mafatlal dyes chemicals ltd Auditors report

MAFATLAL DYES AND CHEMICALS LIMITED ANNUAL REPORT 2007-2008 AUDITORS REPORT To The Shareholders We have audited the attached Balance Sheet of Mafatlal Dyes and Chemicals Limited as at 31st March, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the period 1st January, 2007 to 31st March, 2008 annexed thereto and report that:- (1) 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. (2) We 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 state ments 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. (3) As required by the Companies (Auditors Report) Order, 2000, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, (4) Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (a) 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; (b) 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; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the above books of account; (d) In our opinion, subject to Note regarding non-provision for diminution in the value of certain investments for reasons explained in the note, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub- section 3(c) of Section 211 of the Companies Act, 1956. (e) On the basis of the written representations received from the directors and taken on record by the board of directors, we report that :- As for other directors are concernd none of them is disqualified as on 31st March, 2008 from being appointed as a director in terms of section 274(1)(g) of the Companies Act, 1956. (f) Further, attention is invited to the following notes in Schedule No.18 (i) Note regarding non-provision in the accounts for diminution of Rs.2065.00 lakhs (Previous Year Rs. 2211.00 lakhs) in the value of investments in the wholly owned subsidiaries for reasons explained in the note. .The accounts of the subsidiaries as of 30th June, 2006 reflect substantial erosion of net worth after considering the unprovided diminution in the value of investments held by these Companies. (ii) Note regarding non-provision in the accounts for doubtful loans to subsidiary /group companies aggregating to Rs.298.93 lakhs (Previous year Rs.200.28 lakhs) for reasons explained in the note Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 accdunting principles generally accepted in India; (i) In the case of the Balance Sheet, of the state of affairs of.the Company as at 31st March, 2008; (ii) In the case of the Profit and Loss Account, of the loss for the Period is April, 2007 to 31st March, 2008; and (iii) In the case of the Cash Flow Statement, of the cash flow for the Period 1st April, 2007 to 31st March, 2008. For Ponkshe Kulkarni & CO. Chartered Accountants H.Y. Ponkshe Place : Mumbai, Dated : 18th August, 2008 Partner Membership No.38482 Annexure to the Auditors Report referred to in Paragraph 3 of our report of even date on the Accounts for the Period 1st April, 2007 to 31st March, 2008 of Mafatial Dyes and Chemicals Limited. 1. The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets. The Fixed Assets have been physically verified by the Management during the period. In our opinion the frequency of verification is reasonable. We are informed that no material discrepancies were noticed by the Management on such verification. 2. None of the Fixed Assets has been revalued during the period. 3. The stocks of finished goods have been physically verified during the period by the Management. In our opinion, the frequency of verification is reasonable. 4. The procedures of physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business. 5. The discrepancies noticed on verification between the physical stocks and the book records were not material. 6. On the basis of our examination of stock records, we are of the opinion that the valuation of $tocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. 7. The Company has not taken any loan; secured or unsecured, from the companies, firms or other parties listed in the registers maintained under Section 301 of the Companies Act, 1956. We are informed that there are no companies under the same Management as this Company as defined under Section 370(IB) of the Companies Act, 1956. 8.(i) The Company has granted interest free loans of Rs.200.28 lakhs (Previous Year Rs.200.82 lakhs) to the wholly owned subsidiaries. Considering the weak financial position, substantial erosion of net worth in some cases and ability to repay the loans, we are unable to express our opinion on whether the other terms and conditions of such loans are prima facie prejudicial to the interest of the Company or not. (ii) We are informed that there are no Companies under the same Management as this Company as defined under Section 370(IB) of the Companies Act, 1956. 9. The parties including employees to whom loans (or advances in the nature of loans) have been given by the Company are repaying the principal amounts as stipulated and are also regular in payment of interest. 10. In our opinion and according to the information and explanations given to us there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of stores, raw materials including components, plant and machinery, equipments and other assets and for the sale of goods. 11. In our opinion and according to the information and explanations given to us, the transactions of purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in Registers maintained under Section 301 and aggregating during the period to Rs. 50,000/- or more in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods, materials or services or the prices at which transactions for similar goods or services have been made with other parties or as available with the Company. 12. According to the information and explanations given to us, the Company, has a regular procedure for determination of unserviceable or damaged stores, raw materials and finished goods. Adequate provision has been made in accounts for the loss arising on the items so determined. 13. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A of the Companies Act, 1956 and the Rules framed there under with regard to the deposits accepted from the public. Attention is invited to Note No. 19 of Schedule No. 18. 14. We are informed that the Company does not generate any realisable by- products and scrap. 15. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 16. According to the Information given by managment of company, Provident Fund and Employees State Insurance provision are not applicable to company. 17. According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth tax, sales tax, customs duty and excise duty were outstanding as at 31.3.2008, however income tax demand of Rs.0.66 crores was outstanding for the AY 2005/06. 18. According to the information and explanations given to us, no personal.expenses of employees or directors have been charged to Revenue Account, other than those payable under contractual obligations or in accordance with generally accepted business practice. 19. The Company is a Sick Industrial Company within the meaning of Clause (o) of Sub Section (1 j of Section 3 of the Sick Industrial Companies (Special Provisions) Act,1985. 20. The Company has determined the value of damaged goods in respect of which compensation has been received/receivable from Insurance Company. For Ponkshe Kulkarni & CO. Chartered Accountants H.Y. Ponkshe Place : Mumbai, Dated : 18th August, 2008 Partner Membership No.38482