEDULE – A SHARE CAPITAL Authorised : 2,00,00,000 (Previous Year 1,00,00,000) Equity Shares of Rs. 10/- each 20,00,00,000 10,00,00,000 (Authorised Capital increased persuant to Share Holders approval in the Extra Ordinary General Meeting held on 07.03.2007)
Issued & Subscribed : 72,97,900 (Previous Year 69,23,900) Equity Shares of Rs. 10/- each fully paid-up. (Ref. Note No. 2 of Schedule - I) 7,29,79,000 6,92,39,000 (Of the above Shares 10,00,000 Shares (F.Y. 1993-1994) and 15,00,000 Shares (F.Y. 2002-2003) are allotted as fully paid-up by way of Bonus Shares by capitalisation of General Reserve). 7,29,79,000 6,92,39,000
SCHEDULE – B RESERVES AND SURPLUS
1. Capital Reserve : Balance as per last Balance-Sheet 1,22,28,822 1,29,40,938 Less: Difference in depreciation on revalued cost of assets and that on its original cost 7,12,116 7,12,116 1,15,16,706 1,15,16,706 1,22,28,822 1,22,28,822
2. Share Premium Account : Balance As per Last Balance Sheet 59,44,48,885 2,35,00,000 Additions during the year (Ref. Note No. 2 of Sch. - I) 7,08,91,700 59,63,49,995 66,53,40,585 61,98,49,995 Less : Share Issue Expenses — 66,53,40,585 2,54,01,110 59,44,48,885
3. General Reserve : Balance as per last Balance-Sheet 15,68,19,123 13,68,19,123 Add : Transferred from Profit & Loss Appropriation Account 2,00,00,000 17,68,19,123 2,00,00,000 15,68,19,123
4. Profit & Loss Account Balance : 59,45,06,926 34,67,47,630 1,44,81,83,340 1,11,02,44,460
28 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31st MARCH, 2007
(Amount in Rs.)
As at 31.03.2007 As at 31.03.2006 SCHEDULE – C SECURED LOANS
1. Banks Cash Credit against Book Debts 14,94,43,432 6,35,00,110
2. Contractees Secured by Guarantees from Banks 34,66,59,107 17,45,73,896
3. Financial Institutions/Banks Against Plant & Machineries, Vehicles and Other Current Assets 57,10,79,493 16,97,82,129 1,06,71,82,032 40,78,56,135
SCHEDULE – D UNSECURED LOANS
1. Fixed Deposits 2,40,19,000 2,04,56,000
2. Advance – Preferential Warrants/Share Application Money 4,27,66,075 3,24,26,875 6,67,85,075 5,28,82,875
Schedule – E FIXED ASSETS & DEPRECIATION (Amount in Rs.)
GROSS BLOCK DEPRECIATION NET BLOCK PARTICULARS As at Addition Deduction As at Upto For the Adjustment As at As at As at 01.04.2006 31.03.2007 31.03.2006 Year 31.03.2007 31.03.2007 31.03.2006
Land 16,19,224 — — 16,19,224 — — — — 16,19,224 16,19,224
Buildings 3,69,14,803 — — 3,69,14,803 60,20,082 6,01,712 — 66,21,794 3,02,93,009 3,08,94,721
Plant & Machinery 53,83,01,712 65,70,38,727 7,43,73,064 1,12,09,67,375 10,63,66,301 3,62,27,880 2,83,53,686 11,42,40,495 1,00,67,26,880 43,19,35,411
Furniture, Fixtures & Office Equipments 2,57,08,462 60,28,884 — 3,17,37,346 93,02,315 20,48,497 — 1,13,50,812 2,03,86,534 1,64,06,147
Vehicles 5,05,78,125 8,61,56,858 21,13,826 13,46,21,157 1,84,05,470 1,16,55,802 12,94,950 2,87,66,322 10,58,54,835 3,21,72,655
Total 65,31,22,326 74,92,24,469 7,64,86,890 1,32,58,59,905 14,00,94,168 5,05,33,891 2,96,48,636 16,09,79,423 1,16,48,80,482 51,30,28,158
Previous Year 52,05,46,632 13,67,73,336 41,97,642 65,31,22,326 11,27,04,699 2,94,82,583 20,93,114 14,00,94,168 51,30,28,158 40,78,41,934
Capital Work-in-Progress 18,26,68,730 18,26,68,730 18,26,68,730
Annual Report 2006-2007 29 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31st MARCH, 2007 SCHEDULE – F INVESTMENTS (TRADE) (AT COST) As at 31.03.2007 As at 31.03.2006 Name of the Company Qty. Book value Qty. Book value Nos. Rupees Nos. Rupees
LONG TERM INVESTMENTS (AT BOOK VALUE) TRADE INVESTMENTS
A. QUOTED & FULLY PAID : Equity Shares : (1) Jyoti Structures Ltd. 18,81,400 1,39,56,563 34,31,400 2,52,40,563 (Face value Rs. 2/- per share) (One Share of Face Value Rs. 10/- splitted into 5 Shares of Rs. 2/- each on 5.8.06) (During the year 15,50,000 Nos. of Share sold) (2) Kalindee Rail Nirman Engineers Ltd. (Face Value Rs. 10/- per share) 4,363 91,852 4,363 91,852 Total 1,40,48,415 2,53,32,415
B. UNQUOTED & FULLY PAID : Equity Shares : (1) The Saraswat Co-op. Bank Ltd. (Face Value Rs. 10/- each) 2,500 25,000 2,500 25,000 (2) The Janakalyan Sahakari Bank Ltd. (Face Value Rs. 10/- each) 50,000 5,00,000 50,000 5,00,000 (3) Valecha Chambers Condominium (Face Value Rs. 100/- each) 17 1,700 17 1,700 (4) The Thane Janta Sahakari Bank Ltd. (Face Value Rs. 50/- each) 1 50 1 50 (5) Varun Cements Ltd. (Face Value Rs. 10/- each) 42,800 2,20,000 42,800 2,20,000 (6) F2 Fun-N-Fitness (I) Pvt. Ltd. (Face Value Rs. 100/- each) 8,400 8,40,000 8,400 8,40,000 (7) First Fitness (I) Pvt. Ltd. (Face Value Rs. 100/- each) 91,289 91,28,900 91,289 91,28,900 Total 1,07,15,650 1,07,15,650
C. INVESTMENT IN WHOLLY OWNED SUBSIDIARY COMPANY Valecha Infrastructure Limited (Face Value Rs. 10/- each) 50,000 5,00,000 50,000 5,00,000 5,00,000 5,00,000
D. BONDS & OTHER INVESTMENTS : National Savings Certificate 1,000 1,000 1,000 1,000
E. BUILDING VALECHA CHAMBERS 4,49,73,441 4,49,73,441 Abstract : A. Quoted 1,40,48,415 2,53,32,415 B. Unquoted 1,07,15,650 1,07,15,650 C. Investment in Wholly Owned 5,00,000 5,00,000 D. Bonds & Other Investments 1,000 1,000 E. Building Valecha Chambers 4,49,73,441 4,49,73,441 Grand Total 7,02,38,506 8,15,22,506
Market Value of Quoted Investment in Shares : 32,12,54,998 37,44,57,080 Total 32,12,54,998 37,44,57,080
30 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31st MARCH, 2007 (Amount in Rs.)
As at 31.03.2007 As at 31.03.2006
SCHEDULE – G CURRENT ASSETS, LOANS AND ADVANCES 1. Inventories : Closing Stock of Materials 20,66,78,147 4,15,07,625 (As Certified by the Management) 20,66,78,147 4,15,07,625
2. Work in Progress : 10,39,01,630 17,81,177 10,39,01,630 17,81,177 3. Sundry Debtors : (Unsecured and Considered Good) (a) Exceeding Six months 11,25,03,511 7,29,48,118 (b) Within Six Months 55,58,74,229 39,01,08,123 66,83,77,740 46,30,56,241 4. Cash and Bank Balances : (a) Cash on Hand 4,72,524 4,28,842 (b) With Scheduled Banks (i) In Current Accounts 7,79,36,197 11,32,06,719 (ii) In Deposit Accounts 17,69,38,598 38,62,82,265 (Lien against Bank Guarantees & L.Cs Rs. 1719.38 lacs) (Previous Year Rs. 841.59 lacs) 25,53,47,319 49,99,17,826 5. Loans and Advances : (Unsecured and considered good) (a) Advance to Wholly Owned Subsidiary Company 50,58,43,028 21,61,89,000 (b) Advances recoverable in cash or in kind or for value to be received 34,24,18,255 20,32,54,852 (c) Deposits with clients & others 19,57,42,026 10,38,54,234 (d) Prepaid Taxes (Net of Provisions) Advance Tax Paid 10,66,40,675 8,61,41,425 Less : Provision for Taxation 7,61,00,000 3,05,40,675 5,15,50,000 3,45,91,425 1,07,45,43,984 55,78,89,511
SCHEDULE – H CURRENT LIABILITIES AND PROVISIONS 1. CURRENT LIABILITIES : SUNDRY CREDITORS : (Other than SSI’s) (a) For Goods & Expenses 17,18,19,759 18,03,54,453 (b) For Other Liabilities 78,96,60,827 23,62,41,690 96,14,80,586 41,65,96,143 2. PROVISIONS : (a) Proposed Dividend 72,97,900 2,07,71,700 (b) Tax on Dividend 12,40,278 29,13,231 85,38,178 2,36,84,931 Note: There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
Annual Report 2006-2007 31 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT AS AT 31st MARCH, 2007 (Amount in Rs.)
