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Numech Emballage Ltd.

BSE: 507884 Sector: Industrials
NSE: N.A. ISIN Code: INE679D01017
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Numech Emballage Ltd. (NUMECHEMBALLAGE) - Auditors Report

Company auditors report

NUMECH EMBALLAGE LIMITED ANNUAL REPORT 2008-2009 AUDITORS' REPORT To The members of Numech Emballage Ltd. We have audited the attached Balance Sheet of NUMECH EMBALLAGE LIMITED as at the close of 31st March, 2009 and also the Profit and Loss Account of the Company for the year ended on that date attached 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. These 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. 1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2. We draw attention to note 1 (I) in the notes to Accounts [Schedule N]. The Company has incurred a net loss before tax of Rs. 6,86,430.00 for the year ended on March 31, 2009 and as of that date, the Company's Current Liabilities exceeded the Current Assets by Rs. 1,83,294.44 and its total liabilities exceeded its total assets by Rs. 7,02,08,138.13. These factors along with other matters as set forth in clauses 1 and 2 in the notes to accounts [Schedule N] and comments given in clause 2 [a] below, raise substantial doubts that the Company will be able to continue as a going concern. We also draw attention to Note 4 regarding non-provision of impairment loss in the absence of any reliable source of information to ascertain the same. 2. (a) Further to our comments in the Annexure referred to in paragraph 1 above: a) 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. 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, the Profit and Loss Account and the Cash Flow Statement are in agreement with the books of account; d) In our opinion the aforesaid Balance Sheet, Profit and Loss Account and the Cash Flow Statement comply in all material respects with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, except for comments given otherwise and Accounting Standard 28 regarding impairment of assets; e) On the basis of the written representations received from the Directors, as on 31st March, 2009, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2009, from being appointed as a Director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956; f) In our opinion and to the best of our information and according to the explana-tions given to us, the accounts read with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and subject to the following give a true and fair view in conformity with the accounting principles generally accepted in India:- a) Clause 1 (d) in the notes to accounts regarding stocks of the Company; b) Clause 1 [I] in the notes to accounts regarding the closure of plant and consequent effect on the going concern assumption in preparation of accounts and the dependence upon restructuring of operations by considering appropriate business strategies and requisite financial viabilities; c) Non-provision of depreciation on the fixed assets of the company except for Furniture and Fixtures and Office Equipment, amounting to Rs.10,88,587.00 (p.y. Rs. 10,88,587.00). Total non-provision upto date Rs.55,70,484.00 (p.y. Rs.44,81,897);and d) Clause 2 in the notes to accounts regarding claims against the Company not acknowledged as debts. e) Non-provision of Impairment Loss. In the case of: (I) Balance Sheet of the state of Company's affairs as at 31st March, 2009; and (ii) Profit and Loss Account of the loss for the year ended on that date. For Sheth & Associates Chartered Accountants M.M. SHETH Proprietor Place : Mumbai Date : June 30, 2009 Annexure referred to in paragraph 1 of our report of even date to the members of NUMECH EMBALLAGE LIMITED on the accounts for the year ended March 31, 2009: (i) (a) The Company has recreated the records showing full particulars including quantitative details and situation of fixed assets as the same which were maintained earlier were not available. b) As explained to us, no physical verification of the fixed assets at the factory premises of the Company as at March 31, 2009 was conducted by the management. The further clause regarding our opinion on the frequency of physical verification being reasonable or not is not applicable. The further clause regarding our opinion on the net differences found on physical verification being significant or not is not applicable. c) During the year covered under our audit, the Company has not disposed of a substantial part of its fixed assets and hence the provisions of section 4(i)(c) are not applicable. (ii) (a) As explained to us, the stocks of finished goods and work in progress have not been physically verified by the Management as at the end of the financial year or after the year end. In our opinion, the frequency of verification is not reasonable. (b) In view of (ii)(a) above, in our opinion the procedures of physical verification of stocks followed by the Management is not reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In view of (ii) (a) above, we are unable to comment on whether the Company is maintaining proper records of inventory and on the discrepancies noticed on verification between the physical stocks and the book records were material or not