We have audited the attached Balance Sheet of CHROMATIC INDIA LIMITED,
as at 31st March. 2008 and the Profit & Loss Account and also Cash Flow
Statement of the company for the year ended on that annexed 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 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 (Auditors Report)(Amendment) 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 I
above:
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, the Company has kept proper books of account as
required by law 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 Profits 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 non-compliance of Accounting
Standard 15 (Revised) on Employee Benefits.
e) On the basis of written representations received from the Directors
of the Company as on 31* March, 2008, and taken on record by the Board
of Directors of the Company, we report that none of the Directors is
disqualified as on 31 * March, 2008 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 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. 156.75
lacs, which is subject to confirmation.
4) The networth of the Wholly Owned Subsidiary Arcoiris 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.94.08 lacs which is
doubtful of recovery.
5) Provision not made for bad debts amounting to Rs. 3.88 lacs.
We are unable to comment on the resulting effect of our observations in
paragraph ll(d) and (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, 2008, 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.
ANNEXURE REFERRED TO IN PARAGRAPH I 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 of Insituation 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 was noticed on such verification.
3. During the year, the Company has not disposed off a substantial
part of its fixed assets.
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.
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.
In view of above, paragraph (iii) (b),(c),(d),(f) and (g) are not
reported upon.
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, 1956 have been so
entered.
9. Each 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 internal controls.
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, Sales tax, Wealth
tax, Excise duty, Custom duty and other material statutory dues, if
any, applicable to it and there are no outstanding dues as at balance
sheet date for more than six months from the date they became payable,
except for Income Tax of Rs. 1,68,193.
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 below:
Name of the statute Period to which the amount relates
Income Tax Act A. Y. 1996-97
Income Tax Act A. Y. 2000-01
Forum where dispute is pending Amount (Rs)
CIT (A), Mumbai 3,48,538
ITAT, Mumbai 74,957
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 31 March, 2008
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
explanations 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 debenture holders.
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 provisions of any special statute are not applicable to the
Company.
20. The Company has not dealt or traded in shares, securities,
debentures, or other investments during the year.
21 The company has not given guarantees for loans taken by others from
banks or financial institutions, the terms whereof are, prima facie,
prejudicial to the interest of the Company.
22. The Company has not raised any terms loans during the year.
23. Based on our examination of the balance sheet of the company as at
31st March, 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 long term purpose.
24.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.
25. During the period covered by our audit report, the company has not
issued any debentures for which security needs to be created.
26. The Company has not raised any money by public issue during the
year.
27. 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 & Company
Chartered Accountants
Place: Mumbai
Date : 30th June, 2008 Rakesh Rathi
Partner
Membership No.45228