As at 31.03.2007 As at 31.03.2006
SCHEDULE – J OTHER INCOME (a) Rent 3,18,76,616 3,25,57,184 (TDS Rs. 17,00,484/-) (Previous Year Rs. 60,53,262/-)
(b) Dividend : From Long Term Investments 21,14,525 13,03,544
(c) Miscellaneous Income 25,57,873 7,13,137 3,65,49,014 3,45,73,865
SCHEDULE – K CONSTRUCTION EXPENSES
(a) Materials
Opening Stock of Material 4,15,07,625 3,52,33,607
Add : Purchases 90,57,31,026 40,03,89,852
94,72,38,651 43,56,23,459
Less : Closing Stock 20,66,78,147 4,15,07,625
74,05,60,504 39,41,15,834
(b) Sub-Contracting and Transportation Expenses 72,13,43,895 54,46,51,623
(c) Power and Fuel 13,43,60,145 5,69,80,484
(d) Value Added Tax/Service Tax 5,06,59,213 1,86,90,055
(e) Repairs, Rent & Maintenances to P & M and Vehicles, etc. 17,55,80,222 7,38,43,613
(f) Insurance 1,11,13,752 95,21,770
(g) Site Expenses 35,41,92,055 24,57,14,684
2,18,78,09,786 1,34,35,18,063
32 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT AS AT 31st MARCH, 2007 (Amount in Rs.)
As at 31.03.2007 As at 31.03.2006
SCHEDULE – L EMPLOYEES REMUNERATION & WELFARE EXPENSES Salaries, Wages, Gratuity and Bonus 6,16,23,280 2,71,62,500 Contribution to Provident Fund, etc. 40,89,603 13,39,001 Welfare Expenses 5,48,520 6,03,249 6,62,61,403 2,91,04,750
SCHEDULE – M ADMINISTRATIVE AND OTHER EXPENSES (a) Rates & Taxes 10,35,702 9,06,519 (b) Printing and Stationery 7,69,930 7,20,425 (c) Telephone and Postage 19,33,268 16,32,415 (d) Advertisement 5,56,644 4,98,139 (e) Travelling & Conveyance 9,37,868 6,29,983 (f) Business Promotion 11,04,583 7,77,692 (g) Electricity Charges 9,71,565 9,20,079 (h) Professional Fees 64,17,691 50,83,273 (i) Office Maintenance 48,78,432 43,53,430 (j) Tender Expenses 16,73,771 55,13,001 (k) Bank Charges 7,01,246 4,62,621 (l) Directors Remuneration 89,99,341 69,01,157 (m) Commission to Non-Executive Directors 16,00,000 9,00,000 (n) Auditor's Remuneration 3,93,216 3,62,170 (o) General Expenses 9,72,812 5,52,224 (p) Loss on Sale of Assets 1,36,33,258 10,49,528 4,65,79,327 3,12,62,656
SCHEDULE – N FINANCIAL COST Interest Paid to : (a) Banks 1,25,33,727 61,46,176 (b) Institutions 2,13,00,802 1,27,20,522 (c) Others 70,22,110 1,01,97,742 4,08,56,639 2,90,64,440 Less : Interest Earned 1,92,43,583 62,67,246 (TDS of Rs. 24,04,459/-) (Previous Year Rs. 7,13,448/-) Profit on Foreign Exchange 66,86,920 30,35,068 1,49,26,136 1,97,62,126
Annual Report 2006-2007 33 VALECHA ENGINEERING LIMITED Engineers & Contractors
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2007 (Amount in Rs.)
As at 31.03.2007 As at 31.03.2006
A. Cash Flow from Operating Activity
Profit Before Tax and Extraordinary Items 33,00,56,969 29,54,15,594
Add/(Deduct) Adjustment for:
Depreciation 4,98,21,775 2,87,70,467
Financial cost 4,08,56,639 2,90,64,440
Dividend on Investment (21,14,525) (13,03,544)
Rent from Property (3,18,76,616) (3,25,57,184)
Miscellaneous Income (25,57,873) (7,13,137)
Interest Earned (1,92,43,583) (62,67,246)
Profit on Sale of Long Term Investment (18,10,81,106) (19,98,51,480)
Operating Profit Before Working Capital Changes 18,38,61,680 11,25,57,910
Adjustment for:
Trade and other Receivables (39,58,72,693) (40,18,05,140)
Inventories/WIP (26,72,90,976) 3,65,08,124
Trade and other Payables 54,91,49,924 33,57,26,058
Cash Generated from Operations 6,98,47,935 8,29,86,952
Direct Taxes (Paid) (2,52,12,610) (2,84,51,722)
Prior year adjustments (12,07,309) 7,00,607
Net Cash Flow from Operating Activity 4,34,28,016 5,52,35,837
B. Cash Flow from Investing Activity
Purchase of Fixed Assets (74,92,24,469) (13,67,73,336)
Proceeds from Sale of Fixed Assets 4,68,38,255 21,04,528
Proceeds from Sale of Investments 19,23,65,106 21,55,95,639
Investment in Wholly Owned Subsidiary — (5,00,000)
Advance against Investment/Fixed Assets (5,53,49,000) (3,72,54,688)
Advance to Subsidiary Company (28,96,54,028) (21,61,89,000)
Dividend on Investment 21,14,525 13,03,544
Rent, Interest and Miscellaneous Receipts 5,36,78,072 3,95,37,567
Net Cash from Investing Activity (79,92,31,539) (13,21,75,746)
34 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2007 — (Contd.) (Amount in Rs.)
As at 31.03.2007 As at 31.03.2006
C. Cash Flow from Financing Activities
Proceeds from Issue of Share Capital 37,40,000 2,42,39,000
Proceeds from Share Premium 7,08,91,700 57,09,48,885
Proceeds from Long Term Borrowings 50,11,42,886 (3,92,67,895)
Financial Cost (4,08,56,639) (2,90,64,440)
Dividend Paid (2,07,71,700) (1,35,00,000)
Dividend Tax Paid (29,13,231) (18,93,375)
Net Cash used in Financing Activities 51,12,33,016 51,14,62,175
Net Increase in Cash and Cash Equivalents (24,45,70,507) 43,45,22,266
Opening Balance of Cash and Cash Equivalents 49,99,17,826 6,53,95,560
Closing Balance of Cash and Cash Equivalents 25,53,47,319 49,99,17,826 (Ref. Schedule G (4) (b) (ii)
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
Annual Report 2006-2007 35 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULE - I NOTES FORMING PART OF THE ACCOUNTS AS AT 31st MARCH, 2007.
(1) Significant Accounting Policies :
A. Basis of Preparation of Accounts : i. The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company.
ii. The Company follows accrual system of accounting except otherwise stated.
B. Fixed Assets : i. Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount.
ii. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.
C. Depreciation : i. Depreciation on Fixed Assets is calculated on “Straight Line Method” at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.
ii. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.
D. Work-in-progress : Work-in-progress is valued at Cost or net realisable value whichever is lower.
E. Inventories : The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-in-First-out method.
F. Investments : Long term Investments are stated at cost. It includes Office Premises in Valecha chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.
G. Disclosure of the Revenue Recognition as per Accounting Standard – 7 : (a) On Contracts : i. The Company follows the “Percentage of Completion Method” of accounting for all contracts in accordance with “Accounting Standard – 7” “Accounting for Construction Contracts” issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.
36 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
Disclosure as required under Accounting Standard – 7 for the contracts awarded after 01.04.2003 are given below : (Rs. in lacs)
Sr. No. Particulars 31.03.2007 31.03.2006
I Contract Revenue Recognised as revenue in the period 23,107.94 11,628.65
II Contract Costs Recognised as expenses in the period 20,794.64 10,321.31
III Recognized Profit 2,313.30 1,307.34
IV Progress Billings in the period 23,107.94 11,628.65
V Amount Due from customers (Amount Receivable -Bills) 6,248.43 3,229.15
VI Amount Due to customers (Mobilisation/Machinery advance) 3,466.59 1,745.74
ii. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the Contracts for such claims or variations and/or evidence of the acceptability of the same from customers.
iii. Uncertified work-in-progress is recognised as revenues and is valued at the lower of cost and net realisable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.
iv. Contracts executed in Joint Ventures under work sharing arrangement (Consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of profit/(Loss) is recognised as a income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/Income received.
