MUKAND ENGINEERS - BSE

MUKANDENGINEERS

tnd22"' Annual Report 2007-2008

MUKANDENGINEERS

22nd Annual Report 2007-2008

NOTICE

NOTICE is hereby given that the 22nd ANNUAL GENERALMEETING of the Members of the Company will be held onWednesday, the 30th day of July, 2008 at 3.30 p.m. atKamalnayan Bajaj Hall, Bajaj Bhawan, Jamnalal Bajaj Marg,226, Nariman Point, Mumbai 400021, to transact the following .business:-ORDINARY BUSINESS:1. To consider and adopt the Audited Balance Sheet as at

31st March, 2008 and Profit & Loss Account for the yearended on that date and the Reports of the Board ofDirectors and the Auditors thereon.

2. To appoint a Director in place of Shri Rajesh V. Shahwho retires by rotation and being eligible, offers himselffor re-appointment.

3. To appoint a Director in place of Shri Prakash V. Mehtawho retires by rotation and being eligible, offers himselffor re-appointment.

4. To appoint M/s. Dalai & Shah, Chartered Accountants,retiring Auditors of the Company who are eligible for re-appointment for the period commencing from theconclusion of this Annual General Meeting till theconclusion of the next Annual General Meeting and toauthorise the Board of Directors to fix their remuneration.

SPECIAL BUSINESS:5. To consider and if thought fit, to pass, the following as a

Special Resolution:"RESOLVED THAT pursuant to Sections 198, 269, 387 andother applicable provisions, if any, of the Companies Act,1956, and subject to such other approvals as may benecessary, the Company do hereby appoint Shri.K. P. Jotwani,as the "Manager" of the Company, as defined under Section2(24) of the Companies Act, 1956, for a period of three yearswith effect from 1st June, 2008 upon the terms and subject tothe conditions as set out in the Draft Agreement between theCompany and Shri K. P. Jotwani with further liberty to theBoard of Directors from time to time, to alter and vary the saidterms and conditions in such manner as may be agreed upon,between the Board of Directors and Shri K. P. Jotwani in thebest interests of the Company, subject to the provisionscontained in Schedule XIII to tine Companies Act, 1956, asamended from time to time.RESOLVED FURTHER THAT Shri K. P. Jotwani shall functionas a "Manager" within the meaning of Section 2(24) of theCompanies Act, 1956 subject to the superintendence, controland direction of the Board of Directors of the Company.RESOLVED FURTHER THAT the Company do hereby ratifythe acts, deeds, matters and things done by the Board ofDirectors of the Company in connection with theremuneration, allowances and perquisites paid / payable toShri K. P. Jotwani during his tenure as the "Manager" of theCompany from 1st June, 2007 to 31st May, 2008.RESOLVED FURTHER THAT the Company do hereby ratifythe acts, deeds, matters and things done by Shri K. P. Jotwaniduring his tenure as the "Manager" of the Company from1st June, 2007 to 31st May, 2008.RESOLVED FURTHER THAT the Board of Directors of theCompany be and is hereby authorized to do all such acts,deeds, matters and things as may be necessary to give effectto this Resolution."NOTES FOR MEMBERS' ATTENTION:1. AMEMBER ENTITLED TOATTENDAND VOTE IS ENTITLED

TOAPPOINTAPROXYTOATTENDAND VOTE INSTEADOF HIMSELF AND SUCH A PROXY NEED NOT BE AMEMBER. PROXIES IN ORDER TO BE EFFECTIVE MUSTBE RECEIVED BY THE COMPANY AT ITS REGISTEREDOFFICE NOT LESS THAN 48 HOURS BEFORE THE MEETING

2. The Register of Members and the Share Transfer Booksof the Company will remain closed from 28/07/2008 to30/07/2008, (both days inclusive) for the purpose ofAnnual General Meeting.

3. Pursuant to Section 205A of the Companies Act, 1956 allunclaimed dividends upto the financial year 1993-94 have

been transferred to the General Revenue Account ofthe Central Government. Those Members who have sofar not claimed their dividends upto the said period arerequested to claim the amount by submitting anapplication in prescribed Form II to the Registrar ofCompanies, Maharashtra.Pursuant to Section 205C of the Companies Act, 1956 allunclaimed dividend for the year 1999-2000 has beentransferred to the Investors' Education and ProtectionFund (the Fund) set up by the Central Government. Thesaid Section further provides that amounts remainingunclaimed for a period of seven years from the date ofpayment shall be transferred to the said Fund. Membersare requested to note that no claims shall thereafter lieagainst the said Fund or the Company in respect of thesaid amount so transferred.Members who have so far not encashed their DividendWarrants) for the financial year ended 31st March, 2001are advised to submit their claim to the Companyimmediately quoting their folio numbers failing which theamount will be transferred to the said Fund pursuant tothe provisions of Section 205C of the Companies Act, 1956.

4. Members holding shares in the dematerialised mode arerequested to intimate all changes with respect to theirbank details, mandate, nomination, power of attorney,change of address, change in name etc. to theirDepository Participant (DP). These changes will beautomatically reflected in Company's records, which willhelp the Company to provide efficient and better serviceto the Members.

5. The Company's Equity Shares are listed on Bombay StockExchange Ltd., Mumbai and The National Stock Exchangeof India Ltd., Mumbai.

6. As regards the re-appointment of retiring Directors, Viz.-Shri Rajesh V. Shah & Shri Prakash V. Mehta referred initem no. 2 & 3 of the Notice, their brief resume, details ofdirectorships, shareholdings etc. have been given in theReport on Corporate Governance which forms part ofthe Directors' Report and Members are advised to referto the same.

By Order of the BoardFor Mukand Engineers Limited

Place: MumbaiDate : 19th May, 2008

P. R. DhruvaCompany Secretary

ANNEXURE TO THE NOTICEExplanatory Statement pursuant to Section 173 (2) ofthe Companies Act, 1956:Item No. 5 . 'The Board of Directors of the Company at their meeting heldon 19th May, 2008 has, subject to the approval of the Members,appointed Shri K. P. Jotwani, as the "Manager" of theCompany effective from 1s : June, 2008 for a period of 3years with liberty to alter/vary the said terms and conditionsin conformity with the requirements of Schedule XIII to theCompanies Act, 1956 or any amendments thereto.The earlier appointment of Shri K. P. Jotwani had expired on31st May, 2007. However, the Company continued to avail hisservices from 1st June, 2007 till 31 s ' May, 2008, which isbeing ratified as mentioned in the Notice.Shri Jotwani, aged 65 years is a B. E. (Mech.) from M. S.University, Baroda. He joined Mukand Limited in the year 1966as a Management Trainee and has held various positions inMukand Limited. Prior to joining the Company on 1st June, 2002he was in-charge of Machine Building Division, and was designatedas Vice President (Machine Building) of Mukand Limited.Shri Jotwani has been associated with the Company since1st February, 1997 as the Chief Executive of the Companyand the Board of Directors at its meeting held on 29th June,1998 had appointed him as the Chief Executive and "Manager"of the Company. Since February, 2000, he was on the Board asDirector of the Company and resigned in January, 2003. Heresigned on 28lh January, 2000 as "Manager" to join Mukand

MUKANDENGINEERS


Limited to head its Machine Building Division for the period29lh January, 2000 to 31st May, 2002.Shri Jotwani, the "Manager" of the Company will be entrustedwith substantial powers of the Management and will performsuch functions as may, from time to time be decided by theBoard of Directors.The draft Agreement between the Company and Shri Jotwaniis available for inspection at the Registered Office of theCompany between 10.00 a.m. and 12.30 p.m. on all workingdays of the Company up to and including the day of theMeeting. Remuneration payable per month will be subject tothe approval by the Board from time to time within the maximumlimit as under:

Three years.Rs.60,000/- per month.50% of Basic Salary.Rs.40,000/- per month.Rs.90,000/- per month,

to Provident Fund

(a) Period of Agreement(b) Basic Salary(c) House Rent Allowanced) Special Allowancee) Personal Allowancef) Company's contribution to Provident Fund and

Superannuation Funds.(g) Gratuity at the rate of one month's salary for each

completed year of service. Services rendered upto 31stMay, 2008 including services rendered in Mukand Ltd.upto 31st May, 2002 will be included for payment ofgratuity on termination.

h) Leave with full pay as per the Rules of the Company,i) Company will take insurance cover for accident for self

and hospitalization for self and family in India.(j) Reimbursement of gas, electricity, water charges, soft

furnishings, house repairs, furniture repairs and attireexpenses and domiciliary medical expenses.

(k) Reimbursement of actual travelling expenses forproceeding on leave from Mumbai to any place and returntherefrom in respect of self and family in accordancewith the rules specified by the Company from time to time.

(I) Reimbursement of membership fees for clubs in India orabroad including any admission / life membership fees.

(m) Free use of Company's car and reimbursement ofoperating and maintenance expenses including driver.

The ceiling for item (i), (j), (k), (I) and (m) is Rs.3,30,000/- perannum.(n) Telephone, telefax and other communication facilities at

the residence.(0) Subject to statutory ceiling/s, the "Manager" may be given

any other allowance/s, perquisites, benefits and facilitiesas the Board of Directors from time to time may decide.

(p) Unutilised leave as on 31st May, 2008 will be availablefor use in future/encashment is permitted during thetenure and balance on termination of services.

In the absence of profits or inadequacy of profits in anyfinancial year, Shri K. P. Jotwani will be paid the aboveremuneration within the ceiling laid down in Section II of PartII of Schedule XIII to Companies Act, 1956 upon the Resolutionbeing passed as a Special Resolution.Memorandum of Interest - None of the Directors of theCompany is in any way concerned or interested in the SpecialResolution. Pursuant to Section 302 of the Companies Act,1956, this may be treated as an abstract of the terms andconditions governing the appointment of Shri K. P. Jotwani,as the "Manager" ofthe Company.Information pursuant to clause (iv) of the proviso to para. (B)of Section II of Part II of Schedule XIII to the Companies Act,1956 is furnished hereunder:I. GENERAL INFORMATION:(1) Nature of industry - The Company is engaged in the

business of execution of projects in core sectors, handlingof all areas of engineering construction, erection andcommissioning of equipments, project and designengineering, site fabrication work.

(2) Commencement of commercial production - TheCompany has no plants as the Company carries outvarious jobs at different sites of customers, hence thequestion of date of commencement of commercialproduction does not arise.

(3) Financial performance based on given indicators -The financial performance of the Company as reflectedby total income, profit, earnings per share and dividendrecommended for the financial year ended 31st March,2008 is as under:-

( Rs. in Lacs )a. Total Income 2862.42b. Profit before tax 216.66c. Profit after tax 213.47d. Earnings per share (Rs.) 1.70e. Rate of Dividend (on equity shares) Nil

(4) Export performance & Net Foreign ExchangeEarnings / Outgo - As the Company is engaged inengineering construction activities in India, the questionof export performance, Foreign Exchange Earnings /Outgo does not arise.

(5) Foreign investments or collaborations - NILII. INFORMATION ABOUT THE APPOINTEE:(1) Background details -The relevant information is given

in the Explanatory Statement of the Notice hereinabove.(2) Past remuneration - The gross remuneration drawn

by the appointee during the past 3 years are as under:Financial Year (Rs. in Lacs)2005-2006 : 11.95200.6-2007 : 10.572007-2008 (subject to the approval of member) : 12.30

(3) Recognition or awards - NIL(4) Job profile and suitability - Shri Jotwani is responsible

for orders from Steel, Aluminium and Power sectors.Shri Jotwani is a Mechanical Engineer of 1965 batchfrom M. S. University, Baroda with Post Graduation inIndustrial Engineering in 1975 from Mumbai University.He has been with Mukand Limited since February 1966and has worked through design, marketing, planning andexecution. He was responsible for development ofbusiness of Industrial Machinery other than cranes inMachine Building Division. He executed Medium MerchantStructural Mill Project of Vishakapatnam Steel Plant from1986 to 1990 and also Basic Oxygen Furnace Project ofRourkela Steel Plant from 1994 to 1997. Since 1997 hehas been the Chief Executive of MEL. During his tenure,business has been developed with SAIL, IISCO, NTPC,BHEL and Vedanta Group. He has experience of morethan 40 years in the business. He is the link betweenExecution Group and the Board.

