1. We have audited the attached balance sheet of Chromatic India
Limited (''the Company'') as at March 31, 2011 and also the profit and
loss account and the cash flow statement 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 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
3. As required by the companies (Auditor''s Report) order, 2003, as
amended by the companies (Auditor''s Report) (amendment) order, 2004,
issued by the central government of India in terms of sub-section(4A)
of section 227 of ''the companies act, 1956'' of India (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
explanations given to us, 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 paragraph 3 above and subject to
note nos. 6,7,8,9 & 15, we report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
ii) 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
iii) The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of account;
iv) In our opinion, 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 (3C) of section 211 of the
Companies act, 1956, except for non-compliance of accounting standard
15 (Revised) on Employee Benefits wherein the impact on the financial
statement cannot be ascertained.
v) On the basis of the written representations received from the
directors, as on March 31,2011, and taken on record by the board of
directors, we report that none of the directors is disqualified as on
March 31, 2011 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
vi) 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.
vii) As stated in note no. 9 of the notes on accounts, no provision has
been made with regard to the readability of the investment, interest
receivable and loan, from Societa Eiducle L Con Sa (Arcoiris SA), a
subsidiary company, aggregating Rs 136.97 lacs as at March 31, 2011 (Rs
122.09 lacs as at March 31, 2010), where the net worth has been
completely eroded and there is no significant activities being carried
out. This has resulted in overstatement of profits by Rs 136.97 lacs
(Rs 376.73 lacs for the year ended March 31, 2010), loans and advances
by Rs 110.74 lacs (Rs 350.50 lacs as at March 31, 2010) and investment
by Rs 26.23 lacs (Rs 26.23 lacs as at March 31, 2010).
5. Based on our audit conducted as above, subject to the effects of
our observations given in paragraph 4 above, the said accounts give a
true and fair view in conformity with the accounting principles
generally accepted in India;
a) In the case of the balance sheet, of the state of affairs of the
Company as at March 31, 2011;
b) In the case of the profit and loss account, of the profit for the
year ended on that date; and
c) In the case of cash flow statement, of the cash flows for the year
ended on that date.
Annexure to Auditors'' Report
[Referred to in paragraph 3 of the Auditors'' Report of even date to the
members of Chromatic India Limited on the financial statements for the
year ended March 31, 2011]
i) a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
b) All the fixed assets have not been physically verified by the
management during the year but there is a regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. As informed, no
material discrepancies were noticed on such verification.
c) There was no substantial disposal of fixed assets during the year.
ii) a) The inventory has been physically verified by the management
during the year. In our Opinion, the frequency of verification is
b) The procedures of physical verification of inventory 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 is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification carried
out at the end of the year.
iii) a) As informed, the Company has not granted/ taken any loans,
secured or unsecured to/ from Companies, firms or other parties covered
in the register maintained under section 301 of the Companies Act,
Accordingly, clauses (iii) (b), (c), (d), (e), (f) and (g) of the
Companies (Auditor''s Report) Order, 2003 (as amended) are not
applicable to the Company and hence, not reported upon.
iv) In our opinion and according to the information and explanations
given to us, there exists an adequate internal control system
commensurate with the size of the company and the nature of its
business with regard to purchase of inventory, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, no major weakness has been noticed in the internal control
system in respect of these areas. During the course of our audit, we
have not observed any continuing failure to correct major weakness in
internal control system of the company.
v) a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 that
need to be entered into the register maintained under section 301 have
been so entered.
b) None of the transactions made in pursuance of any contracts or
arrangements exceed the value of Rupees five lakh in respect of any
such party in the financial year.
vi) The company has not accepted any deposits from the public within
the meaning of sections 58A and 58AA of the Act and the rules framed
vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii) The Company is required to maintain the cost records as
prescribed by the Central Government of India under clause (d) of
sub-section (1) of section 209 of the act for the activities carried on
by the company.
ix) a) Undisputed statutory dues including provident fund, investor
education and protection fund, Employees'' state insurance, income-tax,
sales-tax, wealth-tax, customs duty, excise duty, have not been
regularly deposited with the appropriate authorities and there have
been slight delays in few cases.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth-tax, sales-tax, customs duty, excise duty and other undisputed
statutory dues were outstanding, at the year end, for a period of more
than six months from the date they became payable.
c) According to the records of the company, the dues outstanding of
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty and cess on account of any dispute, are as follows:
Name of the
Statute Nature of dues Amount (Rs) Period to which Forum
Tax Act Income Tax 6,75,100 A.Y.2002-03 Asst.
x) The Company''s accumulated losses at the end of the financial year
are less than fifty per Cent of its net worth and it has not incurred
cash losses in the current and immediately preceding financial year.
xi) Based on our audit procedures and as per the information and
explanations given by the Management, we are of the opinion that the
Company has not defaulted in repayment of dues to banks.
xii) According to the information and explanations given to us and
based on the documents and records produced 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
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor''s Report) order, 2003 (as amended)
are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditor''s Report) order,
2003 (as amended) 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 any guarantee for loans taken by
others from banks or financial institutions.
(xvi)The term loans have been applied for the purpose for which the
loans were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
(xviii)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.
(xix) The Company did not have any outstanding debentures during the
(xx) The management has disclosed on the end use of money raised by
public issue and the same has been verified.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the 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 S. K. Badjatya & Co.
Firm Registration No. 004017C
C A.Sudhir K.Jain
Membership No. 072282
Date: May 30, 2010