(b) Wind Mill : Energy generated through windmill Installed at Lamba, Jamnagar (Dist.), Gujarat is sold to Gujarat Electricity Board at their prescribed power purchase price. During the year the Company has disposed off its Wind Mill.
(c) Exceptional Income : Exceptional Income of Rs. 18,10,81,106/- (2005-06 Rs. 19,98,51,480/-) pertains to Profit on Sale of 15,50,000 Nos. (2005-06 Nos. 20,00,000) Shares of Jyoti Structures Ltd.
H. Advances from Customers and Progress payments : i. Advances received from customers in respect of contracts are treated as liabilities. ii. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed. iii. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.
I. Retirement Benefits : i. The Company has opted for the Group Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India (LIC). The Company’s contribution to this scheme is charged to the Profit and Loss Account for the year. The difference between the actuarial valuation by LIC and the funds with LIC has been adequately provided for in the Profit and Loss Account.
ii. The contributions to the Provident Fund, a defined contribution scheme are charged to the Profit and Loss Account.
iii. The Company does not have scheme of leave encashment.
Annual Report 2006-2007 37 VALECHA ENGINEERING LIMITED Engineers & Contractors
(2) Issue of Shares during the year : i. Out of the allotted 20,48,900 Preferential Warrants with an option to subscribe to equity shares on a future date, in respect of 4,23,900 warrants, the company had received the entire issue price for which equity shares were allotted with the nominal value of Rs. 10/- each with a premium of Rs.189.55/- per share during the year 2005-06. Further in respect of 3,74,000 warrants, the Company has received the entire issue price for which equity shares were allotted with the nominal value of Rs. 10/- each with a premium of Rs.189.55/- per share during the year 2006-07.
Consequent to the above, Share Capital is increased by Rs. 37,40,000/- and the Share Premium account by Rs. 7,08,91,700/-.
ii. During the year the Company has allotted additional 10,00,000 Preference warrants @ Rs. 300 per warrant as approved in the Extra Ordinary General Meeting held on 7th March, 2007. In respect of 5,30,000 warrants the Company has received Rs. 30 per warrant being 10% of the issue price as advance.
(3) Contingent Liability :
Contingent Liabilities are not provided for and are disclosed by way of notes :
i. Bank Guarantee outstanding amounting to Rs. 14,284.32 lacs (Previous Year Rs. 9,138.84 lacs)
ii. The Company has preferred an Appeal to the Income Tax Appellate Tribunal for an addition of Income of Rs. 58.59 lacs (Net of Tax Rs. 28.27 Lacs) Previous Year Rs. 58.59 lacs (Net of Tax Rs. 28.27 Lacs) confirmed by the Commissioner of Income Tax (Appeal).
(4) Provision for Taxes :
i. Current Tax : The Provision for Income Tax is determined in accordance with provisions of Income Tax Act, 1961.
ii. Deferred Tax Provision : Deferred Tax charge or credit is recognized on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted by the balance sheet date. Deferred Tax Liability at the Year end comprises timing difference of (Rs. in lacs)
Deferred Tax Liabilities as at Current Year Charged to Deferred Tax Liabilities as 01.04.2006 P & L A/c. at 31.03.2007
Depreciation 781.99 232.89 1,014.88
. iii. Fringe Benefit Tax :
Tax on Fringe Benefits is measured at the specified rates on the value of Fringe Benefits in accordance with the provisions of the section 115 WC of the Income Tax Act, 1961. Accounting for Fringe Benefit Tax is done as per the Guidance Note issued by the Institute of Chartered Accountants of India.
(5) Foreign Currency Transaction : i. Transactions denominated in Foreign Currency are normally recorded at Exchange Rate prevailing at the time of transactions. ii. Current asset denominated in Foreign Currency are translated at the rate prevailing at the end of the year and the net gain/loss is recognized in Profit and Loss Account by reducing/increasing it from the Financial Costs.
(6) Under “Loans and Advances” sub head “Advances recoverable in cash or kind” includes Rs. 23.00 lakhs due from the parties, the Company is hopeful of recovering the same as the action has been initiated towards recovery. The Company considers the same as good and recoverable.
38 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(7) Segment reporting : The Company considers its operations as one single segment i.e. “Construction Activity” and as such, AS-17 is not applicable.
(8) Related Party Disclosure : Disclosure as required by the Accounting Standard 18 “Related Party Disclosures” are given below :
Name of the Related Party Nature of Relationship % of Profit
(A) Particulars of Subsidiary & Associate Companies/Firm
1. Valecha Infrastructure Ltd. Wholly Owned Subsidiary Company 100%
2. Gopaldas Vasudev Construction Pvt. Ltd. Associate Company Nil
3. Valecha Investment Pvt. Ltd. Associate Company Nil
4. Construction Machinery Corporation Associate Firm Nil
5. First Fitness (India) Pvt. Ltd. Associate Company Nil
6. F2 Fun-N-Fitness Pvt. Ltd. Associate Company Nil
(B) Particulars of Joint Ventures & Consortium
1. Valecha Engineering Limited & AMA Pvt. Ltd. (Consortium) Consortium Member
2. Valecha Engineering Limited & M. Venkata Rao (Joint Venture) Joint Venture Member
3. Venkata Rao – Valecha (Consortium) Consortium Member
4. Valecha – S. N. Shah (Consortium) Consortium Member
5. Valecha – NAPC (Consortium) Consortium Member
6. Ashoka Buildcon – Valecha Engineering Limited (Joint Venture) Joint Venture Member
7. Valecha – ECCI (Joint Venture) Joint Venture Member
8. Valecha – TBL (Joint Venture) Joint Venture Member
(C) Key Management Personnel
1. Vasudev P. Valecha Chairman
2. Jagdish K. Valecha Managing Director
3. Ramchand H. Valecha Whole-time Director
4. Umesh H. Valecha Whole-time Director
5. Arvind B. Gogate Whole-time Director
6. Dinesh H. Valecha Whole-time Director
Annual Report 2006-2007 39 VALECHA ENGINEERING LIMITED Engineers & Contractors
(D) Transactions with Subsidiary & Associate Companies/Firms (Rs. in lacs)
2006-07 2005-06
1. Equity Contribution 104.69 104.69 2. Advance Share Application Money Received 199.03 139.65 3. Inter Corporate Deposit/Loans received during the year 3,099.25 997.44 4. Inter Corporate Deposit/Loans given/repaid during the year 5,908.74 3,145.82 5. Rent Received 15.48 15.51 6. Interest Received 11.37 4.49 7. Interest Paid 13.16 27.91 8. Other Payments received during the year 27.05 17.50 9. Other Payments made during the year 5.00 1.08 10. Outstanding Balance – Amount Receivables 5,178.43 2,250.64 11. Outstanding Balance – Amount Payables 331.76 191.41
(E) Transactions with Joint Ventures & Consortium
1. Sales 2,115.51 1,783.88 2. Advance Payments made during the year — 1.00 3. Outstanding Balance – Amount Receivables 956.98 346.92 4. Outstanding Balance – Amount Payables 10.00 10.00
(F) Transactions with Persons referred to in Item (C) above
1. Remuneration paid during the year 89.99 69.02 2. Sitting Fees paid during the year 0.35 0.50 3. Commission paid during the year 4.00 3.50 4. Rent paid during the year 0.45 —
(9) Remuneration to Directors : The amount paid or provided by way of remuneration to the Managing Director and the Whole-time Directors are as under : (Rs. in lacs)
2006-2007 2005-2006 (I) For Managing Director (i) Salary 16.33 13.17 (ii) Perquisites 2.19 1.81
Total 18.52 14.98
(II) For Whole-time Directors (i) Salary 68.88 52.62 (ii) Perquisites 2.69 1.42
Total 71.47 54.04
40 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(10) Commission to Non-Executive Directors : Computation of Net Profit in accordance with the Company’s Act, 1956. (Rs. in lacs) 2006-2007 2005–2006 Profit Before Taxation as per Profit & Loss Account 3,300.57 2,954.16 Add : (1) Depreciation Provided in the Books 498.22 287.70 (2) Loss on Sale of Assets 136.33 10.50 3,935.12 3,252.36 Less : (1) Depreciation under Section 350 of the Company’s Act, 1956 498.22 287.70 (2) Profit on Sale of Investment & Assets 1,810.81 1,998.52 1,626.09 966.14 Commission up to 1% thereof 16.26 9.66 Restricted by the Board of Directors of the Company 16.00 9.00
(11) Remuneration to Auditors : (Rs. in lacs) 2006-2007 2005–2006 1. Audit Fee 2.25 1.75 2. Taxation Matters 1.00 1.00 3. Certification & Others 0.36 0.66 4. Service Tax 0.32 0.21 Total 3.93 3.62