(5) Remuneration proposed - As mentioned hereinabove.(6) Comparative remuneration profile with respect to

industry, size of the company, profile of the positionand person - The remuneration proposed takes intoconsideration nature and size of business operations; thequalifications, experience and contribution of appointee to allround growth of the Company; present trends and normsobserved in the industry for payment of managerial remunerationby companies of comparable size and nature of business.

(7) Pecuniary relationship directly or indirectly withthe company, or relationship with the managerialpersonnel, if any - He does not have any pecuniaryrelationship with the Company except for remunerationdrawn as "Manager".

III. OTHER INFORMATION:The Resolution proposed to be passed is a Special Resolutionso that in case of situation of "absence or inadequacy ofprofits" during any financial year under the present tenure,this remuneration can be paid to Shri K. P. Jotwani as theminimum remuneration.

By Order of the BoardFor Mukand Engineers Limited

Place: MumbaiDate : 19th May, 2008Registered OfficeBajaj Bhawan, Jamnalal Bajaj Marg,226, Nariman Point, Mumbai - 400 021

P. R. DhruvaCompany Secretary

MUKANDENGINEERS


DIRECTORS' REPORT

Current Year21.67

(0.29)

21.38

(0.03)

22.80

(Rs. in Million)Previous Year

16.15

0.40

16.55

(0.85)

7.10

44.15 22.80

TO THE MEMBERS,

1. Your Directors present the Twenty Second Annual Reportand the Audited Statement of Accounts of the Companyfor the year ended 31st March 2008.

2. Financial Results:

Profit for the year before tax

Add/(Less) : Provision for tax(including deferred tax)

Profit after tax

AddZ(Less): Prior period adjustments

AddZ(Less): Balance brought forwardfrom previous year

Balance carried to Balance Sheet

3. Dividend:

The Company has made profit during the year. Howeverto conserve resources required to expand activities, yourdirectors do not recommend payment of dividend on theequity shares.

4. Operations:

4.1 General-The income from operations and other income duringthe year was Rs.286.24 Million compared toRs.310.40 Million in the previous year. The Companyearned a profit before tax of Rs.21.67 Million duringthe year under review as compared to Rs. 16.15Million in the previous year.

4.2 Engineering-The infrastructure industry is growing and there issubstantial investment in expansion / new projectsof Petroleum, Steel & Engineering.4.21 The income from Engineering operation during

the year was Rs.203.61 Million as againstRs.229.78 Million in the previous year.Engineering operations earned profit beforeinterest and tax of Rs.30.13 Million during theyear under review as compared to Rs.18.21Million in the previous year.

4.22 Orders outstanding as at the end of the yearwere Rs.1,298.48 Million.

4.3 Infotech-The Income from Infotech operations during the yearwas Rs.48.50 Million as against Rs.56.34 Million inthe previous year. Infotech operations earned profitsof Rs.25.21 Million during the year under review ascompared to Rs.28.61 Million in the previous year.

4.4 Financial-

4.41 The Company has received Bank Guaranteefacility of Rs.29.70 Million during the year. Thetotal facility sanctioned is R's.79.70 Million. Thiswill enable the company to procure more orders.

5. Fixed Deposits:The Company held Rs. 105.64 Million as Public deposits asof 31s ' March 2008, out of Which, deposits aggregatingRs.1.71 Million have matured but remain unclaimed as onthat date.

6. Corporate Governance:Pursuant to Clause 49 of the listing agreement, a report onCorporate Governance, along with Auditor's certificateregarding compliance of conditions of Corporate

Governance and Management Discussion and Analysisis separately given in this Report.

7. Other Information:

7.1 As the Company does not own an undertaking wheremanufacturing operations are carried out, theinformation to be furnished under the Companies(Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 is not applicable.

7.2 During the year under review there were neitherforeign exchange earnings nor foreign exchangeoutgo.

7.3 None of the employees is covered within the purviewof Section 217 (2A) of the Companies Act, 1956 readwith the Companies (Particulars of Employees) Rules,1975.

8. Directprs' Responsibility Statement:

As required by Section 217 (2AA) of the Companies Act,1956, the Board of Directors of the Company hereby stateand confirm that:(i) In the preparation of the annual accounts, the

applicable accounting standards have been followed;(ii) appropriate accounting policies have been selected

and applied consistently, and have made judgmentsand estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs ofthe Company as at 31st March 2008 and of the profitof the Company for the year ended 31s1 March 2008.

(iii) proper and sufficient care has been taken for themaintenance of adequate accounting records inaccordance with the provisions of the CompaniesAct, ' igse, for safeguarding the assets of theCompany and for preventing and detecting fraud andother irregularities;

(iv) The annual accounts have been prepared on a goingconcern basis.

9. Directors:

In accordance with the provisions of the Companies Act,1956 and Articles of Association of the Company, ShriRajesh V. Shah and Shri Prakash V. Mehta, Directors ofthe Company retire by rotation and are eligible for re-appointment.

The Board of Directors of the Company at their meetingheld on 19th May, 2008 has subject to the approval of theMembers, appointed Shri K. P. Jotwani as the "Manager"of the Company effective from 1st June 2008 for a periodof 3 years on such terms and conditions in conformitywith the requirements of Schedule XII to the CompaniesAct, 1956 or any amendments thereto for whichnecessary resolution is given in the annexed notice.

10. Auditors:

Messrs Dalai & Shah, Chartered Accountants, Auditors ofthe Company retire and are eligible for re-appointment.

11. Auditors' Report:

The notes referred to in the Auditors' Report are self-explanatory and therefore do not call for any commentsunder section 217 of the Companies Act, 1956.

For and on behalf of the Board of Directors

Place: Mumbai,Date: 19lhMay, 2008

Rajesh V. ShahChairman

REPORT ON CORPORATE GOVERNANCE

MUKANDENGINEERS


(As required by Clause 49 of the Listing Agreementwith Stock Exchanges)

1. Company's Philosophy :

The Company's Corporate Governance philosophy isbased on principles of doing business in a way which isopen, transparent and ethically responsible, in compliancewith the letter and spirit of the law in all facets of itsoperations and interactions with its stakeholders viz.shareholders, employees, customers, suppliers, publicand other regulatory authorities at large.

2. Board of Directors :

(a) Composition and size of the Board :

The Board of Directors of the Company consists offive Directors including the Non-Executive Chairman.All these five Directors are Non-Executive Directorsout of which three Directors are IndependentDirectors. The Company did not have any pecuniaryrelation or transaction with Non-Executive Directorsduring the year under review.

(b) Board Meetings :

During the year five Board Meetings were held on14th May, 2007 (2 meetings), 27th July , 2007, 24th

October, 2007 and 31st January, 2008. The Boardwas presented with the relevant and necessaryinformation. None of the Directors is a member ofmore than ten Committees or acting as Chairman ofmore than five Committees across all Companies inwhich he is a Director. The attendance at the BoardMeetings during the year and at the last AnnualGeneral Meeting as also number of other directorshipsis given below:

Name of theDirector

ShriRajeshV.Shah

Shri Niraj Bajaj

Shri Prakash V. Mehta

ShriT. S.Anand

Shri N. Ramanathan*

Cate-gory

AttendanceParticulars

Board LastMeetings AGM

C.NED 5 Yes

NED

NED

NED

NED

5 Yes

1 No

5 Yes

5 Yes

No. of outsideDirectorshipsin PublicLimitedCompanies

5

12

11

2

-

No. of Member No. ofship (M) /Chairmanship(C) in otherBoardCommittee/s

_

1(M)

6(M)

—

-

Sharesheld in theCompany

as at31-03-08

43320

Nil

Nil

Nil

Nil

C: Chairman, NED: Non-Executive Director.* 1st Meeting as Invitee

(c) Re-appointment of Directors : .

Shri Rajesh V. Shah and Shri Prakash V. Mehta areliable to retire by rotation and being eligible offerthemselves for re-appointment. Information asrequired under Clause 49 of the Listing Agreement isgiven hereunder-

Name of the Director

Date of appointment

Expertise in SpecificFunctional areas

List of other Directorshipsheld (in listed Companies)

Chairman/Member of theCommittee of the Boardof other Companies inwhich he is a Director

Shri Rajesh V. Shah

23'" July, 1989

Marketing, Planning andPerformance, Expansion, etc

1) MukandLtd.

Chairman: NilMember : Nil

Shri Prakash V. Mehta

19" August. 1992

Joint Ventures & ForeignCollaborations. Propertyand Corporate Laws.

1) Bharat BijieeLtd2) PCS Technologies Ltd3) W.H.BradySCo Ltd4) JBF Industries Ltd.5) HikalLtd6) Advani Hotels and

Resorts (I) Ltd7) Ciba India Ltd8) MukandLtd.

Chairman : NilMember :A) Audit Committee

1) Bharat Bijlee Ltd2) Advani Hotels and

Resorts (I) Ltd.3) Ciba India Ltd.4) HikalLtd5) MukandLtd

B) Shareholders' andInvestors' GrievanceCommittee1) Bharat Bijlee Ltd.2) Ciba India Ltd.3) JBF Industries Ltd.4) HikalLtd

(d) Re-appointment of "Manager":

The Board of Directors of the Company at theirmeeting held on 19th May, 2008 has, subject to theapproval of the Members, appointed Shri K. P. Jotwani,as the "Manager" of the Company effective from 1st

June, 2008 for a period of 3 years on such terms andconditions and in conformity with the requirementsof Schedule XIII to the Companies Act, 1956 or anyamendments thereto for which necessary resolutionis given for approval of the Shareholders in theannexed Notice.

3. Audit Committee :

The Audit Committee consists of Shri Rajesh V. Shah, ShriPrakash V. Mehta, Shri T. S.Anand and Shri N. Ramanathan,all of whom are Independent Directors. The terms ofreference of the Audit Committee specified by the Boardare as contained in Section 292A of the Companies Act,1956 and Clause 49 of the Listing Agreement. All themembers of the Audit Committee are financially literateand one member is having accounting and related financialmanagement expertise.

During the year under review, the Audit Committee metfour times on 14th May, 2007, 27'" July, 2007, 24th October,2007 and 31st January, 2008. These meetings were alsoattended by the Statutory Auditors, Internal Auditors, ShriNiraj Bajaj, Director, Shri S. B. Jhaveri, Advisor to theBoard, Shri K.P. Jotwani, "Manager" and Shri M. R.Karandikar, Chief of Accounts. Shri P. R. Dhruva, Secretaryacts as Ex-officio Secretary to the Audit Committee. Apartfrom considering unaudited and/or audited financial resultsfor the relevant quarter and the year, before submissionto the Board for its approval, the Committee focused itsattention on other matters which inter-alia included key

MUKANDENGINEERS


areas impacting the overall performance of the Companyand major accounting policies and practices, review ofinternal control system, review of current site progressand Management Information System.

The attendance at the Audit Committee Meetings duringthe year is given hereunder:


Shri Prakash V. MehtaShri T. S. AnandShri Rajesh V. ShahShri N. Ramanathan

Category

C. NEDNEDNEDNED

Attendance ParticularsNumber of Meetings Attended

1444

C: Chairman, NED: Non-Executive Director.

4. Remuneration Committee & Policy :

The Company has not constituted a RemunerationCommittee. The decision regarding remuneration of the"Manager" under the Companies Act, 1956 is taken by theentire Board subject to such approvals as may benecessary. The Company does not pay any remunerationto the Non-Executive Directors except payment of sittingfees for attending the Board /Audit Committee Meetings,details of which are given below. However, Shri Rajesh,V. Shah, Chairman and Shri Niraj Bajaj, Director of theCompany have waived their sitting fees w.e.f. June 30,2003.

Remuneration to Shri K. P. Jotwani "Manager" under theCompanies Act, 1956, for the year ended 31st March, 2008.

Particulars

Salary and allowancesContribution to Provident Fund and Other FundsPerquisites (approx. money value)

T O T A L

(Rupees)

8,95,12289,155

2,45,867

12,30,144

The employee wise break up of liability on account ofRetirement Schemes based on Actuarial Valuation is notascertainable. The amounts relatable to the "Manager"will be, therefore, disclosed in the year of payment.

