MAFATLAL DYES AND CHEMICALS LIMITED
ANNUAL REPORT 2007-2008
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 Company's
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 (Auditor's 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.
Place : Mumbai,
Dated : 18th August, 2008 Partner
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
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
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
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,
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.
Place : Mumbai,
Dated : 18th August, 2008 Partner