(12) Additional Information pursuant to the provision of part II Schedule VI to the Companies Act, 1956 :
2006-2007 2005–2006 Qty. Rupees Qty. Rupees (in lacs) (in lacs) I. In respect of Wind Farm : (a) Power Generated : In Units 244867 772146 (b) Power Sold : In Units 244867 772146 : In Value 4.29 13.51 II. In respect of Foreign Exchange : (a) Foreign Exchange Earning Receipts from GDR Issue 2,628.14 2,224.21 Interest & Fluctuation in Foreign Currency 39.55 50.24 (b) Expenditure in Foreign Currency i. C.I.F. Value of Imports (a) Capital Goods 4,941.80 866.50 (b) Components & Spare Parts 33.59 15.91 ii. Traveling Expenses & Others 5.43 0.92 iii. Expenditure on GDR Issue — 193.44 iv. Outward Remittances 293.06 — NRI No. of Shares Amount Shareholders (Rs. in lacs) (c) Remittance of Dividend in Foreign Currency In Respect of Financial Year 2005-06 65 1335835 40.80 In Respect of Financial Year 2004-05 35 119556 3.59
Annual Report 2006-2007 41 VALECHA ENGINEERING LIMITED Engineers & Contractors
(13) Earning Per Share :
Particulars 2006-07 2005-06
1. Net Profit after Tax (With Exceptional Income) (In Rs.) 27,75,04,783 26,80,74,201 Less: Exceptional Income (In Rs.) 18,10,81,106 19,98,51,480
2. Net Profit after Tax & Exceptional Income (In Rs.) 9,64,23,677 6,82,22,721
3. Weighted average Number of shares for Basic EPS (In Numbers) 69,55,067 48,68,659
4. Weighted average Number of shares for Diluted EPS (In Numbers) 82,06,067 56,81,158
5. Basic Earning Per share (Rs.) With Exceptional Income 39.90 55.06 Without Exceptional Income 13.86 14.01
6. Diluted Earning Per share (Rs.) With Exceptional Income 33.82 47.19 Without Exceptional Income 11.75 12.01
(14) Since the principal business of the company is construction activity quantitative data in respect of trading and manufacturing activities carried out by the company as required by Part II of schedule VI to the Company’s Act, 1956 is not furnished.
(15) The Company is in the process of identifying suppliers falling under the Micro, Small and Medium Enterprises Development Act, 2006.
(16) The previous years’ figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
42 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I. Registration Details Registration No. 19535 State Code 11 Balance Sheet Date 31.03.2007
II. Capital Raised during the year (Amount in Rs. Thousands) Public Issue Right Issue NIL NIL Bonus Issue Private Placement NIL 3,740
III. Position of Mobilisation & Development of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 27,56,618 27,56,618 Source of Funds Paid-up Capital Reserves & Surplus 72,979 14,48,184 Secured Loans Unsecured Loans 10,67,182 66,785 Deferred Tax Liability 1,01,488 Application of Funds Net Fixed Assets Investments 13,47,549 70,239 Net Current Assets Share Issue Expenses 13,38,830 NIL Accumulated Losses NIL
IV. Performance of Company (Amount in Rs. Thousands) Total Income * Total Expenditure 26,95,726 23,65,669 Profit/(Loss) before Tax Profit/(Loss) after Tax 3,30,057 2,77,505 Earning per Share (Rs.) Dividend Rate Basic Diluted 10% With Extraordinary Item 39.90 33.82 Without Extraordinary Item 13.86 11.75
V. Generic Names of Principal Products/ Services of the Company (As per Monetary basis) Item Code No. NIL Products Description Infrastructure Development, Real Estate Development and Wind Power Generation * after considering exceptional income
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director Place : Mumbai. Date : 29th June, 2007.
Annual Report 2006-2007 43 VALECHA ENGINEERING LIMITED Engineers & Contractors
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956. Statement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Company M/s. Valecha Infrastructure Limited.
1. The Financial period of the Company ended on 31.3.2007.
2. Shares of the Subsidiary company held by M/s. Valecha Engineering Limited. (a) Numbers : 50,000 (b) Face Value per share : Rs. 10/- (c) Extent of holding : 100%
3. The Net aggregate of Profit of the Subsidiary Company for the Accounting Period, so far as they concern the members of M/s.Valecha Engineering Limited : (a) Dealt with in the account of M/s. Valecha Engineering Limited : Rs. 6.76 Lacs (b) Not dealt with in the account of M/s. Valecha Engineering Limited : Nil
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Kavita Valecha Sharma V. P. Valecha J. K. Valecha Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
INFORMATION ON THE FINANCIAL OF THE SUBSIDIARY COMPANY M/S. VALECHA INFRASTRUCTURES LIMITED As per the exemption Letter of the Ministry of Company affairs Government of India (Rs. in lacs) Sr. Particulars Valecha Infrastructure Ltd. 1. Capital 5.00 2. Reserves & Surplus 6.76 3. Total Assets 5,070.19 4. Total Liabilities 5,070.19 5. Details of Investment 5,066.49 6. Turnover 0 7. Other Income (Dividend) 8.00 8. Profit Before Taxation 6.76 9. Profit After Taxation 6.76 10. Proposed Dividend N.A.
Notes : (1) Please refer to consolidated financial statements and notes appearing there on. (2) The Ministry of Company affairs vide its letter No. 47/294/2007 CI – III Dated 12.06.2007 granted approval to the company for not attaching the financials of the subsidiary company to the financials of the Company for the Financial year 2006-07. (3) The members if they desire, may write to the company at the Regd. Office situated at Valecha Chambers, 7th floor, Andheri New Link Road, Andheri (W), Mumbai-53 to obtain a copy of the financials of its subsidiary company. (4) The annual accounts of the subsidiary company can be inspected by the members at the Regd. Office of the company.
44 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
AUDITOR’S REPORT ON CONSOLIDIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF VALECHA ENGINEERING LIMITED We have audited the attached Consolidated Balance Sheet of of India and on the basis of the separate audited financial VALECHA ENGINEERING LIMITED (“the Company”) and statements of the Company and its subsidiaries included in the its subsidiaries (the company and its subsidiaries constitute ‘the consolidated financial statements. Group’) as at 31st March, 2007, and also the Consolidated Profit On the basis of the information and explanations given to us and and Loss Account and the Consolidated Cash Flow Statement for on the consideration of the separate audit reports on individual the year ended on that date annexed thereto. These consolidated audited financial statements of the Company and its subsidiaries, financial statements are the responsibility of the Company’s we are of the opinion that the Consolidated Financial Statements management and have been prepared by the management on give a true and fair view in conformity with the Accounting the basis of separate financial statements and other financial Principles generally accepted in India : information regarding the subsidiaries. Our responsibility is to express an opinion on these consolidated financial statements (a) in the case of the Consolidated Balance Sheet, of the based on our audit. consolidated state of affairs of the Group as at 31st March, 2007; We conducted our audit in accordance with generally accepted auditing standards in India. Those Standard require that we (b) in the case of the Consolidated Profit and Loss Account, of plan and perform the audit to obtain reasonable assurance about the consolidated results of operations of the Group for the whether the financial statements are prepared, in all material year ended on that date; and respects, in accordance with an identified financial reporting (c) in the case of the Consolidated Cash Flow Statement, of the framework and are free of material mis-statements. An audit Cash Flows of the Group for the year ended on that date. includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating For D. M. JANI & CO. the overall financial statement presentation. We believe that our Chartered Accountants audit provides a reasonable basis for our opinion. DILIP M. JANI We report that the consolidated financial statements have been Proprietor prepared by the Company in accordance with the requirements Membership No. 17259 of Accounting Standard (AS) 21 on “Consolidated Financial Place : Mumbai Statements”, issued by the Institute of Chartered Accountants Date : 29th June, 2007.
Annual Report 2006-2007 45 VALECHA ENGINEERING LIMITED Engineers & Contractors
CONSOLIDATED BALANCE SHEET AS AT 31st MARCH, 2007
(Amount in Rs.)