Sitting fees paid to the Directors for the year ended 31s1

March, 2008 are hereunder :

Sr. No.

1.2.3.


Shri Prakash V. MehtaShri T. S. AnandShri N. Ramanathan

T O T A L

(Rupees)

8,00036,00032,000

76,000

The Company has not issued stock options to any of itsDirectors.

5. Shareholders'/ Investors' Grievance Committee:

The Company had constituted Shareholders? Investors'Grievance Committee consisting of Shri Rajesh V. Shahas the Chairman, Shri Niraj Bajaj and Shri T. S. Anand as.Members. The Company Secretary acts as ComplianceOfficer. The meeting of the said Committee was heldon ia t h May, 2008 which was attended by all themembers.

There were no major complaints from the shareholders.Thefunctions of Investors' Grievance Committee are to reviewand redress Shareholders' / Investors' query / grievance/complaint on matters relating to transfer of shares,non-receipt of balance sheet, non-receipt of declareddividends, etc. which were attended by the Registrar &Transfer Agents within stipulated time and some of theroutine complaints were also directly attended by theCompany Secretary.

The Committee also oversees the performance of theRegistrars and Transfer Agents and recommendsmeasures for overall improvement in the quality of servicesto Investors.

6. Annual General Meetings :

(a) The last three Annual General Meetings were held atKamalnayan Bajaj Hall, Bajaj Bhawan, 226, JamnalalBajaj Marg, Nariman Point, Mumbai 400 021 on thefollowing dates and time:

Financial Year

2006-2007

2005-2006

2004-2005

Date

27th July, 2007

20th July, 2006

23rd August, 2005

Time

3.30 p.m.

3:30 p.m.

3:30 p.m.

(b) Following Special Resolutions were adopted in theabove three Annual General Meetings.

FinancialYear

2006-2007

2005-2006

2004-2005

Date of AnnualGeneralMeeting

27th July, 2007

20th July, 2006

23rd August, 2005

Particulars ofResolutionI

Nil

.Nil

^Ratification oftransactionpertaining toassignment ofdebt fromCommerz BankAG

(c) There were no Resolutions passed vide Postal Ballotduring the year.

Disclosures :

There were no transactions of material significanceentered into by the Company with its Promoters, Directorsor their relatives, Companies, the management or theirrelatives during the year, which have potential conflictwith interests of the Company, at large. The details oftransactions with related parties entered into in theordinary course of business are disclosed in the accountsand are placed before the Audit Committee. There was nodefault in compliance on any matters related to capitalmarkets. Consequently, during the last three years neitherany penalties were imposed nor strictures passed on theCompany by Stock Exchanges, SEBI or any statutoryauthority.

No transaction with related parties or others have beenentered into which are not at arm's length.

MUKANDENGINEERS


The Company receives professional services in the normalcourse of business from M/s. Malvi Ranchoddas & Co., alegal firm in which Shri Prakash V. Mehta is a partner. Inthe opinion of the Board, these transactions do not affectthe independence of the said Director.

The process of identification and evaluation of variousrisks inherent in the business environment and operationsof the Company and initiation of appropriate measures forprevention and / or mitigation of the same is dealt with bythe Operational Head under the supervision of the"Manager" who has overall responsibility towards theBoard of Directors of the Company.

The Company has adopted a Code of Conduct for itsDirectors and Senior Management cadres in the meetingof the Board of Directors of the Company.

The Company has also instituted a Code of Conduct forprevention of Insider Trading on the securities of theCompany for its Directors and key Managerial persons asrequired by SEBI (Prohibition of Insider Trading)Regulations, 1992 as amended.

8. Means of Communication :

Quarterly un-audited and yearly audited results arepublished in English and local language newspapers asspecified by SEBI and as required under the ListingAgreement. The Management Discussion and Analysis isa part of the Annual Report. All financial and other vitalinformation is promptly communicated to the StockExchanges on which the Company's Shares are listed.

9. General Information for Shareholders :a. Registered Office Bajaj Bhawan,

Jamnalal Bajaj Marg,226, Nariman Point,Mumbai-400 021

Date, Time andVenue of AnnualGeneral Meeting

b. Date, Time and 30th July, 2008 at 3:30 p.m.Kamalnayan Bajaj Hall,Bajaj Bhawan,Jamnalal Bajaj Marg,226, Nariman Point,Mumbai400 021.

c. Reporting on Financial Calender 2008-2009 :June 30September 30December 31For the year endingMarch 31

Last week of JulyLast week of OctoberLast week of JanuaryLast week of May

d. Dates of Book 28th July, 2008 to 30thJuly, 2008.Closure (both days inclusive)

e. Listing Details :

The Company's Shares are listed on the StockExchanges at Mumbai (Bombay Stock Exchange Ltd.,Mumbai and The National Stock Exchange of IndiaLtd.) The Company has paid the listing fees for theperiod from 1st April, 2008 to 31st March, 2009 to boththe Stock Exchanges where the shares of theCompany are listed.

f. Stock code1. Bombay Stock Exchange Ltd. (BSE) 5320972. The National Stock Exchange Ltd. (NSE) Mukand Engg.3. ISIN INE022B01014

Stock Market Data :

Month

Apr- 07May- 07June-07

July- 07Aug- 07Sep- 07Oct- 07Nov- 07

Dec- 07Jan- 08Feb- 08Mar- 08

Bombay Stock Exchange Ltd., Mumbai (BSE)

Month'sHighPrice

27.3036.4030.9035.4034.6534.75

. 35.2035.8069.0081.5043.5533.90

Month'sLow

. Price

23.0023.4026.3527.0027.5029.8027.9527.2032.5536.4033.0022.75

Total Volumeof Shares *Transacted (Nos.)

74,619825,433158,301611,378

. 444,508450,180351,637496,109

4,810,255949,031131,236165,115

(Amount in Rs.)

The National Stock Exchange Ltd. (NSE)

Month'sHighPrice

28.0036.6031.2535.9034.5535.0038.00

. 36.9069.2082.1543.3533.60

Month'sLowPrice

22.6023.0526.8027.5028.0526.0526.1525.2032.5036.9032.6522.40

Total Volumeof SharesTransacted (Nos.)

53,105792,383102,697453,702324,835215,648212,310309,685

4,971,3081,434,146

122,993231,717

MUKANDENGINEERS


Comparative Stock Price Performance:

The Equity share prices of the Company on BSE in comparison with the BSE Sensex is given in the following graph.

80.00 T T 25000.00

70.00

60.00.0.

~ 50.00 foO<D 4 0 . 0 0raszCO- I 30.00-

20.00

10.00

- * • Closing Price-•-Sensex

20000.00

00

15000.00 rn

10000.00

5000.00

0.00

h. Registrar and Transfer Agents Bigshare Services Pvt. Ltd.(For share transfers and othercommunication relating to sharecertificates, dividend and changeof address, etc.)

E-2/3, Ansa Industrial Estate, Saki Vihar Road,Saki Naka, Andheri (East) Mumbai - 400 072.Tel : (022) 28470744/28470652/53Fax : (022) 28475207E-Mail: infobigshareonline.comWebsite : www.bigshareonline.com

i. Share Transfer SystemThe Share Transfers are approved by a Committee of Directors and are registered within a period of 15 days from thedate of receipt, if the documents are complete in all respect. During the year under review, the Company has followedthe guidelines issued by SEBI for dematerialisation of shares sent for transfer by the investors.

Total number of shares transferred in physical form (non-dematerialised) during 2007-08 were 13,37.7 shares.

There were no transfers which remained unattended as of 31 th March, 2008.

The Board in their respective Board Meetings held duly ratified the transfers.

j . Investor Services (Complaints received during the year)

Nature of Complaints / Queries 2007-2008Received Cleared

2006-2007Received Cleared

Relating to Transfer, Transmission, Dividend,Interest, Demat & Remat, Change of address and others

149 149 153 153

There were no complaints / queries pending reply as of 31 th March, 2008.

k. Distribution

No. of EquityShares Held

1-100101-200201-500501-1,0001,001-5,0005,001-10,00010,001 & above

Total

of Shareholding as on

No. ofShare

holders22,166

2,0081,850

636477

6672

27,275

31st

%ofShare

holders81.28

7.366.782.331.750.240.26

100.00

:

March, 2008

No. ofShares

Held540,599353,621694,378525,849

1,082,222487,467

8,888,264

12,572,400

% ofShare

holding

4.302.815.524.188.613.88

70.70

100.00

No. ofShare

holders22,684

1,9821,919

646488

6479

27,862

31st March,

%ofShare

holders81.42

7.116.892.321.75 10.230.28 8

100.00 12

2007

No. ofShares

Held539,100350,321725,170534,232,116,786466,189,840,602

,572,400

% ofShare

holding

4.292.785.774.258.883.71

70.32

100.00

MUKANDENGINEERS


1. Categories of

Categories

IndividualsCorporateFinancial InstitutionsFllsNRIs/OCBsBanksMutual FundsTrustsPromotersTotal

Shareholding as on:

No. ofShare

holders26,700

47351

70103

103

27,275

31st March, 2008

%ofShare

holders97.89

1.730.02

. .0.260.040.010.040.01

100.00

No. ofShares

Held

4,006,3882,276,717

1,33565

33,09426,033

800301,792

5,926,17612,572,400

% ofShare

holding31.8718.100.01

0.260.210.012.40

47.14100.00

No. ofShare

holders27,335

41651

79103

103

27,862

31st March

%ofShare

holders98.111.490.02

0.280.040.010.040.01

100.00

2007

No. ofShares

Held4,222,9192,060,262

1,33565

40,0931,083

800319,667

5,926,17612,572,400

% ofShare

holding

33.5916.380.01

0.320.010.012.54

47.14

100.00

m. Dematerialisation ofShares and Liquidity

n. Plant Locations

o. Investor Correspondence

Auditor's Certificate ofCorporate Governance

92.70%-of outstanding equity have been dematerialised up to 31S| March, 2008Trading in Equity Shares of the Company on any Stock Exchange is permitted only inthe dematerialised form from 24th July, 2000 as per Notifications issued by SEBI.

The Company has no plants but carries out jobs at various sites of customers.

For any queries, investors are requested to get in touch with the Company'sRegistrar and Transfer Agent:Bigshare Services Pvt. Ltd.E-2/3, Ansa Industrial Estate,Saki Vihar Road, Saki Naka,Andheri (East), Mumbai - 400 072.

Registered Office of the Company :Bajaj Bhawan, Jamnalal Bajaj Marg,226, Nariman Point, Mumbai - 400 021.

The Company has obtained a certificate from the Auditors of the Companyregarding compliance of conditions of Corporate Governance as stipulated in theListing Agreement with Stock Exchanges. This is annexed to the Directors' Report.The certificate will be sent to the Stock Exchanges along with annual return to be filedby the Company.

Auditors' Certificate on Corporate GovernanceToThe MembersMukand Engineers LimitedBajaj Bhawan,226, Nariman Point,Mumbai-400 021.

We have reviewed the records concerning the Company's compliance of conditions of Corporate Governance as stipulated inClause 49 of the Listing Agreements entered into, by the Company, with the Stock Exchanges of India, for the financial yearended 31st March, 2008.The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited toprocedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

We have conducted our review on the basis of the relevant records and documents maintained by the Company and furnishedto us for the review, and the information and explanations given to us by the Company.

Based on such a review, and to the best of our information and according to the explanations given to us, in our opinion, theCompany has complied with the conditions of Corporate Governance, as stipulated in Clause 49 of the said Listing Agreements.

We further state that, such compliance is neither an assurance as to the future viability of the Company, nor as to the efficiencyor effectiveness with which the Management has conducted the affairs of the Company.

For and on behalf ofDALAL & SHAH

Chartered Accountants

MUMBAI, 19th May, 2008

Ashish DalaiPartner

Membership no. 33596

AAUKANDENGINEERS


MANAGEMENT DISCUSSION AND ANALYSIS

1 ENGINEERING CONSTRUCTION DIVISION

1.1 Industry Structure and Developments:

The business of the Company continuesmainly in the areas of Refineries andPetrochemicals , Power Generation Plants,Integrated steel Plants and Aluminium Plants.The works undertaken by the company covererection of mechanical plant, Structural Works,Piping Works and Electrical works . For the firsttime, the Company has undertaken workcovering basic and detailed engineering ofWater System for a contract for rolling millproject for an integrated steel plant.

