| We have audited the attached Balance Sheet of PAINTEX CHEMICALS
(BOMBAY) LIMITED, as at 31st March 2003, Profit & Loss Account and Cash
Flow Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Company's management
Our responsibility is to express an opinion on these financial
statements based on our audit.
We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion and we report that:
1. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
2. In our opinion, proper Books of Account as required by law, have
been kept by the Company so far as appears from our examination of the
Books of Account.
3. The Balance Sheet and the Profit & Loss Account dealt with by this
report are in agreement with the books of Account.
4. In our opinion, the Profit & Loss Account and the Balance Sheet of
the Company comply with the accounting standards referred tow Section
211(3C) of the Companies Act, 1956 subject to our comments in Para 6
below.
5. On the basis of written representations received from the directors
of the Company and as per the information and explanations given to us,
we report that as on the Balance Sheet date, none of the directors of
the Company is disqualified from being appointed as a director of the
Company in terms of clause (g) of sub-section (1) of section 274 of the
Companies Act, 1956.
6. In our opinion and to the best of our information and according to
explanations given to us, the accounts subject to Note No. 2 Re.
Non-Provision of gratuity and leave encashment liability, Note No. 11
Re. Non Compliance of Section 3S3A of the Companies Act, 1956 that is
non appointment of Wholetime Company Secretary and Note No. 4(a) Re.
Cash Credit Account balance written back amounting to Rs. 36,86,749/-
which was not in accordance with AS-9 "Revenue Recognition" of the
Institute of Chartered Accountants of India. Had the pro vision not
been written back, the loss for the year would have been Rs.
58,76,484/- and the accumulated losses would have been Rs. 4,
76,50,096V- which exceeds the Share Capital and Reserves of the Company
and therefore going concern assumption is no longer appropriate and
read with the other notes thereon give the information required by the
Companies Act, 1956 in the manner so required and give a true and fair
view
i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2003
and
ii) In the case of the Profit & Loss Account, of the loss for the
financial year ended on that date.
7. As required by the Manufacturing and other Companies (Auditor's
Report) Order, 1988 issued by the Company Law Board in terms of section
227 (4A) of the Companies Act, 1956 and on the basis of such checks as
we considered necessary and appropriate, we further report that:
i) The Company is updating the records showing full particulars,
including quantitative details and situation of fixed assets We are
informed that the fixed assets have been physically verified by the
management at reasonable intervals during the year and no material
discrepancy was noticed on such verification.
ii) None of the fixed assets have been revalued during the year.
iii) As per the information and explanations given to us, the physical
verifications have been conducted by the management at reasonable
intervals during the year in respect of finished goods and raw
materials.
iv) As per the information and explanations given to us and in our
opinion, the procedures of physical verification of stocks followed by
the Company are reasonable and adequate in relation to the size of the
Company and the nature of its business.
v) As per the information and explanations given to us, no material
discrepancies have been noticed on physical verification of stocks as
compared to book records and the same have been properly dealt with in
the Books of Account.
vi) In our opinion, the valuation of stocks is fair and proper in
accordance with the normally accepted accounting principles and is on
the same basis as in immediately preceding year.
vii) The Company has taken unsecured loans from directors, their
relatives and Companies as listed in the register maintained under
section 301 of the Companies Act, 1956, the rate of interest and other
terms and conditions of which are, prima facie, not prejudicial to the
interest of the Company.
viii) The Company has not granted any loan to Companies firms or other
parties as listed in the register maintained under section 301 of the
Companies Act, 1956 or to the companies under the same management as
defined under section 370(1B) of the Companies Act, 1956.
ix) The employees to whom the loans or advances in the nature of
interest free loans have been given by the Company are generally
repaying the principal amounts as stipulated In respect of a loan with
interest given to a party of Rs 8,39,451/-, there is no stipulation as
to re-payment of the principal and the interest amounts.
x) In our opinion the internal control procedures needs to be
strengthened so as to be commensurate with the size of the Company and
the nature of its business for the purchase of goods, stores, raw
materials including components, plant and machinery, equipment and
other assets and for the sale of goods.
xi) As per the information and explanations given to us, there are no
transactions of purchase of goods and materials and sale of goods and
materials made in pursuance of contracts or arrangement entered in the
register maintained under section 301 of the Companies Act, 1956 as
aggregating during the year to Rs 50,000/- or more in respect of each
party.
xii) As per the information and explanations given to us, the Company
has regular procedure for determination of the unserviceable or damaged
stores, raw materials or finished goods Adequate provision has been
made in the accounts for the items so determined.
xiii) In our opinion the Company has complied with the provisions of
section 58A of the companies Act 1956 read with the Companies
(Acceptance of Deposits) Rules, 1975 as amended with regard to the
deposits accepted from the public. However, no liquid asset has been
maintained amounting to Rs 18,000/- as required under Rule 3A of the
Rules.
xiv) As per the information and explanations given to us, there are no
realisable by-products. In our opinion, the Company has maintained
reasonable records for the sale and disposal of realisable scrap.
xv) The Company did not have an internal audit system.
xvi) As informed to us, the Central Government has not prescribed
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 for any of the activities of the Company.
xvii) The Company is depositing the amount of provident fund and
Employees State Insurance dues with the appropriate authorities with
delays, the overdue amounts as on 31st March, 2003 were Rs.15,796/- and
Rs.6,678/- respectively.
xviii) The undisputed amounts payable in respect of interest on
income-tax of Rs. 10,04,073/- were outstanding as at 31st March, 2003
for a period of more than six months from the date they became payable.
xix) As per the information and explanations given to us, no personal
expenses other than those payable under contractual obligations or in
accordance with generally accepted business practice, have been charged
to revenue account.
xx) Read with Para 6 above, the Company is a sick Industrial Company
within the meaning of section 3(1)(O) of the Sick Industrial Companies
(Special Provisions) Act, 1985.
xxi) As per the information and explanations given to us, there are no
damaged goods in respect of trading activities.
For H.N. MOTIWALLA & CO.
CHARTERED ACCOUNTANTS
Place: Mumbai N.A. DOSHI
Date : PARTNER |