SCHEDULE As at 31st March, 2007 As at 31st March, 2006
I SOURCES OF FUNDS : 1. Shareholders' Funds : (a) Share Capital A 7,29,79,000 6,92,39,000 (b) Reserves & Surplus B 1,44,84,97,261 1,10,97,91,434 1,52,14,76,261 1,17,90,30,434
2. Loan Funds : (a) Secured Loans C 1,06,71,82,032 40,78,56,135 (b) Unsecured Loans D 6,67,85,075 1,13,39,67,107 5,28,82,875 46,07,39,010
3. Deferred Tax Liability : 10,14,88,327 7,81,99,500 Total 2,75,69,31,695 1,71,79,68,944
II APPLICATION OF FUNDS : 1. Fixed Assets : E (a) Gross Block 1,32,58,59,905 65,31,22,326 (b) Less : Depreciation 16,09,79,423 14,00,94,168 (c) Net Block 1,16,48,80,482 51,30,28,158 (d) Capital Work-in-Progress 18,26,68,730 —
2. Investments F 57,63,87,424 29,72,09,928
3. Current Assets, G Loans & Advances : (a) Inventories 20,66,78,147 4,15,07,625 (b) Work-in-Progress 10,39,01,630 17,81,177 (c) Sundry Debtors 66,83,77,740 46,30,56,241 (d) Cash & Bank Balances 25,53,66,575 49,99,71,991 (e) Loans & Advances 56,87,00,956 34,17,00,511 1,80,30,25,048 1,34,80,17,545 Less : Current Liabilities and Provisions H (a) Current Liabilities 96,14,91,811 41,66,01,756 (b) Provisions 85,38,178 2,36,84,931 97,00,29,989 44,02,86,687 NET CURRENT ASSETS 83,29,95,059 90,77,30,858 Total 2,75,69,31,695 1,71,79,68,944 Notes to the Accounts I As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
46 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors CONSOLIDATED PROFIT & LOSS ACCOUNT FOR YEAR ENDED 31st MARCH, 2007
(Amount in Rs.)
SCHEDULE As at 31st March, 2007 As at 31st March, 2006
INCOME Receipts from Operations 2,47,76,67,119 1,51,24,05,495 Wind Farm Income 4,28,517 13,51,256 Other Income J 3,73,49,014 3,45,73,865 Total 2,51,54,44,650 1,54,83,30,616
EXPENDITURE Construction Expenses K 2,18,78,09,786 1,34,35,18,063 Wind Farm Expenses 2,70,360 3,48,440 Employees Remuneration & Welfare Expenses L 6,62,61,403 2,91,04,750 Administrative & Other Expenses M 4,66,12,380 3,12,62,656 Financial Cost N 1,49,26,136 1,97,62,126 Depreciation/Amortisation 5,05,33,891 2,94,82,583 Less : Amount withdrawn from Revaluation Reserve 7,12,116 4,98,21,775 7,12,116 2,87,70,467
Total 2,36,57,01,840 1,45,27,66,502 Profit Before Exceptional Income & Taxation 14,97,42,810 9,55,64,114 Add : Exceptional Income 18,10,81,106 19,98,51,480 [Ref: Note No. 1(H)(c) of Sch. I] Profit Before Taxation 33,08,23,916 29,54,15,594 Provision for Taxation: Minimum Alternate Tax (MAT) 3,68,00,000 2,20,00,000 Less : Mat Credit Entitlement 80,60,000 — Net Minimum Alternate Tax (MAT) 2,87,40,000 2,20,00,000 Deferred Tax 2,32,88,827 49,23,393 Fringe Benefit Tax 5,23,359 5,25,52,186 4,18,000 2,73,41,393 PROFIT AFTER TAX 27,82,71,730 26,80,74,201 Add : Balance Brought Forward from Last Year 34,67,47,630 11,14,42,150 Prior Year Adjustment for Taxes & Depreciation (12,07,309) 1,09,16,210 Profit for Appropriation 62,38,12,051 39,04,32,561
APPROPRIATIONS Proposed Dividend 72,97,900 2,07,71,700 Tax on Dividend 12,40,278 29,13,231 Transfer to General Reserves 2,00,00,000 2,00,00,000 Balance carried to Balance-Sheet 59,52,73,873 34,67,47,630 62,38,12,051 39,04,32,561 Notes to the Accounts I As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
Annual Report 2006-2007 47 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE-SHEET AS AT 31st MARCH, 2007
(Amount in Rs.)
As at 31st March, 2007 As at 31st March, 2006
SCHEDULE – A SHARE CAPITAL
Authorised : 2,00,00,000 (Previous Year 1,00,00,000) Equity Shares of Rs. 10/- each 20,00,00,000 10,00,00,000 (Authorised Capital increased persuant to Share Holders approval in the Extra Ordinary General Meeting held on 07.03.2007)
Issued & Subscribed : 72,97,900 (Previous Year 69,23,900) Equity Shares of Rs. 10/- each fully paid-up. (Ref. Note No. 2 of Schedule-I) (Of the above Shares 10,00,000 Shares (F.Y. 1993-1994) and 15,00,000 Shares (F.Y. 2002-2003) are allotted as fully paid-up by way of Bonus Shares by capitalisation of General Reserve). 7,29,79,000 6,92,39,000 7,29,79,000 6,92,39,000
SCHEDULE – B RESERVES AND SURPLUS 1. Capital Reserve : Balance as per last Balance-Sheet 1,22,28,822 1,29,40,938 Less : Difference in depreciation on revalued cost of assets and that on its original cost 7,12,116 7,12,116 1,15,16,706 1,15,16,706 1,22,28,822 1,22,28,822
2. Share Premium Account : Balance as per last Balance Sheet 59,39,95,859 2,35,00,000 Additions during the year (Ref. Note No. 2 of Sch - I) 7,08,91,700 59,63,49,995 66,48,87,559 61,98,49,995 Less : Share Issue Expenses — 66,48,87,559 2,58,54,136 59,39,95,859
3. General Reserve : Balance as per last Balance-Sheet 15,68,19,123 13,68,19,123 Add : Transfered from Profit & Loss Appropriation Account 2,00,00,000 17,68,19,123 2,00,00,000 15,68,19,123
4. Profit & Loss Account Balance : 59,52,73,873 34,67,47,630 1,44,84,97,261 1,10,97,91,434
48 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE-SHEET AS AT 31st MARCH, 2007
(Amount in Rs.)
As at 31st March, 2007 As at 31st March, 2006
SCHEDULE – C SECURED LOANS 1. Banks Cash Credit against Book Debts 14,94,43,432 6,35,00,110
2. Contractees Secured by Guarantees from Banks 34,66,59,107 17,45,73,896
3. Financial Institutions/Banks Against Plant & Machineries, Vehicles and Other Current Assets 57,10,79,493 16,97,82,129 1,06,71,82,032 40,78,56,135
SCHEDULE – D UNSECURED LOANS 1. Fixed Deposits 2,40,19,000 2,04,56,000
2. Advance – Preferential Warrants/Share Application Money 4,27,66,075 3,24,26,875 6,67,85,075 5,28,82,875
Schedule – E FIXED ASSETS & DEPRECIATION (Amount in Rs.)
