PAINTEX CHEMICALS (BOMBAY) LIMITED
ANNUAL REPORT 2003-2004
1) We have audited the attached Balance Sheet of PAINTEX CHEMICALS (BOMBAY)
LIMITED as at 31st March 2004 and also the Profit & 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.
2) 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 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
3) 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 enclose in the Annexure, a statement on the
matters specified in paragraphs 4 and 5 of the said Order, on the basis of
such checks of the books and records of the Company as we considered
appropriate and the information and explanations given to us during the
course of our audit.
4) As referred to in note no 2 of schedule `K' the Company has prepared
accounts on going concern basis. However in view of the negative networth
of the company and continuing losses, company's ability to continue in
operations for the foreseeable future is doubtful and therefore, may be
unable to realize its assets and discharge its liabilities in the normal
course of business.
5) During the year the company has not provided for gratuity and leave
encashment liability, as mentioned in the note no 2 of Schedule 'K' Notes
6) 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.
7) 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
8) The Balance Sheet and Profit & Loss Account dealt with by this report
are in agreement with the books of account.
9) Subject to Para 4 and 5 above, in our opinion, the Profit & Loss Account
and the Balance Sheet of the Company comply with the accounting standards
referred to in section 211(3C) of the Companies Act, 1956.
10) On the basis of written representations received from the Directors,
and taken on record by the Board of Directors, we report that none of the
directors is disqualified as on 31st March, 2004 from being appointed as a
director of the Company in the terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
11) Subject to note no 4 and 5 above, and non-appointment of the Company
Secretary as required a/s 383A of the Companies Act, 1956 as mentioned in
note no 10 of Schedule 'K' in our opinion and to the best of our
information and according to the explanations given to us the accounts read
together with the notes thereon, give the information required by the
Companies Act, 1956 in the manner so required give a true and fair view in
conformity with the accounting principals generally accepted in India:
a) In the case of the Balance Sheet, of the state of affairs of the Company
as at 31st March, 2004
b) In the case of the Profit & Loss Account, of the loss for the financial
year ended on that date.
c) In the case of Cash Flow Statement, of he cash flows of the Company for
the year ended on that date.
For H.N. MOTIWALLA & CO.
PLACE : MUMBAI
DATE : November 3, 2004
ANNEXURE TO THE AUDITORS REPORT*
(* Referred to our Report of even date on the accounts of PAINTEX CHEMICALS
(BOMBAY) LIMITED for the year ended 31st March, 2004)
1. a) The Company has not maintained proper records to show full
particulars including quantitative details and situation of fixed assets;
b) During the year the Company has not carried out the physical
verification of fixed assets.
c) During the year, the Company has not disposed off a substantial part, of
the fixed assets.
2. a) The inventories have been physically verified by the Management
during the year. In our opinion, the frequency of such verification is
b) In our opinion, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to the
size of the Company and the nature of its business.
c) The Company has maintained proper records of inventories. No material
discrepancies were noticed on physical verification of stocks as compared
to book records.
3. a) The company has received unsecured loan from one of the company
covered in the register maintained under section 301 of the Act. There has
not been any transaction in respect of the said loan during the year. The
year end balance of the loan received from the said company is Rs.
3,50,000. The company has not granted loan to any of the parties covered
under Section 301 of the Companies Act, 1956.
b) The loan received (Prom the company covered in the register maintained
under Section 301 of the Companies Act, 1956 is interest free loan. In the
absence of any stipulations in respect of the repayment and other terms and
conditions of the said loan, we are unable to comment thereof.
c) In the absence of any stipulations in respect of the repayment of the
above loan, we are unable to comment upon the regularity of the repayment
of the same.
d) In the absence of any stipulations in respect of the repayment of the
above loan, we are unable to comment upon the overdue amounts, if any, and
steps taken by the company for payment of the overdue principal.
4. 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 the
purchase of inventory, fixed assets and for the sale of goods. During the
course of our audit, we have not observed any continuing failure to correct
major weakness in internal controls.
5. a) In our opinion and according to the information and explanations
given to us, transactions that need to be entered into the register
maintained in pursuance of section 301 of the Act have been so entered;
b) In our opinion and according to the information and explanations given
to us, there were no transactions made in pursuance of contracts or
arrangements entered in the Register maintained under Section 301 of the
Companies Act, 1956 and acceding aggregate the value of rupees five lakhs
in respect of each party during the year.
6. The company had accepted deposits from the public, the provisions of
sections 58A and 58AA of the Act and the rules framed there under, have not
been complied with. However, the said deposits have been transferred to
security deposits for sale of scrap, materials and assets in future to the
said parties. Further, as per the certificate of a Company Secretary,
produced to us, the same is not a violation of the aforesaid sections and
rules framed thereunder.
7. The company does not have internal audit system during the year.
8. As informed to us, the Central Government has not prescribed the
maintenance of cost records under Section 209 (1) (d) of the Companies Act,
1956 in respect of the products manufactured by the company.
9. a) According to the records of the Company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employee's State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty
Excise Duty, cess and any other statutory dues have generally not been
deposited on time during the year with the appropriate authorities. Arrears
of the aforesaid dues as on the date of the Balance Sheet outstanding for a
period of more than six months from the date they became payable was Rs.
b) According to the records of the Company and according to the information
and explanations given to us, there were no dues of sales tax, income tax,
custom tax (duty) wealth tax, excise duty, cess which have not been
deposited on account of any dispute.
10. Accumulated losses of the Company at the end of the current financial
year are more than fifty per cent of its net worth. The Company has
incurred cash losses during the financial year covered by our Audit
amounting to Rs. 45,75,159/- (Previous Year : Rs 38,86,236/-)
11. The company has defaulted in repayment of dues to a financial
institution. Total amount defaulted amounted to Rs. 2,14,65,896/-. The said
amount was due in installments starting form November 1998.
12. According to the information and explanations given to us, the Company
has not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations given
to us, the Company is not a chit fund Company or a nidhi / mutual benefit
fund / society.
14. In our opinion the company is not dealing in or trading in shares,
securities, debentures and other investments.
15. According to the information and explanations given to us, the Company
has not given any guarantee for loans taken by others from bank or
16. According to the information and explanations given to us, during the
year the Company has not received any amounts against term loans.
Therefore, the question of its utilization for any specific purpose does
17. According to the information and explanations given to us and on an
overall examination of the Balance Sheet and Profit and Loss Account of the
company we are of the opinion that the funds raised on short term basis
have not been used for long term investments and vice versa.
18. In our opinion and according to the information and explanations given
to us, during the year 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.
19. According to the information and explanations given to us the Company
has no debenture outstanding as at the year end. Therefore the question of
creating a security for the same does not arise.
20. The Company has not raised any money by public issues during the year
covered by our report.
21. According to the information and explanation given to us, no fraud on
or by the company has been noticed or reported during the year.