1.2 Growth opportunity and threats:

During the year under review, the Companybooked seven orders valued at Rs.1,264Million. These include engineering, projectmanagement and erection for UniversalSection Mill of a Steel Plant, Electrical Works ofa Thermal Power Project, Erection of plant andequipment of a Steel Plant and MechanicalJobs at Naphta Cracker Unit of a Refinery.

An order successfully executed for a refinerywill qualify the Company for participation inlarger value tenders in the Hydrocarbon sector.

Business in the current year is expected fromexpansion projects in Hydrocarbon Industry aswell as in Aluminum, Integrated Steel Plantsand Power Projects for which the company hasreceived enquiries.

1.3 Outlook:

The Company expects large businessopportunities from green field steel plantsexpected to come up in Eastern India and inAndhra, Power Projects of NTPC, expansion ofAluminium plants as well as projects inHydrocarbon Industry at Bhatinda andParadeep, etc.

Sharp rise in the input costs could escalatecontract costs particularly where steelmaterials are to be procured by the company.The Company is taking care by providing forescalation clauses in contracts.

1.4 Risk Management:

As the contracts undertaken by the Companyare generally in the Public Sector or reputedprivate sector companies, the risk of paymentdefaults by the clients is minimum. Thecompany also evaluates project locationenvironment risks before accepting contracts.

2 INFOTECH DIVISION:

The Company continues to undertake Electronic

Data Processing and ERP advisory & supportactivities.

3 SEGMENTWISE PERFORMANCE:

The Income from operations of the Engineering andConstruction business amounted to Rs.203.61million for the year under review as againstRs.229.78 million in the previous year. Infotechbusiness income amounted to Rs.48.50 million inthe current year against Rs.56.34 million in theprevious year. The detailed disclosures in respectof both the segments of the Company are availablein the financial statements.

4 INTERNAL CONTROL SYSTEM:

The Company has instituted a system of internalcontrol to safeguard and protect the assets of theCompany. The Company has also appointed anindependent auditor whose reports are regularlyreviewed by the Management and guidelines andprocedures are formulated and monitored forproper controls.

5 FINANCIAL PERFORMANCE:

For the year under review turnover and other receiptsamount to Rs.286.24 million as compared toRs.310.40 million in the previous year. The profitfor the year before interest and depreciationamounted to Rs.54.06 million as against profit ofRs.52.77 million in the previous year.

The Company has received an approval for BankGuarantee facility of Rs.30 Million during the year.The total facility as on date is Rs.80 Million. Thiswill enable the Company to procure more orders.Discussions with the Bankers will be continued toget enhanced Bank Guarantee facility for expectedgrowth in the business.

6 HUMAN RESOURCE MANAGEMENT INITIATIVES:

Shortage of experienced technical manpowercontinues to be a challenge for booking andexecuting engineering construction work. TheCompany continues to structuring trainingprogramme to improve skills of engineeringpersonnel. The Company continues to developdevelope quality manpower. New recruitments atvarious levels are being made to increase collectiveoutput and help achieve higher productivity.

7 CAUTIONARY STATEMENT:

Statements made herein describing the Company'sexpectations or predictions are "forward-lookingstatements". The actual results may differ fromthose expected or predicted. Prime factors that maymake a difference to the Company's performanceinclude market conditions, input costs, interestcosts, Government regulations, economicdevelopments within/outside the country.

REPORT OF THE AUDITOR TO THE MEMBERS

MUKANDENGINEERS


We have audited the attached Balance sheet of MUKANDENGINEERS LIMITED, as at 31s' March, 2008, the annexedProfit and Loss Account for the year ended on that date, andalso the Cash-flow Statement for the year ended on that date.These financial statements are the responsibility of theCompany's management. Our responsibility is to express anopinion on these financial statements based on our audit.

1. We conducted our audit in accordance with the auditingstandards generally accepted in India. These Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free from any material misstatement. Anaudit includes, examining on a test basis, evidencesupporting the amounts and disclosures in the financialstatements. An audit also includes, assessing theaccounting principles used and significant estimates madeby management, as well as evaluating the overallpresentation of the financial statements. We believe thatour audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditor's Report) Order,2003, and the Companies (Auditor's Report) (Amendment)Order, 2004 issued by the Central Government in terms ofSection 227 (4A) of the Companies Act, 1956, we annexhereto a statement on the matters specified in paragraphs4 and 5 of the said Order.

3. Further to our comments in the Annexure referred to above,we report that:

(i) We have obtained all the information and explana-tions, which, to the best of our knowledge and beliefwere necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as requiredby law, have been kept by the Company so far asappears from our examination of the books ofcompany;

(iii) The Balance Sheet, Profit and Loss Account andCash Flow Statement dealt with by this report are inagreement with the books of account of the Company;

(iv) In our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with by thisreport comply with the accounting standards referredto in sub-section (3C) of Section 211 of the CompaniesAct, 1956;

(v) Based on the representations made by the Directorsand taken on record by the Board of Directors of theCompany and the information and explanations givento us, none of the Directors is, as at 31st March, 2008prima-facie disqualified from being appointed as aDirector in terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956;

(vi) We invite attention to :

(a) Note No. 10 in Schedule 20 to theAccounts relating to loans aggregatingRs. 219,450,000 and interest receivableaggregating Rs. 62,332,753, at the close ofthe year, due from companies whosenetworths have eroded. The Managementis of the opinion that the loss that would

result on this account, is not quantifiableat present, since, it would depend uponthe amount which will ultimately berealized from the financial assets of thesecompanies and therefore, no provision onthis account is quantifiable at present.Under the circumstances, we have reliedupon this judgment of the Management.Also refer our observation in para. 3(vi)(b)below;

(b) Note No. 12 in Schedule 20 to the Accountsrelating to computation of limits underSection 372A based on legal opinionobtained by the Management relating tounrecovered overdue loan amounts ofRs. 219,450,000 at the close of the year,due from borrowers, which, on the basisof the said legal opinion, are notconsidered to be effective renewal, andtherefore, not attracting the restrictiveprovisions of Section 372A of theCompanies Act, 1956;

(c) Note No. 6 in Schedule 20 to te Accountsrelating to Debtors amounting toRs. 9,457,572- against whom the Companyhas initiated arbitration proceedings,which in the opinion and judgement of theManagement continue to be classified as"Good". We have relied upon thisjudgment of the Management.

We further report that, the impact resulting out ofour observation in this para 3(vi) on the Profit, isnot quantifiable by us since, the issues concerned,are judgemental in nature, and we have relied uponthe judgement of the Management.

4. In our opinion and to the best of our information andaccording to the explanations given and managementrepresentations made to us, the said financial statements,subject to our reservations expressed in para. 3(vi)above and read together with the notes thereon, give theinformation required by the Companies Act, 1956, in themanner so required and present a true and fair view inconformity with the accounting principles generallyaccepted in India:

(a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2008;

(b) in the case of the Profit and Loss Account, of theprofit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cashflows for the year ended on that date.



Ashish DalaiPartner

Membership No.: 33596

Mumbai : 19th May, 2008

MUKANDENGINEERS

•22nd Annual Report 2007-2008

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OURAUDITORS REPORT OF EVEN DATE ON THE ACCOUNTSFOR THE YEAR ENDED 31ST MARCH, 2008 OF MUKANDENGINEERS LIMITED

On the basis of such checks as we considered appropriateand in terms of the information and explanations given tous, we state that :-

(i) (a) The Company has generally maintained properrecords showing full part iculars includingquantitative details and situation of its fixed assets,except for changes in location of certainmoveable assets, which need to beupdated;

(b) As explained to us, fixed assets at majority ofthe locations, have been physically verified bythe Management at the close of the year which,in our opinion, is reasonable, looking to the sizeof the Company and the nature of its business.The results of the physical verification, havenot been compared with the book recordsand hence discrepancies, if any, have notbeen identified;

(c) The Company has not disposed off anysubstantial part of its fixed assets so as to affectits going concern;

(ii) (a) As explained to us, inventories'of stores and sparessituated at the various construction sites, have beenphysically verified by the Management, at the closeof the year. The intervals at which these inventorieshave been verified are, in our opinion, reasonablein relation to the size of the Company and the natureof its business. In view of the nature of the activity

• carried on, at present by the Company, there are noother items of inventory;

(b) The procedures, as explained to us, which arefollowed by the Management for physical verificationof inventories, are, in our opinion, reasonable andadequate in relation to the size of the Company andthe nature of its business;

(c) On the basis of our examination of the inventoryrecords of the Company, we are of the opinion that,the Company is maintaining proper records of itsinventories. Discrepancies noticed on physicalverification of inventory as compared to bookrecords, which were not material, have beenproperly dealt with in the books of account;

(iii) (a) According to the information and explanations givento us, the Company has not-granted any loan,secured / unsecured, to companies, firms or otherparties listed in the register maintained under Section301 of the Companies Act, 1956;

(b) According to the information and explanations givento us, the Company has not taken any loan, securedor unsecured from companies, firms or other partiescovered in the register maintained under Section301 of the Companies Act, 1956

(iv) In our opinion and according to the information andexplanations given to us, there are generally adequateinternal control systems commensurate with the size ofthe Company and the nature of its business with regardto purchase of inventory and fixed assets and for saleof services and materials supplied as part of executionof contract work. There was no other sale of goodsduring the year. During the course of our audit, no majorweakness in internal control, had come to our notice;..

(v) (a) On the basis of the audit procedures performed byus, and according to the information, explanationsand representations given to us, we are of theopinion that, the transactions in which directorswere interested, as contemplated under Section 297and sub-section (6) of Section 299 of the CompaniesAct, 1956 and which were required to be entered inthe register maintained under Section 301 of theCompanies Act, 1956, have been so entered;

(b) In our opinion and according to the information andexplanations given to us, the transactions made inpursuance of contracts or arrangements entered inthe register maintained under Section 301 of theCompanies Act, 1956 exceeding the value ofRupees five lacs in respect of any party during theyear have been made at prices which arereasonable having regard to market prices prevailingat that time.

(vi) In our opinion and according to the information andexplanations given to us, the Company has compliedwith the provisions of Section 58A of the CompaniesAct, 1956, and its Rules and also the directives of ReserveBank of India with regard to acceptance of depositsfrom the public. Since the Company has not defaulted inrepayment of deposits, compliance of Section 58AA orobtaining any order from the Company Law Board orNational Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal does not arise;

(vii) On the basis of internal audit reports broadly reviewedby us, we are of the opinion that, the coverage of internalaudit functions carried out by a firm of CharteredAccountants appointed by the management, iscommensurate with the size of the company and natureof its business;

(viii)(a) According to the records of the Company and theinformation and explanations given to us, it has beenregular in depositing undisputed statutory duesincluding Investor Education and Protection Fund,Employees' State Insurance, Income Tax, Sales Tax,Wealth Tax, Service Tax and Cess. During the yearthere brave been delays in depositingProvident Fund relating to contractors'employees and also taxes collected at source(TCS) on sales of scrap. TCS amounting toRs. 10,299/- are outstanding as at 31st March2008, for a period exceeding Six months fromthe date they became payable. The Companyis in the process of reconciling service taxbalance relating to earlier years and theamounts due, if any will be ascertained on

MUKANDENGINEERS


(b)

completion of such reconciliations. There wereno dues towards Customs Duty and Excise duty,during the year.

On the basis of our examination of the documentsand records of the Company, there were no disputeddues in respect of Wealth tax, Service Tax, Customduty, Excise duty and Cess. However, the followingdisputed statutory dues have not been depositedwith the appropriate authorities:

Nature ofDues

Income tax

WorksContract tax

Entry tax

Amount in Rs.