GROSS BLOCK DEPRECIATION NET BLOCK PARTICULARS As at Addition Deduction As at Upto For the Adjustment As at As at As at 01.04.2006 31.03.2007 31.03.2006 Year 31.03.2007 31.03.2007 31.03.2006
Land 16,19,224 — — 16,19,224 — — — — 16,19,224 16,19,224
Buildings 3,69,14,803 — — 3,69,14,803 60,20,082 6,01,712 — 66,21,794 3,02,93,009 3,08,94,721
Plant & Machinery 53,83,01,712 65,70,38,727 7,43,73,064 1,12,09,67,375 10,63,66,301 3,62,27,880 2,83,53,686 11,42,40,495 1,00,67,26,880 43,19,35,411
Furniture, Fixtures & Office Equipments 2,57,08,462 60,28,884 — 3,17,37,346 93,02,315 20,48,497 — 1,13,50,812 2,03,86,534 1,64,06,147
Vehicles 5,05,78,125 8,61,56,858 21,13,826 13,46,21,157 1,84,05,470 1,16,55,802 12,94,950 2,87,66,322 10,58,54,835 3,21,72,655
Total 65,31,22,326 74,92,24,469 7,64,86,890 1,32,58,59,905 14,00,94,168 5,05,33,891 2,96,48,636 16,09,79,423 1,16,48,80,482 51,30,28,158
Previous Year 52,05,46,632 13,67,73,336 41,97,642 65,31,22,326 11,27,04,699 2,94,82,583 20,93,114 14,00,94,168 51,30,28,158 40,78,41,934
Capital Work-in-Progress 18,26,68,730 18,26,68,730 18,26,68,730
Annual Report 2006-2007 49 VALECHA ENGINEERING LIMITED Engineers & Contractors SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET AS ON 31.03.2007 SCHEDULE – F INVESTMENTS (TRADE) (AT COST) As at 31.03.2007 As at 31.03.2006
Name of the Company Qty. Book value Qty. Book value Nos. Rupees Nos. Rupees
LONG TERM INVESTMENTS (AT BOOK VALUE) TRADE INVESTMENTS A. QUOTED & FULLY PAID: Equity Shares : (1) Jyoti Structures Ltd. 54,31,400 52,06,05,481 54,31,400 24,14,27,985 (Face Value Rs. 2/- each) (One Share of Face Value Rs. 10 Splitted into 5 Shares of Rs. 2 each on 5.8.2006) (2) Kalindee Rail Nirman Engineers Ltd. 4,363 91,852 4,363 91,852 (Face Value Rs. 10/- each) Total 52,06,97,333 24,15,19,837
B. UNQUOTED & FULLY PAID : Equity Shares : (1) The Saraswat Co-op. Bank Ltd. (Face Value Rs. 10/- each) 2,500 25,000 2,500 25,000
(2) The Janakalyan Sahakari Bank Ltd. (Face Value Rs. 10/- each) 50,000 5,00,000 50,000 5,00,000
(3) Valecha Chambers Condominium (Face Value Rs. 100/- each) 17 1,700 17 1,700
(4) The Thane Janta Sahakari Bank Ltd. (Face Value Rs. 50/- each) 1 50 1 50
(5) Varun Cements Ltd. (Face Value Rs. 10/- each) 42,800 2,20,000 42,800 2,20,000
(6) F2 Fun-N-Fitness (I) Pvt. Ltd. (Face Value Rs. 100/- each) 8,400 8,40,000 8,400 8,40,000
(7) First Fitness (I) Pvt. Ltd. (Face Value Rs. 100/- each) 91,289 91,28,900 91,289 91,28,900 Total 1,07,15,650 1,07,15,650
C. BONDS & OTHER INVESTMENTS :
National Savings Certificate 1,000 1,000 1,000 1,000
D. BUILDING VALECHA CHAMBERS 4,49,73,441 4,49,73,441
Abstract : A. Quoted 52,06,97,333 24,15,19,837 B. Unquoted 1,07,15,650 1,07,15,650 C. Bonds & Other Investments 1,000 1,000 D. Building Valecha Chambers 4,49,73,441 4,49,73,441 Grand Total 57,63,87,424 29,72,09,928
Market Value of Quoted Investment in Shares : 92,59,97,498 59,26,37,080 Total 92,59,97,498 59,26,37,080
50 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE-SHEET AS AT 31st MARCH, 2007 (Amount in Rs.) As at 31.03.2007 As at 31.03.2006 SCHEDULE – G
CURRENT ASSETS, LOANS AND ADVANCES 1. Inventories : Closing Stock of Materials 20,66,78,147 4,15,07,625 (As Certified by the Management) 20,66,78,147 4,15,07,625
2. Work in Progress : 10,39,01,630 17,81,177 10,39,01,630 17,81,177
3. Sundry Debtors : (Unsecured and Considered Good) (a) Exceeding Six months 11,25,03,511 7,29,48,118 (b) Within Six Months 55,58,74,229 39,01,08,123 66,83,77,740 46,30,56,241 4. Cash and Bank Balances : (a) Cash on Hand 4,72,524 4,29,792 (b) With Scheduled Banks (i) In Current Accounts 7,79,55,453 11,32,59,934 (ii) In Deposit Accounts 17,69,38,598 38,62,82,265 [Lien against Bank Guarantees & L.Cs Rs. 1,719.38 lacs (Previous year Rs. 841.59 lacs) 25,53,66,575 49,99,71,991 5. Loans and Advances : (Unsecured and considered good) (a) Advances recoverable in cash or in kind or for value to be received 34,24,18,255 20,32,54,852 (b) Deposits with clients & others 19,57,42,026 10,38,54,234 (c) Prepaid Taxes (Net of Provisions) Advance Tax Paid 10,66,40,675 8,61,41,425 Less : Provision for Taxation 7,61,00,000 3,05,40,675 5,15,50,000 3,45,91,425
56,87,00,956 34,17,00,511
SCHEDULE – H CURRENT LIABILITIES AND PROVISIONS 1. CURRENT LIABILITIES : SUNDRY CREDITORS : (Other than SSI’S) (a) For Goods & Expenses 17,18,19,759 18,03,54,453 (b) For Other Liabilities 78,96,72,052 23,62,47,303 96,14,91,811 41,66,01,756 2. PROVISIONS : (a) Proposed Dividend 72,97,900 2,07,71,700 (b) Tax on Dividend 12,40,278 29,13,231 85,38,178 2,36,84,931 Note: There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
Annual Report 2006-2007 51 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF CONSOLIDATED PROFIT & LOSS ACCOUNT AS AT 31st MARCH, 2007 (Amount in Rs.) As at 31.03.2007 As at 31.03.2006
SCHEDULE – J
OTHER INCOME
(a) Rent 3,18,76,616 3,25,57,184 (TDS Rs. 17,00,484/-) (Previous Year Rs. 60,53,262/-) (b) Dividend : From Long Term Investments 29,14,525 13,03,544
(c) Miscellaneous Income 25,57,873 7,13,137
3,73,49,014 3,45,73,865
SCHEDULE – K
CONSTRUCTION EXPENSES
(a) Materials
Opening Stock of Material 4,15,07,625 3,52,33,607
Add : Purchases 90,57,31,026 40,03,89,852
94,72,38,651 43,56,23,459
Less : Closing Stock 20,66,78,147 4,15,07,625
74,05,60,504 39,41,15,834
(b) Sub-Contracting and Transportation Expenses 72,13,43,895 54,46,51,623
(c) Power and Fuel 13,43,60,145 5,69,80,484
(d) Value Added Tax/Service Tax 5,06,59,213 1,86,90,055
(e) Repairs, Rent & Maintenances to Plant & Machinery and Vehicles, etc. 17,55,80,222 7,38,43,613
(f) Insurance 1,11,13,752 95,21,770
(g) Site Expenses 35,41,92,055 24,57,14,684
2,18,78,09,786 1,34,35,18,063
52 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
SCHEDULES FORMING PART OF CONSOLIDATED PROFIT & LOSS ACCOUNT AS AT 31st MARCH, 2007 (Amount in Rs.) As at 31.03.2007 As at 31.03.2006
SCHEDULE – L EMPLOYEES REMUNERATION & WELFARE EXPENSES Salaries, Wages, Gratuity and Bonus 6,16,23,280 2,71,62,500 Contribution to Provident Fund, etc. 40,89,603 13,39,001 Welfare Expenses 5,48,520 6,03,249 6,62,61,403 2,91,04,750
SCHEDULE – M ADMINISTRATIVE AND OTHER EXPENSES (a) Rates & Taxes 10,35,702 9,06,519 (b) Printing and Stationery 7,69,930 7,20,425 (c) Telephone and Postage 19,33,268 16,32,415 (d) Advertisement 5,56,644 4,98,139 (e) Traveling & Conveyance 9,37,868 6,29,983 (f) Business Promotion 11,04,583 7,77,692 (g) Electricity Charges 9,71,565 9,20,079 (h) Professional Fees 64,17,691 50,83,273 (i) Office Maintenance 48,78,433 43,53,430 (j) Tender Expenses 16,73,770 55,13,001 (k) Bank Charges 7,01,246 4,62,621 (l) Directors Remuneration 89,99,341 69,01,157 (m) Commission to Non-executive Directors 16,00,000 9,00,000 (n) Auditor’s Remuneration 4,04,440 3,62,170 (o) General Expenses 9,94,641 5,52,224 (p) Loss on Sale of Assets 1,36,33,258 10,49,528 4,66,12,380 3,12,62,656
SCHEDULE – N FINANCIAL COST Interest Paid to : (a) Banks 1,25,33,727 61,46,176 (b) Institutions 2,13,00,802 1,27,20,522 (c) Others 70,22,110 1,01,97,742 4,08,56,639 2,90,64,440 Less : Interest Earned 1,92,43,583 62,67,246 (TDS of Rs. 24,04,459/-) (Previous Year Rs. 7,13,448/-) Profit on Foreign Exchange 66,86,920 30,35,068 1,49,26,136 1,97,62,126
Annual Report 2006-2007 53 VALECHA ENGINEERING LIMITED Engineers & Contractors
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2007 (Amount in Rs.) As at 31.03.2007 As at 31.03.2006 A. Cash flow from Operating Activity Profit Before Tax and Extraordinary Items 33,08,23,916 29,54,15,594 Add/(Deduct) Adjustment for : Depreciation 4,98,21,775 2,87,70,467 Financial cost 4,08,56,639 2,90,64,440 Dividend on Investment (29,14,525) (13,03,544) Rent from Property (3,18,76,616) (3,25,57,184) Miscellaneous Income (25,57,873) (7,13,137) Interest Earned (1,92,43,583) (62,67,246) Profit on Sale of Long Term Investment (18,10,81,106) (19,98,51,480) Operating Profit Before Working Capital Changes 18,38,28,627 11,25,57,910 Adjustment for : Trade and Other Receivables (39,58,72,693) (40,18,05,140) Inventories/WIP (26,72,90,975) 3,65,08,124 Trade and other Payables 54,91,55,535 33,57,31,671 Cash Generated from Operations 6,98,20,494 8,29,92,565 Direct Taxes (Paid) (2,52,12,610) (2,84,51,722) Prior year adjustments (12,07,309) 7,00,607 Net Cash Flow from Operating Activity 4,34,00,575 5,52,41,450 B. Cash Flow from Investing Activity Purchase of Fixed Assets (74,92,24,469) (13,67,73,336) Proceeds from Sale of Fixed Assets 4,68,38,255 21,04,528 Proceeds from Sale of Investments (9,80,96,390) (5,91,783) Advance against Investment/Fixed Assets (5,53,49,000) (3,72,54,688) Dividend on Investment 29,14,525 1,303,544 Rent, Interest and Miscellanous Receipts 5,36,78,072 3,95,37,567 Net Cash From Investing Activity (79,92,39,007) (13,16,74,168) C. Cash Flow from Financing Activities Proceeds from Issue of Share Capital 37,40,000 2,42,39,000 Proceeds from Share Premium 7,08,91,700 57,04,95,859 Proceeds from Long Term Borrowings 50,11,42,886 (3,92,67,895) Financial Cost (4,08,56,639) (2,90,64,440) Dividend Paid (2,07,71,700) (1,35,00,000) Dividend Tax Paid (29,13,231) (18,93,375) Net Cash Used in Financing Acitivities 51,12,33,016 51,10,09,149 Net Increase in Cash and Cash Equivalents (24,46,05,416) 43,45,76,431 Opening Balance of ‘Cash and Cash Equivalents 49,99,71,991 6,53,95,560 Closing Balance of ‘Cash and Cash Equivalents 25,53,66,575 49,99,71,991 [Ref.: Schedule G(4)(b)(ii)]
