ANNUAL REPORT 2005-2006
THE MEMBERS OF
CHROMATIC INDIA LIMITED
We have audited the attached Balance Sheet of CHROMATIC INDIA LIMITED, as
at 31st March, 2006 and the Profit & Loss Account and also Cash Flow
Statement of the company for the year ended on thai annexed thereto.
Respective Responsibility of the Management and the Auditors:
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.
Basis of Opinion:
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 misstatements. 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
We report as under:
I. Our report as required by the Companies (Auditors' Report) Order, 2003,
as amended by the Companies (Auditor's Report)(Amendment Order, 2004.
issued by the Central Government of India in terms of Section 227(4A) of
the Companies Act, 1966 (the 'Act') and on the basis of such checks of the
books and records of the Company as we considered appropriate and according
to the information and explanation given to us by the management, we give
in the Annexure a statement on the matters specified in paragraphs 4 and 5
of the said Order. Order, 2004. issued by the Central Government of India
in terms of Section 227(4A) of the Companies Act, 1956 (the 'Act') and on
the basis of such checks of the books and records of the Company as we
considered appropriate and according to the information and explanation
given to us by the management, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
II. Further to our comments in the Annexure referred to in paragraph
a) We have obtained all the information and explanation, 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, Profit & Loss Account and Cash Flow Statement dealt
with by this report are in agreement with the books of account
d) In our opinion, the Profit & Loss Account, Balance Sheet and Cash Flow
Statement comply with Accounting Standards referred to in sub-section (3C)
of Section 211 of the Companies Act, 1956 to the extent they are applicable
to the Company, except as mentioned in Note No. 1 (A) regarding non-
compliance with Accounting Standard 15 on 'Accounting for Retirement
Benefits in Financial Statements of Employers.'
e) On the basis of written representations received from the Directors of
the Company as on 31st March, 2006, and taken on record by the Board of
Directors of the Company, we report that none of the Directors is
disqualified as on 31st March, 2006 from being appointed as a Director in
terms of clause (g) of sub-section (1) of section 274 of the Companies Act,
f) In our opinion and to the best of information and according to the
explanations given to us. the said accounts give the information required
by Companies Act, 1956 in the manner so required.
g) Subject to
1) Note no.3 regarding non confirmation of balances in respect of advances
recoverable in cash or in kind and of amounts due from / to sundry debtors
/ sundry creditors.
2) Note no.4 regarding amount due on bills discounted of Rs. 101.68 lacs,
which appears to be fully not recoverable
3) Note no. 5 regarding amount due on bills discounted of Rs. 161 lacs,
which is subject to confirmation
4) The networth of the Wholly Owned Subsidiary Accounts SA is eroded and it
does not have any realizable assets. No provision is made for the
investment of Rs 26.23 lacs and dues of Rs.80.82 lacs which is doubtful of
We are unable to comment on the resulting effect of our observations in
paragraph (g) above on relevant assets, liabilities and on profit for the
year. Subject to this, the said accounts give a true and fair view in
conformity with the accounting policies generally accepted in India:
i) in case of the Balance Sheet, of the state of affairs of the Company as
at 31st March, 2006,
ii) in case of the Profit & Loss Account, of the profit of the Company for
the year ended on that date And
iii) In case of Cash Flow statement, of the cash flows of the Company for
the year ended on that date.
For HARIBHAKTI & CO.
Membership No. 17000
Place : Mumbai
Date : 6th October, 2006
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF CHROMATIC INDIA LIMITED
1. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
2. We are informed that these assets have been physically verified by the
Management at reasonable intervals, which in our opinion, is appropriate
having regard to the size of the Company and nature of its assets. No
material discrepancies were noticed on such verification.
3. During the year, the Company has not disposed off a major part of its
4. We are informed that the Management has physically verified the stocks
of stores, spares, raw materials and finished goods during the year. In
our opinion, the frequency of verification is reasonable.
5. The procedures for physical verification of inventories followed by
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
6. On the basis of our examination of the records of the Company, we are
of the opinion that the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between the physical and book
records were not material.
Related party transactions:
7. The company has neither taken nor given loans or advances in the nature
of loans from / to companies, firms or other parties listed in the register
maintained under Section 301 of the Companies Act, 1956.
8. In our opinion and according to the information and explanations given
to us, the transactions that need to be entered into a register in
pursuance of section 301 of the Companies Act, have been so entered.
9. Fact of these transactions are made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
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, equipment
and other assets and for sale of goods.
During the course of audit, no major weakness has been noticed in the
11. The Company has an adequate internal audit system commensurate with its
size and nature of its business.
12. The Company has not accepted any deposits from the 'public' to which
the provisions of section 58A and section 58AA of the Companies Act, 1956,
and the rules framed thereunder apply.
13. The Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, ESIC dues, Investor Education and
Protection Fund, Sales tax, Wealth tax, Excise duty and other statutory
dues, if any, applicable to it, except for income tax of Rs. 423495/-.
14. According to the information and explanations given to us, there were
no dues of income tax, custom duty, wealth tax, excise duty and sales tax
that have not been deposited on account of any dispute except as mentioned
Name of statute Amount (Rs.) Forum where dispute is
Income Tax Act
Penalty under Section 271 (1) (C) 36,53,613 ITAT (Appeal order in
favour of the Assessee
after March 31, 2006
15. We are informed that the Central Government has prescribed the
maintenance of cost records by the Company under section 209(1)(d) of the
Companies Act, 1956. We are of the opinion that prima facie, the
prescribed accounts and records are being made and maintained. However, we
have not made detailed examination of the records with a view to determine
whether they are accurate and complete.
16. The Company neither has accumulated losses as at 31st March, 2006 nor
it has incurred cash losses during the financial year covered by our audit
as well as in the immediately preceding financial year.
17. Based on our audit procedures and on the information and explanation
given by the management we are of the opinion that the company has not
defaulted in repayment of dues to a financial institution, bank or
18. Based on our examination of documents and records, we are of the
opinion that the company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
19. The Company has not dealt or traded in shares securities, debentures,
or other investments during the year.
20. The company has not given guarantees for loans taken by others from
banks or financial institutions.
21. Based on our examination of the balance sheet of the company as at
March 31, 2006 on an overall basis and as per the information and
explanation given to us, we find that the no funds raised on short term
basis were utilized for bug term purpose.
22. The company has not made any preferential allotment of shares to the
parties and companies covered in the register maintained under section 301
of the Companies Act 1956 during the year.
23. During the period covered by our audit report, the company has not
issued any debentures for which security needs to be created.
24. The Company has not raised any money by public issue during the year.
25. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by the
company has been noticed or reported during the course of our audit.
For HARIBHAKTI & CO.
Membership No. 17000
Place : Mumbai
Date : 6th October, 2006