Jyoti Ltd: Outcome of Board Meeting

Jyoti Ltd has informed BSE that :

"Karnataka Neeravari Nigam Ltd. (KNNL) had earlier awarded a Contract for upper Bhadra Lift Irrigation Scheme, Karnataka, to the Joint Venture of RNS Infrastructure Ltd. (RNS) and Jyoti Ltd. The total amount of the Contract was Rs. 1032 Crores, out of which the order value of Jyoti was Rs. 424 Crores.

There were some differences between the JV Partners and the Company with regard to the execution of the KNNL Project. Since the Company has not taken any exposure with regard to execution of this project, the parties have agreed to settle the matter on the following lines:

1. Jyoti's portion of work under the JV Agreement will be assigned to any other party by the lead partner RNS.

2. The lead partner RNS has agreed to pay a sum of Rs. 18 Crores to Jyoti Ltd. in the following manner:

(i) A sum of Rs. 9 Crores has been paid by RNS by post dated quarterly cheques over a period of 24 months.
(The Company has already received Rs. 90 lacs (after deduction of tax at source Rs. 10 lacs) from RNS against the first post-dated cheque).

(ii) The balance Rs. 9 Crores will be paid from realization @ 1% of the Gross Running Bills to be submitted by RNS to KNNL.

3. The Company expects to have the entire cash inflow of Rs. 18 Crores over a period of 3-4 years.

Diversion of this order is not likely to have any major impact on the top-line of the Company in next three years as the Company has otherwise also sufficient orders on hand and expects regular order inflow. The pending order position as on date is about Rs. 700 crores.

In view of the above, it is felt that the settlement at Rs. 18 Crores without executing the order, is reasonable and would be more beneficial to the Company as compared to execution of the same and waiting for the realization of profits and blocking of money in working capital.

This settlement was placed before the Board of Directors of the Company in its meeting held on May 05, 2011 and the Board took note of the same."Read More