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director Place : Mumbai. Date : 29th June, 2007
54 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors SCHEDULE – I NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS AS AT 31st MARCH, 2007
(1) Significant Accounting Policies :
A. Consolidation of Accounts : The consolidated financial statements are prepared in accordance with Accounting Standard (AS) 21 on Consolidated Financial Statement issued by the Institute of Chartered Accountants of India. The Consolidated Financial Statements comprise the Financial Statements of Valecha Engineering Limited (Holding Company) and its Wholly Owned Subsidiary Company namely M/s. Valecha Infrastructure Limited.
B. Basis of Preparation of Accounts : i. The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company. ii. The Company follows accrual system of accounting except otherwise stated.
C. Fixed Assets : i. Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount. ii. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.
D. Depreciation : i. Depreciation on Fixed Assets is calculated on “Straight Line Method” at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. ii. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.
E. Work-in-progress : Work-in-progress is valued at Cost or Net realisable value whichever is lower.
F. Inventories : The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-In-First out method.
G. Investments : Long Term Investments are stated at cost. It include office premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.
H. Disclosure of the Revenue Recognition as per Accounting Standard-7 :
(a) On Contracts : i. The Company follows the “Percentage of Completion Method” of accounting for all contracts in accordance with “Accounting Standard-7” – “Accounting for Construction Contracts” issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.
Annual Report 2006-2007 55 VALECHA ENGINEERING LIMITED Engineers & Contractors
Disclosure as required under Accounting Standard-7 for the contracts awarded after 01.04.2003 are given below : (Rs. in lacs)
Sr. No. Particulars 31.03.2007 31.03.2006
I Contract Revenue Recognised as revenue in the period 23,107.94 11,628.65 II Contract Costs Recognised as expenses in the period 20,794.64 10,321.31 III Recognized Profit 2,313.30 1,307.34 IV Progress Billings in the period 23,107.94 11,628.65 V Amount Due from customers (Amount Receivable – Bills) 6,248.43 3,229.15 VI Amount Due to customers (Mobilisation/Machinery advance) 3,466.59 1,745.74
ii. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the Contracts for such claims or variations and/or evidence of the acceptability of the same from customers. iii. Uncertified work-in-progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads. iv. Contracts executed in Joint Ventures under work sharing arrangement (Consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of profit/(loss) is recognised as a income/(loss) in the Books of account of the Company in the year in which the relative contracts is/are completed/Income received.
(b) Wind Mill : Energy generated through windmill Installed at Lamba, Jamnagar (Dist), Gujarat is sold to Gujarat Electricity Board at their prescribed power purchase price. During the year the Company has disposed off its Wind Mill. (c) Exceptional Income : Exceptional Income of Rs. 18,10,81,106/- (2005-06 Rs. 19,98,51,480/-) pertains to Profit on Sale of 15,50,000 Nos. (2005-06 Nos. 20,00,000) Shares of Jyoti Structures Ltd.
I. Advances from Customers and Progress payments : i. Advances received from customers in respect of contracts are treated as liabilities. ii. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed. iii. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.
J. Retirement Benefits : i. The Company has opted for the Group Gratuity-Cum-Life Assurance scheme of the Life Insurance Corporation of India (LIC). The Company’s contribution to this scheme is charged to the Profit and Loss Account for the year. The difference between the actuarial valuation by LIC and the funds with LIC has been adequately provided for in the Profit and Loss Account. ii. The contributions to the Provident Fund, a defined contribution scheme are charged to the Profit and Loss Account. iii. The Company does not have scheme of leave encashment.
(2) Issue of Shares during the year : i. Out of the allotted 20,48,900 Preferential Warrants with an option to subscribe to equity shares on a future date, in respect of 4,23,900 warrants, the company had received the entire issue price for which equity shares were allotted with the nominal value of Rs. 10/- each with a premium of Rs. 189.55/- per share during the year 2005-06. Further in respect of 3,74,000 warrants, the company has received the entire issue price for which equity shares were allotted with the nominal value of Rs. 10/- each with a premium of Rs. 189.55/- per share during the year 2006-07. Consequent to the above, Share Capital is increased by Rs. 37,40,000/- and the Share Premium account by Rs. 7,08,91,700/-. ii. During the year the company has allotted additional 10,00,000 Preference warrants @ Rs. 300 per warrant as approved in the Extra Ordinary General Meeting held on 7th March, 2007. In respect of 5,30,000 warrants the Company has received Rs. 30 per warrant being 10% of the issue price as advance.
56 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(3) Contingent Liability : Contingent Liabilities are not provided for and are disclosed by way of notes : i. Bank Guarantee outstanding amounting to Rs. 14,284.32 lacs (Previous Year Rs. 9,138.84 lacs). ii. The Company has preferred an Appeal before the Income Tax Appellate Tribunal for an addition of Income of Rs. 58.59 lacs (Net of Tax Rs. 28.27 lacs) Previous Year Rs. 58.59 lacs (Net of Tax Rs. 28.27 lacs) confirmed by the Commissioner of Income Tax (Appeal).
(4) Provision for Taxes : i. Current Tax : The Provision for Income Tax is determined in accordance with provisions of Income Tax Act, 1961. ii. Deferred Tax Provision : Deferred Tax charge or credit is recognized, on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted by the balance sheet date. Deferred Tax Liability at the Year end comprises timing difference of : (Rs. in Lacs)
Deferred Tax Current Year Charged Deferred Tax Liabilities as at to P & L A/c. Liabilities as at 01.04.2006 31.03.2007
Depreciation 781.99 232.89 1,014.88
iii. Fringe Benefit Tax : Tax on Fringe Benefits is measured at the specified rates on the value of Fringe Benefits in accordance with the provisions of the Section 115WC of the Income Tax Act, 1961. Accounting for Fringe Benefit Tax is done as per the Guidance Note issued by the Institute of Chartered Accountants of India.
(5) Foreign Currency Transaction : i. Transactions denominated in Foreign Currency are normally recorded at Exchange Rate prevailing at the time of transactions. ii. Current asset denominated in Foreign Currency are translated at the rate prevailing at the end of the year and the net gain/(loss) is recognized in Profit and Loss Account by reducing/increasing it from the Financial Costs.
(6) Under “Loans and Advances” sub-head “Advances recoverable in cash or kind” includes Rs. 23.00 lakhs due from the parties, the company is hopeful of recovering the same as the action has been initiated towards recovery. The Company considers the same as good and recoverable.
(7) Segment reporting : The Company considers its operations as one single segment i.e. “Construction Activity” and as such, AS-17 is not applicable.