17,453,074

20,637,549

384,334

1,009,007

Forum where disputeis pending

Income tax Appellate:Tribunal

Income tax DepartmentalAuthorities

Sales tax DepartmentalAuthorities

High Court / SupremeCourt

(ix) The Company, neither has accumulated losses at theend of the financial year nor has incurred cash lossesboth, in the financial year under report and in theimmediately preceding financial year;

(x) According to the records examined by us and theinformation and explanations given to us, we have tostate that, the Company has not defaulted in re-paymentof dues to Banks. There were no dues to financialinstitutions or debenture holders;

(xi) As explained to us, the Company has not granted anyloans or advances on the basis of security by way ofpledge of shares, debentures or any other securities;

(xii) On the basis of our examination of the documents andrecords of the Company, the Company is not dealing inor trading in shares, securities, debentures and otherinvestments;

(xiii) According to the information and explanations give to usand the representations made by the Management, theCompany has given guarantees to banks and financialinstitutions for loans taken by another company in earlieryears. In our opinion, the terms and conditions of theseguarantees, are not prima-facie, prejudicial to the interestof the Company;

(xiv)On the basis of the records examined by us, and relytingon the information compiled by the Company for co-relating the funds raised to the end use of term loan, wehave to state that, the Company has, prima-facie, appliedthe term loan for the purpose for which it was obtained:

(xv) According to the information and explanations given tous and on an overall examination of the financialstatement of the Company and after placing reliance onthe reasonable assumptions made by the Company forclassification of long term and short term usage of funds,we are of the opinion that, prima-facie, as at the close •of the year, short term funds amounting toRs. 114,332,938 stand utilised for long term purposes;

(xvi) The Company has not made any preferential allotment ofshares during the year;

(xvii)The Company has not issued any debentures during theyear;

(xviii)The Company has not raised any money by public issueduring the year;

(xix) According to the information and explanations given tous and the representations made by the Management,and to the best of our knowledge and belief, no fraud onor by the Company, has been noticed or reported by theCompany during the year.

Looking to the nature of activities being carried on at presentby the Company and also considering the nature of thematters referred to in the various clauses of the Companies(Auditor's Report) Order, 2003 and the Companies (Auditor'sReport) (Amendment) Order, 2004, clauses (iii)(b), (iii)(c),(iii)(d), (iii)(f), (iii)(g), (viii) and (xiii) of Paragraph 4 of theaforesaid Order, are, in our opinion, not applicable to theCompany.



Ashish DalaiPartner

Membership No. : 33596

Mumbai : 19th May, 2008

MUKANDI ENGINEERS


Balance Sheet as at 31st March, 2008

Schedule Rupees31.3.2008Rupees

31.3.2007Rupees

I. SOURCES OF FUNDS

(1) Shareholders' Funds :

(a) Share Capital(b) Reserves and Surplus

(2) LoaVi Funds :

(a) Secured Loans(b) Unsecured Loans

(3) Deferred Tax Liability (Net)

II. APPLICATION OF FUNDS

TOTAL

(1) Fixed Assets :(a) Gross Block(b) Less: Depreciation / Amortisation

(c) Net Block

(2) Investments

(3) Current Assets, Loans and Advances:(a) Inventories(b) Sundry Debtors(c) Cash and Bank Balances(d) Other Current Assets(e) Loans and Advances

Less :Current Liabilities and Provisions :(a) Current Liabilities(b) Provisions

Net Current Assets

TOTALStatement of Significant Accounting Policiesadopted by the Company and Notes formingpart of the Accounts

12

3

4

5

678910

1112

on

125,797,500268,920,214

23,569,192263,832,875

267,156,318207,095,953

66,312,340154,812,033

50,105,61474,076,099

648,234,997

993,541,083

248,058,533131,602,700

379,661,233

394,717,714

287,402,0679,381,246

691,501,027

60,060,365

17,560,812

613,879,850

691,501,027

125,797,500247,573,575

373,371,075

24,985,782239,858,560

264,844,34210,403,893

648,619,310

259,483,878203,177,513

56,306,365

17,560,812

31,357,841162,531,522

18,856,38464,565,948

616,116,444

893,428,139

192,078,452126,597,554

318,676,006574,752,133

648,619,310

As per our attached report of even dateFor and on behalf ofDALAL&SHAHChartered Accountants

ASHISH DALALPartnerMumbai, 19th May, 2008

RAJESH V. SHAHChairman

T.S.ANANDDirector

K. P. JOTWANIManager

P. R. DHRUVACompany Secretary

Mumbai, 19th May, 2008

MUKANDENGINEERS


Profit and Loss Account for the year ended 31st March, 2008

Schedule Rupees2007-2008

Rupees2006-2007

Rupees

INCOMEIncome from OperationsOther Income

EXPENDITUREContract execution costsVariation in InventoriesEmployees' remuneration and benefitsAdministrative and Other expensesDepreciationInterest and Finance charges

Profit before TaxProvision for Tax- Current Tax- Minimum Alternate Tax (MAT) Credit Entitlement- Fringe Benefit Tax- Deferred Tax Credit

Profit for the year after TaxPrior period adjustments (Net) {Refer Note B(7)}Short Provision for Taxation (Net of MAT CreditEntitlement Rs. 262,234)

Balance brought forward from previous year

Balance carried to Balance Sheet

Earnings for EPSWeighted average number of Equity Shares outstandingduring the. yearBasic and diluted earnings per share (in Rs.)Nominal Value of Share (in Rs.)

Statement of Significant Accounting Policiesadopted by the Company and Notes formingpart of the Accounts

85,392

21,751,929(30,562)

(374,728)

21,346,63922,807,346

44,153,985

1314

15161718

19

252,107,97834,134,070

158,697,571(34,024,805)58,961,34748,551,936

5,492,27626,897,186

(2,226,000)2,226,000(937,255)

1,022,647

286,242,048

286,242,048

264,575,511

21,666,537

286,125,27424,276,103

310,401,377

•310,401,377

178,511,996(19,946,339)48,090,75050,976,582

9,807,89626,812,753

294,253,638

16,147,739

(1,500,000)1,500,000(731,645)

1,136,800

405,155

16,552,894(846,599)

15,706,2957,101,051 •

22,807,346

21

12

,346

,572

,639

,4001.70

10

15,706

12,572

,295

,4001.25

10

20




T.S.ANANDDirector

K. P.JOTWANIManager


Mumbai, 19'" May, 2008

MUKANDENGINEERS


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

2007-2008Rupees Rupees


A. Cash Flow arising from Operating Activities

Profit before Tax

Add:a) Depreciationb) Facilities at Customers' site written offc) Interest and Finance chargesd) Loss on Sale of Assets (Net)e) Bad debts, Loans, Advances and Claims

written offf) Investments written off

Less:a) Interest Incomeb) Prior period adjustments(Net)c) Dividend on Investments (Quoted)

Operating Profit before working capital changes

5,492,2762,732,060

26,897,186122,252

23,502,10230,562

681,252

21,666,537

35,243,774

24,213,916

32,696,395

9,807,896614,470

26,812,7534,930,813

293,77817,500

22,287,658846,599

115

16,147,

42,477,

23,134,

35,490,

210

372

577

Add:a) Decrease in Long term Bank Deposits for securing

Operational Guaranteesb) Increase in Trade Payables

Less:a) Increase in Inventoriesb) Increase in Long term Bank Deposits for securing

Operational Guaranteesc) Increase in Trade and Other Receiviablesd) Decrease in Trade Payables

Cash Inflow / (Outflow) from Operations

Less: Direct taxes Paid

Net Cash (Outflow) in the course of OperatingActivities

56,647,776

34,954,499

29,705,00020,199,346

56,647,776

84,858,845

4,485,326

18,003,720

(13,518,394)

6,961,522

20,123,595

29,468,4972,057,375

6,961,522

51,649,467

(9,197,368)

13,171,452

(22,368,820)

MUKANDENGINEERS


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008 (Contd.)



B. Cash Flow arising from Investing Activities

Inflow:a) Sale of Fixed Assetsb) Interest receivedc) Dividend on Investments (Quoted)d) Loans realised

Outflow: Acquisition of Fixed Assets (Including Facilities atCustomer's Site)

Net Cash Inflow in the course of Investing Activities

656,23519,708,518

681,25216,292,236

37,338,241

18,473,390

18,864,851

12,90322,730

22,432

,22/,315115

,541

58

15

42

,066

,381

,684

,198

,943

,255

C. Cash Flow arising from Financing Activities

Inflow : Increase in borrowings (Net)

Outflow:

a) Dividend paidb) Interest paidc) Decrease in borrowings (Net)

Net Cash (Outflow) in the course of Financing Activities

Net Increase / (Decrease) in Cash / Cash EquivalentsAdd: Balance at the beginning of the year

Cash / Cash Equivalents at the close of the year

Cash / Cash Equivalents at the close of the yearCash on handBank balancesLess: Long term Bank Deposits for securing

Operational Guarantees

221,75217,717,885

49,955,565

42,205,000

14,137,410

17,939,637

(3,802,227)

1,544,2306,356,384

7,900,614

150,049

7,750,565

7,900,614

6,11618,767,283

3,611,290

18,555,747

12,500,000

22,384,689

(22,384,689)

(2,069,254)8,425,638

6,356,384

300,637

6,055,747

6,356,384


ASHISH DALALPartnerMumbai, 19lh May, 2008

RAJESHV.SHAHChairman

T.S.ANANDDirector



Mumbai, 19'" May, 2008

MUKANDENGINEERS


SCHEDULES TO THE ACCOUNTSSchedules ' 1 ' to '20' annexed to and forming part of the Balance Sheet as at and the Profit and Loss Account forthe year ended 31st March, 2008.

Rupees31.3.2008

Rupees31.3.2007

Rupees

1. SHARE CAPITALAuthorised:

20,000,000 Equity Shares of Rs.10/- each500,000 Preference Shares of Rs.100/- each

Issued :12,592,700 Equity Shares of Rs.10/- each

Subscribed and Paid up:12,572,400 • Equity Shares of Rs.10/- each, fully paid upAdd: Forfeited SharesAmounts originally paid up

° Includes 598,500 Equity Shares alloted as fully paid up,pursuant to a contract without payments being received incash.

2. RESERVES AND SURPLUSSecurities Premium Account:

As per last Account

Surplus as per Profit and Loss Account

3. LOAN FUNDS

Secured Loans:

Loans from Banks:Working Capital [Refer Note B (1)]Others (Secured against Vehiclepurchased thereagainst)

Loan from a company (Secured against machinerypurchased thereagainst)

Unsecured Loans:

Fixed Deposits

19,539,521

180,835

Inter-Corporate Deposits (Short term)Interest accrued thereon

140,000,00018,192,875

105,640,000

158,192,875

200,000,00050,000,000

19,720,356

3,848,836

23,569,192

263,832,875

287,402,067

200,000,00050,000,000

250,000,000

125,927,000

125,927,000

125,724,000

73,500

125,797,500

224,766,229

44,153,985

268,920,214

250,000,000

125,927,000

125,927,000

125,724,000

73,500

125,797,500

224,766,229

22,807,346

247,573,575

19,431,615

288,898

19,720,513

5,265,269

24,985,782

90,086,000

140,000,0009,772,560

149,772,560

239,858,560

264,844,342

MUKANDENGINEERS


SCHEDULES TO THE ACCOUNTS

4. FIXED ASSETS Rupees

ASSETS

Intellectual Property RightsPlant and MachineryComputersFurniture and Fixtures etc..VehiclesAssets acquired onHire-Purchase: Vehicles

Total

Previous Year's Total

GROSS BLOCK (AT COST/BOOK VALUE)

As at1st April,

2007

52,000,00062,439,967

128,800,17812,864,4962.801,177

578.060

259,483,878

280,944,671

Additions/Adjustments

3.243,7723,009,0673.771,924

10,024,763

12,881,024

Deductions/Adjustments

887,312262,090231,747971,174

2,352,323

34,341,817

As at31st March,

2008

52,000,00064,796,427

131,547,15616,404,6731,830,003

578,060

267,156,318

259,483,878

DEPRECIATION/AMORTISATION

Upto1st April,

2007

52,000,00023,807,554

117,338,8717,964,1091,929,690

137,289

203,177,513

209,877,394

Depreciation/Amortisationfor the Year

2,954,3181,418,930•860,008204,104

54,916

5,492,276

9,807,896

Deductions/Adjustments

328,845257,247123,503864,241

1,573,836

16,507,777

Up to31st March,

2008

52,000,00026,433,027

118,500,5548,700,6141,269,553

192,205

207,095,953

203,177,513

NET BLOCK

As at31st March,

2008

38,363,40013,046,6017,704,059

560,450

385,855

60,060,365

56,306,365

As at31st March,

2007

38,632.41311.461,3074.900,387

871 487

440,771

56,306,365

Rupees31.3.2008Rupees

31.3.2007Rupees

5. INVESTMENTS

Long Term Investments (At Cost / Book Value):Other than Trade:

Nos. Shares:Unquoted:Indian Thermal Power Limited

7,153 Equity Shares of Rs.10/- each, fully paid upLess: Provision for Diminution in value

71,530(71,530)

71,530(71,530)

Quoted:Mukand Limited®

681,200 Equity Shares of Rs.10/- each, fully paid upMukand Limited

52,400 0.01% Cummulative Redeemable PreferenceShares (CRPS) of Rs.10/- each, fully paid up

17,036,812

524,000

17,560,812

17,560,812

17,036,812

524,000

17,560,812

17,560,812

Notes:

1 Market value of quoted investments as at 31-03-2008 Rs.61,616,636/-, as at 31-03-2007 Rs.55,331,256/-

2 All the above Investments have been classified by the Company as "Long Term Investments" in view of its intentionto hold the same on long term basis.° Pledged as collateral security against working capital facilities availed from Allahabad Bank.


