Bhatia Colour Chem’s record is clean on its face: five years of unqualified audit opinions and no fraud findings. Three things deserve attention: operating cash flows are deeply negative over the six-year cycle, with cumulative CFO of ₹-87 crore against PAT of ₹15 crore, and promoter directors have repeatedly secured steep remuneration increases, from ₹2 lakh to ₹7 lakh per month.
Key findings
- Operating cash flows are deeply negative over the six-year cycle, with cumulative CFO of ₹-87 crore against PAT of ₹15 crore
Major- Over the six financial years FY2021-22 through FY2025-26, cumulative cash flow from operations was ₹-87 crore against cumulative profit after tax of ₹15 crore, yielding a cumulative CFO/PAT ratio of -5.87x [SQL]. In FY2025-26, CFO was ₹-12.71 crore against PAT of ₹4.18 crore [SQL]. The company has recommended no dividend in any of the years FY2021-22, FY2023-24, FY2024-25, or FY2025-26, stating in FY2025-26 that it is conserving resources for future growth. - Promoter directors secured steep remuneration increases, from ₹2 lakh to ₹7 lakh per month
Major- Mr. Bharat Brijlal Bhatia (MD) and Mr. Rameshchand Chanduram Bhatia (WTD) each drew ₹2,00,000 per month as of the FY22 AGM notice dated 25 Aug 2022. The FY24 AGM notice sought approval to increase their remuneration to ₹4,00,000 per month, and a postal ballot concluded on 21 Mar 2025 approved further increases to ₹7,00,000 per month effective 1 Apr 2025, invoking the minimum-remuneration clause under Schedule V for no-profit years. On the remuneration resolutions at the 27 Aug 2024 AGM, the promoter group cast zero votes, leaving the public minority to approve the increases. - Collateral provided by directors and relatives is disclosed, and undrawn SBI facility is shown as cash
Major- The term loan from Edelweiss Retail Finance Ltd. is secured by a mortgage over a property belonging to directors and their relatives, not the company. The SBI cash credit facility is secured by equitable mortgages over three leasehold properties belonging to M/s. Shreenathji Industries, M/s. Aditya Chemicals (prop. Sonal Bharat Bhatia, relative of a director), and M/s. Bharat Chemicals (prop. Bharat Brijlal Bhatia, a director). As at FY2025-26 year-end, the company had not utilised the SBI facility and reported the credit balance of ₹2.45 crore under ‘Cash and Cash Equivalents’ rather than as short-term borrowings. - Audit opinions are consistently unqualified, but FY2025-26 secretarial audit reveals six compliance lapses
Minor- The statutory auditor issued an unqualified opinion on standalone financial statements for every year from FY2021-22 through FY2025-26. The Secretarial Audit Report for FY2025-26, dated July 31, 2026, contains six adverse observations including late filing of the shareholding pattern after a 15,07,199-share allotment, missing website disclosures, and a corrupted SDD software backup. No fraud by or on the company was noticed or reported by auditors under Section 143(12) in any year from FY2021-22 to FY2025-26. - Revenue recognition is a recurring Key Audit Matter, while trade receivables involve a discounted related-party debt transaction
Minor- Revenue recognition is identified as a Key Audit Matter by the statutory auditor in both FY2024-25 and FY2022-23. In FY2024-25, the company entered into a debt discounting transaction with Dacoc Chemicals Pvt. Ltd. at a 5% discount for certain debtors, and the resulting amount is now shown as a current receivable from Dacoc Chemicals under Trade Receivables. Trade receivables are net of advances received from customers, which fell from ₹43.94 lacs in FY2023-24 to ₹6.18 lacs in FY2024-25 and further to ₹0.78 lacs in FY2025-26.
What to watch
- RPT resolutions at the 5th AGM. Shareholder vote on the four material RPT resolutions (items 7-10) at the AGM convened by notice dated 3 Aug 2026.
- Director re-appointment and remuneration. Outcome of the resolutions on re-appointment and remuneration of the three executive directors for the five-year term from 21 Jan 2027 at the same AGM.
- GST search outcome. The GST search initiated by DGGI Surat Zonal Unit was disclosed on 9 April 2026.
Bottom line: This is a disclosed and audited record where the statutory auditor has never qualified an opinion. The risk sits in the structure: its profits have not converted to cash over six years, and its borrowings are secured in part by director and relative assets rather than its own. Read the RPT resolutions and the cash flow statement with that in mind, and watch the AGM votes on the proposed director transactions.