ENKAY TEXOFOOD INDUSTRIES LIMITED
ANNUAL REPORT 2001-2002
The Members of
ENKAY TEXOFOOD INDUSTRIES LTD
We have audited the attached Balance Sheet of ENKAY TEXOFOOD as at 31st
MARCH 2002 and also the Profit INDUSTRIES LIMITED and Loss Account 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 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 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 Manufacturing and Other Companies (Auditors Report)
Order, 1988 issued by the Central Government of India in terms of sub-
section (4A) of section 227 of the Companies Act, 1956, we enclose in the
Annexure a statement on the matters specified in paragraphs 4 and 5 of the
1 Further to our comments in the Annexure referred to above, we report
i. 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;
ii. 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.
iii. The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account.
iv. In our opinion, the Balance Sheet and Profit Loss Account dealt with by
this report comply with the accounting standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956;
V. No Provision has been made for the debts amounting to Rs. 838387852
which have become long overdue and are doubtful of recovery,(Note 6 in
vi. No statement of accounts and/or confirmation of balances of Sundry
Debtors, Sundry Creditors, Loan and Advances, Loan from Financial
institutions, Banks and other parties have been produced before us and
consequential impact, if any, could not be ascertained, (Note 3 and 8 in
vii. Provision has not been made for interest on working capital loans and
term loans from banks and financial institutions since the same is also not
been applied by the banks and financial institutions. Estimated interest on
working capital loans and term loans of the banks and financial
institutions, interest for the year under review is Rs. 58 Crores and thus
the Loss for the year is lower to that extent.(Note 8 in Schedule 17).
viii. No provision for Provident Fund, Family Pension Fund and Tax Deducted
at Source has been made, amount of which is presently not ascertainable,
due to non-compilation of information and records of the Company during the
year. (Note 9 in Schedule 17).
2.The Company has filed a reference with Board for Industrial and Financial
Reconstruction (BIFR) and has been registered as Case No. 188/2001 vide
letter dt. 23rd May, 2001. However pending finalisation and relevant
direction from BIFR, we are unable to express any opinion presently in this
3. On the basis of representations received, directors of the Company do
not prima facie, have any disqualification as referred to in clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
4. Subject to the foregoing, we are of the opinion that, to the best of our
information and according to the explanations given to us, the said account
read together with Significant Accounting Policies and other Notes in
Schedule 17 and elsewhere in the accounts, give the information required by
the Companies Act, 1956, in the manner so required and give a true and fair
(i) in the case of the Balance Sheet, of the state of affair of the Company
as at 31st March, 2002 and
(ii) in the case of the Profit and Loss Account, of the Loss of the Company
for the year ended on that date.
For M.D. Gala
MUMBAI, 31st August, 2002 Proprietor
Annexure referred to in paragraph 1 of our report of even date on the
Accounts for the year ended 31st March, 2002
1. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. Physical
verification of most of the fixed assets have been conducted by the
management at reasonable intervals and no material discrepancies were
noticed on such verification.
2. None of the fixed assets have been revalued during the year
3. As explained to us, the stocks of Finished Goods, Stores, Spare parts
and Raw Materials have been physically verified by the management during
the year. In our opinion, the frequency of verification is reasonable.
4. In our opinion and according to the information an explanations given to
us, the procedures of physical verification of the 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 and the same have been properly
dealt with in the books of accounts.
6. On the basis of our examination of stock records, we are of the opinion
that the valuation of stocks is fair and proper in accordance with the
normally accepted accounting principles and is on the same basis as in the
7. The Company has not taken loans from companies, firms and other parties
listed in the register maintained under Section 301 of the Companies Act,
1956 and/or from the companies under the same management as defined under
sub-section(1-B) of Section 370 of the Companies Act, 1956 except loans and
advances taken in ordinary course. In our opinion, the rate of interest and
other terms & conditions stipulated, if any, of such loans and advances are
not prime facie prejudicial to the interest of the Company.
8. The Company has not granted loans to companies, firms or other parties
fisted in the register maintained under Section 301 of the Companies Act,
1956 and/or to the companies under the same management as defined under
sub- section (I-B) of Section 370 of the Companies Act, 1956 except
advances given in the ordinary course of business. In our opinion, the rate
of interest and other terms & conditions stipulated, if any, of such loans
and advances are not prime facie prejudicial to the interest of the
9. The panics arid employees to whom loans or advances in the nature of
loans have been given by the Company are, where stipulations have been
made, generally repaying the principal amounts arid interest, where
applicable, as stipulated.
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 with regard to purchase
of stores, raw materials including components, plant and machinery,
equipment and other assets and with regard to 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 contract or arrangements
entered in the register maintained under Section 301 of the Companies Act,
1956 and aggregating during the year to Rs. 50000 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 at the
prices at which transactions for similar goods, materials or services have
been made with other parties.
12. As explained to us, the Company has a regular procedure for the
determination of unserviceable or damaged stores, raw materials & finished
goods and adequate provision has been made in the accounts for the loss
arising on the item so determined.
13. In our opinion and according to the information and explanations given
to us, the Company has not complied with the provisions of Section 58A of
the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,
1975 with regard to deposits accepted from the public to the extent
referred to in Note 15 in Schedule 17 regarding Intimation about the
defaults to be made to the Company Law Board.
14. As explained to us, having regard to the nature and size of operations
of the Company, reasonable records have been maintained by the Company for
the sale and disposal of realisable scrap The Company's operations do not
generate any by-products.
15. In our opinion, the Company has an adequate internal audit system
commensurate with the size and the nature of its business.
16 Maintenance of cost records has not been prescribed by the Central
Government under Section 209(1) (d) of the Companies Act, 1956 for any
product of tile Company.
17. The Provident Fund and other dues amounting to Rs. 367426/- have not
been paid to the appropriate authorities and remained unpaid till date.
18. According to the information and explanations given to us undisputed
amounts payable in repect of income tax, Sales tax, Professional tax,
wealth tax and custom duty amounting to Rs 7722338/- were outstanding as at
31st March) 2002 for a period of more than six months from the date became
19. 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.
20. The Company has become a Sick Industrial Company within the meaning of
Clause(0) of Section 3(1) of the Sick Industrial Companies (Special
Provisions) Act, 1985 and as given in Note 5 of Schedule 17 the necessary
application to Board for Industrial and Financial Reconstruction (BIFR) to
register itself as a sick industrial unit has been made.
For M.D. GALA
MUMBAI, 31st August, 2002 M.D. GALA