31.3.2007Rupees

6. INVENTORIES [Refer Policy A(4) and (5) (iii)]Stores and SparesContract work-in-progress:Incomplete Contract WorksAccumulated Direct Costs

45,191,16119,803,093

1,318,086

64,994,254

388,392

20,896,77010,072,679

30,969,449

66,312,340 31,357,841

MUKANDENGINEERS



31.3.2007Rupees

7.

8.

9.

SUNDRY DEBTORS {Refer Note B (6)}Over Six months : (Unsecured)Considered goodConsidered doubtfulLess: Provision

Other Debts (Unsecured, considered good)

CASH AND BANK BALANCESCash on handBalances with Scheduled Banks :(i) In Current Accounts(ii) In Deposit Accounts [Includes Rs. 5,000/- endorsed

in favour of Government authorities as security(Previous Year Rs. 5,000/-) and Rs. 42,205,000/-for securing operational guarantees (Previous YearRs. 12,500,000/-)

9,345,445

9,345,445

7,185,565

37,910,747

116,901,286

154,812,033

150,049

40,632,609

9,345,445

9,345,445

121,898,913

162,531,522

300,637

5,550,747

42,770,000

OTHER CURRENT ASSETSInterest Receivable {Refer Note B (10)}Facilities at Customers' Site Completed : {Refer Policy A(5)(iv)}Opening BalanceAdd: Constructed / Created during the year

Less: Proportionate cost of Facilities written off

1,886,4498,448,627

10,335,0762,732,060

10. LOANS AND ADVANCES (Unsecured, considered good

unless otherwise specified)

Loan" to a Company (Secured) on assignment of debt by

a bank {Refer Note B(11)}

Loans to Other Companies {Refer Note B(10)}

Other Loans and Advances

Advances recoverable in cash or in kind or for value

to be received

Advance payment of tax

MinimumAlternateTaxCredit Entitlement Receivable

Trade Deposits

49,955,565

50,105,614

66,473,083

7,603,016

74,076,099

178,179,029

219,450,000

189,739

70,428,471

166,759,925

3,988,234

9,239,599

13,005,000

18,555,747

18,856,384

62,679,499

2,500,919

2,500,919614,470

1,886,449

64,565,948

194,471,265

219,450,000

237,979

39,825,476

148,756,205

1,500,000

11,875,519

648,234,997 616,116,444

MUKANDENGINEERS



31.3.2007Rupees

11. CURRENT LIABILITIES

Sundry Creditors {Refer Note B(19)}

Advances received against contracts {Refer Policy A(5)(ii)}

Unclaimed dividends

Interest accrued but not due on Loans

136,479,025

106,907,403

160,017

4,512,088

248,058,533

107,728,876

80,389,102

381,769

3,578,705

192,078,452

12. PROVISIONS

For Taxation

For Warranties

For Employees' Benefits

125,040,064

1,000,000

5,562,636

131,602,700

121,239,847

1,000,000

4,357,707

126,597,554

Rupees2007-2008

Rupees

2006-2007Rupees

13. INCOME FROM OPERATIONS

Value of Contract Work executed (including supply of materials)

{Refer Policy A(5)(i) and A (5) (ii)}

Income from Equipment provided

Income from Infotech Business

203,148,963463,617

48,495,398

252,107,978

229,309,474

475,000

56,340,800

286,125,274

14. OTHER INCOMEInterest (Gross)(Tax deducted at source Rs. 4,454,080/-, Previous year Rs.Nil)Excess Provision Written Back (Net)Dividend on Investments (Quoted)CommissionMiscellaneous Income

15. CONTRACT EXECUTION COSTSSub-contracting ExpensesStores, Spares and Construction Materials

Consumed (Net) (Indigenous)Equipment Hire Charges (Net)Facilities at Customers' site written offOther Operational Expenses (Net)

23,502,102183,368681,252

7,676,7702,090,578

34,134,070

78,187,522

54,085,95713,806,590

2,732,0609,885,442

158,697,571

22,287,658269,440

115—

1,718,890

24,276,103

55,419,484

99,387,53015,328,320

614,4707,762,192

178,511,996

/ ^ \ MUKAND11 m l I ENGINEERS22nd Annual Report 2007-2008

Rupees2007-2008

Rupees2006-2007

Rupees

16. VARIATION IN INVENTORIESOpening Stocks:

Incomplete Contract WorksAccumulated Direct Costs

Closing Stocks:Incomplete Contract WorksAccumulated Direct Costs

Net (Increase)

20,896,77010,072,679

45,191,16119,803,093

30,969,449

64,994,254

(34,024,805)

11,023,110

11,023,110

20,896,77010,072,679

30,969,449

(19,946,339)

17. EMPLOYEES' REMUNERATION AND BENEFITS {Refer Note B(9)}Salaries, Wages and other paymentsContribution to Provident and other FundsWelfare Expenses

18. ADMINISTRATIVEAND OTHER EXPENSESRentInsuranceRepairs:

Plant and MachineryOthers

Travelling and ConveyanceAuditors' RemunerationDirectors' FeesBank ChargesBank Guarantee CommissionLegal and Professional ChargesLoss on Sale of Assets (Net)Printing and StationeryTelephone, Telex, etc.Service Tax and Works Contract TaxBad debts, Loans, Advances and Claims Written off (Net)Investment Written offMiscellaneous Expenses

19. INTEREST AND FINANCE CHARGESOn Fixed LoansTo Banks and Others

384,4873,848,891

48,320,8336,508,3624,132,152

58,961,347

4,117,483721,473

4,233,3787,492,680

630,09276,000

302,1441,596,8187,793,716

122,2521,616,8421,750,4428,942,718

——

9,155,898

48,551,936

22,456,4834,440,703

26,897,186

38,973,4944,739,7254,377,531

48,090,750

3,916,268. 409,167

353,5992,613,047

2,966,6468,003,797

464,99560,000

488,928448,812

7,812,2674,930,8131,822,1031,982,9149,548,537

293,778. 17,500

. 7,810,057

50,976,582

21,660,7705,151,983

26,812,753

MUKANDENGINEERS


20. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ADOPTED BYTHE COMPANY AND NOTESFORMING PART OF THE ACCOUNTS.

A. Statement of Significant Accounting Policiesadopted by the Company:

(1) Basis of Accounting:

The financial statements are prepared under the historicalcost convention on the accrual basis of accounting inaccordance with the generally accepted accountingprinciples, the applicable mandatory Accounting Standardsand the relevant provisions of the Companies Act, 1956.

(2) Fixed Assets and Depreciation :

(i) Fixed Assets :

(a) Fixed Assets are stated at cost of acquisition/book value less accumulated depreciation/amortisation.

(b) The Company, at each balance sheet date,assesses whether there is any indication thatan individual asset or group of assetsconstituting a Cash Generating Unit (CGU) maybe impaired. Provisibn for impairment loss isrecognised where the recoverable amount ofan asset or a CGU, is less than its carryingamount. Provisions for impairment lossesrecognised in earlier years are further reviewedat each balance sheet date and adjusted forchanges in the estimated recoverable amountof asset / CGU.

(ii) Depreciation / Amortisation:

(a) Depreciation on assets is provided on StraightLine Method at the rates prescribed in ScheduleXIV to the Companies Act, 1956.

(b) Cost of Intellectual Property Rights capitalisedhave been amortised over a period of five yearsthereof.

(c) Depreciation / Amortisation on additions or onsale/discardment of assets are provided on pro-rata basis from the month of such addition or upto the month of such sale/discardment as thecase may be.

(3) Investments :

All Long term investments are stated at cost. Diminution, ifany, in the value of investments, other than temporary, isprovided for each investment individually.

(4) Inventories :

(i) Stores and Spares :

Stores and Spares are valued at cost or net realisablevalue whichever is lower. The cost formula used is'First In First Out'.

(ii) Construction materials at site:

Construction materials at site are valued at cost lessamounts written off over their estimated useful life.

(iii) Incomplete Contract Works under ContractWork-in-Progress:

"Incomplete Contract Works" are valued by the direct

cost method. The direct cost rate is determined foreach contract separately by considering all directcosts (including materials supplied) specificallyattributable to each contract in relation to theaggregate quantity of work to be carried out undereach activity of the contract. The concept of valuationof "Incomplete Contract Works" under "ContractWork-in-Progress" arises only after the stage whendirect costs under each contract are not any furthercarried forward as "Accumulated Direct Costs" ascontemplated in policy 5 (iii) below.

(5) Income and Expenditure :

Engineering construction business:

(i) Income by way of revenue arising out of executionof contract work (including supply of materials), iscredited as "Income" in respect of each contractundertaken on the basis of pre-determined rates ofincome derived in relation to value of each activityunder the contract, only after at least 15% of thetotal estimated contract costs (i.e. direct and indirectcosts) in respect of each contract are incurred (onaccrual basis). Such revenue is recognised as thecontract activity progresses, by reference to thestage of completion of each contract and the invoicesacknowledged by the customer's representative.Procurement of goods and materials, prior tocommencement of the contract activity, is notconsidered as a progress in the contract activity andhence, no revenue is recognised, although, value ofsuch goods and materials procured, exceeds 15%of the estimated contract costs.

(ii) The Company follows the "Percentage of CompletionMethod" of accounting for execution of contract work.The revenue from the execution of contracts isrecognised proportionately with the degree ofcompletion achieved under each contract, matchingrevenue with expenses incurred. Therefore, theinvoices raised for claiming periodic payments fromcustomers are not accounted as income and the"Sundry Debtors" are reflected accordingly.

Claims made on account of escalation in costs andon account of variation in contract work approvedby the customer, are both, recognised as revenueonly when and to the extent of the acceptance/realisation of the amount of the claim or variation.

(iii) Direct costs which are accounted on accrual basis,are charged to revenue in respect of each contractundertaken, only after at least 15% of the totalestimated contract costs (i.e. all direct and indirectcosts) in respect of each contract are incurred (onaccrual basis).

Till such time, all the direct costs accounted in respectof each contract are carried forward to the nextaccounting year as "Accumulated Direct Costs" under"Contract Work-in-Progress". Indirect costs aretreated as expenses of the year in which they areincurred on accrual method of accounting andcharged to revenue.

MUKANDENGINEERS


(iv) All facilities in the nature of assets created at thecustomers' site and which are to be abandoned atthe end of the contract are, when under construction,carried forward at cost to-date as "Facilities atCustomers' site-under construction". Uponsubsequent completion, they are carried forward as"Facilities at Customers' site-completed" (both beinggrouped as "Other Current Assets"). The completedfacilities are written off in equal annual instalmentsover the period commencing from the year ofcompletion of the facility up to the contracted year

• for completion of the contract. Billable reimbursementsagainst such facilities, if separately identified in acontract, are similarly credited in equal annualinstalments against the write-offs over the saidperiod.

Infotech Business:

(v) Income from EDP services provided is accounted onaccrual basis.