(8) Related Party Disclosure : Disclosure as required by the Accounting Standard 18 “Related Party Disclosures” are given below :
Name of the Related Party Nature of Relationship % of Profit (A) Particulars of Associate Companies/Firm 1. Gopaldas Vasudev Construction Pvt. Ltd. Associate Company Nil 2. Valecha Investment Pvt. Ltd. Associate Company Nil 3. Construction Machinery Corporation Associate Firm Nil 4. First Fitness (India) Pvt. Ltd. Associate Company Nil 5. F2 Fun-N-Fitness Pvt. Ltd. Associate Company Nil
Annual Report 2006-2007 57 VALECHA ENGINEERING LIMITED Engineers & Contractors
Name of the Related Party Nature of Relationship
(B) Particulars of Joint Ventures & Consortium 1. Valecha Engineering Limited & AMA Pvt. Ltd. (Consortium) Consortium Member 2. Valecha Engineering Limited & M Venkata Rao (Joint Venture) Joint Venture Member 3. Venkata Rao – Valecha (Consortium) Consortium Member 4. Valecha – S.N. Shah (Consortium) Consortium Member 5. Valecha – NAPC (Consortium) Consortium Member 6. Ashoka Buildcon – Valecha Engineering Limited (Joint Venture) Joint Venture Member 7. Valecha – ECCI (Joint Venture) Joint Venture Member 8. Valecha – TBL (Joint Venture) Joint Venture Member
(C) Key Management Personnel 1. Vasudev P. Valecha Chairman 2. Jagdish K. Valecha Managing Director 3. Ramchand H. Valecha Whole Time Director 4. Umesh H. Valecha Whole Time Director 5. Arvind B. Gogate Whole Time Director 6. Dinesh H. Valecha Whole Time Director
(Rs. in lacs)
(D) Transactions with Associate Companies/Firms 2006-07 2005-06 1. Equity Contribution 99.68 99.68 2. Advance Share Application Money Received 199.03 139.65 3. Inter Corporate Deposit/Loans received during the year 3,099.25 997.43 4. Inter Corporate Deposit/Loans given/repaid during the year 850.31 983.93 5. Rent Received 15.48 15.51 6. Interest Received 11.37 4.48 7. Interest Paid 13.16 27.91 8. Others Payments received during the year 27.05 17.50 9. Others Payments made during the year 5.00 1.07 10. Outstanding Balance – Amount Receivables 120.00 88.75 11. Outstanding Balance – Amount Payables 331.76 191.41
(E) Transactions with Joint Ventures & Consortium 1. Sales 2,115.51 1,833.87 2. Advance Payments made during the year — 1.00 3. Outstanding Balance – Amount Receivables 956.98 396.92 4. Outstanding Balance – Amount Payables 10.00 10.00
(F) Transactions with Persons referred to in Item (C) above 1. Remuneration paid during the year 89.99 69.02 2. Sitting Fees paid during the year 0.35 0.50 3. Commission paid during the year 4.00 3.50 4. Rent paid during the year 0.45 —
58 Annual Report 2006-2007 VALECHA ENGINEERING LIMITED Engineers & Contractors
(9) The Company has the following Joint Ventures/Consortium for execution of Projects awarded by the employer.
Particulars of Joint Ventures & Consortium Nature of Relationship 1. Valecha Engineering Limited & AMA Pvt. Ltd. (Consortium) Consortium Member 2. Valecha Engineering Limited & M Venkata Rao (Joint Venture) Joint Venture Member 3. Venkata Rao – Valecha (Consortium) Consortium Member 4. Valecha – S.N. Shah (Consortium) Consortium Member 5. Valecha – NAPC (Consortium) Consortium Member 6. Ashoka Buildcon – Valecha Engineering Limited (Joint Venture) Joint Venture Member 7. Valecha – ECCI (Joint Venture) Joint Venture Member 8. Valecha – TBL (Joint Venture) Joint Venture Member
The Joint Ventures/Consortium have no independent assets and liabilities except for trade receivables from the client and payables to the Ventures/Consortium Members in respect of work executed by them in their respective capacities. The profit received during the year is taken as other income in the Profit & Loss Account..
(10) Earning Per Share :
Sr. Particulars 2006-07 2005-06
1. Net Profit after Tax (With Exceptional Income) (In Rs.) 27,82,71,730 26,80,74,201 Less : Exceptional Income (In Rs.) 18,10,81,106 19,98,51,480 2. Net Profit after Tax & Exceptional Income (In Rs.) 9,71,90,624 6,82,22,721 3. Weighted average Number of shares for Basic EPS (In Numbers) 69,55,067 48,68,659 4. Weighted average Number of shares for Diluted EPS (In Numbers) 82,06,067 56,81,158 5. Basic Earning Per share (Rs.) With Exceptional Income 40.00 55.06 Without Exceptional Income 13.97 14.01 6. Diluted Earning Per share (Rs.) With Exceptional Income 33.91 47.19 Without Exceptional Income 11.84 12.01
(11) Since the principal business of the company is construction activity, quantitative data in respect of trading and manufacturing activities carried out by the company as required by Part II of schedule VI to the Company’s Act 1956 is not furnished.
(12) The Company is in the process of identifying Suppliers falling under Micro, Small and Medium Enterprises development Act, 2006.
(13) The previous years’ figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
Annual Report 2006-2007 59 VALECHA ENGINEERING LIMITED Engineers & Contractors
CONSOLIDATED BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I. Registration Details Registration No. 19535 State Code 11 Balance Sheet Date 31.03.2007 II. Capital Raised during the year (Amount in Rs. Thousand) Public Issue Right Issue NIL NIL Bonus Issue Private Placement NIL 3,740 III. Position of Mobilisation & Development of Funds (Amount in Rs. Thousand) Total Liabilities Total Assets 27,56,931 27,56,931 Source of Funds Paid-up Capital Reserves & Surplus 72,979 14,48,497 Secured Loans Unsecured Loans 10,67,182 66,785 Deferred Tax Liability 1,01,488 Application of Funds Net Fixed Assets Investments 13,47,549 5,76,387 Net Current Assets Share Issue Expenses 8,32,995 NIL Accumulated Losses NIL IV. Performance of Company (Amount in Rs. Thousands) Total Income * Total Expenditure 26,96,526 23,65,702 Profit/(Loss) before Tax Profit/(Loss) after Tax 3,30,824 2,78,272 Earning per Share (Rs.) Dividend Rate Basic Diluted 10% With Extraordinary Item 40.00 33.91 Without Extraordinary Item 13.97 11.84 V. Generic Names of Principal Products/ Services of the Company (As per Monetary basis) Item Code No. NIL Products Description Infrastructure Development, Real Estate Development and Wind Power Generation * after considering exceptional income
As per our report of even date For and on behalf of the Board For D. M. JANI & CO. Chartered Accountants
Dilip M. Jani Kavita Valecha Sharma V. P. Valecha J. K. Valecha Proprietor Company Secretary Chairman Managing Director
Place : Mumbai. Date : 29th June, 2007.
60 Annual Report 2006-2007 Engineers & Contractors
PROXY FORM
VALECHA ENGINEERING LIMITED Registered Office: “Valecha Chambers”, 7th Floor, Plot No. B-6, Andheri New Link Road, Andheri (West), Mumbai-400 053.
Reg. Folio No...... No. of Shares held......
I/We...... of...... being a member/members of the above named Company, hereby appoint...... of ...... or failing him ...... of ...... as my/our proxy to attend and vote for me/us on my/our behalf at the Thirtieth Annual General Meeting of the Company to be held on Monday, the 3rd September, 2007 at 4-00 p.m. at M. C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, 18/20, Kaikhushru Dubhash Marg, Mumbai - 400 001 and at any adjournment thereof.
Affix Re. 1 Signed this...... day of...... 2007 Signature...... Revenue Stamp
Note: Proxy Forms must reach the Company’s Registered Office not less than 48 hours before the meeting.
TEAR HERE
ATTENDANCE SLIP
VALECHA ENGINEERING LIMITED Registered Office: “Valecha Chambers”, 7th Floor, Plot No. B-6, Andheri New Link Road, Andheri (West), Mumbai-400 053. (To be handed over at the entrance of the Meeting Hall) 30th Annual General Meeting — 3rd September, 2007 at M. C. Ghia Hall, Bhogilal Hargovindas Building, 2nd Floor, 18/20, Kaikhushru Dubhash Marg, Mumbai - 400 001. I hereby record my presence at the Thirtieth Annual General Meeting to be held on Monday, the 3rd September, 2007 at 4-00 p.m. and at any adjournment thereof.
Full name of Member (IN BLOCK LETTERS)......
Reg. Folio No...... No. of Shares held......
Full name of Proxy (IN BLOCK LETTERS)......
Member’s/Proxy’s Signature......