bombay paints ltdmerged Auditors report

BOMHAY PAINTS LIMITED ANNUAL REPORT 2007-2008 AUDITORS REPORT TO THE SHAREHOLDERS BOMBAY PAINTS LIMITED We have audited the attached Balance Sheet of Bombay Paints Limited, as at 31st March 2008, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act 1956, we give below a statement on the matters specified in paragraphs 4 and 5 of the said order. i) In respect of its Fixed Assets: a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets; b) As explained to us, the assets have been physically verified by the management in accordance with a phased programme of verification, which in our opinion is reasonable, considering the size and the nature of its business. The frequency of verification is reasonable and no material discrepancies have been noticed on such physical verification; c) The Company has not disposed off any part of the fixed assets during the year. ii) In respect of its inventories: a) The inventory has been physically verified by the management during the year In our opinion, the frequency of verification is reasonable. As regards materials lying with third Parties, confirmations have been obtained; b) The procedures of physical verification of inventory followed by the management are, in our opinion, reasonable and adequate in relation to the size of the Company and nature of its business; c) The Company has maintained proper records of inventory. As informed, no material discrepancies were noticed on such physical verification. iii) a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the clauses 4 (iii) (b) to (d) of the Order are not applicable. b) The Company has taken secured / unsecured loans from five companies and a party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.2259.23 Lacs and the year-end balance of such loans taken was Rs.1978.11 Lacs. c) The rate of interest, and other terms and conditions of such loans taken by the Company, are not prima facie prejudicial to the interest of the Company. d) According to the information and explanations given to us, in respect of unsecured loans taken by the Company, the principle amount is repayable on demand. As explained to us, the Company has not paid interest on such loans except in respect of one company. Further, in respect of secured loan taken by the Company, the principle amount is payable as per stipulation and the Company has paid interest on such loan. iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system. v) a) Based on the audit procedure applied by us and according to the information and Explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register maintained under that section. b) According to the information and explanations given to us, where each of such transactions is in excess of Rs. 5 lacs in respect of any party during the year, the transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi) The Company has not accepted any deposits from the public, to which the provisions of section 58A and 58 AA of the Companies Act, 1956 and the rules framed there under would apply. vii) The Company does not have a formal internal audit system. However, in our opinion, there are adequate internal control procedures commensurate with the size and nature of its business. viii) We have broadly reviewed the books of account maintained by the Company, pursuant to the Rules made by the Central Government for the maintenance of the cost records, under section 209 (1) (d) of the Companies Act, 1956 in regard to Paints manufactured by the Company and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. ix) a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty Cess and other statutory dues with appropriate authorities, where applicable. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2008 for a period of more than six months from the date they became payable. b) There are no dues of Sales tax, Income tax, Wealth tax, Customs duty, Excise duty and Cess that have not been deposited on account of any dispute, except for Sales Tax matters pending before Commissioner (Appeals) amounting to Rs.16.40 Lacs, x) The Company has accumulated losses exceeding fifty percent of its net worth. The Company has not incurred cash losses in the current financial year and in the immediately preceding financial year. xi) As explained to us, the Company has not defaulted in repayment of its dues to bank. The Company does not have any borrowings by way of debentures from financial institutions. xii) As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities. xiii) The provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund / Societies are not applicable to the Company. xiv) The Company is not dealing or trading in shares, securities, debentures or other investments and hence the requirements of clause 4 (xiv) of the Order are not applicable to the Company. xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from any bank or financial institution. xvi) On the basis of the records examined by us, we have to state that, the Company has, prima facie, applied the term loans for the purpose for which they were raised. xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term purposes. xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. (xix) The Company has not issued any debentures during the year. xx) The Company has not raised any money by public issue during the year, xxi) On the basis of our examination and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. Further to our comments referred to above, 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 purpose 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 those books; 3. The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account; 4. In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; 5. On the basis of written representations received from the Directors as on 31st March 2008 and taken on record by the Board of Directors and on the basis of examination and records of the Company, we report and certify that none of the Directors is disqualified from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date; 6. Attention is invited to: a) Note no. 17 relating to non-provision of interest amounting to Rs.63.45 Lacs for the year (Rs. 142.76 lacs upto 31st March 2007) on short-term loans wherein the company has approached its lenders for waiver of interest in line with the rehabilitation proposal submitted to BIFR, b) The Company was declared a sick industrial Company by The Board for Industrial and Financial Reconstruction (BIFR) on 19th May 2003. Pending finalisation / approval of the scheme of rehabilitation by BIFR, the accounts of the Company are prepared on a going concern basis (Refer note no. 2 in schedule 13). We further report that had the observations made by us in para a) above been considered, the profit for the year would have been lower by Rs. 63.45 lacs and the Balance in the Profit and Loss Account would have been higher to that extent. Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said Accounts read together with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; a) in the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March 2008; b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and c) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date. For M.M. NISSIM AND CO. Chartered Accountants N. Kashinath (Partner) Membership No. 36490 Place : Mumbai, Date : 30th June, 2008