Other Income and Expenditure:

(vi) Other Revenue / Income and Costs/Expenditure aregenerally accounted on accrual, as they are earnedor incurred.

(vii) Share issue expenses are charged, first againstavailable balance in Securities Premium Account.

(6) Use of Estimates :

The preparation of financial statements in conformity withgenerally accepted accounting principles requiresmanagement to make estimates and assumptions thataffect the reported amount of assets and liabilities on thedate of the financial statements and the reported amountof revenues and expenses during the reported period.Differences between actual results and estimates arerecognised in the period in which results are known.

(7) Retirement and other Employee related Benefits:

(i) Short term employee benefits are recognisedas an expense at the undiscounted amount in theProfit and Loss Account of the year in which therelated service is rendered.

(ii) Post employment benefits

(a) Defined contribution plans:

Company's contribution to the superannuationscheme, state governed provident fund scheme,etc. are recognised during the year in which therelated service is rendered.

(b) Defined benefit Plans:

The present value of the gratuity obligation isdetermined based on an actuarial valuation,using the Projected Unit Credit Method. Actuarialgains and losses arising on such valuation arerecognised immediately in the Profit and LossAccount. The gratuity liability is funded with theLife Insurance Corporation of India and the fairvalue of the plan assets, is reduced from thegross obligation under the defined benefit plan,to recognise the obligation on a net basis.

(iii) Long term compensated absences are provided onthe basis of an actuarial valuation.

(iv) Termination Benefits are recognised as anexpense in the Profit and Loss Account of the year inwhich they are incurred.

(8) Foreign Currency Fluctuations:

(i) All transactions in foreign currency, are recorded atthe rates of exchange prevailing on the dates whenthe relevant transactions take place;

(ii) Monetary items in the form of Current Assets and• Current Liabilities in foreign currency, outstanding at

the close of the year, are converted in IndianCurrency at the appropriate rates of exchangeprevailing on the date of the Balance Sheet. Resultantgain or loss is accounted during the year;

(9) Borrowing Costs :

Interest and other borrowing costs attributable to qualifyingassets are Capitalised. Other interest and borrowing costsare charged to revenue.

(10) Taxation :

Income-tax expense comprises Current tax, Fringe BenefitTax and Deferred tax charge or credit.

(i) Provision for current tax is made on the assessableincome at the tax rate applicable to the relevantassessment year. Minimum Alternate Tax (MAT) eligiblefor set off in subsequent years, (as per tax laws) isrecognized as an asset by way of credit to the Profitand Loss Account only if there is convincing evidenceof its realisation. At each balance sheet date, thecarrying amount of MAT Credit Entitlement receivableis reviewed to reassure realisation.

(ii) Provision for Fringe Benefit Tax is made on the fringebenefits provided / deemed to have been providedduring the year at the rates and the values applicableto the relevant assessment year.

(iii) The Deferred tax Asset and Deferred tax Liability iscalculated by applying tax rate and tax laws thathave been enacted or substantively enacted by theBalance Sheet date. Deferred tax Assets arisingmainly on account of brought forward losses andunabsorbed depreciation under tax laws, arerecognised, only if there is a virtual certainty of itsrealisation, supported by convincing evidence.Deferred tax Assets on account of other timingdifferences are recognised, only to the extent thereis a reasonable certainty of its realisation. At eachBalance Sheet date, the carrying amount of Deferredtax Assets are reviewed to reassure realisation.

(11) Provisions, Contingent Liabilities and ContingentAssets:

Provisions involving a substantial degree of estimation inmeasurement are recognised when there is a presentobligation as a result of past events and it is probable thatthere will be an outflow of resources. Contingent liabilitiesare not recognised but are disclosed in the financialstatements. Contingent Assets are neither recognised nordisclosed in the financial statements.

MUKANDENGINEERS


B. Notes forming part of the Accounts :

1. Loan Funds :

Nature of security for Secured Loans:

Cash credit facilities from Allahabad Bank, UTI Bankand Indian Overseas Bank are secured byhypothecation of all the stocks, book debts andmoveable fixed assets of the Company. [Also referfootnote (@) under Schedule 5],

2.

6.

Contingent Liability notprovided for

(i) Disputed Income Tax /

Entry Tax as the

matters are in appeal

(ii) Disputed Sales Tax as the

matters are in appeal

(iii) Corporate Guarantee

given by the Company

on behalf of a company

(iv) Counter Guarantees

given by the Company

on behalf of a company 1

(v) Works Contract Tax

As at31.3.2008Rupees

77,178,581

855,246

60,000,000

000,891,582

1,833,319

As at31.3.2007

Rupees

52,969,991

39,246

60,000,000

903,625,094

-

3. In the opinion of the Board of Directors, all items ofCurrent Assets, Loans and Advances continue tohave a realisable value of at least the amounts atwhich they are stated in the Balance Sheet, unlessotherwise stated.

4. Auditor's • 2007-2008Remuneration

(i) As Auditors

(ii) As Tax Auditors.

(iii) For Other Matters

(iv) For Certification work

(v) Out of pocket expenses

Rupees

375,000

25,000

120,000

90,000

20,092

630,092

2006-2007Rupees

250,000

1(3,000

90,000

90,000

18,995

464,995

Confirmation of Balances has not been obtained fromCreditors, Debtors and from other parties to whomAdvances and Deposits have been given. TheBalances are therefore as per Books of Accountonly.

Sundry Debtors in Schedule 7 include Rs. 9,457,572for the' recovery of which the Company has initiatedarbitration proceedings during the financial year 2004

7.

8.

9.

- 2005. The management continues to classify thesedebts as "Good" and accordingly, does not considerit necessary to make any provision there against.The Auditors have relied upon this judgement of themanagement regarding the realisability of these dues.

Prior period 2007-2008adjustments represent: . Rupees

Debits relating toearlier years

Credits relating toearlier years

Net (Debit) / Credit

(54,881)

24,319

(30,562)

2006-2007Rupees

(861,538)

14,939

(846,599)

The Company is in the process of reconciling certainbalances outstanding relating to statutory dues viz.Service Tax etc. The management does not, however,expect any significant impact on the financialstatements on this account.

ManagerialRemuneration:

2007 - 2008Rupees

Salary and allowances 895,122

Contribution to Provident andOther Funds 89,155

Perquisites (including approx.money value) 245,867

1,230,144

2006-2007Rupees

820,603

79,020

157,093

1,056,716

The employee-wise break-up of liability on accountof Retirement Schemes based on actuarial valuationis not ascertainable. The amounts relatable to theManager are, therefore, disclosed in the year ofpayment.

The Board of Directors, at their meeting held on19lh May, 2008 has, subject to the approval of theMembers at the ensuing Annual General Meeting,re-appointed the Manager for a further three yearswith effect from 1st June, 2008.

10. The Company has loans aggregating Rs.219,450,000and interest recoverable aggregating Rs.62,332,753due from investment companies. The net worth ofthese companies has eroded. On the undertaking bythese companies to pay the principal amount alongwith interest up to 31" March, 2003 before the end ofthe financial year 2008-2009, the Company hasagreed to waive interest on these loans with effectfrom 1st April, 2003. As a matter of prudence, theCompany had already stopped accounting for interestincome on these loans with effect from 1st April, 2003.Further, the management believes that ultimate losses

MUKANDENGINEERS


that may result on account of these loans andrecoverables will depend upon the amounts thatwould be realised from the financial assets of thesecompanies. Under these circumstances, being unableto make an informed judgement, the auditors haverelied upon the judgement of the managementregarding the possible readability of the dues fromthese companies.

11. As per the understanding reached by Mukand Limitedwith Commerzbank AG as recorded in the ConsentTerms filed in the Debt Recovery Tribunal, theCompany during 2002-2003 joined as a surety underthe said Consent Decree to pay a sum ofRs.76,000,000/- in the manner specified in theConsent terms, whereby the Company becameentitled to assignment of the entire outstanding debtof Rs.160,858,072/- due by Mukand Limited to theBank together with the security held by the Bank.The Company discharged its obligations under thesaid Consent Terms and the aforesaid debt has beenassigned in its favour. The difference between theface value of debt assigned to the Company andthe obligation discharged by it aggregatingRs.84,858,072/- was credited to the Profit and LossAccount as "Exceptional Income" during 2002-2003.The Company had participated along with'othersecured creditors in restructuring of Mukand Limited'sdebts and will receive the payment of principal amountand interest only over a period of 12 years, on similarlines, as other secured creditors, who haveaccepted the Financial Restructuring Package {FRP)

. approved by the Corporate Debt Restructuring Cellfor Mukand Limited. As per the aforesaid FRP, interestfor the period 1st April, 2002 to 30th September, 2004.was converted into a loan to be repaid in 96 monthlyinstalments from April 2005 to March 2013. ThePrincipal amount will be received in 144 monthlyinstalments from April 2006 to March 2018. Theinstalments of principal and interest have beenreceived as per the said schedule. The Companyhas ceded pari-passu charge on the assets ofMukand Ltd. to the extent of Priority Debt raised byMukand Ltd.

12. Loans granted aggregating Rs.219,450,000/-,matured for recovery. The Company, on the basisof a legal opinion, continues to treat these loans asoverdue for recovery and therefore does notconsider them as loans granted while examiningtheir limits under Section 372A of the Companies Act,1956.

13. Deferred Tax : As at31.3.2008

Rupees

Deferred Tax Liabilityon account of :

(i) Depreciation 14,435,968

(ii) Income deferredfor tax purposes 26,680,014

41,115,982

Deferred Tax Asset' on account of :

(i) Employee benefits 2,848,904

(ii) Taxes, Duties, etc. 3,532,748

(iii) Provision for doubtfuldebts 3,176,517

(iv) Unabsorbed losses /depreciationunder tax laws 22,176,567

31,734,736

Net Liability 9,381,246

As at31.3.2007

Rupees

14,388,456

28,122,177

42,510,633

2,354,436

1,253,118

3,176,517

25,322,669

32,106,740

10,403,893

As at31.3.2006

Rupees

17,289,345

28,563,227

45,852,572

2,757,109

1,240,952

3,145,677

27,168,141

34,311,879

11,540,693

14. Related party disclosures :

(i) Relationships :

(a) Related parties where control exists:1. Mukand Limited2. Indian Thermal Power Limited3. Mukand Global Finance Limited4. Mukand International Limited5. Vidyavihar Containers Limited6. Mukand Vijaynagar Steel Limited7. Bombay Forgings Limited8. Stainless India Limited9. Hospet Steels Limited10. Kalyani Mukand Limited

.11. Jamnalal Sons Private Ltd.12. Conquest Investments & Finance Limited13. Econium Investments & Finance Limited14. Fusion Investments & Financial Services

Limited15. Catalyst Finance Limited16. Primus Investments & Finance Limited17: Lineage Investments Limited

(b) Key Management Personnel:Mr. K. P. Jotwani - Manager

Note : Related party relationship is as identified by the Companyand relied upon by the Auditors.

MUKANDENGINEERS


(ii) Transactions with related parties referred in (i) above, in the ordinary course of business:

Nature of Transactions

Sales

• Contract executed(including supply of materials)*

• EDP Data Processing Services*

• Income from Equipment Provided*

Other Payments

• Rent*

• Reimbursement of Expenses

• Remuneration

•• Vehicle hire Charges

•• Legal and Professional Charges®

Other Receipts

• Commission*

• Reimbursement of Other Expenses

Finance• Loans repayment received*

• Loan received / renewal #

• Interest paid / payable #

• Interest received / receivable*

Outstanding balances at the close ofthe year :

• As Debtors*

• As Creditors®

• Advances received against contracts*

••' Rent Deposits given*

• Interest Receivable $

• Loans and Advances - receivable A

• Counter Guarantees given by the Company*

• Loans payable #

• Interest accrued but not due

• Interest accrued and due #

• Guarantees given by the Company*

2007-2008Rupees

Referred in(i)(a) above

34,625,472

47,182,800

463,617

1,194,000

2,370,337

-

-

1,655,289

7,676,770

-

16,292,236

140,000,000

12,600,000

19,512,252

5,482,423

394,529

16,900,000

650,000

62,332,753

397,629,029

1,000,891,582

140,000,000

-

18,192,875

60,000,000

Referred in(i)(b) above

-

-

-

-

-

1,230,144

•-

-

-

-

-

-

-

-

-

'-

-

-

-

-

-

-

-

-

2006 - 2007Rupees

Referred in(i)(a) above

50,538,508

47,140,800

-

1,114,800

3,117,583

-

75,945

1,335,653

-

70,000

22,432,541

140,000,000

12,600,000

20,675,201

9,677,296

896,768

-

650,000

62,332,753

413,921,265

903,625,094

140,000,000

1,107,302

9,772,560

60,000,000

Referred in(i)(b) above

-

-

-

-

-

1,056,716

-

-

-

-

197,505

-

-

-

-

-

-

-

-

-

-

-

-

-

Mukand Ltd.@ Mukand Global Finance Ltd.# Vidyavihar Containers Ltd.S Party Nos. 12 to 17 in (i).A Mukand Ltd and Party Nos. 12 to 17 in (i).

