We have audited the attached Balance Sheet of NUMECH EMBALLAGE LIMITED
as at the close of 31 st 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
companys 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 Companys
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 alongwith 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
2(a) Further to our comments in the Annexure referred to in paragraph 1
(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
(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
(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 oil
31st March, 2009, from being appointed as a Director in terms of clause
(g) of sub-section(l) 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
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
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 Companys af- fairs as at 31 st
March, 2009; and
(ii) Profit and Loss Account of the loss for the year ended on that
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
(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
(c) In view of (ii) (a) above, we are unable to comment on whether the
Company is main- taining proper records of inventory and on the
discrepancies noticed on verifi- cation between the physical stocks and
the book records were material or not having regard to size of the
operations of the Com- pany.
(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
(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 sec- tion 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 trie 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 relevaht
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
thedate 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 depos- ited on account of any dispute is aiven
Statute Nature of dues . Period
Central Sales Sales Tax 01.07.86 to
Tax Act, 1956 31.03.90;
01.04.92 to 31.3.98 and
Income Tax Income Tax 1988-89
Act, 1961 1996-97
Statute Amount Forum
Central Sales Rs. 326.66 lacs Appeal before Asstt. Comm.
Tax Act, 1956 (Appeals) Surat. pending
Income Tax Rs. 62.61 lacs Assessing
Act, 1961 Rs. 13.47 lacs Officer
(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
(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 (Auditors Report ) Order,2003 are not applicable to the
(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 (Auditors 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
(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 underSection 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 (Auditors 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
Mumbai: June 30, 2009