having regard to size of the operations of the Company. (iii) (a) The Company has taken loans from six entities covered in the register maintained under Section 301 of the Companies Act, 1956.The maximum amount involved during the year was Rs. 66.32 lacs (inclusive of opening balance Rs. 60.07 lacs) and the year-end balance of loans taken from such entities was Rs. 66.32 lacs. The Company has not granted any loans to firms covered in the register maintained under Section 301 of the Companies Act, 1956. b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which loans have been taken from/granted to companies, firms or other parties listed in the register maintained under section 301 of the companies Act,1956 are not, prima facie, prejudicial to the interest of the Company. c) The Company is not regular in repaying the principal amounts as stipulated. These loans have been given free of interest and hence the proviso regarding regularity in payment of interest is not applicable. Further, the Company has not granted any loans and hence the proviso regarding receipt of the same and interest thereon is not applicable. (d) There is an overdue amount of Rs. 29.55 lacs (p.y. Rs. 29.55 lacs) of loans taken from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. (iv) The Company does not have any formal internal audit system. As informed to us, this is in view of the continuing suspension of the business operations of the Company. (v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion and having regard to our comments in paragraph (iv) above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, if any, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market price are available. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public during the period covered by our audit report. There are no unclaimed deposits matured in earlier years that are outstanding during the year, and hence the proviso regarding the Company having complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 is not applicable. (vii) In our opinion, the Company does not have an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of Companies Act,1956 for any products of the Company. (ix)(a) According to the information and explanation given to us, the Company is generally regular in depositing with appropriate authorities undisputed Statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, customs duty, excise duty, cess and other material statutory dues applicable to it. (b) According to the information and explanations given to us, there are some demands in respect of income tax, sales tax, which are in arrears, as at March 31, 2009 for a period of more than six months from the date they became payable, against which the company has preferred an appeal as it disputes the same. (c) The proviso regarding details of dues of sales tax and income tax which have not been deposited on account of any dispute is given below: Statute Nature of Period Amount Forum dues Central Sales Sales Tax 01.07.86 to Rs. 326.66 Appeal before Tax Act, 1956 31.03.90; lacs Asstt. Comm. 01.04.92 to (Appeals) 31.3.98 and Surat. 01.04.99 - pending order. 15.02.00 Income Tax Income Tax 1988-89 Rs. 62.61 Assessing Act, 1961 1996-97 lacs Officer Rs. 13.47 lacs (x) The accumulated losses of the Company as at March 31, 2009 are more than 50% of its net worth. The Company has incurred cash losses during the financial year covered by our audit and also in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the Company not defaulted in repayment of dues to a financial institution or bank. (xii) In our opinion and according to the information and explanations given to us, the Company has not granted loan and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order,2003 are not applicable to the Company. (xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in of trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4 (xiv) of the Companies (Auditor's Report) order, 2003 are not applicable to the Company. (xv) In our opinion and according to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions. (xvi) In our opinion and according to the information and explanations given to us, the Company has not raised any term loans and hence the clause regarding the loans raised having been applied for the purpose for which they were raised other than amounts temporarily invested pending utilization of the funds for the intended use is not applicable. (xvii) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of Company, we report that no funds raised on short-term basis have been used for long- term investment and vice-versa. (xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of share to parties and companies covered in register maintained under Section 301 of the Companies Act, 1956. (xix) In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period covered by our report. Accordingly, the provision of clause 4(xix) of the Companies (Auditor's Report) order, 2003 are not applicable to Company. (xx) During the period covered by our audit report, the Company has not raised any money by public issues. (xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit. For SHETH & ASSOCIATES Chartered Accountants M.M. SHETH Proprietor Place : Mumbai Date : June 30, 2009