MUKANDENGINEERS


15. SEGMENT INFORMATION

A. BUSINESS SEGMENT-PRIMARYRupees

Particulars

Segment RevenueExternal RevenueTotal Revenue

Segment Result before interest and taxAdd/(Less): Unallocated (Expenses) (Net)Interest and Finance chargesDeferred Tax CreditProvision for Current TaxMinimum Alternate Tax (MAT)Credit EntitlementProvision for Fringe Benefits TaxShort Provision for Taxation(Net of MAT credit Entitlement Rs. 262,234)

Net ProfitOther InformationSegment AssetsUnallocated assets

Total assets

Segment LiabilitiesUnallocated liabilities

Total Liabilities

Capital ExpenditureSegment capital expenditureUnallocated capital expenditure

Total Capital Expenditure

DepreciationSegment depreciationUnallocated depreciation

Total Depreciation

Significant Non Cash Expenditure

Construction

CurrentYear

203,612,580203,612,580

30,131,320

346,797,175

346,797,175

230,860,486

230,860,486

7,122,914

7,122,914

3,588,103

3,538,103

PreviousYear

229,784,474229,784,474

18,209,887

252,087,012

252,087,012

175,839,006

175,839,006

11,513,670

11,513,670

3,861,664

3,861,664

Infotech

CurrentYear

48,495,39848,495,398

25,207,843

13,508,200

13,508,200

2,297,203

2,297,203

1,489,280

1,489,280

1,329,055

1,329,055

PreviousYear

56,340,80056,340,800

28,611,764

23,486,043

23,486,043

6,325,057

6,325,057

351,810

351,810

5,476,460

5,476,460

-

Total

CurrentYear

252,107,978252,107,978

55,339,163(6,806,002)

(26,897,186)1,022,647

(2,226,000)

2,226,000(937,255)(374,728)

21,346,639

360,305,375710,856,885

1,071,162,260

233,157,689443,286,857

676,444,546

8,612,1941,412,569

10,024,763

4,917,158575,118

5,492,276

-

PreviousYear

286,125,274286,125,274

46,821,651(4,707,758)

(26,812,753)1,136.800

(1,500,000)

1,500,000(731,645)

15,706,295

275,573,055691,722,261

967.295,316

182,164,063411,760,178

593,924,241

11,865,4801,015,544

12,881,024

9,338,124. 469,772

9.807,896

-

Notes :1. Segment result is after adjusting prior period adjustments Rs. 54,880/- (Previous Year Rs.469,778/-).2. Unallocated income aggregating Rs. 23,502,102/- (Previous Year Rs. 22,284,211/-) includes interest received,3. Unallocated assets mainly relate to Loans to Companies, Advance Tax and Investments, Unallocated liabilities mainly relate to Loan Funds and Deferred Tax Liability.

B. Other Disclosures

1. Segments have been identified in line with the Accounting Standard (AS) 17 on Segment Reporting taking intoaccount the organisation structure as well as the differential risks and returns of these segments.

2. The Company has disclosed Business Segment as the primary segment.

3. Types of products and services in each business segment :

Business Segment Types of Products and services

a) Construction - Construction and Engineering activities

b) Infotech - ERP Implementation and EDP Services

4. The Segment Revenues, Results, Assets and Liabilities include the respective amounts identifiable to each ofthe segment and amounts allocated on a reasonable basis.

5. Secondary Segment Information - Geographical Segment:

The operations of the Company are, at present, only in India and therefore there are no reportableGeographical Segments.

MUKANDENGINEERS


16. a. During the year, the Company has adopted Accounting Standard (AS) 15 - Employees Benefits. No separate treatmenthas been given for transitional provisions in absence of any significant impact.

b. The Company has recognised Rs.4,491,526 as contribution towards defined contribution plans as an expense in theProfit and Loss Account.

c. The disclosures in respect of the Defined Eienefit Gratuity Plan are given below:

Changes in present value of obligations: Gratuity

a. Present value of Defined Benefit Obligation as at 1-4-2007b. Interest costc. Current service costd. Actuarial Losses / ( Gains)e. Benefits paidf. Present value of Defined Benefit Obligation as at 31-3-2008

Changes in Fair Value of plan assets:a. Fair value of plan assets as at 1-4-2007b. Expected return on Plan Assetsc. Contributionsd. Benefits Paide. Actuarial gain / (loss) on Plan Assetsf. Fair value of plan assets as at 31-3-2008

Reconciliation of present value of the obligation and the fair value ofplan assets and amount recognised in the balance sheet:a. Present value of Defined Benefit Obligation as at 31-3-2008b. Fair value of plan assets as at 31-3-2003c. Net Liability / (Asset) recognised

Amounts recognised in the Profit and Loss Account:a. Current Service Costb. Interest Costc. Expected Return on plan assetsd. Actuarial Losse. Expense recognised

Broad Categories of plan assets as a percentage of total assets as at31-3-2008:Actuarial Assumptions as the Balance Sheet oate:

Discount RateExpected rate of return on Plan AssetsSalary Escalation rate** The estimated salary escalation rate taKes into accountinflation, seniority, promotion and other relevant factors.

5,716,137428,710474,887

1,101,711(1,155,097)6566,348

5,667,410530,221992,909

(1,155,097)Nil

6,035,443

Rupees6,566,3486,035,443

530,905

474,887428,710

(530,221)1,101,7111,475,087

Managed byLIC

7.50%9.25%5.00%

This being the first year of implementation of AS-15, previous year figures have not been given.17. (A) Details of loans and advances (stipulated under clause 32 of the listing agreement with Stock Exchange).

(Rupees)

Name of the party

Associates

Mukand Ltd. *

Catalyst Finance Ltd.

Conquest Investments & Finance Ltd.

Econium Investments & Finance Ltd.

Fusion Investments & Financial Services Ltd.

Lineage Investments Ltd.

Primus Investments & Finance Ltd.

Outstanding Amount

As at31.3.2008

178,179,029

25,550,000

75,800,000

40,000,000

28,100,000

10,000,000

40,000,000

As at31.3.2007

194,471,265

25,550,000

75,800,000

40,000,000

28,100,000

10,000,000

40,000,000

Maximum BalanceOutstanding during the year

2007- 2008

194,471,265

25,550,000

75,800,000

40,000,000

28,100,000

10,000,000

40,000,000

2006 - 2007

201,403,806

25,550,000

75,800,000

41,650,000

28,100,000

22,350,000

41,500,000

* Also a Company in which Directors are interested as Directors.

MUKANDENGINEERS


(B) Shares held by the loanees in the capital of the Company

18.

Name of the Loanee

Mukand Ltd.

Catalyst Finance Ltd.

.Econium Investments & Finance Ltd.

Fusion Investments & Financial Services Ltd.

Primus Investments & finance Ltd.

No. of shares heldby Loanee

As At31.3.2008

4,539,781

40,000

200,600

60,000

227,400

As At31.3.2007

4,539,781

40,000

200,600

60,000

227,400

Maximum no. ofshares held by

Loanee during the year

2007-2008

4,539,781

40,000

200,600

60,000

227,400

2006-2007

4,539,781

40,000

200,600

60,000

227,400

Disclosure regarding Contracts in progress

Contract Costs incurred and recognized profits (less recognized losses)

Advances received

The amount .of retention (Included in Sundry Debtors)

Year Ended31-3-2008

Rs. in Lacs

5,374.50

780.47

231.11

Year Ended31-3-2007Rs. in Lacs

4,762.29

478.82

196.59

19. In the absence of necessary information relating to the suppliers registered as Micro, Small and Medium enterprises underthe Micro, Small and Medium Enterprises (Development) Act, 2006, the Company has not been able to identify such suppliersas a result of which the required information could not be compiled and disclosed.

20. Previous year's figures have been regrouped / recast wherever necessary.




T.S.ANANDDirector



Mumbai, 19th May, 2008

MUKANDENGINEERS


Statement pursuant to Part IV of Schedule VI to the Companies Act, 1956 videNotification No. GS.R. 388 (E) dated May 15,1995 :

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE : (PART IV)

REGISTRATION DETAILS :

Registeration No.

Balance Sheet date

1

3

1

1

- 4

0

2

3

3 7

2

8

0 ! 0 8

State Code 1 1

Date Month Year

CAPITAL RAISED DURING THE YEAR (Amountin Rs. Thousands)Public Issue

N I L

Bonus Issue

N I L

III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousands).Total Liabilities

6 9 1 5 | 0 1Sources of Funds:

Paid up Capital

1 2 5 7 9 8

Secured Loans

2 3 5 6 9

Rights Issue

N I L

Private Placement

N I L

5. Thousands).Total Assets

6 9 1 5 0 .1

Reserves and Surplus

2 6 8 9 2

Unsecured Loans

2 6 3 8 3

0

3

Deferred Tax

9 3 8 1

Application of Funds:Net Fixed Assets Investments

6 0 0 6 0

Net Current Assets

6 1 3 8 8 0

1 7

Miscellaneous

5 6 1

Expenditure

N I L

Accumulated Losses

N I L

IV PERFORMANCE OF THE COMPANY (Amountin Rs. Thousands)Turnover (including Other Income) Total Expenditure

2 8 6 2 4 2

Profit / (Loss) before tax

• 2 1 6 6 7

Earnings per share in Rs.

Please tickappropriate box+ for profit,- for loss

Please tickappropriate box+ for profit,- for loss.

GENERIC NAMES OF PRINCIPAL PRODUCTS, SERVICES OF THE COMPANY:

Item Code No. (ITC Code ;

Product Description

• 1 7 0

+

•

2 6 4 5 7 6

Profit / (Loss) after tax

2 1 3 4 7

+ - Dividend Rate ( % )

• N I L

N

E

0

N

T

G I

A

N

P

E

P

E

L

R

I

I

C

N

A

G

B L

C

E

0 N S T R U C T I O N

(ID

MUKANDENGINEERS


(Rs. in Million)

1 CAPITALACCOUNTS

A Share Capital

B. Reserves

C. Net Worth (A+B)

D. Borrowings

E. Capital Employed (C+D)

F. Gross Block

G. Net Block

H. Debt-Equity Ratio (D/C)

II REVENUE ACCOUNTS

A Gross Revenue

B. Profit / (Loss) before Taxes (PBT)

C. Profit / (Loss) after Taxes (PAT)

D. Return on Shareholders' Fund %

III EQUITY SHAREHOLDERS' EARNINGS

A Equity Dividend

B. Earnings per Equity Share (in Rs.)

C. Dividend per Equity Share (in Rs.)

D. Networth per Equity Share (in Rs.)

2003-2004

126

247

373

362

735

313

124

0.97:1

• 178

$(103)

(95)

(25.50)

-

(7.36)

-

29.67

2004-2005

126

225

351

291

642

302

98

0.83:1

306

(39)

(32)

(9.12)

-

(2.41)

-

27.88

2005-2006

126

232

358

259

617

281

71

•0.72:1

271

10

15

4.19

-

1.19

-

28.45

2006-2007

126

247

373

265

638

259

56

0.71:1

310

16

17

4.56

-

1.25

-

29.70

2007-2008

126

269

395

287

682

267

60

0.73:1

286

22

21

5.32

-

1.70

-

31.40

$ After Exceptional Expenditure

MUKAND ENGINEERS - BSE

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